Canada Has a $375 Million Port Problem

Date: Friday, July 7, 2023
Source: Sourcing Journal

The strike affecting 30 Canadian West Coast ports entered its sixth day Thursday morning. More than 7,400 dockworkers again didn’t show up for work as contract negotiations reached an impasse after talks broke down Monday.

The International Longshore and Warehouse Union (ILWU) Canada and the British Columbia Maritime Employers Association (BCMEA), representing 49 waterfront employers on the coast, are pointing fingers at each other for stalling the negotiations.

A major sticking point for union members has been the use of outsourced contract work for non-union workers, which they say erodes its jurisdiction over regular maintenance.

This issue has divided workers and employers, with the BCMEA accusing the union of attempting to “aggressively expand” this jurisdiction and redefine “regular maintenance” beyond the initial agreement.

Under the most recent collective agreement, which expired March 31, ILWU exclusively supplies the labor force for maintenance work.

But the terminals claim the union has “been consistently unable to fulfill the trades work they have jurisdiction over,” such as in the Port of Vancouver, where the BCMEA says 25 percent of specific maintenance jobs went unfilled in the past year. If the union isn’t able to fill the vacancies, the BCMEA uses third-party contractors, as per the most recent agreement.

The ILWU said claims of expanding its jurisdiction are “completely false,” adding that using contractors reflects an “unwillingness of the employers to properly utilize our trades workers.”

“We already have sufficient numbers of registered trades workers to meet the demands of the industry and we continue to recruit more,” said Rob Ashton, president of ILWU Canada in a statement. “The issue is that the BCMEA member employers refuse to utilize them or train them as required.”

As a result of the strike, the ports haven’t serviced any vessels since June 30.

On Wednesday, the BCMEA said the strike has potentially disrupted $3.7 billion of cargo thus far, including automotive parts, refrigerated food, fertilizer and critical minerals.

But CNBC, citing MarineTraffic and Canadian customs data, suggests this number could be closer to $12 billion off Vancouver and Prince Rupert, the country’s two largest West Coast ports.

The Canadian Federation of Independent Business (CFIB) said strike-related delays could have a larger impact on small businesses, especially as the economy attempts to stave off high inflation.

“Some businesses may lose inventory if perishable goods are not unloaded and brought to market quickly, which would lead to considerable loss of revenue,” Jasmin Guénette, CFIB’s vice president of national affairs, said in a statement. “Contracts are also at risk if goods are not delivered or received on time.”

According to data from the Canadian Manufacturers & Exporters (CME), 16 percent of the country’s total goods, worth approximately $500 million Canadian dollars ($375 million), is being disrupted every day.

“Once again manufacturers are being held hostage and paying the cost of a labor disruption at one of Canada’s transportation hubs,” said Dennis Darby, president and CEO of CME.

So far, the strike doesn’t appear to have affected freight rates, with Freightos Terminal data for the Shanghai to Vancouver trade lane showing container rates haven’t changed since the strike started—for now.

“A prolonged shutdown could divert significant volumes to alternate ports and put pressure on rates, though so far no impact on ocean prices [is] evident,” said Judah Levine, head of research at Freightos. “A prolonged shutdown and significant enough diversions could push rates up at alternate ports.”

Canadian Labor Minister Seamus O’Regan met with British Columbia Labor Minister Harry Bains in Vancouver on Wednesday to discuss the port strike. It’s unclear if the Canadian federal government would get involved in the negotiations—a move Ashton adamantly opposes.

In a statement, O’Regan said federal mediators will continue to support BCMEA and ILWU in their negotiations for the time being.

“We encourage both parties to immediately return to the bargaining table and remain there until a deal is reached,” O’Regan said. “Collective bargaining is hard work, but it’s how the best, most resilient deals are made.”

Devin Dreeshen, Alberta’s minister of transportation and economic corridors, said he wants the Canadian federal government to recall Parliament to consider back-to-work legislation to end the strike. And at the CME, Darby similarly called for the government to intervene to discourage future disruptions elsewhere.

“If we do not seriously address the root problems of Canada’s transportation network disruptions, and eliminate the incentives to time and game labor disruptions to inflict maximum economic pain, then it will just continue to be Groundhog Day—where every six months a disruption occurs, and manufacturers and Canadians are left to pay the economic costs,” added Darby.


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