Major ports along Canada’s West Coast, including the bustling Port of Vancouver—Canada’s largest container port—and the strategically vital Port of Prince Rupert, have been brought to a standstill due to a labor strike initiated on Monday morning.
The International Longshore and Warehouse Union (ILWU) Ship & Dock Foreman Local 514 announced the strike early Monday, leading to an immediate halt of all container and cargo operations. The Greater Vancouver Board of Trade reported that an astounding $800 million in trade flows through these West Coast ports on a daily basis, emphasizing the economic significance of the situation.
Significantly, approximately 20% of U.S. trade relies on the Canadian ports of Vancouver and Prince Rupert, where labor disputes flared after union negotiators and industry representatives failed to secure an agreement before a mandated cooling-off period came to an end. The ILWU Local 514’s contract expired on March 31, 2023, and a resounding 96% of union members had voted in favor of a strike in September, showcasing the level of discontent within the ranks.
This strike unfolds against the backdrop of a recent labor action that remains to significantly affect the Port of Montreal, Canada’s second largest port. Notably, the Port of Montreal handles an impressive 40% of all container traffic to the East Coast. Two of its terminals have been paralyzed since the strike was announced by the Canadian Union of Public Employees (CUPE) Local 375 last Thursday, compounding pressure on supply chains across the country.
The United States, being Canada’s largest trading partner, is particularly vulnerable to these disruptions. Essential goods, including containers filled with footwear, apparel, auto parts, and chemicals, flow through the Port of Vancouver, utilizing Canadian rail and trucking services to reach U.S. markets.
According to data from the U.S. Department of Transportation, rail cross-border trade between Canada and the U.S. constituted 14% of total bilateral trade, amounting to $382.4 billion in the first half of the year. Approximately $572 million in container trade arrives daily in the United States from Canada, as per U.S. Census statistics.
Disruptions at the Vancouver ports could dramatically impact imported goods destined for the western U.S. markets, warns Jena Santoro, senior manager of intelligence solutions at Everstream Analytics. She emphasized, “Vancouver is a critical entry point for perishable food items like dairy, produce, and seafood, as well as manufactured goods such as automotive components.”
Industry experts predict that the port closures in Vancouver and Prince Rupert would have extensive repercussions for numerous chemical importers, noted Eric Byer, CEO of the Alliance for Chemical Distribution. Companies relying on the rail networks of Canadian Pacific Kansas City and Canadian National Railway to ship goods to the Midwest would particularly face challenges. Key chemicals typically transported through Vancouver include caustic soda, ethylene glycol, and sodium chlorate, all of which play vital roles in a wide array of industries, from water treatment to the production of cleaning products and pesticides.
Logistics executives are expressing significant concerns regarding the possible repercussions of this strike, echoing the challenges faced during the 13-day strike by the ILWU of Canada in July 2023. It took over three months for U.S.-bound freight movement to stabilize post-strike, with rail container delays reported to range from 39 to an alarming 66 days, excluding the vessel processing waits.
Paul Brashier, vice president of global supply chain for ITS Logistics, remarked, “Vancouver processes a significant amount of ocean containers that move via rail to the U.S. A swift resolution to this dispute is essential, as prolonged uncertainty could negatively impact numerous supply chains critical to manufacturing and the impending holiday retail surge.”
Data collected by the Port of Vancouver reflects significant growth in container processing during the first half of 2024, with a notable increase of 14%, translating to 1.8 million twenty-foot equivalent units (TEUs). Additionally, loaded container imports surged by 19% to reach 930,300 TEUs, while loaded container exports grew by 4%, totaling 412,100 TEUs. Approximately $840 million worth of export and import cargo is processed through the port daily.
Anticipating potential labor disputes and changes in global trade routes caused by recent geopolitical tensions, retailers have proactively replenished their inventories, leading to a spike in imports.
A temporary disruption in Canadian West Coast trade routes could force carriers to reroute import cargo to the already saturated U.S. West Coast, cautioning Alan Baer, CEO of OL USA, who indicated that this could exacerbate container dwell times and extend overall transit durations. The Port of Vancouver offers Midwest importers a vital opportunity to diversify their supply routes from Asia to the U.S.
During previous labor actions, vessels were redirected to U.S. West Coast ports. However, ports in Los Angeles and Long Beach are already facing prolonged wait times for rail-bound containers, a byproduct of recent strike-induced trade diversions from the East Coast, compounded by a lithium-ion battery fire that temporarily closed the ports following an overturned tractor trailer incident.
Furthermore, Santoro highlighted that the diversion of vessels to U.S. West Coast ports might lead to increased congestion, creating processing backlogs at additional ports such as Seattle and Oakland.
Steve Lamar, CEO of the American Apparel and Footwear Association, expressed exasperation in a recent email statement: “Logistics networks are over-stressed, facing challenges from global disruptions and looming labor uncertainties. The lockout affecting over 700 employees at British Columbia ports, coupled with a concurrent strike at two terminals in Montreal, and historically high dwell times on the U.S. West Coast threaten to disrupt North American supply chains as we approach the critical holiday shopping season.”
The British Columbia Maritime Employers Association (BCMEA) announced it initiated a lockout of foremen as a precautionary measure after ILWU Local 514 issued a 72-hour strike notice. This lockout took effect with the shift starting at 4:30 p.m. on Monday and will persist until further notice, though operations for grain and cruise services remain exempt.
Negotiations between BCMEA and the ILWU 514 have been led by the Federal Mediation and Conciliation Services (FMCS) but have stagnated, with concerns over automation acting as a significant hurdle to reaching an agreement. Ports operator DP World Canada proposed implementing advanced, remotely controlled rail-mounted cranes at its Vancouver terminal, although ILWU Local 514 President Frank Morena stated that while an agreement with ILWU Local 500 had been reached, negotiations with Local 514 have not yielded similar results.
Automation also remains a central point of contention in negotiations involving U.S. East Coast ports, facing a mid-January deadline to secure a deal to avoid a potential strike.
The BCMEA’s final offer preceding the strike included a substantial 19.2% wage increase, alongside a lump sum payment nearing $21,000 CAD for each eligible foreman, encapsulating a signing bonus and retroactive pay effective from April 2023. Additionally, proposals included a 15% boost to retirement benefits and a considerable 47% increase in meal allowances.
In a statement update, Canadian Labor Minister Steven MacKinnon acknowledged that he has engaged with both BCMEA and ILWU Local 514 regarding negotiations for their new collective agreement. “Federal mediators are on-site, ready to provide assistance. It is crucial for both parties to collaborate and reach a consensus, as businesses, workers, and farmers are depending on their timely resolution.”
**Interview with Jena Santoro, Senior Manager of Intelligence Solutions at Everstream Analytics**
**Interviewer**: Thank you for joining us today, Jena. The recent labor strike at the major ports along Canada’s West Coast, particularly the Port of Vancouver, has caused a significant disruption to trade. Can you elaborate on the scale of impact this has on supply chains, especially in relation to U.S. markets?
**Jena Santoro**: Thank you for having me. The situation is quite critical. Vancouver and Prince Rupert are not just pivotal for Canadian trade; they handle about 20% of U.S. trade as well. The fact that approximately $800 million flows through these ports daily emphasizes the scale of the issue. Goods, including perishables and manufactured products, are now at a standstill. This has broad repercussions, particularly for industries relying on timely imports to fulfill their supply chains.
**Interviewer**: You mentioned perishables and manufactured goods. Can you provide specific examples of products that are affected by this strike?
**Jena Santoro**: Absolutely. Vancouver is a key entry point for perishable items like dairy, seafood, and fresh produce. Moreover, automotive components and various industrial chemicals, like caustic soda and ethylene glycol, are crucial for multiple manufacturing processes. Any delay in processing these goods can lead to significant shortages and economic impact along the supply chain.
**Interviewer**: Given the previous strike in July 2023, what are the implications if this current strike persists?
**Jena Santoro**: If this strike continues, we could see extended delays similar to what we witnessed last summer, where it took more than three months for freight movement to normalize after the work stoppage. Rail container delays were concerning, with wait times reaching up to 66 days. This current dispute arrives ahead of the holiday retail surge, heightening the urgency for a swift resolution.
**Interviewer**: Some experts suggest that the lockout could force cargo to be rerouted to the already congested U.S. West Coast ports. What kind of pressure does that present?
**Jena Santoro**: That is a significant concern. The U.S. West Coast ports, particularly Los Angeles and Long Beach, are already struggling with high dwell times due to other supply chain disruptions. Redirecting vessels here will lead to further congestion, creating a ripple effect across the entire transportation network. Increased processing times at ports such as Seattle and Oakland could exacerbate the situation, leading to delays that could affect consumer goods availability right at the peak shopping season.
**Interviewer**: With the complexity of these supply chains, what can companies do now to mitigate any further risks?
**Jena Santoro**: Companies need to rethink their supply routes and inventory management strategies. Diversifying supply routes to minimize reliance on any single port is essential. Additionally, proactive communication with logistics providers and contingency planning for alternative sourcing tactics can help them navigate these uncertain times more effectively. It’s all about being flexible and agile to adapt to the rapidly changing landscape.
**Interviewer**: Thanks for your insights, Jena. The current labor strike certainly places a spotlight on the vulnerabilities within our supply chains.
**Jena Santoro**: Thank you for the opportunity. It’s imperative for businesses and stakeholders to stay informed and adaptable as we navigate these challenges.
