Global Courant
Shipping containers are loaded onto rail cars at the Global Container Terminals Vanterm container terminal on Vancouver Harbour in Vancouver, British Columbia, Canada.
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Overseas trade entering North America through key ports on Canada’s West Coast faces more uncertainty after dock workers rejected a tentative labor deal late Friday.
The flow of trade destined for U.S. chemical companies, retailers, and manufacturers is delayed at least two months as a result of 14 days of strikes.
Rob Ashton, president of the International Longshoremen and Warehouse Union of Canada, has called on the dock workers’ employers to come back to negotiating table and reach a deal that works for both the union and industry.
The British Columbia Maritime Employers Association did not respond to the union’s request to go back to the negotiating table. BCMEA said they are disappointed that ILWU Canada rejected the four-year tentative agreement. The employers association said it is waiting for the Canadian government to provide direction on next steps.
Canada’s Labor Minister Seamus O’Regan said he has directed the country’s industrial relations board to determine whether the union’s rejection of the tentative agreement eliminated the possibility of a negotiated resolution.
If the board does determine this to be the case, O’Reagan has directed the board to either impose a new collective agreement or impose binding arbitration. If binding arbitration is decided, the union is not allowed to strike.
“Our economy cannot face further disruption from this dispute,” O’Regan said.
The proposed deal which was voted down by the union was presented to both sides by the senior federal mediator. The BCMEA released the terms of the deal in its announcement. This is not the first time the BCMEA has released the deal.
The four-year package increased the compounded wage over four years by 19.2%. A signing bonus of $1.48 an hour per employee which tallied to approximately $3,000 per full-time worker was included. Also in the deal was an 18.5% increase in retirement payout.
In a pushback against the union’s argument of having a salary sustainable against rising inflation, the BCMEA said, “Over the course of the past 13 years, longshore wages have risen by 40%, ahead of inflation at 30%.”
U.S. trade impact
The timing of this strike adds unnecessary hurdles to peak season when holiday items are arriving for retailers. At the height of the strike, $12 billion in freight was stranded on the water. Some of that trade was diverted on vessels that called on ports on the U.S. West Coast.
For the third week in a row, rail traffic from Canada into the U.S. is down following the on-again, off-again western Canadian ports strike. The first two weeks of the labor strike prevented over 80% of rail trade from entering the United States. The U.S. saw another 12% decrease in trade this week.
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Immediate impact on railroad earnings
The strike is also hitting the bottom lines of railroad companies. The labor unrest will negatively impact Canadian Pacific Kansas City railroad’s revenue by $80 million, Chief Marketing Officer John Brooks told analysts on a conference call Thursday. Brooks said the company is working to claw back those losses over the remainder of the third and fourth quarter.
Canadian National Railway railroad announced they were running additional trains to help expedite the clearing out of the container congestion.
The Railway Association of Canada originally estimated that it would take three to five days for every day the strike lasted for networks and supply chains to recover. When the first strike ended on its thirteenth day, delays for rail containers were estimated at 39 to 66 days. Adding another day with the on-again, off-again strike last week brings the congestion removal tally up to 42 to 70 days.
“There are millions of dollars of chemicals stranded on the water. We have members waiting for chemicals to be unloaded in Vancouver and then railed down to Chicago,” Byer said.
That includes chemicals like sulfuric acid, which is used in drain cleaning products like Drano; phosphates used in laundry detergent; and acetone, which is used in the nail industry as well as a solvent that breaks down grease and wax.
Sodium fluoride, found in toothpaste, and sodium bicarbonate, also known as baking soda, also come through the West Coast ports of Canada. Additional chemicals transported through the Canadian ports go into food, power drinks, cleaning, water purification, and personal care products.
The on-again, off-again strike has left logistics managers and the world of trade in turmoil as they attempt to assess the situation and make decisions on ocean and rail transport during peak shipping season.
Alan Baer, CEO of trucking company OL USA, said global supply chains are complex and cannot be simply turned on and off like a light switch.
Historical cargo volumes show how trade moving via the the U.S. West Coast eroded due to fears about cargo being stuck and or diverted due to labor tensions over the past year, Baer said. Many shippers diverted business to East Coast ports, he said.
“Once changed, not everyone will simply return,” Baer added.
