Global Courant
Following a recent crushing vote among union members, the ILWU Canada has announced its intention to strike in ports on the country’s west coast from July 1. Canadian Labor Law requires three days’ notice to announce a strike. The message came on Wednesday.
More than 99% of ILWU Canada’s union workers critical to port operations on the West Coast, including in Vancouver and Prince Rupert, voted earlier this month to support a strike if a labor agreement is not reached. The vote, which took place June 9-10, took place during a 21-day cooling-off period between the British Columbia Maritime Employers Association, which represents the port property, and ILWU Canada. Two mediators appointed by the Canadian government oversaw the talks, which continued until the end of May.
ILWU Canada said in a statement Wednesday that its goal is to protect jobs and claims the British Columbia Maritime Employers Association is demanding major concessions.
“Their sole purpose is to take away the rights and conditions of longshoremen after they have stuffed themselves with record profits during the pandemic,” said Rob Ashton, president of the ILWU Canada.
BCMEA countered in a statement that it has put forward multiple proposals and positions, “with the aim of moving forward and reaching a fair deal at the table”.
Implications for the US economy and trade
The largest port affected by this strike is the Port of Vancouver, Canada’s largest port. About 90% of the cargo that passes through the Port of Vancouver is Canadian trade, according to the Vancouver Fraser Port Authority. But there are potential ramifications for US trade. About 15% of container trade passing through the Port of Vancouver is destined to or from the U.S., and about 2% of U.S. international laden imports arriving at West Coast ports each year pass through the Port of Vancouver, said the port authority.
According to data from the port, about two-thirds of the volume of containerized imports entering the Port of Prince Rupert is destined for the US market by rail.
It is estimated that Canada’s west coast ports handle nearly $225 billion in cargo annually, with items transported by rail, including many consumer products from clothing to electronics and household items. Grain barge movement must not be affected by the strike under Canadian labor law.
Three Class 1 railroads operate in these ports: CN, Canadian Pacific, and BNSF, a subsidiary of Berkshire Hathaway. CN and BNSF were not immediately available for comment.
In a CPKC customer advisory issued Wednesday, the railway said: “The work stoppage associated with this notice may have an impact on port operations in British Columbia. At this time, we do not expect any significant service interruptions as a result of this work stoppage, and As such, CPKC has not placed any embargoes regarding a potential service interruption, but we are closely monitoring developments to evaluate any impact on shipments on CPKC’s network. We will provide updates as necessary.”
BCMEA’s statement said it remains willing to reengage with the union through the federal mediation process. “That includes voluntarily participating in a mediation-arbitration process formed by the parties that encourages ongoing dialogue and negotiation and only, if necessary, secures a binding outcome through adjudication of interests. To date, ILWU Canada has rejected this proposal for binding mediation and arbitration, it said.
It is hoped that cruise ships will be serviced during the busy summer season, but it is “unclear at this time whether the ILWU will provide service to that segment of the industry,” according to the BCMEA.
Another round of talks is scheduled for Thursday.
The global supply chain has returned to normal
The global supply chain has faced several new risks as the busy shipping season begins, which includes both back-to-school and holiday orders. The Panama Canal has suffered a severe drought, while ports on the west coast of the US reached a tentative labor agreement after weeks of tension between the US ILWU and port management, but it will take months for that deal to be ratified by rank-and-file union members.
“We are concerned about a potential strike and its impact in the ports of Vancouver and Prince Rupert,” Jon Gold, vice president of supply chain and customs policy at the National Retail Federation, said in an email to CNBC. “Retailers have diversified their supply chains to include these critical ports in Canada. A strike would lead to delays and disruptions as we enter the busy shipping season. We urge parties to stay at the table and continue negotiations until a deal is struck.”
General, data shows that supply chain costs have fallen significantly since the pandemic inflation shocks, and companies say the supply chain has moved closer to normal operating conditions, despite recent congestion on the west coast due to ILWU and port management actions before the tentative deal was closed. During an interview with CNBC on Wednesday, Jeff Harmening, CEO of General Mills, described the supply chain as “getting healthier over the past three months” and said the number of disruptions is similar to pre-pandemic levels.
But logistics managers tell CNBC that news of the Canadian dockers’ strike is a blow to operations. “We will pre-pull as many containers as possible before the weekend,” said Paul Brashier, vice president of drayage and intermodal at ITS Logistics. “We then take the containers that were on their way to the rail and transfer the products to dry vans.”
Brashier said these Canadian ports are vital to Midwestern manufacturers and the automotive industry, as most transpacific cargo enters at these points before interlining to rail and heading to inland rail ramps in Chicago and other major markets.
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