Following a recent landslide by union members, ILWU Canada has notified that it plans to strike at ports on the country’s west coast starting July 1. The Canadian Labor Code requires a three-day notice to announce a strike. The notice came on Wednesday.
More than 99% of ILWU Canada union workers critical of West Coast port operations, 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, occurred during a 21-day cooling-off period between the British Columbia Maritime Employers Association, which represents port ownership, and ILWU Canada. Two Canadian government-appointed mediators oversaw the discussions that ran through the end of May.
ILWU Canada said in a statement Wednesday that its goal is to protect jobs and says the British Columbia Maritime Employers Association is demanding significant concessions.
“Their only goal is to take away the rights and conditions of dockworkers after they gorged themselves on record profits during the pandemic,” said Rob Ashton, president of ILWU Canada.
BCMEA responded in a statement that it has advanced multiple proposals and positions, “with the goal of moving forward and achieving a fair deal at the table.”
Impact on the US economy and trade
The largest port that will be affected by this strike is the Port of Vancouver, the largest port in Canada. About 90% of the cargo moving through the Port of Vancouver is Canadian trade, according to the Vancouver Fraser Port Authority. But there are potential impacts for US trade. According to the Port Authority, approximately 15% of container trade moving through the Port of Vancouver is destined for or originates from the US.
About two-thirds of containerized import volumes entering the Port of Prince Rupert are destined for the US market by rail, according to port data.
Canada’s west coast ports are estimated to handle nearly $225 billion worth of cargo a year, with items transported by rail including many consumer products from clothing to electronics and household items. The movement of grain ships should not be affected by the strike under the Canadian labor code.
Three Class 1 railroads operate in these ports, CN, Canadian Pacific, and BNSF, a subsidiary of Berkshire Hathaway. CN and BNSF could not immediately be reached for comment.
In a CPKC customer notice issued Wednesday, the railroad said: “The work stoppage related to this notice could affect port operations in British Columbia. At this time, we do not anticipate any significant service interruptions as a result of this work stoppage, and as such CPKC has not initiated embargoes related to a potential service interruption, but we are closely monitoring developments to assess any impact on shipments on CPKC’s network. We will provide updates as necessary.”
The BCMEA statement said it remains ready to re-engage with the union through the federal mediation process. “That includes voluntarily entering a mediation and arbitration process made up of the parties that encourages ongoing dialogue and negotiations and only, if necessary, provides a binding outcome through interest arbitration. Until now, ILWU Canada has rejected this binding proposal for mediation and arbitration”. He said.
The cruise ships are expected to be serviced during the busy summer season, but “it is unclear at this time if the ILWU will service that segment of the industry,” the BCMEA said.
Another round of discussions is scheduled for Thursday.
The global supply chain is back on track
The global supply chain has faced several new risks as the peak shipping season that encompasses both back-to-school and holiday orders begins. The Panama Canal has been dealing with severe drought conditions, while US West Coast ports reached a tentative labor agreement after weeks of tension between the US ILWU and port management , but that agreement will take months to be ratified by the rank-and-file union members.
“We are concerned about a potential strike and its impact on the ports of Vancouver and Prince Rupert,” Jon Gold, vice president of supply chain and customs policy for 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 cause delays and disruptions as we enter the peak shipping season. We urge the parties to stay at the table and continue negotiations until they are resolved.” come to an agreement.”
In general, data shows supply chain costs have been reduced significantly since the pandemic inflation crisis struck, with companies saying 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 a CNBC interview Wednesday, General Mills CEO Jeff Harmening described the supply chain as “healthier in the last three months” and said the number of disruptions is similar to pre-pandemic levels.
But logistics managers told CNBC the news of the Canadian dockworkers’ strike is a blow to operations. “We will preload as many containers as possible before the weekend,” said Paul Brashier, vice president of drayage and intermodal for ITS Logistics. “Then we will take those containers that were destined for the rail and transfer the products to dry vans.”
Brashier said these Canadian ports are vital to Midwestern manufacturers and the auto industry, as most trans-Pacific freight enters these points before interlining with rail and heading to inland rail ramps in Chicago and other major markets. .