Strikes shut operations at Canada’s largest ports, US trade in limbo
Key ports on Canada’s West Coast, including its largest container port in Vancouver and the Port of Prince Rupert, were shut down by a labor strike on Monday.
The International Longshore and Warehouse Union Ship & Dock Foreman Local 514 began striking on Monday morning, stopping containers and cargo immediately. According to the Greater Vancouver Board of Trade, $800 million in trade flows through West Coast ports every day.
Approximately 20% of U.S. trade arrives in the Canadian ports of Vancouver and Prince Rupert, where strikes broke out after union leadership and industry representatives failed to reach a deal before a cooling-off period expired. The ILWU Local 514 contract expired on March 31, 2023, with 96% of union members voting in favor of a strike in September.
This strike comes on the heels of a recent strike still impacting the country’s second-largest port, the Port of Montreal (Prince Rupert is Canada’s third-largest port). Montreal processes 40% of all East Coast container traffic. Two terminals have been blocked since Thursday when a strike was announced by the Canadian Union of Public Employees (CUPE) Local 375.
The United States is Canada’s largest trading partner. Containers filled with footwear, apparel, auto parts, chemicals, and lumber are just some of the top products that enter the Port of Vancouver and use Canadian rails or trucking to come into the U.S.
According to the U.S. Department of Transportation, rail cross-border trade between Canada and the U.S. accounted for 14% of total bilateral trade of $382.4 billion in the first half of the year. Approximately $572 million in container trade arrives daily in the U.S. from Canada, according to U.S. Census data.
Any port disruptions in Vancouver would have the most significant impact on imported goods destined for markets in the western U.S., according to Jena Santoro, senior manager of intelligence solutions at Everstream Analytics. “Vancouver is a critical entry point for perishable food items like dairy, produce, and seafood, and manufactured goods like automotive components.”
Closures at the ports of Vancouver and Prince Rupert are also expected to have a significant impact on many chemical importers, said Eric Byer, CEO of the Alliance for Chemical Distribution, especially for companies that use the rail networks of Canadian Pacific Kansas City and Canadian National Railway out of these ports to ship goods to the Midwest. Specific chemicals that move through Vancouver include caustic soda, ethylene glycol, and sodium chlorate. These chemicals have several crucial uses, including water treatment processes, plastics, solvents, paper, pesticides, cleaning products, and de-icing products.
Logistics executives are concerned about the impact of a strike, pointing to the 13-day strike by the International Longshore and Warehouse Union of Canada in July 2023. It took at least three months for the movement of U.S.-bound freight to return to normal. Delays for rail containers were anywhere from 39 to 66 days, excluding delays in vessels waiting to get processed.
“Vancouver processes a significant amount of ocean containers that move via rail to the U.S.,” said Paul Brashier, vice president of global supply chain for ITS Logistics. “As was the case last year, a quick resolution to this dispute is needed as this will negatively impact many supply chains that need goods for manufacturing and the holiday peak retail season for replenishment.”
Trade data recorded by the Port of Vancouver shows the port processed significant container growth in the first half of 2024, rising 14% to 1.8 million twenty-foot equivalent units (TEUs.) Loaded container import volumes surged 19%, reaching 930,300 TEUs, while loaded container exports grew 4% to 412,100 TEUs. An estimated $840 million in export and import cargo moves through the port each day.
Imports have surged as retailers replenished their inventories early, anticipating potential labor disputes, including the recent U.S. East Coast strike, which resulted in trade diversions, and ongoing changes in trade routes caused by the Red Sea attacks and avoidance of those waters by global shippers.
A temporary loss of the Canadian West Coast trade gateway could push carriers to discharge import cargo along the already strained U.S. West Coast, said Alan Baer, CEO of OL USA, further increasing the dwell time of containers and elongating overall transits. The Port of Vancouver provides Midwest importers an option to diversify their Asia-to-U.S. supply chain.
Vessels were diverted to the U.S. West Coast ports during the last strike but currently ports in Los Angeles and Long Beach, California, are experiencing longer rail-bound container wait times as a result of the recent East Coast strike diversions, as well as a lithium ion battery fire on September 26 caused by an overturned tractor trailer which burned for days, closing the ports temporarily.
Santoro said in addition to Los Angeles-Long Beach delays, vessel diversions to U.S. West coast ports could cause congestion to spike and prompt cargo processing backlogs at additional ports such as Seattle and Oakland.
“Enough already!” Steve Lamar, CEO of the American Apparel and Footwear Association, wrote in an email statement. “Logistics networks are over stressed, with Houthi attacks still diverting global trade and the threat of an East Coast strike pushed to mid-January. The lockout of over 700 employees at the British Columbia ports, compiled with a strike at two terminals in the port of Montreal and two-year high rail dwell times on the U.S. West Coast, will cause a significant disruption to North American supply chains as we approach the holiday shopping season.”
The British Columbia Maritime Employers Association said in a statement that it began a lockout of foremen as a “defensive” measure after the ILWU Local 514 issued a 72-hour strike notice for what the union described as a “limited job action,” with forepersons and other Local 514 members locked out beginning with the 4:30 p.m. shift on Monday and continuing until further notice, with exceptions for grain and cruise operations.
Negotiations between the two parties were led by the Federal Mediation and Conciliation Services (FMCS) but have stalled, with automation among the issues that stand in the way of a deal. Ports operator DP World Canada proposed implementing remotely controlled rail-mounted cranes at its Vancouver terminal. Frank Morena, President of ILWU Local 514, said in a statement that DP World Canada had earlier reached a “manning agreement” with ILWU Local 500 regarding these cranes, “but refused to do so directly with Local 514.
Automation remains a key issue in the ongoing negotiations between U.S. East Coast ports and ports management with a mid-January deadline to reach a deal or face another strike.
The BCMEA’s final offer ahead of the strike included a 19.2% wage increase, a lump sum payment of around $21,000 (CAD) per eligible foreperson — combining a signing bonus and retroactive pay to April 2023 — with all retroactive pay and bonuses to be disbursed by mid-December. Also included were a 15% increase to retirement benefits and a 47% increase to meal allowance.
In his last statement posted to X about the talks on November 2, Canadian Labor Minister Steven MacKinnon said, “I have spoken with the BCMEA and ILWU 514 on the negotiations for their new collective agreement. Federal mediators are on site, ready to assist the parties. It is the responsibility of the parties to reach an agreement. Businesses, workers, and farmers are counting on them to get a deal.”
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