Canada dry—and not the good kind

By Andrew Joseph, Editor

This article was written just days after port workers from the International Longshore and Warehouse Union went on strike on July 1, 2023, then revised as the strike was resolved on July 13, and revised again when the deal remained unratified. This article explores what led up to it and what the strike delay could mean to Canada and her global trading partners.

The old saying that “any port in a storm” will provide a haven may no longer hold as much sway as it did after port workers in British Columbia went on strike as of July 1, 2023.

The 7,200 striking workers from 30 BC ports are members of the International Longshore and Warehouse Union (ILWU) Canada. The strike has caused concern amongst Canada’s ag retailers, their customers, and farmers, as well as dismay that it may also play havoc with global food security and the availability of foods.

After days of striking, the negotiations appeared to have been stalled by the ILWU complaint that the use of contractors continues to erode maintenance at the ports and that the critical issue behind it all is the refusal of employers to agree to “one sentence’’ contained within a document relating to care.

We understand the striking player’s desire for wages, fair treatment, and job security—everyone wants the same for themselves—but the localized event across Canada’s west coast will disrupt global supply chains and impact international trade if it hasn’t already.

If that sounds like a familiar refrain, the same dire consequences were realized when Covid shutdowns affected how the world went about its business, causing cargo bottlenecks when products were available and leading to a global shortage of products and food.

Although the striking ILWU wants worker protection rights and to avoid work loss by outsourcing, the BC Maritime Employers Association (BCMEA) stands in opposition, stating that the ILWU’s demands are too, well, demanding—going beyond the industry-wide agreement, especially regarding Regular Maintenance Work, where the BCMEA said that any alteration of this definition would have immediate and significant consequences for terminal operations.

The BCMEA points a finger back at the ILWU, saying that the union is attempting to “aggressively expand’’ its control of port maintenance duties well beyond an agreement that the BCMEA noted has been “legally well established for decades.”

The BCMEA represents 49 of British Columbia’s private-sector waterfront employers that are collectively responsible for handling about 16 percent of our country’s annual traded goods.

You may have noticed that the ILWU also wanted to be treated fairly, which is one of its striking points. In this case, the union cited the need to be recognized in thanks and financial terms for port workers’ sacrifices during the Covid-19 pandemic. For the ILWU, the port workers worked during that difficult time to ensure global food security didn’t suffer and supply chains remained open and viable.

Snarled, yes. But still open.

Because rail transportation often works arm-in-arm with the waterway shipping mode, the Canadian National Railway Co. acknowledged in a released statement that this port strike could lead to increased shipping costs and higher costs for consumers.

“A labour disruption can create significant impacts on shippers’ decisions to use Canada’s ports,” commented Jonathan Abecassis, a spokesperson for CN. “Given the integrated nature of ports and rail corridors, a work stoppage can create disruptions that take weeks or even months to correct.”

As the CN spokesperson alluded to, regardless of whatever the position is of the two factions, the strike could place Canada in a negative light amongst its economic trading partners.

Yes, Canada has lots of great things other countries want and need—and at a reasonable price—but it’s all moot if those commodities cannot physically travel to the buyer because of the strike.

And, as Abecassis said, even if the strike is resolved, there will be a tremendous backlog that could take a very long time to clear up.

If you wanted something from Store #1 but found they didn’t have what you needed when you wanted it, wouldn’t you go to Store #2? That’s the biggest fear in the Canadian economic sector.

And, even worse, being seen as unreliable in the short term is not a stain easily washed away. It could have longer-lasting effects, as countries may want to avoid purchasing from unstable environments.

Although no one is calling Canada unstable—least of all CAAR—our country could be perceived as such by others. Countries seeking to curry favour with our customers could also push that narrative. Canadian farmers are wondering if their ag retailers have sufficient fertilizer inventories for them.

Yes, we have no doubt that Canada has the ability to provide a good supply of potash.

Per Fertilizer Canada, 95 percent of Canada’s potash and 40 percent of our nitrogen are exported—although if the ports remain closed, international customers will look elsewhere, meaning that Canadian farms could see an increase in the availability of Canadian fertilizer ingredients.

We don’t need to tell ag retailers that the timing and precision of fertilizer transportation are critical for farmers to maintain an optimal agricultural yield.

The Trickledown Effect

Along with the striking dock workers, ancillary workers involved in trucking were also forced to be idle.

To put it another way, the strike has long-reaching and long-lasting implications.

Anything that could be shipped over water is now being forced to sit in a crate or a container on a ship.

Ships are being forced to wait outside their destination ports in BC, unable to offload or take on new cargo. It’s food, beverages, electronics, furniture, etc.

Concerning food and beverages, a shortage of them will lead to higher consumer prices for the products that are available.

The Retail Council of Canada (RCC) has stated that supply-chain specialists are working to find alternative transportation to ensure that goods reach stores. It also warned that any delays caused by the strike could increase consumer prices since shipping companies charge for the time goods are on ships, trains, trucks, or in container terminals.

The RCC said many imported consumer goods enter Canada through BC ports, so any impact could be “North America-wide,” especially since companies will have to spend money to arrange alternative transportation methods.

The Canadian Federation of Independent Business (CFIB) had previously stated that strike-related delays could be more costly for small businesses and come when the economy is still reeling from high inflation.

“Some businesses may lose inventory if perishable goods are not unloaded and brought to market quickly, which would lead to a considerable loss of revenue,” Jasmin Guénette, CFIB’s Vice President of National Affairs, said in a statement. “Contracts are also at risk if goods are not delivered or received on time.”

Robin Guy, Vice President of Government Relations for the Canadian Chamber of Commerce, noted that Western Canadian ports handle some $800 million of cargo daily. He said the strike would undoubtedly reduce a company’s ability to export products, making it challenging to gain future global contracts—contracts that also help employ Canadians.

The Canadian Federation of Agriculture (CFA), a group representing about 190,000 farm families across our nation, commented that the longer such a strike goes on, the worse the impact on farmers—as ships that are delayed because of an inability to be loaded or off-loaded will incur demurrage fees and other penalties that will be passed down to the farmer.

“Farmers aren’t paid until their products reach export markets, and these ports are the only effective manner in which many farmers can get their products to those markets,” said Matt Houston, a CFA spokesperson.

The Bottom Line

The impact of the striking port workers has and will continue to affect our supply chains across North America for some time.

While retailers are not physically involved in resolving the dispute, they are examining the possible need for alternate shipping options.

Transporting Canadian goods to a US port or even to a non-striking Canadian port is possible. However, there is a possibility that the Canadian port workers might refuse to offload as a show of solidarity.

However, not only is this a last-minute solution—cargo ships could already be booked, and non-Canadian ports could also be stretched thin and unable to handle the excess loading capacity—but should there be a willing port, it is an additional cost.

There’s also the cost of transporting cargo to an outside Canada port, not to mention the extra fee to pay for a quick turnaround shipping transport.

As well, cargo will be sitting in containers longer. Are reefer trucks or refrigerated container holds required? What is the shelf life of the goods being moved? Will it arrive in time to satisfy our international customers buying, for example, our crops?

We recognize the financial and human aspects affecting the striking workers and their families, and understand that the longer it goes on, the longer supply chain issues will create higher costs for retailers and consumers.

The federal government must remain ready to help end this labour dispute and rebuild Canada’s reputation with its international economic partners.

Resolving the strike is vital to the entire Canadian populace, even if most people are unaware of it now, noted Prince Rupert Mayor Herb Pond to CBC News Network host Sarah Galashan.

Ice-free year-round, the Port of Prince Rupert is the third-largest port in Canada and has the deepest harbour. Because there are some 4,000 people in the town and surrounding area working in some capacity with the port, the strike is hitting home hard.

“The average person in the Vancouver area probably doesn’t even know a longshore worker and wouldn’t know that personal impact on those families, but they will know it when they go to get their Toyota serviced and Toyota can’t get the parts,” summed up Pond.

On July 11, federal Labour Minister Seamus O’Regan gave a federal mediator 24 hours to advise him to end the strike.

On July 13, the strike was resolved two days after the International Longshore and Warehouse Union Canada and the BC Maritime Employers Association agreed to a tentative four-year deal.

Although both sides were confident the deal would be ratified, the workers’ union rejected the agreement, refusing to even vote on it.

The union “does not believe the recommendations had the ability to protect our jobs now or into the future,” an ILWUC statement said. “Our position since day one has been to protect our jurisdiction, and this position has not changed.”

As of July 20, the federal government is looking at ways to end the strike situation, including the possibility of legislating the workers back on the job.

With backlogs ongoing, harvest times are beginning. It is feared that while bulk commodities and intermodal transport get priority once the strike is resolved, ag will be delayed.

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