The fate of 30 of Canada’s busiest trade ports will be decided by union members when rank-and-file International Longshoremen and Warehouse Union members vote on a tentative deal with port ownership on Tuesday.
The plan to send the deal to a full union vote comes after a week of confusion and turmoil at the ports.
On Friday, Wood Central reported that Canadian industry was in turmoil amid a series of striking and working periods.
At stake includes forestry products, mainly pulp and logs, constituting 80% of container shipments at Port Metro Vancouver – one of Canada’s busiest ports and subject to the strike threat.
Wood Central understands that the pulp and logs, left unattended at the port for 13 days, have now arrived in Asia.
The British Columbia Council of Forest Industries has urged both parties to resolve the strike before it extensively damages the industry.
The shuttered ports process forest product exports worth approximately 15 billion Canadian dollars – and have rocked the industry.
Global Implications of Strike Action
Earlier this month, Wood Central reported that continued strike action would result in Asian importers sourcing goods from other suppliers or rerouting existing shipments through ports in the US, both of which will add costs to the bottom line.
One of the world’s largest forest companies, Canfor, is running out of space to store its pulp and engineered wood products following a backlog of inventory at the Vancouver and Prince Rupert ports.
Canfor spokesperson Michelle Ward said earlier this week the company was poised to continue with plans to curtail operations down to a skeleton crew.
“When we can restart the mill, employees will be returned to help with the process.”
Port Operations confusion
Last week, the Canadian Government said the strike was over, and both parties accepted the deal its mediators had put together; however, the union caucus later voted the tentative agreement down.
That kicked off a series of on-again, off-again work stoppages, creating confusion and frustration amongst shippers.
On Thursday (Canadian time), Labour Minister Seamus O’Regan immediately tweeted, “This strike is illegal.”
The ILWU caucus approved and will recommend to its membership the settlement terms proposed by the senior federal mediator and ratified by the British Columbia Maritime Employers Association, which represents port ownership, on July 13.
For the vote, work will stop from 8 a.m.-4 p.m. Pacific Time on Tuesday across all ports.
In a tweet, Canada’s Labor Minister Seamus O’Regan thanked the Caucus for sending the tentative deal to the membership.
According to the BCMEA, the settlement package includes a compounded 19.2% wage increase over four years, resulting in the median ILWU income moving from $136,000 to $162,000, not including benefits and pension.
The proposed deal also provides an 18.5% increase in retirement lump sum payments, increased tool allowances, benefits, and pension contributions.
Damage to the supply chain
On Friday, Logistics managers and trade experts told CNBC that delays created by the strike, which began on July 1 and lasted 13 days before ending last Thursday, and the half-day strike this week, started costly diversions and delays.
Weekly rail trade data aggregated by the American Association of Railroads reveals a total decrease of 82.4% in rail trade throughout the 13-day strike.
The Railway Association of Canada has estimated that it would take three to five days every day the strike lasted for networks and supply chains to recover.
When the first strike ended, rail container delays stretched from 39 to 66 days.
That does not include the delays in vessels waiting to get processed.
The Ports of Vancouver and Prince Rupert are critical ports for US trade, with 15% of US trade coming into the Port of Vancouver and 60% of all the containers bound for rail destined for the US.
They are among the world’s busiest for forest products – serving as a pan-pacific gateway for global trade in engineered products, pulp and paper.
Trade delays lead to late fees on cargo containers that shippers pass onto the consumer.
The delays also occur during peak shipping season, including back-to-school and holiday orders bound for the US.
In a statement, Canadian National Railroad said it is concerned about the impact of this renewed work stoppage on the North American economy and Canada’s reputation as a trading partner.
“We will be communicating with our customers to discuss next steps.”
“Our supply chains need proper reliability, stability, and predictability.”
“We urge the Government and both parties to do whatever is necessary to get goods moving again,” they said.
Trade on the water waiting to enter the ports of Vancouver and Prince Rupert has decreased to around $3 billion as vessels have either left to go to US ports first or left altogether.
At the height of the strike, the amount of trade was around $12 billion.
Destine Ozuygur, head of operations at eeSea, said that given this latest supply chain surprise, carriers and terminals are weighing decisions and waiting on more information before taking action.