B.C.’s dockworkers three-day-old dockworkers strike is already creating kinks in North America’s transpacific supply chain.
A July 3 update from Container xChange notes that there are more than 150 ships in the Port of Vancouver and another 55 scheduled to arrive while there are approximately 60 ships in the Port of Prince Rupert and another 25 scheduled to arrive.
Christian Roeloffs, co-founder and the Hamburg, Germany-based logistics technology company, pointed out that the effect of the labour disruption at B.C. ports will have a domino effect from Asia to the United States.
Especially hard hit, he said, will be automobile, container, breakbulk and project cargo business sectors.
Container xChange pointed out that delays caused by the labour disruption will affect transpacific transit times and ship dwell times (the time they spend loading and unloading cargo at terminals).
Those delays, Roeloffs noted, could increase shipping costs, which are often passed on to ocean carrier companies and eventually to consumers in the form of higher prices for goods.
“The strike could have a significant impact on the ports of Vancouver and Prince Rupert, which are crucial gateways for Canada's foreign trade, especially with Asia,” Roeloffs said in a Container xChange update. “These ports handle a substantial portion of Canada’s imports and exports. The disruption caused by the strike can lead to delays, congestion and inefficiencies in the movement of cargo, affecting various industries and businesses that rely on the smooth functioning of the supply chain.”
Unionized port workers set up picket lines on Canada Day after talks between the International Longshore and Warehouse Union Canada (ILWU) and the BC Maritime Employers Association (BCMEA) failed to reach agreement on a new contract. B.C. port workers have been without a contract since the end of March.
The job action came despite the June 29 arrival in Vancouver of federal Minister of Labour Seamus O’Regan, who thus far has said the federal government has no plans to invoke back-to-work legislation.
He continues to maintain that the focus of both sides in the dispute “needs to be on the [bargaining] table.”
But the BCMEA said in a July 3 statement that the ILWU has left no further avenues open to reach a deal with B.C.'s maritime employers.
It pointed out that the union is attempting to “aggressively expand” its scope and redefine regular maintenance work “far beyond what is set out in the industry-wide agreement, which has been legally well established for decades. Changing this definition would result in immediate and significant impacts to terminal operations. Under the current collective agreement, the ILWU exclusively supplies the labour force, however, it has been consistently unable to fulfill the trades work they have jurisdiction over.”
ILWU president Rob Ashton has said the union is seeking a fair deal “that respects longshore workers [and] protects our jobs and our jurisdiction,” but claims the BCMEA bargaining committee continues to seek major concessions.
Key ILWU objectives in the current contract negotiations, he said, include stopping the erosion of union work through contracting out, protecting current and future jobs from the impacts of port automation and protecting dockworkers from high inflation and B.C.’s skyrocketing cost of living.
According to the BCMEA, the union’s compensation demands “are unreasonable, and well outside the established norm of union settlements in Canada.”
It noted that the median annual ILWU Canada salary in 2022 was $136,000, plus benefits and pension. The maritime employers group added that longshore wages have increased 40 per cent over the past 13 years and 10 per cent since the pandemic began.
The BCMEA said the union needs to decide if it is "going to continue this strike with no hope of settlement or significantly modify [its] position so a fair and balanced deal can be reached."
Wage and benefits increases in the previous ILWU contract added approximately 14.6 per cent to the overall port worker employee costs over the term of the five-year deal.
Pressure to resolve the strike is building, especially from businesses affected by another disruption in Asia-Pacific supply chain cargo flow.
The Canadian Federation of Independent Business (CFIB) registered its concern on Canada Day with a release stating that the strike will “have serious consequences for our economy and our small businesses. Port operations must remain fluid so as not to exacerbate supply chain disruptions and put further pressure on costs, at a time when we are still facing high inflation.”
While CFIB’s vice-president of national affairs Jasmin Guénette noted in a statement that grain vessels and cruise ship operations will not be affected by the ILWU job action, he added that “It’s clearly not enough. … The
Canadian economy and our small businesses don't have the luxury of waiting before the government uses every means at its disposal to bring this strike to a swift end.”
Failure to secure a new long-term contract in B.C. also comes despite the tentative agreement reached in June on a six-year deal between the Pacific Maritime Association and the 22,000 unionized dockworkers employed at 29 ports along the U.S. West Coast.
It also comes at a critical time in a global economy teetering on the edge of recession and a downshift in transpacific trade.
Freightwaves founder and CEO Bob Fuller provided some worrying shop-floor insights on that direction during the global supply chain market intelligence company’s most recent State of Freight update.
He said the market today “is as opaque as it has ever been.... The mainstream economy that we care about, the goods economy, is incredibly bearish. And there are a lot of reasons to continue to be bearish.”
Those reasons range from “consumer spending that is starting to get tapped out” to major retailers mired in inventory gluts accumulated during the pandemic economy panic.