News / Canada west coast port strike yet to bite – but it will

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Forwarders and shippers have not yet begun to divert traffic away from the ports of Vancouver and Prince Rupert, but logistics providers expect the situation to escalate in the coming week.

Vancouver and Prince Rupert, along with 28 smaller ports on the coast of British Columbia, have been shut down by striking workers since 1 July, after contract negotiations between the International Longshore and Warehouse Union (ILWU) and the British Columbia Maritime Employers Association (BCMEA) broke down.

The union has accused the BCMEA of refusing to negotiate and calling on federal government to intervene with a return-to-work mandate. The BCMEA said it saw no hope for a negotiated settlement of the dispute and called for the federal government to step in.

The call has been echoed by more than 120 business associations, warning of dire consequences for the Canadian economy and severe repercussions within days. Most pointed out that Vancouver and Prince Rupert – the nation’s top and third-largest maritime gateways – handled almost 20% of Canada’s traded cargo flows.

Federal labour minister Seamus O’Regan has reiterated his stance that the best solutions could be accomplished at the negotiating table. Ottawa is unlikely to intervene quickly – partly for political reasons, partly because parliament is in recess and would have to be recalled.

But so far, a predicted apocalypse has not started. Marc Bibeau, CEO and president of Overseas Express Consolidators and a director of the Canadian International Freight Forwarders Association, pointed out that the strike began on a weekend followed by a public holiday, which meant it had effectively only run for three working days so far.

Moreover, traffic volumes have been low, resulting in a fluidity at ports and on the rails not seen since the pandemic. High inventory levels are also softening the impact of goods stuck in transit, so far.

However, Mr Bibeau predicted that the impact of the strike will build and rise quickly.

In the US, the prospect of a strike on the west coast prompted many cargo owners to shift routings to ports on the east and Gulf coasts. So far this has not happened on the Canadian side, according to Mr Bibeau.

Given the mild impact of the strike so far, the longer transits and higher costs associated with diversions have deterred cargo owners from embracing this option, he said.

Moreover, there are questions over how diversions to US gateways would fare. The ILWU in the US has expressed solidarity with its sister organisation north of the border. The International Longshoremen’s Association, whose members handle cargo at US east coast ports, pledged it would not process any cargo diverted from Vancouver and Prince Rupert.

Trucking is another issue.

“There is not much north-south truck capacity from Seattle up to Vancouver,” Mr Bibeau noted, adding that trucking rates on the sector were bound to soar in the event of a spike in demand.

CPKC Rail has been promoting its new pan-USMCA reach to Asian shippers, pointing to the Mexican port of Lazaro Cardenas as a new gateway for Asian exports to the US Midwest and Canada. Mr Bibeau sees much promise in this some time down the road, but it will not play a significant role to alleviate rising congestion at the Canadian ports now, he reckons.

On the Canadian side, CPKC has already moved to limit traffic through the Vancouver gateway, implementing embargoes for shipments heading for the port, to “allow traffic to move west while protecting network fluidity”.

With no indication of an imminent resumption of negotiations, such measures are likely to increase as volumes build up at the Canadian west coast ports. Without a doubt, the clamour for Ottawa to step in will increase correspondingly.