Canadian retailers are facing potential supply chain challenges as wildfires and ongoing labour disputes threaten to disrupt rail and port operations across the country. These developments could have significant implications for inventory management and product availability in the retail sector.
The Canadian National (CN) Rail main line in Jasper, which had been temporarily halted due to wildfires, has recently resumed operations. However, the threat of wildfires continues to loom over both CN Rail and Canadian Pacific Kansas City Limited (CPKC) rail systems. This ongoing risk poses a potential challenge for retailers relying on these rail networks for product transportation.
Adding to the complexity, the Port of Vancouver is experiencing heightened demand and vessel delays. This situation could further complicate the supply chain for retailers, particularly those importing goods from overseas or exporting products through Canada’s busiest port.
Labour disputes are also contributing to the uncertainty. The Canadian Industrial Relations Board (CIRB) is scheduled to resume hearings between ILWU Local 514, representing 730 dock forepersons at Canada’s West Coast port terminals, and the B.C. Maritime Employers Association from August 6 to 9, 2024. The union is currently conducting another strike vote, expected to conclude by August 9, 2024. Should a strike be called, a 72-hour notice would be required before any disruption occurs.
The retail sector is also closely monitoring the impending CIRB ruling on the CPKC and CN Rail labour disputes, due by August 9, 2024. No labour disruption can occur until 72 hours after this date, unless the ruling includes an extended “cooling off” period. The Retail Council of Canada (RCC) has stated that it is applying maximum pressure on all parties to achieve a resolution and avoid any work stoppages.
These potential disruptions come at a critical time for Canadian retailers, many of whom are preparing for the busy back-to-school and fall shopping seasons. The combination of natural disasters and labour unrest could lead to delays in product shipments, increased transportation costs, and potential inventory shortages.
Retail analysts suggest that companies with diverse supply chains and multiple transportation options may be better positioned to weather these challenges. Some retailers are reportedly exploring alternative shipping routes and increasing their inventory levels as precautionary measures.
Gary Newbury, Strategic Advisor and Delivery Executive, RetailAID.ca, said that retailers have struggled with supply chain issues since the pandemic, and that issues remain.
“During the restrictions retailers became vitally aware of opportunities and challenges presented by their existing supply chain capabilities. Many found creative ways, both internally and working with their partners, to overcome levels of what seemed then, unprecedented levels of disruption,” said Newbury. “As the restrictions lifted, many retailers found themselves with excess inventories and resumed the business of managing their sales channels, product merchandising and focusing on brand building in a “cost of living” crisis, to an extent, pushing supply chains into the backroom.”
Newbury says that supply chain disruptions have become more localized, and are still posing challenges for retailers.
“Disruption has not receded, it has merely shifted and become, to a degree, more localized, leaving Canadian businesses pulling their hair out,” he said. “Some have ventured into multi-shoring, near-shoring, friendly shoring and attempted to increase their sources and transportation modes to provide more flexible responses to demand or supply variation, under the guise of adopting agile principles, alas, it remains early days in such strategic moves, and often transformational plans are disjointed and not aligned with business objectives.”
Newbury said that technology is a solution, as well as leadership that can navigate the challenges.
“Vital lessons learnt during disruption seemed to have waned. Technology remains a key area that will not only transform supply chain management (automating many tactical and strategic decisions), but also how to compete,” Newbury said. “Those not actively progressing their digital transformation will be found flat footed.”
“This challenge, for many, remains ahead beyond these localized and highly challenging disruptions. Leadership talent, boldness and courage remain the key strengths to enable solution creativity, development of resilient capabilities and executional excellence.”
