The 2024 East Coast port strike that lasted three days (October 1 to October 3) was the largest shutdown of its kind in almost 50 years. As the distribution chain continues to recover from this historic event, it was announced on October 31 that Port of Montreal dockworkers have begun a partial and unlimited strike at the Viau and Maisonneuve terminals. This has resulted in a 40 percent reduction of the port’s total container-handling capacity. This recent shutdown was further amplified on November 4, as the International Longshore and Warehouse Union Ship & Dock Foremen Local 514 (ILWU) also started a lockdown across British Columbia.
What can we learn from recent events, and what can occupiers do now to mitigate future supply chain disruption risks?
First things first: what’s happening right now in Montreal and British Columbia ports?
The Montreal and British Columbia port strikes may be the latest, but they won’t be the last. With these ports on strike, 70% of Canadian container traffic is on full stop as respective local unions work to hammer out a deal with the Maritime Employers Association (MEA) and BC Maritime Employers Association (BCMEA). Contracts between the two expired in December (Montreal) and March (Vancouver) of 2023, and they have been unable to come to agreeable terms for continued engagement thus far.
The latest strikes effectively put a halt on the flow of a wide variety of goods coming into Canada: everything from bananas and clothing to household goods and auto parts and, notably, critical parts needed to keep Canadian factories (and plant jobs) running.
Disputes like these are all too familiar these days, as supply chain disruptions in places like the United States, Canada, China, Egypt, Panama, and many more critical locations, seem to be occurring a few times each year now—with the last major North American strike having taken place only a little more than a month ago across Canadian rail systems.
What happened during the recent Canadian rail strikes?
Union labour disputes with the Canadian National Railway Company (CN) and Canadian Pacific Kansas City (CPKC) led to a mass freight railway shutdown in August.
While the strike—from lockout to ordering trains to resume operations—lasted only a day, its impacts extended wide across the supply chain (imports and exports), had U.S. trade implications, and impacted commuter train functionality for tens of thousands of people, creating myriad ripple effects.
“When the Canadian rail strike happened, we had to anticipate significant delays between when an agreement could be reached and the point where labour and supply could recover. On an annual basis 21,500 freight trains cross into the U.S. from Canada, averaging out to 59 trains per day. Any disruption to this system has a ripple effect on the supply chain infrastructure. It creates significant strain and bottlenecks to the movement of freight that will need to be worked through and managed,” said Warren D’Souza, Senior Manager, Market Intelligence, National Industrial Lead for Avison Young.
In a similar fashion, current port strikes could lead to shipping backlogs five times the length of halts, with a variety of major impacts felt across retail, automotive, energy, manufacturing, and agricultural sectors.
What can the rail strike tell us about what might happen next during the port strikes?
We can look at what happened during the recent Canadian rail strike and past port strikes for indications of what might come next with the port strikes now in full swing.
A wide variety of household goods we use daily could become in demand quickly as bottlenecks and delays increase need—and prices.
A prolonged strike could cripple the agricultural export market share, and surge prices for consumers, while dropping prices for producers. A strike would cause disruption, and likely increase prices on consumer staple foods that are also being imported, largely via container, such as bananas, other fruits, vegetables, and other grocery items at a time when inflation is one of the largest issues out there.
Both strikes also come with risk of leaving shippers stranded at sea, anchored until further notice, with myriad untold impacts. And with billions in goods crossing the U.S.-Canada border each day, helping both economies, it’s easy to say that there’s a lot at stake, even if the ports shutter for a day, let alone days to weeks at a time.
For those less prepared, what should occupiers across Canada – and, indeed, across North America – do now to mitigate current and future risk during events like this?
Supply chains have never been more fragile amidst shifts in global production and consumption. Consumers are increasingly invested in convenient retail (direct to doorstep) at a time when the labour movement is only growing in power.
While increased production in Mexico and recent railroad mergers across the North American transportation network have left us more connected than ever before, this concentration also carries risk.
Luckily, there is a lot occupiers in this space can do right now to make it through tough times in the future:
- Add on. More warehouses or short-term space for season overflow in more places helps spread out risk.
- Bring operations closer to home. Shifting production closer to consumption means less distance to travel, less delay when delays occur.
- Diversify hubs. Spreading out ports, including a mix of U.S. and Canadian ports, can help ensure that, no matter what, operations don’t come to a full halt.
- Engage outside. Utilize a 3PL to help handle ebbs and flows in demand, have drayage drivers on standby, and be able to quickly arrange for alternative shipping methods.
- Have a plan for extra. Determine the best lease/sub-lease plan for proactive excess inventory, and be ready with extra parking for containers or for large amounts of products (from delay or otherwise) that might come in all at once.
With tactics like these in place, the industry may be better prepared to keep things running and ready, regardless of when the inevitable next big disruptor hits.
(Content supplied by Avison Young)
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