U.S. labour tensions help clog B.C. ports

Peak season has arrived earlier than usual at Vancouver’s port, local authorities say, likely sparked by ongoing labour talks at U.S. West Coast ports.

GCT Canada/TSI Terminal Systems Inc., Canada’s largest terminal operator, noted a 15% year-over-year increase in U.S. volume in June from its ocean carrier customers. Container imports at Prince Rupert’s port rose 22% in June compared to the same month last year.

“We can likely attribute that to potential diversions from those West Coast ports,” said John Parker-Jervis, a spokesman for Port Metro Vancouver.

Jonathan Gold , vicepresident for supply chains at the Washington, D.C.-based National Retail Federation, said diverting shipments to Canada is the option many retailers chose in order to sidestep any potential labour disruption in the U.S. Employers at almost 30 ports are negotiating a new contract with nearly 20,000 unionized workers, who had their contracts expire on July 1.

In a joint statement on July 11, the International Longshore and Warehouse Union and the Pacific Maritime Association said that, while no contract is in place, both parties have “pledged to keep cargo moving.”

But shippers aren’t convinced, Mr. Gold said, since a similar situation occurred in 2002, leading to a 10-day lockout.

“So a lot of shippers, importers, retailers and others have put contingency plans into place to make sure they can get their cargo to their destination, just in case there was going to be some kind of disruption,” he said.

Mr. Parker-Jervis said the sudden influx means more containers end up being stored on docks at the port’s four terminals as backlogs are cleared. “Of course, shippers can look at whether our four container terminals have capacity, but the next piece of the puzzle is whether the railways have capacity to get that cargo wherever it needs to go,” he said.

Canada’s two major rail networks are already feeling the heat. Canadian National Railway Co. deemed the situation “untenable,” in a letter to its customers dated July 8.

“We have seen a major change in rail import volume patterns to the U.S. at both Vancouver and Prince Rupert,” CN’s chief operating officer Jean-Jacques Ruest said, adding CN intends to prioritize Canadabound cargo.

CN has imposed limits on handling U.S.-bound goods, and during the “diversion” period, Mr. Ruest warned, any cargo beyond allocated levels will either be declined, moved under lower priority or moved with a surcharge.

Canadian Pacific Railway Ltd. said it won’t be introducing restrictions at this time.

“We’ve seen a little bit of uptick, but it’s nothing that to me is going to move the needle,” CP president Keith Creel said on a call with analysts this week.

“If it were to get worse, then obviously it could result in revenue opportunity but at the same time operational challenges,” he said.