Union Contract Dispute Shuts Down Ports – This Time in Canada

Ports shut down yesterday as a result of a union strike and lockout over contract negotiations. It sounds familiar, but we’re not talking about the International Longshoremen’s Association (ILA) shutting down U.S. East and Gulf Coast ports again – though there’s a risk of another one of those on January 15th. Instead, you have to jump over to the West Coast and then head north to British Columbia, Canada for this strike and the ensuing lockout.

International Longshore & Warehouse Union (ILWU) Local 15 initiated a strike yesterday morning. It was followed by a lockout at the ports by the employers in the afternoon. Now we’re in the second day of Canadian West Coast ports being shut down with no sign of negotiation between the parties.

It’s important to remember that just because this is happening in Canada doesn’t mean it won’t affect U.S. ports and supply chains. As often talked about in Universal Cargo’s blog, disruptions at major shipping hubs cause ripples if not waves that impact supply chains around the world. With the United States being so connected to Canada, major disruptions to our northern neighbor’s supply chain tends to have a significant impact on ours.

Let’s check out what’s going on…

Timeline of Yesterday’s Port Closures

Marcus Hand reported on the situation in a Seatrade Maritime News article, laying out details like when the strike started and when the lockouts followed:

Members of the foreman union ILWU Local 514 started a strike at Canadian West Coast ports at 8am (PT) on 4 November, in response employers, represented by the BC Maritime Employers Association (BCMEA) said they would start a lockout at 4:30pm on 4 November, “to facilitate a safe and orderly wind-down of operations”.

“ILWU Local 514’s strike action has already begun to impact to B.C.’s waterfront operations and strike activity can easily escalate, including a complete withdrawal of labour without notice,” the BCMEA said.

The lockout does not impact cruise or grain terminals. Employers said that their final offer made to the unions on Wednesday remains open.

Despite the BCMEA and ILWU Local 514 having been engaged in talks for nearly two years over negotiating a new collective agreement which expired in March 2023, a new deal has failed to be reached.

This is a familiar story. The master contract for a dockworkers union draws near to expiration with contract negotiations for the next nowhere near complete. The contract expires. Negotiations turn contentious, if they’re not already. There’s disruption at the ports. Disruption to supply chains. Shippers and consumers pay the price. It’s a cycle shippers are tired of.

Supply Chain Disruption on Top of Supply Chain Disruption

Unfortunately, this is not the only port disruption happening in Canada right now.

Ed White reports in a Reuters article about the continuing ports shutdown:

Industries and provincial governments across Canada are alarmed by the dispute, which is occurring at the same time as a partial strike is blocking 40 percent of container traffic of the Port of Montreal, according to the Maritime Employers Association, which represents port terminal operators.

That means port disruption is happening at both the West and East Coast ports for Canada. Additionally, some Canadian companies are complaining they’re still recovering from the simultaneous shutdown of Canada’s two major railroads in August.

Of course, we’re also just a month removed from U.S. East and Gulf Coast ports shutting down for three days due to an ILA strike. And the hurricanes added extra disruption to several ports there. Attacks in the Red Sea and Gulf of Aden persist, forcing ocean freight shipping lines to route away from the Suez Canal… I could keep adding to this list.

Disruptions keep stacking on top of disruptions, compounding their effects and adding to the time and costs of importing and exporting for shippers.

Will the Canadian Government Intervene

Canada’s federal government stepped in quickly to make the shutdown of the country’s railroads a short one. Employers at the ports, as well as shippers and consumers, are likely hoping for a similar result with the BC port shutdowns.

By all accounts, there’s no progress in negotiation between the ILWU and BCMEA in the wake of the strike and lockout. Hand did report that government representatives are on the ground at the BC ports shutdown:

Canada’s Labour Minister Steven MacKinnon posted on social media platform X, “Federal mediators are on site, ready to assist the parties. It is the responsibility of the parties to reach an agreement. Businesses, workers, and farmers are counting on them to get a deal.”

Saying it is the responsibility of the parties to reach an agreement doesn’t exactly sound like the government is wanting to force mediation and a return to work at the docks like Hand reports businesses are calling for:

The Canadian Federation of Independent Business (CFIB) called for Federal Government intervention to keep ports open. “The federal government must ensure BC ports remain fully operational during the current negotiation. Small businesses cannot bear the cost of another long strike or lockout. CFIB continues to call on government to make ports an essential service, so they remain operational at all times,” said Jasmin Guénette, Vice-President, National Affairs, CFIB.

Right now, no one knows how long the ports will be shut down.

Would Diversions to U.S. West Coast Meet Refusal

This isn’t the first time the ILWU in Canada has gone on strike over these negotiations. There were strikes and on-again-off-again threats of strike last year.

Back then, the ILWU in the U.S. said it wouldn’t work diverted ships from the ILWU strike in Canada.

Lori Ann LaRocco reported on the situation at that time in a CNBC article:

U.S. West Coast port workers’ unions say they won’t work containerships originally bound for the Port of Vancouver that changed course and were diverted to the Port of Seattle. The disruption comes as labor strikes at West Coast ports in Canada stretch into a seventh day.

The International Longshore and Warehouse Union U.S. West Coast chapter said Friday its members would not work any of the diverted vessels.

“The ILWU will not be unloading Canadian bound cargo in solidarity with our Brothers and Sisters in ILWU Canada,” said ILWU U.S. West Coast chapter President Willie Adams in a statement to CNBC.

…

The ILA, the largest union of maritime workers in North America, representing the workers at ports on the Atlantic and Gulf Coasts, Great Lakes, major U.S. rivers, Puerto Rico and Eastern Canada, also said in a statement that no diverted cargo from striking ports would be accepted.

The U.S. West Coast is the natural diversion place for container ships when the ports on Canada’s West Coast shut down. Would we see resistance now from the ILWU on working those ships? One would think the union’s position likely hasn’t changed. However, refusing to accept and work such ships would likely go against the union’s master contract, which also saw port disruption – though not full shutdowns – during its contentious negotiation period.