‘Absolutely brutal’: BC companies brace for latest supply chain blows

Business groups say the work stoppage at B.C.’s ports is the latest in a series of supply chain disruptions affecting Canadian companies and the country’s economy.

Employers at most of the province’s ports locked out workers Monday in a dispute involving about 700 unionized foremen. Workers represented by the International Longshore and Warehouse Union Local 514 have been without a contract since March 2023.

“It was absolutely brutal. I mean, the timing of this is really challenging,” said Pascal Chan, senior director of transportation, infrastructure and construction at the Canadian Chamber of Commerce.

Canada’s supply chains have been under considerable strain over the past few years, from labor disputes to fires and floods, as well as the COVID-19 pandemic, he said.

The latest disruption comes less than a year and a half after a 13-day strike by various workers at most of BC’s port terminals and just months after a nationwide work stoppage at Canada’s two largest railways .

Greater Vancouver Board of Trade president Bridgitte Anderson said the shutdown would disrupt $800 million in goods each day, warning it could put upward pressure on inflation.

“The Port of Vancouver is by far the most important port we have in Canada,” said Fraser Johnson, professor of operations management at the University of Western Ontario’s Ivey Business School.

He said the port handles about 45 percent of Canada’s total port volume, with Montreal next at about 10 percent.

“I think a lot of people tend to focus on what’s coming into the country in terms of consumer goods, automotive, electronics, especially this time of year as we get closer to the holiday season,” Johnson said.

“But there are a lot of things that are exported from Canada. So lumber, commodities like coal, for example, iron ore, they’re all shipped out of Canada through our ports on the West Coast.”

Johnson said the longer the port shutdown lasts, the harder business profits and the economy will be hit.

If it lasts a few weeks, consumers may start to see a bigger impact as well, he said.

But for some retail goods that aren’t stocked that far in advance, the impact could be more immediate, said Matt Poirier, vice-president of federal government relations at the Retail Council of Canada.

Retailers continue to recover from previous disruptions heading into the busiest time of the year, Poirier said.

“These last minute holiday goods arrive and are discontinued. So it won’t be long before the empty shelves start to appear.”

The 2023 BC port strike cost manufacturers an average of $207,000 per day, Canadian Manufacturers and Exporters president and CEO Dennis Darby said in a statement Friday.

The House’s Chan called on the government in a statement to “use all tools at its disposal to resolve this dispute”.

The federal government was relatively muted in the port dispute last year, Johnson said — unlike the rail shutdown, in which the government asked the Canada Industrial Relations Board to order back-to-work and binding arbitration, which it did.

Despite the importance of Canada’s ports, Johnson said rail disruption is a more imminent threat.

“Railways touch most of the products that people consume at some point in the supply chain, so they’re really the lifeblood of the Canadian economy,” he said.

“Closing a port for a few weeks probably won’t be something people will notice, but … a rail disruption would have a much more significant economic impact and a significant impact on consumers directly.”

On Friday, Fertilizer Canada also sounded the alarm about the impending labor disruption, saying the ports are vital to exporting potash overseas and that a shutdown would cost the industry $9.7 million a day in sales revenue lost.

The organization said the 2023 dispute cost the fertilizer industry more than $126 million and had knock-on effects beyond the 13 days workers were out of work: In the months following the shutdown, Canada lost significant of the market to Russia in key markets, he said.

“We are once again on the verge of losing access to a critical trade corridor, and potash fertilizer will be one of the most affected commodities,” President and CEO Karen Proud said in a statement.

The organization called on the federal government to amend the Canada Labor Code to “ensure the continued movement of fertilizer products at ports during labor disputes.”

Nutrien, the world’s largest potash producer, said its marketing and delivery subsidiary, Canpotex, was exploring alternatives to mitigate the effect of the shutdown on customers.

However, a prolonged outage could negatively affect farmers and food security globally, media relations manager Shawn Churchill said in an emailed statement.

On the other side of the country, the Port of Montreal is also in the middle of a dispute, with two terminals closed until further notice, while about 1,200 longshore workers went on strike in late October.

“It’s a double whammy for us,” said the Retail Council’s Poirier, adding that the Montreal outage disproportionately affects retailers because it’s container traffic.

Retailers have learned lessons from supply chain disruptions in recent years, Poirier said.

“Some retailers have avoided ports for months in anticipation of this,” he said.

However, smaller businesses don’t have the same flexibility as larger companies, Poirier said.

“When the costs are exorbitant, which they tend to get, then they’re the ones who really … get the short end of the stick.”