British Columbians may start seeing some elevation to their grocery bills in the long term courtesy of a labour lockout which started Monday at ports across the province.
Employers shut down a major trade artery by locking out over 700 foremen at ports across British Columbia, igniting concerns nationwide over Canada’s supply chain. With a separate labour dispute already partially closing two terminals at the Port of Montreal, the added stoppage could lead to further shipping backlogs as the holiday season approaches, tightening the window for importing goods.
The B.C. Maritime Employers Association (BCMEA) called the lockout a difficult decision, implemented after the International Longshore and Warehouse Union (ILWU) Local 514 issued a 72-hour strike notice for limited job action, scheduled to begin at 8 a.m. PT on Monday. The lockout excludes grain and cruise operations.
The union planned limited action through an overtime ban and a refusal to implement technology changes on Monday if no agreement was reached. It previously accused the BCMEA of “acting recklessly” by threatening the lockout.
“Our West Coast ports handle $800 million worth of cargo every single day,” Pascal Chan, senior director of transportation, infrastructure and construction at the Canadian Chamber of Commerce. “That accounts for something like 25 per cent of the goods flowing through the country.”
Canada’s West Coast serves as its primary trade portal for sea-shipped goods. When disruptions hit a major port, some ships carrying goods anchor outside, waiting for the strike to end, says Fraser Johnson, a professor of operations management at the Ivey Business School, Western University in London, Ont. This often affects ships with perishable food products.
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Freight rates have tripled due to Suez Canal issues
Freight rates have already tripled over the past year, driven by issues in the Suez Canal and a drought in the Panama Canal, which has slowed ship transit times, says Fraser Johnson.
He explains that the closure of B.C. ports impacts nearly everything, from food and holiday retail goods to export commodities like lumber, coal, and automobiles.
“The general rule of thumb is that for every day that the port is shut down, it takes a week to be able to recover,” Fraser said.
The main points of contention include wage increases, benefits, and the preservation of work conditions, particularly around automation and contracted labour. Employers offered a 19.2 per cent wage increase over four years, but this offer has not resolved the dispute. The union remains dissatisfied with terms affecting their jurisdiction and rising living costs.
Public and business sentiment on social media reveals frustration over the potential disruption. Some urge the government to mandate a return to work to prevent economic damage. The federal labor minister has expressed the government’s readiness to assist in negotiations, emphasizing the importance of reaching an agreement at the bargaining table.
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Small and medium sized businesses feel the squeeze first
Canadians likely won’t see grocery or retail shortages immediately, says Johnson. However, if the labor dispute continues for several weeks, those effects could emerge as costs increase.
Johnson expects small and medium-sized businesses to feel the impact first. These businesses typically face increased costs and delays when shipments are disrupted, and have less flexibility in contracts.
A significant delay could prevent distributors serving multiple retailers from meeting contractual obligations. This could lead to possible penalties, according to Christina Santini, director of national affairs at the Canadian Federation of Independent Business (CFIB). Following a 13-day strike at B.C. ports in 2023, some manufacturers reliant on glass imports told CFIB they couldn’t maintain regular production timelines.
These scenarios haven’t yet materialized, Santini noted. However, she observed that while many CFIB members once maintained three to six months of inventory, now most members report only two weeks of stock.
“It all comes down to how long the strikes last and what’s the backlog,” she said. “Some businesses are gonna be more resilient than others.”
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joseph@mugglehead.com
