First B.C., now Montreal ports: What a pair of shutdowns means for Canada

November 11

Locked-out workers at ports in British Columbia were joined on the picket lines by their peers in Montreal on Sunday night, stymying trade at Canada’s two largest marine trading hubs heading into the busy holiday shopping season.

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While experts tell Global News that consumers will hopefully avoid a Christmas crunch, they also warn that the latest kinks in the Canadian supply chain could affect hopes for an economic rebound.

“This has been a constant drumbeat of disruptions in the logistics and transportation sector over the last year, year and a half,” says Fraser Johnson, professor of operations management at Western University’s Ivey Business School.

“It’s been a constant problem and a lot of headaches for Canadian companies.”

Click to play video: 'Impact of B.C. port shut down on Canada’s supply chain'

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Impact of B.C. port shut down on Canada’s supply chain

The labour dispute shutting down cargo container traffic at British Columbia’s ports for a week now has shown little signs of moving towards resolution, with the parties breaking off talks on Saturday.

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The next day, dock workers in Montreal voted to reject their employers’ latest offer, leading to another lockout starting Sunday evening.

Johnson tells Global News the ports in B.C. represent roughly 45 per cent of inbound marine shipments to Canada, with the Port of Montreal handling 10 per cent.

In other words, more than half of all goods coming into Canada by sea are currently disrupted by the twin shutdowns.

Risks to Canada’s ‘economic lifeline’

The Port of Vancouver facilitates the import of many goods from Asia, including electronics and other consumer goods, Johnson says. Both Vancouver and Montreal also bring in automotive parts and vehicles, he adds.

Johnson says the Port of Vancouver handles about $800 million a day in freight, while the Montreal terminals handle roughly half that, totalling more than $1 billion in daily trade.

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Both the Vancouver and Montreal ports are also critical for getting Canadian exports to the world. Canadian agricultural and forestry products, oil and critical minerals all head to Asia and Europe through those channels.

“Trade is our economic lifeline. Trade is what drives our economy,” says Pedro Antunes, chief economist at the Conference Board of Canada. “We keep seeing, repeatedly over the last number of years, snags that are affecting our ability to get our products to market.”

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Pascal Chan of the Canadian Chamber of Commerce says the simultaneous disruptions at the ports means the country is effectively advertising that it’s closed for business.

Chan, who is the senior director of transportation, infrastructure and construction at the chamber, says in a statement that the last thing Canadians struggling with high living costs need is another trade disruption.

Click to play video: 'Business Matters: Canada’s economy stalled in August amid rail shutdown'

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Business Matters: Canada’s economy stalled in August amid rail shutdown

The shutdowns at the ports come after operations at Canada’s two main railways were halted in August until the government stepped in, while B.C. ports and the St. Lawrence Seaway were disrupted last year.

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Antunes tells Global News the series of labour disruptions in the Canadian supply chain compound trade concerns stoked by Donald Trump’s election victory in the United States. During the campaign, Trump proposed putting blanket tariffs on goods coming into the U.S. and championed “America-first” policies that could disrupt global trade patterns.

The world is becoming a more “insular” place and borders are becoming “thicker,” Antunes says.

If Canadian businesses continue to show that they can’t resolve labour disputes at the negotiating table, rising to the point of shutdowns, Antunes says that sends a message that foreign firms are taking bigger risks by setting up shop here.

“When businesses are looking where to invest and they need access to a U.S. consumer, for example, they’ll be looking south of the border more so if we keep having these snags in terms of our ability to get products out,” he says.

Global News reached out to Labour Minister Steve MacKinnon’s office on Monday for a comment about whether Ottawa was considering intervening in either dispute to get goods moving through the B.C. and Montreal ports again.

“The parties must understand the urgency of the situation and do the work necessary to reach an agreement. Canadians are counting on them,” a spokesperson from MacKinnon’s office said in a statement.

The spokesperson also pointed to a Nov. 7 statement from MacKinnon, which said that he was “closely monitoring” negotiations in both regions, adding that talks were progressing at an “insufficient pace.”

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Port lockouts could intersect with Canada Post strike

With the busy holiday shopping season nearing, Johnson says he expects minimal impact on consumers. With the labour disruptions anticipated from businesses, many larger retailers were ordering stock in the summer and early fall to ensure their shelves were stocked for the holidays.

Any additional inventory needs will likely be routed through ports in the United States and shipped up across the Canadian land border, he says.

But Johnson warns that it’s more likely to be Canada’s small and medium-sized businesses — those without the extensive supply chains of megaretailers like the Walmarts of the world — who feel the pinch from the latest set of port lockouts.

“They don’t have the flexibility and the variety of alternatives in terms of shipping products. So we’ll probably see proportionally higher costs and probably greater delays and shortages as a result of the labour disruptions,” he says.

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Click to play video: 'B.C. port lockout threatens Calgary small retailers as holiday season nears'

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B.C. port lockout threatens Calgary small retailers as holiday season nears

The Retail Council of Canada warned Global News last week that with the chance of a Canada Post strike also looming, consumers and Canadian businesses should prepare for a “triple threat” of disruptions in the weeks ahead.

Matt Poirier, vice-president of federal government relations for the Retail Council of Canada, said he was concerned about not only getting merchandise on the shelves given the port strikes, but also getting goods to customers who order by delivery.

“A lot of small retailers in particular are really reliant on Canada Post to get the ordered goods to their customers,” he said. “It really does change the economics of the business model when you have to start looking at alternatives that could be pricier and especially when everyone else is, the prices spike and the service might not be as reliable.”

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If the pair of labour disruptions are resolved in a timely fashion, Antunes doesn’t see the lockouts as a “game-changer” for Canada’s economy.

But he notes that the shutdowns come at an uncertain time for economic output. Canada’s latest real gross domestic product figures show the country is barely eking out growth in recent months.

Forecasters including the Bank of Canada, which has been lowering its benchmark interest rate in a bid to stimulate growth, are projecting an economic rebound in the next two years. But Antunes says those estimates are anything but a certainty, with consumers still stretched by mortgage renewals and a weakening labour market.

“The idea that we’ve successfully managed to get inflation down and have a soft landing and we’re going to see a re-emergence of growth, I think there’s still a lot of question marks around that,” he says.

“We’ve only seen a couple of days of disruption here. But again, anything that is longer-lasting will have implications on the strength of our recovery in the near term.”

— with files from Global News’ Sean Previl and The Canadian Press