The looming threat of port strikes across North America continues to exacerbate the anxiety surrounding already strained supply chains. Over the weekend, the Canada Industrial Relations Board (CIRB) ruled that a planned 72-hour strike against DP World in Canada violated the country’s labor code, narrowly averting a three-day shutdown this week.
The ILWU Ship & Dock Foremen Local 514 had formally notified its employer on Friday of its intent to strike, which led to a frantic weekend of negotiations and discussions aimed at avoiding the industrial action. ILWU 514, representing nearly 600 workers, has been in negotiations since November 2022, seeking wage increases and retirement benefits among other demands.
Last year, port workers in British Columbia went on strike in July over issues related to wages, benefits, and training. The impact of that strike still resonates, adding to the current concerns of potential disruptions.
Shippers must also grapple with the looming possibility of Canadian rail workers striking this month. The Teamsters, representing conductors, locomotive engineers, and yard workers at both CN Rail and Canadian Pacific Kansas City Limited, are preparing for possible strike action later this month.
Supply Chains Face New Disruptions Amidst Industrial Actions
South of the border, U.S. ports have also faced significant industrial actions. Last June, a deal was finally reached for a six-year labor contract at 29 U.S. West Coast ports, concluding a tumultuous 13 months of stalled negotiations, walkouts, and cargo diversions to alternative locations.
While the U.S. West Coast ports currently enjoy a period of calm, issues are brewing elsewhere. Last week, dozens of U.S. industry associations urged the White House to intervene and help restart stalled negotiations between East and Gulf Coast dockworkers and port operators.
Earlier this month, contract negotiations broke down between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance. The existing agreement, which covers approximately 45,000 dockworkers at facilities including six of the ten busiest U.S. ports, is set to expire on September 30.
“With capacity already stretched thin by longer routes around Africa, additional delays and backlogs from an ILA strike, or, to a lesser extent, the looming Canadian rail strike possibly in July, would also put more or renewed pressure on ocean rates,” commented Judah Levine, head of research at Freightos, a box booking platform.
The tension surrounding potential strikes and labor disputes is putting immense pressure on the logistics and shipping industries, which are still recovering from the extensive disruptions caused by the COVID-19 pandemic and geopolitical tensions. The complexity of the situation is further heightened by the interconnectedness of global supply chains, where delays in one region can have cascading effects worldwide.
In Canada, the near-strike situation with DP World highlighted the fragility of labor relations in the maritime sector. The ILWU Ship & Dock Foremen Local 514’s demands for better wages and retirement benefits are reflective of broader issues within the industry, where workers are pushing for improved conditions and recognition of their essential roles in maintaining supply chains.
The possibility of a Canadian rail strike adds another layer of uncertainty. Rail networks are crucial for the transportation of goods across North America, and a strike could lead to significant disruptions in the flow of commodities, manufacturing parts, and consumer goods. The Teamsters’ readiness to strike underscores the ongoing labor tensions in the transport sector.
In the United States, the situation remains precarious. The resolution of the West Coast labor contract last year brought some relief, but the breakdown in negotiations between the ILA and the U.S. Maritime Alliance indicates that similar issues could arise on the East and Gulf Coasts. The expiration of the current contract in September sets a deadline that looms large for stakeholders on all sides.
The potential impact of these labor disputes on shipping rates cannot be understated. With global shipping routes already extended due to geopolitical issues and natural barriers like the Suez Canal, additional disruptions could lead to further increases in costs. Freightos’ Judah Levine points out that these potential strikes could exacerbate the already high ocean rates, putting more strain on businesses and consumers alike.
The broader economic implications of such disruptions are significant. Delays and increased costs in shipping and logistics affect not only the transportation sector but also the retail, manufacturing, and agricultural industries. Businesses that rely on just-in-time delivery models are particularly vulnerable to these disruptions, which can lead to stock shortages, increased prices, and loss of customer trust.
Moreover, the ongoing uncertainty highlights the need for more resilient and flexible supply chain strategies. Companies are increasingly looking at diversifying their supply routes, investing in digitalization to improve supply chain visibility, and exploring alternative transportation modes to mitigate risks.
The threat of port and rail strikes across North America presents a significant challenge to the logistics and shipping industries. As negotiations continue and deadlines approach, the potential for disruption remains high. Stakeholders must stay vigilant and proactive in addressing these challenges to ensure the stability and efficiency of global supply chains.
