Supply Chain Crisis Averted: Canadian Government Intervenes in Port Strikes
The Canadian government has taken drastic measures to end the crippling port strikes that have brought trade to a standstill on both coasts. Labor Minister Steven MacKinnon has invoked federal powers to order binding and final arbitration between labor unions and ports ownership, putting an end to the work stoppages that have plagued the ports of Vancouver, Prince Rupert, and Montreal.
Economic Damage Already Done
Despite the intervention, the damage to the supply chain has already been done. The strikes, which began on November 4, have caused severe disruptions to retail supply chains, particularly during the busiest time of the year. The Retail Council of Canada warns that it will take weeks for the sector to recover, but Canadians can rest assured that essential retail goods will continue to flow.
Trade with the US Severely Impacted
The impact on trade with the US is equally concerning. Approximately 20% of US trade arrives in the Canadian ports of Vancouver and Prince Rupert, where strikes broke out after union leadership and industry representatives failed to reach a deal. The ILWU Local 514 contract expired on March 31, 2023, with 96% of union members voting in favor of a strike in September.
Rail Cross-Border Trade Affected
According to the US Department of Transportation, rail cross-border trade between Canada and the US accounted for 14% of total bilateral trade of $382.4 billion in the first half of the year. Approximately $572 million in container trade arrives daily in the US from Canada, according to US Census data.
Industry Relief
Stephen Lamar, CEO of the American Apparel & Footwear Association, expressed relief that operations will resume at Canada’s three busiest ports and hopes a long-term, mutually beneficial agreement comes out of the negotiations.
Government Intervention Necessary
At a press conference, MacKinnon explained that negotiations had hit a “total impasse” and the measure was needed to avoid any economic and reputational damage to Canada. “If these work stoppages go on, the impacts will only worsen, and our well-earned reputation for reliability will be put at risk because of these impasses, more than $1.3 billion in value of goods is affected every day,” said MacKinnon.
Binding Arbitration Ordered
Under section 107 of the Canada Labor Code, the Labor Minister can order binding arbitration to end labor disputes. Existing collective agreements will remain in place pending a new deal being reached between dockworker unions and the ports. This is the second time MacKinnon has stepped in to stop a strike in recent months, having previously ended the lockouts at Canadian Pacific Kansas City and the Canadian National Railway Co. by referring negotiations to the Canada Industrial Relations Board.
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