Shipping containers are loaded onto rail cars at the Global Container Terminals Vanterm container terminal on Vancouver Harbour in Vancouver, British Columbia, Canada.
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Overseas trade entering North America through key ports on Canada’s West Coast faces more uncertainty after dock workers rejected a tentative labor deal late Friday.
The flow of trade destined for U.S. chemical companies, retailers, and manufacturers is delayed at least two months as a result of 14 days of strikes.
Rob Ashton, president of the International Longshoremen and Warehouse Union of Canada, has called on the dock workers’ employers to come back to negotiating table and reach a deal that works for both the union and industry.
The British Columbia Maritime Employers Association did not respond to the union’s request to go back to the negotiating table. BCMEA said they are disappointed that ILWU Canada rejected the four-year tentative agreement. The employers association said it is waiting for the Canadian government to provide direction on next steps.
Canada’s Labor Minister Seamus O’Regan said he has directed the country’s industrial relations board to determine whether the union’s rejection of the tentative agreement eliminated the possibility of a negotiated resolution.
If the board does determine this to be the case, O’Regan has directed the board to either impose a new collective agreement or impose binding arbitration.
“Our economy cannot face further disruption from this dispute,” O’Regan said.
In response to CNBC’s questions on the length of time it would take for the industrial relations board to announce their decision, O’Regan’s office said the minister asked “for expediency.”
If the board does decide binding arbitration, this would be a rare event. CNBC has learned that Canada’s labor code contains no language against striking when binding arbitration is imposed by the industrial relations board.
While striking is prohibited in binding arbitration imposed by parliament or the parties themselves, the union could strike while at the bargaining table in this instance.
The proposed deal which was voted down by the union was presented to both sides by the senior federal mediator. The BCMEA released the terms of the deal in its announcement. This is not the first time the BCMEA has released the deal.
The four-year package increased the compounded wage over four years by 19.2%. A signing bonus of $1.48 an hour per employee which tallied to approximately $3,000 per full-time worker was included. Also in the deal was an 18.5% increase in retirement payout.
In a pushback against the union’s argument of having a salary sustainable against rising inflation, the BCMEA said, “Over the course of the past 13 years, longshore wages have risen by 40%, ahead of inflation at 30%.”
U.S. trade impact
The timing of this strike adds unnecessary hurdles to peak season when holiday items are arriving for retailers. At the height of the strike, $12 billion in freight was stranded on the water. Some of that trade was diverted on vessels that called on ports on the U.S. West Coast.
“Our clients are facing about a two-month delay in the delivery of their product,” said Paul Brashier, vice president of drayage at ITS Logistics. “The vessel was delayed by several weeks and now the rail-bound containers sit at the Ports of Vancouver and Prince Rupert.”
Steve Lamar, CEO of the American Apparel and Footwear Association, said his group estimated that the first strike would cause an average of 6 to 8 weeks of supply chain disruption before conditions return to normal. AAFA had called on the Canadian government to step in during the first strike.
For the third week in a row, rail traffic from Canada into the U.S. is down following the on-again, off-again western Canadian ports strike. The first two weeks of the labor strike prevented over 80% of rail trade from entering the United States. The U.S. saw another 12% decrease in trade this week.