Strikes at airlines and railways are out. Strikes at key ports of trade are in. Today, we look at how labour pains across North America are squeezing supply chains and running headlong into already damaging tariff wars. But first:
In the news
Opening doors: Canada’s banking regulator is set to loosen mortgage rules for homeowners who switch banks when they renew their loans.
Landing a big one: Alimentation Couche-Tard Inc. founder and chairman Alain Bouchard is on the fishing trip of a lifetime.
Going private: Lightspeed Commerce Inc. is zooming away from the stock market.
Happening today
- Earnings include BlackBerry, Costco and H&M, which does not belong in Chappell Roan’s world.
- After becoming one of the first to make rate cuts fashionable in March, Swiss National Bank makes another.
Workers walk a picket line at a Vancouver port earlier this week.Jimmy Jeong/The Globe and Mail
In focus
Supply chains under stress
Grain freeze: Ships are being forced to stay at anchor after a strike at six Vancouver grain terminals created bottlenecks in the supply chain from the Prairies to the West Coast, Brent Jang reports.
There were 19 vessels waiting to load grain at the Port of Vancouver on Wednesday during what would normally be a busy autumn for exports. But instead of ships being assigned berths when they become vacant, the supply chain for grain is becoming congested.
About 650 members of the Grain Workers Union Local 333 who went on strike earlier this week might soon find company on the picket line from thousands of unionized workers on the other side of the continent.
Docks on the clock: Dockworkers up and down the U.S. East Coast are threatening to walk away from some of North America’s busiest ports, a move that could squeeze the global supply chain and weigh on Canada’s already tepid manufacturing sector.
- The potential closing of 36 ports covering the East and Gulf coasts, including five of North America’s 10 busiest ports, comes as the world is already grappling to move goods along in the wake of the pandemic.
- Violence in the Red Sea, drought conditions affecting the Panama Canal, and uncertainty over the U.S. election are also weighing on global trade.
In Canada, which has also struggled through a summer of railway strife, “potential new supply-chain disruptions” caused by a mass strike at the U.S. ports could weigh on the economy, said Douglas Porter, chief economist at Bank of Montreal.
“While I doubt it would be enough to rekindle inflation in goods, it could aggravate a slowdown in manufacturing activity that we are seeing in many key economies, which could in turn affect Canadian plants.”
Brian Slack, an expert on container shipping networks and logistics at Concordia University, said there is a “significant amount” of Canadian cargo handled by U.S. eastern ports.
“You cannot shut down the entire east and Gulf coast ports of the U.S. without major implications for Canada’s economy and eastern Canadian ports,” he said.
Due north? Some industry observers have suggested the Canadian ports of Halifax and Montreal would see a boost in traffic as vessels are redirected.
Frank Kenney, director of industry solutions at systems integrator Cleo, told supply trade publication The Loadstar that he anticipated a boost in traffic through those ports in the event of a strike, “primarily due to their proximity to rail carriers, making them ideal for inbound and outbound freight.”
But Slack said it wouldn’t be possible for Halifax to handle anywhere close to the amount of traffic that typically lands at U.S. ports. “There is also the questions of whether Halifax longshoremen would handle ‘hot’ traffic,” he said.
Lori MacLean, a spokesperson for the Port of Halifax, said the agency was monitoring the situation in the States. “We’ll work with our partners at the Port of Halifax to accommodate additional volumes to the level that we are able to provide support,” MacLean said, referring to the railways, its container terminal operator, “trucking, harbour pilots and tugs.”
This truck at a Brooklyn port is carrying nothing. Practice?Brendan McDermid/Reuters
Meanwhile, in Montreal: Late on Wednesday, 97.9 per cent of the 1,150 longshore workers at the Port of Montreal voted in favour of a strike mandate after more than a year of contract negotiations with the Maritime Employers Association. The union would need to issue a 72-hour notice before its members could walk off the job.
Transport companies began in March to reroute cargo away from the port over concerns of a potential disruption. After the strike vote last night, Renée Larouche, a spokesperson for the Montreal Port Authority, said the agency is optimistic the workers will reach a deal with management “to not induce further or additional pressure to logistic chains in Canada and on the U.S. East Coast.”
Slack said Montreal would be “relatively insulated” from U.S. strikes because its container ships are on “separate, direct services” with European and Mediterranean ports.
Wednesday’s vote isn’t likely to calm global executives who have taken notice of Canada’s railway saga. Jeremy Nixon, chief executive of Japanese shipping company Ocean Network Express, cited the “risk of a rail strike sometime in October and November” as a reason for caution over sending vessels to Halifax and Montreal.
And he told the Seatrade Maritime News that Canadian ports are running at high levels and that the industry has no additional capacity to move freight through Mexican or Canadian ports “to make up anything close to the U.S. requirements.”
Dropping anchor: In the event of a strike along those 36 ports, then, the vessels bound for the U.S. are more likely to remain floating on the edge of the East Coast, waiting for news from shore.
But time is money. Even a day lost would be significant. A two-week strike would prove crippling, according to Copenhagen-based shipping company Sea Intelligence. “Realistically, the ports would not be back to normal operations until we are into 2025,” it estimated in a recent report.
And in B.C., as port officials have asked ships headed their way to “slow steaming,” the Grain Growers of Canada said that the work stoppage will disrupt $35-million a day of bulk grain exports.
Charted
Sure, why not. (You can read more about Ontario Premier Doug Ford’s plan here.)
Morning markets
Global markets rallied, driven by news of aggressive economic stimulus from China that raised investor optimism that more measures would follow what was already announced this week. Wall Street futures and TSX futures followed sentiment higher.
Overseas, the pan-European STOXX 600 was up 1.01 per cent in morning trading. Britain’s FTSE 100 rose 0.19 per cent, Germany’s DAX gained 1.12 per cent and France’s CAC 40 advanced 1.48 per cent.
In Asia, Japan’s Nikkei closed 2.79 per cent higher, while Hong Kong’s Hang Seng advanced 4.16 per cent.
The Canadian dollar traded at 74.27 U.S. cents.