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Port strike could cost $250 million per week, with consumers taking a hit too

‘The first week or two, businesses are usually able to bridge quite fine, it gets increasingly worse’
Striking International Longshore and Warehouse Union Canada workers picket at a port entrance in Vancouver, B.C., Tuesday, July 4, 2023. Business groups are sounding the alarm that consumers and companies will feel the impact of the B.C. port workers strike. THE CANADIAN PRESS/Darryl Dyck

The B.C. port workers strike could cost companies hundreds of millions of dollars per week, experts and business groups say, with smaller operators and consumers feeling the biggest pinch.

Industry organizations say the job action by 7,400 waterfront employees that began Saturday will back up shipments, deplete inventories and boost prices on goods in shorter supply.

The economic toll will amount to at least $250 million per week, said Werner Antweiler, chair in international trade policy at the University of British Columbia’s Sauder School of Business.

“The first week or two, businesses are usually able to bridge quite fine. It gets increasingly worse after that, as some businesses will run out of inventory and cannot replenish it easily,” he said.

Companies face the choice of riding out the strike by drawing on existing inventory and holding on to exports that cannot be shipped — resulting in lost sales and storage costs, respectively — or finding alternate routes for their products, including through already stretched ports in the United States.

“Even if some businesses are rerouting through this channel, it will be more expensive. It will take longer because now things will be starting to queue and it will have spillover effects on the entire system,” Antweiler said.

In a Transport Canada study of the five-day Montreal port strike in 2021, the government projected the economic cost could reach up to $100 million a week. Antweiler based his $250-million estimate on the analysis, with the value of cargo moved at B.C. ports up to three times higher than at the Port of Montreal.

The hit could be even greater in this case, since West Coast cargo volumes are so much greater and thus tougher to reroute, he said.

In a letter to the prime minister Wednesday, 120 business groups expressed “deep concern” about the five-day job action, saying it would fuel inflation, raise costs and dent the economy while hampering exports.

“The damage started being done even before the first picketer picked up a sign, and it’s simply compounding by the day,” Canadian Chamber of Commerce CEO Perrin Beatty said in a phone interview from Ottawa. He called on the federal government to intervene in the stalled talks.

British Columbia’s 30-plus ports — Vancouver’s is the country’s biggest — handle roughly 16 per cent of the Canada’s total traded goods, according to the BC Maritime Employers Association. Beatty said $800 million worth of cargo passes through its terminals each day, from consumer products to auto parts and potash.

Small and medium-sized businesses will be hurt most, since they have fewer resources and less leverage to lean on, said Dennis Darby, who heads the Canadian Manufacturers and Exporters trade group.

“Companies don’t run huge inventories, as we learned during the pandemic,” Darby said, adding some will be able to hold out for just a few days.

“They may have contracts with their customers and they don’t have the ability to pass on (cost) increases,” he added. But for those that can, “it just adds to the potential inflationary effect.”

While entire contracts may be at risk if products are not delivered on time, undelivered perishable goods could also mean retailers lose out on sales and “considerable revenue,” said Jasmin Guénette, vice-president of the Canadian Federation of Independent Business.

Grocers and manufacturers run some of the tightest supply schedules, meaning the price of goods that rely on imports from Asia — non-perishable foodstuffs, car parts and computer chips, for example — could rise faster than in other sectors, according to the Sauder school’s Trevor Heaver, former chair of the World Conference for Transportation Research.

Consumers could eventually see higher prices in sectors ranging from clothing to electronics, said Bob Ballantyne, senior adviser and past president at the Freight Management Association of Canada.

“The fact that so much in the way of retail goods come from (East Asia) these days — from China and Vietnam and Korea — means that retailers, and obviously then consumers, will be impacted by this in a big way,” Ballantyne said.

“The pinch will be felt very broadly across the entire Canadian economy.”

Meanwhile, exporters may soon face a storage crisis, as well as potential temporary closures.

“If it’s industries with a continuous process like some chemical industries, shutting down those operations is a big deal and costs a lot of money,” Ballantyne said.

Companies that churn out commodities such as lumber, fertilizer and sulphur are all contending with a halt on overseas shipments out of West Coast ports.

Grain products continue to flow abroad, in line with rules under the Canada Labour Code. Two B.C. coal-export terminals near Delta and Prince Rupert have continued to operate, since their workers have separate collective agreements from that of the International Longshore and Warehouse Union Canada.

Dock workers walked off the job Saturday before negotiations over wages, automation and contracting out hit a deadlock.

Business organizations, as well as officials in Alberta and Saskatchewan, have called on Ottawa to step in and end the strike, but federal Labour Minister Seamus O’Regan has said he wants the union and employers to go back to the negotiating table after they hit an impasse this week.

READ ALSO: Railway puts temporary embargo on Vancouver, on day five of B.C. port strike