The B.C. port strike is over, but economic impact could last weeks

The British Columbia port strike might be over, but it’s expected to take weeks — even months — for supply chains and affected businesses to recover, according to experts.

The Railway Association of Canada estimates it could take three to five days for supply chains to recover for each single day the port was shuttered. Following a 13-day shutdown, that’s at least 5½ weeks.

Some industry experts say it could take even longer.

The International Longshore and Warehouse Union Canada (ILWU) and the B.C. Maritime Employers Association agreed to a tentative four-year deal on Thursday morning to end the shutdown, and about 7,400 workers are expected to be back at work today. The details of that agreement haven’t been made public yet.

The workers had been on strike since July 1 over wages, contracting and automation, halting shipments in and out of about 30 ports in B.C. The Greater Vancouver Board of Trade has said there are 63,000 shipping containers stuck on vessels waiting at B.C. ports to be unloaded.

Following a 2020 strike at the Port of Montreal lasting 10 days, there was a backlog that took three months to clear, said Christina Santini, executive director of the Canadian Federation of Independent Business.

Businesses awaiting stock could expect to wait even longer before supply chains are clear, she said.

B.C. port strike is over, but it will take weeks to clear the backlog of goods

As the union and employer reach a tentative four-year deal, B.C. port workers are back on the job after nearly two weeks on strike. Now, all eyes are focused on when goods and supplies can start moving again.

“If [businesses] were anticipating or had ordered stock that was supposed to come in this coming week, and now won’t be coming in to their store for another three, four weeks, if not three months, it creates a whole bunch of different issues for them to deal with, as well as cost pressures,” said Santini.

More than 40% of Canadian shipping passes through

The Port of Vancouver is the country’s largest, bringing in everything from cars and car-manufacturing parts, to consumer goods and construction materials, to raw materials. It’s also a key export port for Canada’s natural resources and commodities.

“Vancouver handles 43 per cent of the cargo that’s shipped into Canada via the port system.… It’s a gateway to the East,” said Fraser Johnson, a professor of operations management at the Ivey School of Business at Western University in London, Ont.

Nutrien Ltd., which produces potash, reduced production at its Cory potash mine in Saskatchewan because of “loss of export capacity” associated with the port closures.

During the strike, the Canadian Manufacturers & Exporters (CME) estimated about $500 million of trade was disrupted daily.

While the trade of those goods may have been disrupted, it’s not necessarily money that’s been completely lost, said Werner Antweiler, a professor of economics at the Sauder School of Business at the University of British Columbia.

He estimates the actual cost of the 13-day strike is closer to a total of $100 million.

“These goods are delayed,” he said. “This has caused some revenue losses and some sales losses to businesses but … I reckon that these losses are still quite manageable.

“Noticeable for some businesses, especially those that have tons of time-sensitive goods; less noticeable for those that have more inventory and more slack built into the system and have more resilience.”

But many businesses today have less slack, said Santini. They carry smaller inventories and have less room to negotiate any kind of disturbance to the supply chain — especially at a time when everything is costing more.

“Inflation’s affecting everyone — not just individuals, but also businesses,” she said. “They’re losing out on sales because they’re not getting the materials they need to make those sales or to deliver the services they would need to do.”

Had the strike gone on much longer, Johnson said consumers would have started to see the costs of their goods rise. But in this case, he said, it’s likely to be the businesses that soak up any losses.

“At the end of the day, all these things mean higher costs for organizations,” said Johnson. “So that means that companies end up eating the higher costs, which creates other problems, in terms of their ability to spend money elsewhere.”