BC’s port strike is over, but the economic impact could last for weeks

The British Columbia port strike may be over, experts say it will take weeks or even months for supply chains and affected businesses to recover.

The Railway Association of Canada estimates that it could take three to five days to restore supply chains for every day the port was closed. After a closure of 13 days, that is at least 5½ weeks.

Some industry experts say it could take even longer.

The International Longshore and Warehouse Union Canada (ILWU) and the BC Maritime Employers Association on Thursday morning agreed a preliminary four-year agreement to end the shutdown, and about 7,400 workers are expected to return to work today. The details of that agreement have not yet been made public.

The workers had been on strike since July 1 over wages, contracts and automation, halting shipments in and out of about 30 ports in BC. .

After a 2020 strike in the Port of Montreal that lasted 10 days, there was a backlog that took three months to clear, says Christina Santini, executive director of the Canadian Federation of Independent Business.

Companies waiting for stock can expect to wait even longer for supply chains to be free, she said.

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

Over 40% of Canadian shipping passes through

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

“Vancouver handles 43 percent of the cargo shipped to Canada through the port system… It is 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, cut production at its Cory potash mine in Saskatchewan due to “loss of export capacity” related to the port closures.

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

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

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

“These goods are delayed,” he said. “This has resulted in revenue losses and revenue losses for businesses, but I think these losses are still quite manageable.

“Noticeable for some companies, especially those who have tons of time-sensitive commodities; less noticeable for those who have more inventory and more leeway built into the system and more resiliency.”

But many companies have less leeway these days, Santini said. They have smaller inventories and less room to negotiate any kind of supply chain disruption, especially at a time when everything is getting more expensive.

“Inflation affects everyone – not just individuals, but companies as well,” she said. “They’re missing out on sales because they don’t get the materials they need to make those sales or to provide the services they would need.”

If the strike had lasted much longer, Johnson said consumers would see the cost of their goods go up. But in this case, he said, it’s likely the companies absorbing any losses.

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