Prolonged BC port strike could lead to shortages, experts warn

Consumers in Ontario could face product shortages and higher prices for everything from cars to building materials if British Columbia’s major dockworkers strike lasts long enough, experts warn.

The International Longshore and Warehouse Union Canada (ILWU), whose members are mostly freight loaders, went on strike on Saturday after months of negotiations with the BC Maritime Employers Association (BCMEA) failed to produce a contract.

“If it goes on for a while, you see shortages, higher prices and probably some kind of domino effect in terms of impacting the cost of other goods and services,” said Fraser Johnson, a supply chain expert at Ivey Business School in the United States. University of Western Ontario.

During a 2014 truckers’ strike in Vancouver ports, hundreds of millions of dollars in freight piled up and retailers began to experience shortages in the early weeks of the labor dispute.

Johnson said a prolonged strike could have an impact on the industry as it blocks imports of heavy equipment for factories in Pacific countries such as Japan. Some products from the United States are also shipped to Canada by freighter, he added.

It wouldn’t just hit major industries, resulting in higher car prices, as large shipments from Japan would continue to float in the water, which could in turn push up used car prices, he said.

Building materials could also become an issue in the event of a prolonged strike, he said, while retail goods could come under some pressure.

For now, Johnson said, business-to-business products like machines are likely to suffer from supply chain hiccups.

“I think this would be a more difficult situation if we were closer to Christmas,” he said.

Shipping via the US seen as an option

But those in other sectors of the economy may have the experience to pay until the contract dispute is resolved, he said, adding freight through the United States is an option companies are likely to explore.

ERA Forest Products Research’s Kevin Mason said that due to recent natural disasters in BC, such as wildfires and floods that shut down a major highway through the county, some companies are already experiencing second-hand sourcing of products they need.

“People found different suppliers for different things,” Mason said. “At the moment we don’t hear anyone who is really too worried.”

He said the situation could change if the strike continues longer and it becomes more difficult for companies to get the products they need.

According to the union, the bottlenecks in the labor dispute are wages, increasing automation and outsourcing of work. The union represents more than 7,000 workers at more than 30 terminals across the province, including Vancouver.

The BCMEA says its terminals handle about $180 billion in cargo annually, representing about 16 percent of Canada’s total traded goods.

While the two sides worked out their differences with the help of the federal government brokering the talks, some business groups proposed binding arbitration from Ottawa. The union rejected the idea last weekend.

Johnson said dock workers in the US recently negotiated a 32 percent wage increase over six years. ILWU members in BC probably base their expectations on what the American workers received.

On Monday, the BCMEA released a release saying the union’s demands “are outside any reasonable framework for settlement.”

But Johnson said he remains optimistic.

“I’m not here to preach doom and gloom,” he said. “I’m hopeful that within a few weeks… we’ll sort things out. If it goes on for more than a few weeks, I think it’s going to be a bigger problem.”

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