Anchored in Disruption: The Global Supply Chain Impact of the Canadian Longshoremen Strike

On the 4th November, ILWU Local 514 walked off the job in a strike, forcing the Ports of Vancouver and Prince Rupert to grind to a standstill. In the wake of the July 2023 13-day strike which took months to clear the backlog and resume normal port operations, logistics professionals are worried about the long-term impacts to trade and goods that are vital for the North American markets – especially with the holiday season approaching ¹.

The longshoremen strike here, and other ports across the province, has the potential to send ripples far beyond Canada's borders, impacting global supply chains in multifaceted ways as we head into 2025.

Immediate Disruptions in Trade

In an interconnected global economy, supply chains stretch across continents, weaving through a complex network of suppliers, manufacturers, and logistics providers. Vancouver, with its strategic location on the Pacific Rim, plays a pivotal role in these networks as one of North America's largest and most significant ports – alongside the port of Prince Rupert, handling approximately 20% of U.S. imports.

The Port of Vancouver has handled approximately 2.5M TEUs, already in 2023, with an estimated $840M worth of trade flowing through the port each day, proving that it is a critical entry and exit point for goods between North America and Asia ². With Canada already facing container capacity constraints, due to longshoremen stopping working at several container terminals at the Port of Montreal, a further strike or coastwide lockout could have severe impacts on port operations and efficiency, up and down the coast.

Data flowing through the Infor Nexus network shows how times are already significantly higher than the norm for the Port of Vancouver, the 8th largest port in North America (by volume). Dwell times soared from 6 days in September, to 17 days in October, proving that any further disruption could be devastating and take months to clear the backlog.

Not only that but, according to the JOC, both the Ports of Seattle and Tacoma struggled to maintain efficient operations after the sudden surge of container volumes due to cargo-diversions linked to the brief early-October longshore strike, and a further strike could threaten to overwhelm them entirely ³.

With retailers already causing a surge in imports as they scramble to restock inventory in preparation for the labor issues caused by the strikes, even a temporary closure of the Canadian West Coast trade gateway could force carriers to offload import cargo at already struggling U.S. West Coast ports, which are already experiencing heavy congestion ⁴. This would further extend container dwell times and lengthen overall transit periods.

Ultimately, global supply chains are an intricately connected web of moving parts and components. A strike disrupts this flow, leading to immediate delays in the movement of goods. Containers pile up in terminals, and ships are forced to either anchor offshore or divert to alternative ports, which may already be operating at full capacity. This congestion results in increased transit times, impacting industries that rely on the just-in-time delivery of components and raw materials.

Impact on Key Industries

Several industries, particularly those heavily reliant on imports and exports through British Columbia and the Port of Vancouver, feel the immediate impact.

1. Automotive Industry: In 2023, Canada imported auto parts worth over CAD 25 billion, with a significant share passing through West Coast ports. With many car manufacturers dependent on parts from Asia, delays can lead to halted production lines and increased costs due to sourcing from pricier, alternative suppliers.
2. Technology Sector: Electronics and components, commonly transported as high-value, low-volume goods, face significant disruptions. This affects everything from consumer electronics to critical infrastructure components.
3. Agriculture and Perishables: Exporters of Canadian agricultural products, such as grains and seafood, face spoilage risks and loss of trade relationships due to delays, while importers of fresh produce may struggle to maintain supply. In 2023, Canada exported over CAD 90 billion in agricultural and agri-food products, a considerable volume moving through Vancouver.

Long-Term Strategic Shifts

• Diversification of Ports: Businesses may seek to reduce dependency on any single port by diversifying their points of entry and exit. Conversely, organisations will have to weigh the balance of shifting ports as shipping costs can often increase by 15-25% when re-routing is necessary due to port disruptions., according to recent industry reports.
• Inventory Management: A 2023 survey by Gartner found that 87% of supply chain leaders are investing in greater resilience through supplier diversification and increased inventory levels ⁵. Should the strike, or any further disruption to standard port operations, come to pass, companies might reconsider their inventory strategies, increasing buffer stocks to mitigate future disruptions, though this comes with added costs that ties up working capital.
• Enhanced Supply Chain Resilience: Organizations are likely to accelerate investments in technologies that enhance visibility and flexibility across their supply chains. This includes the adoption of advanced analytics, AI, and IoT to predict and respond to disruptions more effectively.

Economic and Political Pressures

The economic implications extend beyond business operations. Prolonged strikes can sometimes lead to significant economic losses, influencing GDP figures, and potentially leading to government interventions. Politically, strikes highlight labor-management tensions, prompting discussions on labor laws, automation, and the future of work in the logistics sector. An analysis of past port disruptions in North America suggests economic impacts can reach over USD 2.5 billion per day, emphasizing the significance of maintaining operational continuity in major ports like Vancouver ⁶.

Conclusion

The longshoremen strike in British Columbia and the subsequent coast-wide lockout underscores the vulnerabilities inherent in modern supply chains. While the immediate impact is characterized by disruption and delay, it also serves as a catalyst for change, pushing businesses towards more resilient and diversified supply chain strategies. In the long run, these adjustments may not only mitigate future risks but also drive innovation and efficiency within global logistics networks. As businesses navigate these challenges, their ability to adapt and evolve will determine their success in an increasingly unpredictable world.

About Infor Nexus

Infor Nexus provides intelligent, end-to-end visibility and collaboration across the supply chain for faster, smarter and data driven disruption resolution. The single, unified view allows companies to see the impact of disruptions, have a broader view of response options, and then collaborate directly with partners to execute decisions.

Download our white paper here to explore ten key steps for building a resilient supply chain and staying ahead of disruptions.