Vancouver port strike puts chill on economy

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A strike by truckers at Port Metro Vancouver is inflicting increasing damage to the Canadian economy as exports and imports stall while the labour dispute drags on.

"Because the port handles more exports than imports, the disruption will lead to a sharp deterioration in the trade balance in March," BMO Nesbitt Burns Inc. senior economist Sal Guatieri said in a research note Thursday.

The strike began Feb. 26 by independent truckers and spread to include unionized drivers.

Canada's busiest port has suffered disruptions to cargo movements in bulk commodities and intermodal shipping – goods transported inside standardized metal containers that are readily transferred between trains and trucks. There have been delays in exports such as grain, meat, lumber and coal, as well as imports of consumer goods that arrive in containers from Asia. Thousands of cases of wine, beer and spirits from overseas are also sitting in steel containers.

A majority of the 1,800 truckers accredited to service Port Metro Vancouver have picketed the federal facility, demanding pay raises and more oversight of the industry. The B.C. government plans to table back-to-work legislation on Monday, forcing hundreds of unionized drivers back to their rigs.

Federal officials have also announced that they could begin voiding the licenses of as many as 1,000 independent non-union truckers who have refused to work at port terminals.

"This new brake on the economy could dampen the growth rebound that was expected following a miserable winter," Mr. Guatieri said.

Ron Davidson, director of international trade for the Canadian Meat Council, said the work stoppage has halted weekly shipments of about 9,000 tonnes of beef, pork and veal worth $28-million destined for Japan, China, South Korea and other Asian markets.

"It really is having a major impact," said Mr. Davidson, who represents Cargill and dozens of other meat processors across Canada. "We're talking about food. And if our foreign customers aren't getting their food, they're going to go elsewhere."

The strike comes at the end of tough winter for growers and shippers of grain. They have been unable to capitalize on strong prices and a record crop due to capacity shortages on the railways. The labour dispute is prolonging the frustration, and doing more damage to Canada's reputation as a trading partner, industry groups say.

If the transport problems stretch well into spring, some industry observers are concerned that businesses could pass along rising storage costs to consumers, potentially fuelling inflation in some categories such as food.

The strike threatens to send ships to ports in the U.S. Northwest that are not served by Canadian National Railway Co. or Canadian Pacific Railway Ltd., said BMO Nesbitt Burns transport analyst Fadi Chamoun. He noted both railways' intermodal container volumes will be hurt if vessels avoid the Canadian freight backlog by docking at U.S. ports.

CN spokesman Mark Hallman said any large shift of vessels to American ports would be a concern for the Montreal-based railway. CN has stopped hauling pulp and paper from wood and pulp mills in Western Canada as ocean-going shipments have stalled and warehouses have filled up.

CN has obtained an injunction preventing strikers from blocking the company's domestic intermodal terminal traffic in Vancouver. But slowdowns persist at the site where bulk commodities – wheat, lumber and pulp – are put in containers for outgoing ships.

Gordon Bacon, chief executive officer of Pulse Canada, recently visited India, which is a major buyer of Canadian peas and lentils. Buyers there told him of long lead times to order from Canada, effectively adding to costs and uncertainty over prices and currency values. Where it once took six weeks to move a railcar of peas from a farmer's field to a dock in India, it can now take as long as eight months, he said.

Mr. Bacon said Canadian firms are missing sales opportunities. "We miss the ability to meet new market demand and we undermine our reputation to be a reliable and consistent supplier," he said.

Port Metro Vancouver is the federal landlord for marine terminal operators.