The management lockout of British Columbia dockworkers has diverted cargo to U.S. West Coast ports and left operators bracing for work interruptions at U.S. terminals.
And if the lockout drags on, ocean carriers may increase their rates for intermodal cargo moving to the eastern half of North America.
U.S. West Coast ports began receiving containerized cargo diverted from Vancouver, British Columbia, even before a lockout Sunday by Canadian employers against the International Longshore and Warehouse Union.
“There already was a significant amount of diversion leading up to the action in Vancouver,” said Imbert Matthee, a spokesman for the Port of Seattle. Cargo also was diverted to Tacoma, Wash., and Portland, Ore.
Shippers and carriers had been alert for weeks to the possibility of a work stoppage in Vancouver, British Columbia, where the International Longshore and Warehouse Union’s contract expired Dec. 31.
The Canadian ILWU negotiates separately from the ILWU at U.S. West Coast ports, where a three-year contract was agreed upon in July.
Terminal operators in U.S. ports have been watching for the possibility of pickets at their facilities by Canadian ILWU members. The ILWU Coast Labor Relations Committee on Friday sent a memo to locals at U.S. ports alerting them to the possibility of a lockout in Canada. The memo said that if the Canadian ILWU sent pickets to U.S. ports, the committee said it was confident the U.S. longshoremen’s contract would allow them to refuse to cross the picket lines.
The Pacific Maritime Association, which represents shipping lines and terminal operators at U.S. ports, takes the opposite view.
“We’ve been to arbitration before on the same issues and won,” said Joseph Miniace, PMA president, citing similar incidents involving Canadian pickets at U.S. ports in the 1980s.
Although wages are an issue in the Canadian labor dispute, the main issue appears to be a single operator’s hiring last year of a small nonunion company to sample sulfur cargo.
The ILWU, seeking to protect its jurisdiction from incursion by nonunion operators, refused to agree to contract terms unless the sulfur sampler was replaced.
After negotiations stalled, Canadian employers locked out the ILWU.
Most container lines that call in Vancouver, Canada’s largest container port, also call in the U.S. Pacific Northwest. The vessels stop in Vancouver before or after their U.S. calls, so diverting cargo through Seattle, Tacoma or Portland is relatively easy.
Initially, most of the lines intend to slow their vessels to maintain their same basic schedules in the trans-Pacific while skipping calls in Vancouver. “You have to keep to your schedule,” said Bill McKinstry, general manager for the Pacific Northwest at Zim-American Israeli Shipping Co. in Vancouver.
“We hope this is settled quickly, but for now we’re trying to keep our rotation in place,” said Howard Finkel, director of pricing at China Ocean Shipping Co. in Secaucus, N.J.
A lengthy closure of Vancouver and other British Columbia ports could force importers and exporters to pay a surcharge to cover the added costs of shipping their cargo through U.S. ports.
Vancouver has become an important gateway for U.S. as well as Canadian cargo.
Shipping executives say intermodal rates on Canadian Pacific or Canadian National railroads are $600 to $800 per container less than those on Union Pacific and Burlington Northern & Santa Fe railroads in the United States.
Because of the higher costs of U.S. railroads, shipping lines in a discussion group known as the Canadian Transpacific Stabilization Agreement have talked about a lockout surcharge, but have not come to a decision, said Brian Conrad, deputy executive director of the Canadian TSA.
Conrad holds that same position with the Transpacific Stabilization Agreement, a discussion group that covers the U.S. inbound trade from Asia but has a different membership.
If the lockout continues in British Columbia, the Canadian TSA lines may establish a voluntary surcharge for members, or the individual lines may revise their own tariffs so they don’t have to absorb the added cost of the inland move through the United States, Conrad said.
However, if cargo that is already in transit was booked at a certain rate, shippers will pay the rate that was quoted until carriers begin booking cargo at new rates, he added.
The lockout of the British Columbia longshoremen, which follows a job action in August by independent harbor drivers, comes as blow to Vancouver, where containerized volume has jumped more than 40% this year.
Three carriers this year began new services that made the Canadian port the first inbound call on their North American services from Asia.
Barrie Sime, terminal manager at Vancouver’s Deltaport terminal, said only about 100 import containers were stuck at the terminal, but that more than 2,000 containers were waiting to be exported. “A lot of our customers are frustrated, that’s for sure,” he said.
