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U.S. West Coast port workers’ unions say they won’t work containerships originally bound for the Port of Vancouver that changed course and were diverted to the Port of Seattle. The disruption comes as labor strikes at West Coast ports in Canada stretch into a seventh day.
The International Longshore and Warehouse Union U.S. West Coast chapter said Friday its members would not work any of the diverted vessels.
“The ILWU will not be unloading Canadian bound cargo in solidarity with out Brothers and Sisters in ILWU Canada,” said ILWU U.S. West Coast chapter President Willie Adams in a statement to CNBC.
According to MarineTraffic there are 16 vessels currently at anchor waiting off the Port of Vancouver and six at anchor at Prince Rupert. There are more containerships on the way.
There are a total of 15 containerships bound for Vancouver and nine containerships bound for Prince Rupert. These would be vessels, if re-routed, that the ILWU would not service because the containers are easily identified.
It would be very hard for the ILWU to identify containers that had their final destinations changed because they do not have access to container information for security reasons.
The diversions are the first of what could be widespread rerouting of ships, delaying planned arrivals and straining supply chains right at the beginning of peak season when holiday and back-to-school items are coming in.
The rerouting of containers also adds days to the delivery of product. For the auto industry which runs on lean just in time schedules, these delays can impact production.
“This is the largest disruption we have seen since the pandemic and comes at a time when the supply chain was stabilizing,” Goetz Alebrand, head of ocean freight Americas for DHL Global Forwarding, told CNBC.
The strike at the Canadian West Coast ports had previously been met with support from both the ILWU West Coast U.S. Chapter and the International Longshoremen’s Association (ILA).
The ILA, the largest union of maritime workers in North America, representing the workers at ports on the Atlantic and Gulf Coasts, Great Lakes, major U.S. rivers, Puerto Rico and Eastern Canada, also said in a statement that no diverted cargo from striking ports would be accepted.
The first of the diverted containerships is expected at the Port of Seattle on July 10, according to port authorities.
The disruptions follow a breakdown in labor negotiations. Both the British Columbia Maritime Employers Association and the ILWU Canada chapter walked away from talks earlier this week, each blaming the other for the breakdown in talks.
Diverted ships
Two containerships that were diverted were identified as the MSC Sara Elena and the OOCL San Francisco. VesselsValue has also identified the MSC Matilde V which was anchored outside of Vancouver pulling up anchor and leaving with the Vancouver-bound cargo and heading back to Quigdao, China.
OL USA told CNBC all of its future cargo that normally goes to Vancouver is being rerouted to Seattle, Tacoma, Los Angeles, Long Beach and the East Coast.
The strike could lead to congestion in the Canadian ports with longshoremen unable to unload vessels. Congestion can turn into backlogs and lead to delayed pickups from terminals, which can then lead to late fees that are often passed on to consumers — similar to what occurred during the pandemic.
The Canadian National Railway Company, which services the ports, told CNBC it will take weeks to months to clear out the congestion.
The Port of Vancouver and Port of Prince Rupert are popular destinations for U.S. trade because these ports are among the major ports of call for goods arriving from Asia. Some logistics managers have told CNBC that rail service out of those ports is a lot faster than going through the port of Seattle or Tacoma.
The distance between the Port of Vancouver and the Port of Seattle is a little over a half-day’s trip traveling at typical speeds.
ITS Logistics told CNBC it has containers on the OOCL San Francisco. They were scheduled to arrive at the Port of Vancouver on July 3 and were then destined by rail for Memphis. Paul Brashier, vice president of drayage and intermodal at ITS Logistics, said clients are now looking for alternate American ports.
“Right now we are advising all clients with freight that was booked to Vancouver or Prince Rupert to work with their booking agents to track the US ports of call of the vessels that their containers are on and see if the ocean liners will allow reconsigment (switching container final destination) to a US port,” Brashier said.
Many ITS clients have requested a change in container destination and are waiting to see if the ocean carriers will accept that change. The ocean carriers are the final arbiter in any container destination change. Usually, you can change a container’s destination five days prior to a vessel docking.
The Canadian ports normally process goods bound for the United States ranging from auto and manufacturing parts to footwear and apparel. Trade organizations including the American Apparel and Footwear Association and the National Retail Federation have told CNBC they urge the Canadian government to help keep parties at the negotiating table.
Talks still paused
ILWU Canada released a scathing statement Thursday, accusing the British Columbia Maritime Employers Association of a smear campaign and demanding to get back to the mediation table.
“The reality is, our people do hard work under difficult, often dangerous conditions, and they kept Canada’s economy moving through the worst of the pandemic,” said ILWU Canada President Rob Ashton. “That’s a long ways from the picture the employer wants to paint. It can be a good living, but it takes years of sacrifice to get there, and it’s still hard work.”
Ashton listed several points supporting the union’s position, including sporadic income for waterfront workers resulting from on-call work systems; inconsistent hours since many workers are dispatched on a day-to-day basis; and high rates of injury, including several deaths recorded in recent years.
The ILWU Canada president also said higher pay rates often require working night shifts, six or seven days a week.
“Our members’ families are facing spiraling food bills, housing costs, and interest rates. All we’re asking from employers is to share some of the wealth our labor is creating for them through a fair, reasonable increase in wages, and to ensure our members can continue to do that work with respect and dignity,” Ashton said.
BCMEA said in a statement to CNBC Thursday that negotiations are still paused.
“We continue to be ready to return to the table at a moment’s notice, assuming ILWU Canada is prepared to put forward a reasonable proposal, particularly on their demand to aggressively expand ILWU jurisdiction over maintenance work on the terminal,” the group said.
Canadian Labor Minister Seamus O’Regan Jr., who has been urging both sides to come back to the table to negotiate, spoke with acting U.S. Labor Secretary Julie Su Thursday evening about the impact of the strike on the North American supply chain.
With the Canadian Parliament out of session, the governing body would need to recall members in order to intervene. Even with remote voting, a quorum for in-person voting also needs to be met on any measure.
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