Container ships have been diverted from Vancouver to Seattle due to port strikes

Two container ships originally bound for the Port of Vancouver are changing course and have been diverted to the Port of Seattle as labor strikes in ports on Canada’s west coast enter their sixth day, according to VesselsValue tracking data.

The diverted container ships are the MSC Sara Elena and the OOCL San Francisco. It is the first of a wide-ranging diversion of ships that could delay scheduled arrivals and strain supply chains right at the start of the peak season when holiday and back-to-school items arrive.

The strike could lead to congestion at these ports as dockers are unable to offload their ships. Congestion can create backlogs and result in late pickups at terminals, which can then lead to late fees that are often passed on to consumers — much like during the pandemic.

The rerouting of containers also extends the delivery time of the products by several days. For the automotive industry, which relies on lean, just-in-time schedules, these delays can impact production.

The distance between the Port of Vancouver and the Port of Seattle is just over a half-day trip at normal speed.

New data from MarineTraffic shows 15 container ships headed for Vancouver and 9 container ships headed for Prince Rupert. The containers these combined vessels would transport total $10.7 billion.

The Port of Vancouver and the Port of Prince Rupert are popular destinations for US trade as these ports are among the most important ports of call for goods from Asia. Some logistics managers told CNBC that rail travel from these ports is much faster than via the Port of Seattle or Tacoma.

ITS Logistics told CNBC it has containers at OOCL San Francisco. They were scheduled to arrive in Vancouver Harbor on July 3 and then be taken by rail to Memphis. Paul Brashier, vice president of drayage and intermodal at ITS Logistics, said customers are now looking to alternative American ports.

“Currently, we are advising all customers whose cargo has been booked to Vancouver or Prince Rupert to work with their booking agents to trace the US ports of call of the ships their containers are on and to see if the ocean liners are reconsigned ( Transition) allow the final destination of the container) to a US port,” Brashier said.

Many ITS customers have requested a change in container destination and are waiting to see if the shipping companies will accept this change. Shipping companies are the final arbiter of any change in container destination. Typically, you can change a container’s destination five days before a ship docks.

Canadian ports typically process goods destined for the United States, from auto and manufacturing parts to shoes and apparel. Trade organizations such as the American Apparel and Footwear Association and the National Retail Federation have told CNBC that they are calling on the Canadian government to help keep parties at the negotiating table.

Both the British Columbia Maritime Employers Association and the International Longshore and Warehouse Union Canada withdrew from labor negotiations earlier this week, blaming each other for the talks’ failure.

The talks are still on hold

ILWU Canada released a scathing statement Thursday accusing the British Columbia Maritime Employers Association of a smear campaign and calling for a return to the conciliation table.

“The reality is that our employees are working hard in difficult, often hazardous conditions, and have kept Canada’s economy afloat through the worst of the pandemic,” said Rob Ashton, President of ILWU Canada. “This is far from the image that the employer wants to convey. It can be a good living, but it takes years of sacrifice to get there and it’s still hard work.”

Ashton cited several points in support of the union’s position, including sporadic earnings for longshoremen due to on-call systems; inconsistent working hours as many workers are posted on a daily basis; and high injury rates, including several fatalities, recorded in recent years.

The President of ILWU Canada also said that higher wages often require night shifts six or seven days a week.

“Our members’ families are faced with rising food bills, housing costs and interest rates. “All we ask of employers is to share some of the wealth our work creates for them through a fair, reasonable pay increase and to ensure our members can continue to do that work with respect and dignity,” said Ashton.

BCMEA said in a statement to CNBC on Thursday that negotiations are still on hold.

“We remain ready to return to the table at any time, provided ILWU Canada is willing to come up with a reasonable proposal, particularly with regard to their request to vigorously expand the ILWU’s responsibility for terminal maintenance,” the group said.

Canadian Labor Secretary Seamus O’Regan Jr., who has urged both sides to return to the negotiating table, spoke Thursday night with Acting U.S. Secretary of Labor Julie Su about the strike’s impact on the North American supply chain.

Since Canada’s parliament is not in session, the governing body would have to recall its members to intervene. Even in the case of remote voting, a quorum for personal voting must always be observed.

US union workers

The diversion of shipping containers raises the question of whether work will intervene in American ports, metaphorically crossing the picket line.

The strike in Canada’s west coast ports was supported by both the ILWU West Coast US Chapter and the International Longshoremen’s Association (ILA).

The ILA, the largest maritime workers’ union in North America, which represents workers in ports on the Atlantic and Gulf Coasts, the Great Lakes, the U.S. Great Rivers, Puerto Rico and eastern Canada, said in a statement that no diverted cargo from striking Ports would be accepted.

The US West Coast branch of the ILWU declined to comment to CNBC on whether its members plan to put any of the diverted vessels into service. Earlier this week, Willie Adams, President of the ILWU US West Coast Division, met with his Canadian counterpart Ashton, and the ILWU had made previous statements of support for its fellow union members in Canada.

According to port authorities, the first of the diverted container ships is expected in the Port of Seattle on July 10.

Canada’s ports handle approximately $225 billion worth of goods each year, with goods ranging from household goods to electronics to clothing being transported by rail. According to the Port Authority, about 15% of consumer trade through the Port of Vancouver goes to or from the United States. Around two-thirds of the container import volume going to the Port of Prince Rupert goes to the US, port data shows.

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