Operations at Canada’s West Coast ports are slowing down vessel operations ahead of a potential rail strike that threatens to strand thousands of intermodal containers at terminals already reaching capacity. The country’s East Coast ports can absorb some cargo, but not for a prolonged work stoppage by Canadian rail workers.
As of late Wednesday, no agreement on a new contract has been reached between Canada’s two Class I railroads and the Teamsters Canada Rail Conference (TCRC), which represents over 9,000 conductors, engineers and other trades. In the absence of a new agreement, Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) said they would lock out TCRC workers as of Thursday.
A shutdown of the railroads would directly impact Canada’s ports, most of which handle a high percentage of intermodal cargo going into the US. After both railroads started embargoing freight earlier this week, Canada’s major ports and container lines began offering workarounds for shippers and making contingency plans for container backlogs and berth delays.
The Vancouver Fraser Port Authority (VFPA) said in a statement to the Journal of Commerce that ocean carriers are being asked to slow down ships scheduled to arrive at the port to avoid vessel congestion.
Only four ships are at Vancouver’s berths with two vessels waiting to berth, according to the VFPA’s maritime data. Current vessel schedules for Global Container Terminals’ (GCT’s) Deltaport terminal show 20 ships are expected to arrive through Sept. 18. GCT’s Vanterm is expected to receive 11 ships through the same period of time.
Vancouver’s intermodal rail yard is already reaching capacity as measured by dwell time. VFPA data shows that intermodal boxes are sitting for five to seven days on dock, compared with four days in July.
“The impact to the Port of Vancouver will be significant, with approximately two-thirds of all cargo volumes at the port moved by rail, including 90% of international exports,” the VFPA’s statement said. “It took many months to clear the backlog of congestion from the 13-day strike by BC longshore workers in 2023 at the Port of Vancouver, with delayed shipments and overburdened infrastructure struggling to restore normalcy.”
GCT said in a statement to the Journal of Commerce that railcar supply to Vancouver has improved in recent weeks, allowing its Vancouver terminals to work down their backlog. However, GCT said its terminals will start seeing impacts should a strike last longer than a couple of days.
“Our terminals are now fluid, but any rail service outage greater than 48 hours will severely impact the fluidity,” GCT said.
DP World’s Centerm terminal in Vancouver is scheduled for 17 vessel arrivals through mid-September. Its Prince Rupert terminal, which is entirely rail-served, is expected to see 22 ship arrivals through the end of September.
While a potential strike would mean containers cannot be brought into terminals, cargo owners would be permitted to retrieve cargo that reached the destination terminal. For now, any work action would not impact terminal workers who load cargo onto trucks, or the gate operators letting drivers in and out of the terminal. Any cargo en route when a potential strike begins at 12:01 a.m. on Thursday would be held where it is located until the labor dispute is resolved. Part of the wind down in operations includes getting as much cargo to destination terminals on Wednesday or holding the cargo at official crew change locations rather than unsecured locations.
Ocean carriers weigh options
Ocean carriers have yet to completely halt liner services in Canada but are preparing workarounds for a rail strike. Maersk said Wednesday it will still accept bookings to Canadian ports along with inland destinations, but it’s reviewing “contingency actions.”
Hapag-Lloyd said Wednesday it will not take any export bookings from US inland destinations that are routed through Canada. For any intermodal cargo destined for Canadian ports, Hapag-Lloyd said it would provide other workarounds such trucking, subject to a $400 fee and the cost difference for the surface transportation leg.
CMA CGM is telling shippers to expect vessels to be diverted to US ports and plans to halt bookings for inland destinations served by rail, according to a report from ContainerXchange.
A US-based ocean carrier executive told the Journal of Commerce that he expects container lines will have to divert vessels or completely halt bookings to Western Canada because Vancouver and Prince Rupert will not have enough room to store intermodal cargo. Canada’s East Coast ports, however, have room to handle stranded intermodal cargo for about two weeks before they hit capacity.
“West Coast ports are operating at high capacity and have much less flexibility, essentially the ships alongside now at the start of a strike will be the last vessels worked,” the executive said.
The Port of Montreal’s overall container volumes are down slightly this year, providing it with buffer capacity to handle stranded intermodal containers. In addition, the Montreal Port Authority (MPA) said in a statement to the Journal of Commerce that it is looking at longer gate hours so more trucks can move intermodal cargo out of its terminals.
However, the MPA said that certain rail-served markets such as Ontario and the greater Toronto region “will face major challenges” if a strike commences.
A spokesperson for the Port of Halifax told the Journal of Commerce that while it is still receiving vessels, it expects “significant impacts if we have a rail service interruption.”
“Rail serves approximately 60% of containerized cargo business at the Port of Halifax,” the spokesperson said. “Canadian gateways have already seen a reduction of volumes due to the uncertainty around rail operations. We encourage all parties to work towards a resolution.”
Customers who use CN and CPKC outside Canada will not be impacted because the engineers and conductors are not TCRC members. Routes such as CPKC’s Mexico Midwest Express, the Falcon Premium between Mexico and Detroit, and CN’s trains between the US Gulf Coast and US Midwest will operate normally.
Source:
Angell, M. (2024b, August 21). Canadian ports, liner operators bracing for rail strike impact. Journal of Commerce. https://www.joc.com/article/canadian-ports-liner-operators-bracing-for-rail-strike-impact-5708554
