Following last week’s news of a possible work stoppage in Canada, a formal 72-hour strike notice has been issued by the Teamsters Canada Rail Conference should a labor agreement not be reached by 22nd August.
The strike is a significant escalation, signaling the union's readiness to halt operations if their demands are not met. Both CN and CPKC have responded by warning of potential lockouts if an agreement is not reached, and CN has mentioned that it may follow with a phased operational shutdown. The potential strike is expected to have widespread implications for the Canadian economy, disrupting the transportation of essential goods and affecting various industries. Additionally, the disruption could result in delays, higher transportation costs, and possible shortages of essential materials.
Further impacts include the possible diversion of transportation from Canadian ports to US ports of entry. Woodland Group has responded by rerouting their impacted consolidation services to be directed via US ports in the short term and can provide direct trucking and trans-load services to customers to help mitigate potential delays on the rail networks. The Port of Vancouver has just announced measures aiming to prevent further congestion and has asked carriers to adopt slow steaming measures, which will reduce flow of vessels into the Canadian Port and increase transit times.
Another potential transport strike affecting the supply chain if a labor agreement is not reached is planned for October 1, 2024 at US East and Gulf Coast ports, significantly impacting ocean carriers. This is tied to stalled negotiations between port employers and the International Longshoremen's Association (ILA). Whilst a strike would disrupt supply chains, carriers view it as a potential boost for spot rates. Carriers have been grappling with overcapacity, but the threat of a strike has temporarily supported higher rates, especially on routes from Asia to the U.S. East Coast (USEC). However, with shippers already dealing with the impacts of the Red Sea on both rate and transit times, any strike action on the USEC would result in significant pressure on alternative ports of entry - mainly on the USWC alongside possibly Canada and Mexico.
Unfortunately, many shipments from Asia are already experiencing the implications of the potential strike with changing shipment schedules and shipments currently on the water potentially impacted upon arrival into the US.
Specifically, the automotive industry could experience severe effects of the strikes as automotive plants face potential stoppages to production if the parts required cannot be obtained or if unable to ship finished vehicles from their plants. As a result, assembly plants in the Midwest that rely on CPKC for rail transportation could also be affected and Woodland’s US teams have been working with our customers to activate contingency plans to mitigate the effects.
Rates on the world’s largest trade lane between Asia and the USA have been declining due to increased capacity following an early peak in shipments, as shippers adjusted to the Red Sea diversions. However, the ongoing uncertainty and the risk of the US and East Gulf dock strike may drive rates back up. This situation could also put additional pressure on air cargo capacity, leading to higher rates also in that sector.
India's major ports are facing a potential shutdown as dockworkers across 12 crucial ports prepare for an indefinite strike starting on August 28. This action threatens to severely disrupt the nation's export capabilities and is expected to cause significant cargo disruptions, increased costs, and port congestion, which could exacerbate existing supply chain problems, already strained by global port issues and the Red Sea crisis. Should this strike go ahead, it could have significant repercussions for both India's economy and global supply chains, plus air and ocean rates.
Woodland is proactively developing alternative routing solutions available for their customers, offering options to route shipments from Asia to the U.S. East Coast via the U.S. West Coast and Mexico.
In Europe’s case, with most ocean goods from Europe entering the US via the East Coast, a strike at these key ports would have a profound impact on supply chain planning. Although recent disruptions in the Red Sea have already forced many companies to adjust lead times and order patterns, a complete shutdown of the US East Coast ports would present even greater challenges. The resulting supply chain disruptions would be severe, and the cost implications substantial.
Woodland Group will continue to monitor the situation closely and through their global network of air, ocean, road and warehousing solutions across USA, Asia and Europe, will work to provide solutions to customers as the situations develop.
This article originally appeared on Woodland Group's website. Woodland Global are full-trading members of IIFA.
