Canada’s Seaway Strike Could Cost $25 Million Per Day

Another strike is disrupting freight shipments through Canada, but this time the work stoppage is impacting the country’s eastern coast.

Roughly 360 workers at St. Lawrence Seaway walked off the job Sunday calling for higher wages, three months after more than 7,400 dockworkers at 30 Canadian West Coast ports went on a two-week strike. The workers operate lock systems, bridges and other infrastructure throughout the seaway, where the disruption will last until an agreement is reached.

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While no vessels were waiting to exit the system, more than 120 were queued up to enter as of late Wednesday, according to the St. Lawrence Seaway Management Corporation (SLSMC).

The seaway running through the St. Lawrence River into the Great Lakes is a key economic gateway into and out of Eastern Canada, including the provinces of Ontario and Quebec. In 2022, about 36.3 million metric tons of cargo valued at $16.7 billion Canadian dollars ($12.1 billion) passed through the St. Lawrence Seaway’s infrastructure, according to Canadian Manufacturers & Exporters (CME).

Mediation between the union and the SLSMC, its government-owned employer, will take place in Toronto on Friday.

“Unifor will comply with the call to mediation and will continue to support our members on the picket line while talks take place,” the labor organization said in a statement. “Our goal remains to achieve a fair and reasonable collective agreement for those who work along the St. Lawrence Seaway.”

According to the SLSMC, Unifor is seeking wage increases patterned after the current United Auto Workers (UAW) strike in the U.S., which is pushing for pay bumps of 36 percent for workers at Ford, General Motors and Stellantis.

A 72-hour strike notice was officially filed last Wednesday, and despite sustained negotiating efforts, the parties didn’t reach a resolution by the Saturday 11:59 p.m. deadline.

“We’re seeing a lot of these strikes. I don’t believe this to be one of the last strikes that we’ll see,” said James Vanderloo, head of the Milwaukee bureau at freight forwarder OEC Group. “These things tend to be contagious, especially with economic conditions as they are.”

Vanderloo told Sourcing Journal that the closure impacts both Canada and the U.S., estimating that cargo transported via the waterway represents roughly 50 percent of their total cross-border traffic.

The seaway is the prime route for ships carrying vital exports such as grain and iron ore, as well as fuel for transportation, fertilizer for crops and other goods connected to factories and farms in the U.S. Midwest.

Unlike the draft restrictions affecting the Panama Canal, there aren’t many alternatives for ships looking to circumvent the St. Lawrence Seaway, Vanderloo said, particularly those bringing cargo directly to the Midwest.

One option that would traditionally be a workaround for these ships is the Mississippi River, but water levels are lower than usual, slowing the movement of vessels upstream, according to Vanderloo.

And if the ship is internationally owned and already leaving a U.S. port, then they won’t be able to enter the Mississippi under the Jones Act. The World War I-era legislation requires that any cargo traveling by sea between two U.S. ports must sail on an American-owned ship, built in the U.S. and with a majority crew of U.S. citizens.

Canada does not have the same requirements of the Jones Act,” said Vanderloo. “They allow international ships to go in their portion of the waterways. But when it’s all locked at that end, and with the inability for those ships to enter the U.S. waters via the Mississippi, again, there’s just not much place for them to go.”

The Canadian Chamber of Commerce, which has urged the government to intervene to end the strike because of the risk it poses to the economy, estimates the seaway is responsible for 34 million Canadian dollars ($25 million) per day.

Meanwhile, the Canadian Federation of Independent Business (CFIB) is “very concerned” about the strike, according to Jasmin Guénette, the association’s vice president of national affairs.

“Small businesses were seriously affected by the long strike at B.C. ports and the supply chain disruptions it caused this summer. The last thing the Canadian economy needs right now is another strike blocking a busy trade route and impacting businesses once again,” Guénette said in a statement. “Small businesses are already dealing with inflation, labor shortages, heavy debt loads and weak demand. They cannot suffer from another strike that would impact their bottom line.”

Vanderloo agreed with the CFIB.

“[Small businesses] may not have the cash flow or the stock to be able to withstand a three-week to a month-long delay,” Vanderloo said. “If they’re trying meet certain deadlines and trying to produce things before the end of the year, it kind of puts them in a tough situation, in that regard.”

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