Janice R. Andrews
North America’s freight business is having a hard time, and US importers and exporters are working hard to figure out how to deal with the effects of Canada’s almost complete train shutdown. Since Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. have shut down, more than 9,000 workers who are part of the Teamsters Canada Rail Conference have been locked out. This happened after the union sent a strike warning to Canadian Pacific. It has caused worries about ocean goods being held up, freight costs going up, and extra stress on US ports that are already very busy.
Effects on Supply Chains Right Away
Important things like wheat, chemicals, and fertilizers are already having trouble getting where they need to go because of the rail shutdown. In order to lessen the effects, businesses like C.H. Robinson Worldwide, Inc. have started sending ocean goods from US customers from Canadian ports to hubs in Southern California and Washington State. Retail customers also use trucks for deliveries that need to be made quickly. This change to different lines does, however, come with its own problems.
Vice President for Canada at C.H. Robinson, Scott Shannon, talked about how hard it is to shut down the trains, which started a staged shutdown last week. The process had to be done slowly to make sure that dangerous materials weren’t left in places that were not safe. “Railways are like a conveyor belt outside that never stops moving.” “They’re made to work all the time, not just at night, so they can’t just flip a switch,” Shannon said. Because of this, US trains had to stop running early, before the strike limit.
The Effect of the Ripple on US Ports
As more goods is sent to US ports, these sites are under more stress. A group of 730 dock foremen in British Columbia might go on strike, which would make things even more difficult. The International Longshore and Warehouse Union (ILWU) Local 514 foremen are deciding right now on whether to go on strike. There could be major problems at Vancouver, Canada’s biggest port, if they do this. This would then affect ports on the US West Coast.
Logistics companies are worried that US dockworker groups might refuse to unload goods that was meant for Canada if there is a strike. Shannon said that during a 13-day strike at the Vancouver port last year, containers were left without a home for two weeks. If the past happens again, the US West Coast ports, which are already crowded from the large number of containers, could get even worse.
Ongoing Problems with Labor
There is also a lot of uncertainty because of the current contract talks for about 45,000 dockworkers at big US ports from Houston to Boston. Since the beginning of the summer, the International Longshoremen Association (ILA) has stopped negotiating wages and is getting ready to go on strike if a deal isn’t made by September 30th. This possible strike could make things even harder for US ports, which are already dealing with almost record-high numbers of containers.
The Price of Getting Lost
Marine delivery companies don’t like to reroute ships because it means longer trips, more traffic, and different prices. Even so, some cargo has already been sent to ports on the US West Coast, where the extra traffic is being closely watched. “These companies are keeping US ports from getting too crowded and making sure there’s enough space to handle the extra traffic that’s being sent there,” said Richard Patry, Managing Director of DHL Global Forwarding Canada. “This is especially important because Canadian ports are important entry points for cargo going to the US.”
Importers and exporters will lose a lot of money because marine carriers will charge extra fees and moving to trucks will cost money. Because of rules between nearby countries, it’s not easy to move goods to other places. For cargo that’s already on a ship, the best choice is to discharge it directly at a Canadian port.
Long-Term Effects on the US Economy
The US economy is likely to be affected in a big way by the closing of Canada’s two biggest railroads. The US Chamber of Commerce has already said that there will be big effects, pointing out that most Americans don’t know how dependent their country is on Canadian trains. A LinkedIn post by Peter Friedmann, Executive Director of the Agriculture Transportation Coalition, echoed these worries. He emphasized that even with alternative lines, US trains and sea ports aren’t able to handle the extra traffic.
As more and more people try to get through US ports at the same time, the stress on the supply chain becomes clearer. With no quick answer in sight, US shippers are getting ready for a tough time ahead as they try to figure out how to use a North American freight network that is currently down.
