Volumes are rising at the ports of British Columbia as the protracted labour dispute between the International Longshore and Warehouse Union and the Maritime Association continues to disrupt ports along the US west coast. The possible ramifications of the ongoing dispute, which has left some 20,000 dock workers without a contract since July 2014, are becoming a little clearer and the strife faced by the affected ports in the US is manifesting itself as an opportunity for their longstanding Canadian rivals.
There is much to be said for the idea of shipping goods inbound from Asia through Canadian ports, especially when the final destination is the considerable market of the US Mid-West. The use of Canadian ports like Port Metro Vancouver and Prince Rupert to reach the Mid-West is actually faster than using those ports’ US rivals at Seattle or Oakland. This advantage is as much about location and distance as it is disruption, but it has now been made more obvious as shippers seek greater security for their supply chains and divert their gaze away from the US. In fact goods shipped from Shanghai, China, to the Mid-West via Prince Rupert in Canada arrive some two days sooner. Together with congestion to the rail network in the north western US, and the lengthening of transit times through US ports because of the labour dispute, the case for diverting traffic north is quite compelling. Shippers certainly seem to agree as Prince Rupert’s port saw a year-on-year 49% increase in traffic in July 2014.
The geographic advantage of the Canadian ports is further reinforced by the capabilities of the intermodal network that surrounds them. It offers shippers the ability to quickly reach US markets directly from the port with no need for a transfer via road freight, saving time and costs.
With volumes inbound from Asia on the rise and economic recovery gaining pace in the region, particularly in Canada, it seems that the Canadian ports are well placed to take advantage. In fact the boost which Port Metro Vancouver and Prince Rupert have received over the last few months has led to new plans for expansion, with Prince Rupert weighing up plans to double annual capacity to 1.3m TEUs. If such a move was replicated by the much larger port at Vancouver then we could see a significant change to goods flows into North America.
Would such an increase in capacity to the north be sustainable? Eventually the labour dispute that is causing so much disruption to US west coast ports will come to an end and the risks to shippers using them will diminish. However it is likely that the price paid by the ports to resume unhindered operations will be higher costs related to labour, costs which would probably be passed on to shippers. If shipping goods through north western US ports to the mid-western US is slower and more expensive than using a Canadian rival, then surely traffic will continue to pass north to fill increasing capacity.
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)