Business

Canadian West Coast ports strike is over, but it will take weeks for supply chain to recover

Published

1 year ago

July 13, 2023

A gantry crane stands in the DP World Ltd. terminal at Port Metro Vancouver in Vancouver, British Columbia, Canada, on Wednesday, Sept. 19, 2018.

Darryl Dyck | Bloomberg | Getty Images

The strike at the Canada’s West Coast ports is over, after both the labor union and port ownership accepted a deal presented by federal mediators. ILWU Canada union workers were expected to be back on the job for the 4:30 p.m. Pacific time shift on Thursday, but undoing the damage to the supply chain from close to two weeks of strike will take weeks.

In a statement posted to Twitter announcing that a deal had been reached, Canadian Labor Minister Seamus O’Regan and Transport Minister Omar Alghabra said, “The scale of this disruption has been significant.”

While the production ramp down at the ports was seen immediately, the congestion as a result of the 13-day strike will have a lasting effect on ports. The ramping back up takes weeks before efficiencies will be regained. By combing the wait time of vessels getting into port and unloaded, and containers loaded onto the rails, combined delays can extend from a month to at least two months for a U.S. arrival.

The International Longshoremen and Warehouse Union of Canada begin its strike on July 1. Negotiations between the ILWU Canada and the British Columbia Maritime Employers Association were tense, but O’Regan saw differences as bridgeable, leading him to push federal mediators on Tuesday to come up with a proposal both sides could agree to.

With no vessels serviced for 13 days, according to VesselsValue, the number of vessels waiting at Prince Rupert are four, and the number of vessels waiting to enter Vancouver at nine. The combined value of trade floating offshore is $7.5 billion. There were more vessels waiting, but they left anchorage to go to U.S. ports.

Supply chain impacts

In a recent HLS Transpacific Market Report, the company warned clients that the work stoppage at the terminals has delayed the loading and transfer of the containers to railways. “As 15% of import volume going through Vancouver and around 65% of Prince Rupert volume are sent to the US destinations, the US Inland Port Intermodal routings will be heavily impacted,” it wrote.

HLS said shippers are expected to reroute some imports to U.S. West Coast ports. Carriers have cancelled callings at Vancouver and Prince Rupert, which also means further vessel capacity cuts.

The ports strike has already damaged the U.S. supply chain. In data released Wednesday, the American Association of Railroads reported year-over-year intermodal Canadian rail was down almost 50% last week as a result of the strike. The top sectors impacted included forest products such as lumber and wood products, oil and petroleum products, non-metallic minerals such as crushed stone, sand, stone, clay, and glass products, and chemicals. Products that go into paints, coatings as well as acids from Asia, were the most impacted, according to the National Association of Chemical Distributors.

The National Association of Chemical Distributors told CNBC its members likely have tens of millions of dollars in inventory stuck on ships outside of the Port of Vancouver.

“Many of our members are re-booking through U.S. West Coast ports with the likelihood of an extra 10-14 days of ground transit time because of the redirect,” said Eric Byer, CEO of the National Association of Chemical Distributors. “Some member company products have been on the water since June 30 and other arrivals earlier this month are now not being slated to be unloaded until early to mid-August at the earliest,” he said.

Products stuck on the water include essential food additives such as dextrose, guar gum & sorbates, citric acid — agriculture, food, cleaning/HI&I, personal care, sodium sulfite & sodium metabisulfite — water purification, dry caustic soda — used in metal working, food equipment cleaning, and a variety of other applications — and iron oxide, which is used as a pigment. Byer said one member company informed him it is now planning for an extended supply chain disruption through October for Canada.

Billions of dollars in trade tied up

Approximately $572 million in container trade arrives daily in the U.S. from Canada, according to U.S. Census data. Between January 2022 and May 2023, total monthly U.S. goods imported from Canada ranged from $31 billion to nearly $41 billion. Top commodity imports for May included mineral fuels, vehicles, and computer-related machinery. Holiday items, sneakers, apparel, and home goods are also being imported into Canadian ports for U.S. companies.

The U.S. and Canada have a historically strong trade relationship: Each country is the other’s top trading partner. Approximately 20% of U.S. trade arrives in the Canadian ports of Vancouver and Prince Rupert, where strikes broke out after union leadership and industry representatives failed to reach a deal before a cooling-off period expired. The Canadian Chamber of Commerce estimates $605 million in trade moves through one of those two ports daily.

During the strike, it was estimated that it would take three to five days for every day the strike lasted for networks and supply chains to recover, according to the Railway Association of Canada. With the strike ending on its thirteenth day, delays for rail containers can be anywhere from 39 to 66 days. This does not include the delays in vessels waiting to get processed, which would add multiple additional delays.

The British Columbia Maritime Employers Association said in a statement after the deal was announced that it “regrets the significant impact this labour disruption has had on the economy, businesses, workers, customers and ultimately, all Canadians. We must collectively work together to not only restore cargo operations as quickly and safely as possible but to also rebuild the reputation of Canada’s largest gateway and ensure supply chain stability and resilience for the future.”

ILWU Canada could not be immediately reached for comment.

Vessel diversions to U.S. continue

There are now five vessels identified by eeSea that diverted away from Vancouver to U.S. ports — the MSC Sara Elena, Ever Safety, COSCO Africa, Calandra, and MSC Brunella. These five vessels have been worked on by ILWU U.S. West Coast workers.

ILWU president Willie Adams, visited Canada a second time since July 4 to attend a union rally Sunday. He told CNBC in a recent statement that union workers will not serve any rediverted vessels, but there are situations in which it is difficult for union workers to know the origin of cargo.

Logistics managers have been able to reassign the destination of containers from Canada to the United States on vessels. It takes around five days for the changes to be made. U.S. Customs also needs to be alerted and approve the container. One way the union can be alerted to diverted containers is by the number of containers being unloaded on a vessel.

Vessels regularly arrive at the same ports and there is a ballpark number of containers that are unloaded. If 500 containers are normally unloaded, and the current port call now has 900, chances are there are diverted containers on the vessels. Other than that, it would be difficult for the ILWU to identify containers that had their final destinations changed because union workers do not have access to container information for security reasons.

The rash of vessels flipping their port schedules, leaving Vancouver for U.S. ports to supposedly go back to Vancouver has increased to nine, according to eeSea. The schedule can change after being discharged at the U.S. port service. It’s likely that many of the vessels that flipped their schedules will not go back to Canada. That is what happened with the MSC Sara Elena, which was worked on in Seattle. After the service, the carrier announced it would not be heading back to Vancouver, which means the Canadian-bound freight was unloaded or will be unloaded in future U.S. ports.

Key sticking points in the talks included the assignment of work to third-party companies and wages. The ILWU has stressed wages are not keeping up with inflation. It says the real purchasing power of longshore wages has fallen 2.5% since 2017, and longshore wages have grown slower than wages in the overall Canadian economy.

No terms of the deal were disclosed.

On Wednesday, the Bank of Canada raised its benchmark interest rate to a 22-year high, of 5%, and provided hawkish commentary about more hikes potentially being needed in its effort to fight inflation, even as consumer prices have come down from last year’s highs.

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Business

The #1 Skill I Look For When Hiring

Published

17 hours ago

September 17, 2024

Nick Kossovan

File this column under “for what it’s worth.”

“Communication is one of the most important skills you require for a successful life.” — Catherine Pulsifer, author.

I’m one hundred percent in agreement with Pulsifer, which is why my evaluation of candidates begins with their writing skills. If a candidate’s writing skills and verbal communication skills, which I’ll assess when interviewing, aren’t well above average, I’ll pass on them regardless of their skills and experience.

Why?

Because business is fundamentally about getting other people to do things—getting employees to be productive, getting customers to buy your products or services, and getting vendors to agree to a counteroffer price. In business, as in life in general, you can’t make anything happen without effective communication; this is especially true when job searching when your writing is often an employer’s first impression of you.

Think of all the writing you engage in during a job search (resumes, cover letters, emails, texts) and all your other writing (LinkedIn profile, as well as posts and comments, blogs, articles, tweets, etc.) employers will read when they Google you to determine if you’re interview-worthy.

With so much of our communication today taking place via writing (email, text, collaboration platforms such as Microsoft Teams, Slack, ClickUp, WhatsApp and Rocket.Chat), the importance of proficient writing skills can’t be overstated.

When assessing a candidate’s writing skills, you probably think I’m looking for grammar and spelling errors. Although error-free writing is important—it shows professionalism and attention to detail—it’s not the primary reason I look at a candidate’s writing skills.

The way someone writes reveals how they think.

Clear writing = Clear thinking
Structured paragraphs = Structured mind
Impactful sentences = Impactful ideas

Effective writing isn’t about using sophisticated vocabulary. Hemingway demonstrated that deceptively simple, stripped-down prose can captivate readers. Effective writing takes intricate thoughts and presents them in a way that makes the reader think, “Damn! Why didn’t I see it that way?” A good writer is a dead giveaway for a good thinker. More than ever, the business world needs “good thinkers.”

Therefore, when I come across a candidate who’s a good writer, hence a good thinker, I know they’re likely to be able to write:

Emails that don’t get deleted immediately and are responded to
Simple, concise, and unambiguous instructions
Pitches that are likely to get read
Social media content that stops thumbs
Human-sounding website copy
Persuasively, while attuned to the reader’s possible sensitivities

Now, let’s talk about the elephant in the room: AI, which job seekers are using en masse. Earlier this year, I wrote that AI’s ability to hyper-increase an employee’s productivity—AI is still in its infancy; we’ve seen nothing yet—in certain professions, such as writing, sales and marketing, computer programming, office and admin, and customer service, makes it a “fewer employees needed” tool, which understandably greatly appeals to employers. In my opinion, the recent layoffs aren’t related to the economy; they’re due to employers adopting AI. Additionally, companies are trying to balance investing in AI with cost-cutting measures. CEOs who’ve previously said, “Our people are everything,” have arguably created today’s job market by obsessively focusing on AI to gain competitive advantages and reduce their largest expense, their payroll.

It wouldn’t be a stretch to assume that most AI usage involves generating written content, content that’s obvious to me, and likely to you as well, to have been written by AI. However, here’s the twist: I don’t particularly care.

Why?

Because the fundamental skill I’m looking for is the ability to organize thoughts and communicate effectively. What I care about is whether the candidate can take AI-generated content and transform it into something uniquely valuable. If they can, they’re demonstrating the skills of being a good thinker and communicator. It’s like being a great DJ; anyone can push play, but it takes skill to read a room and mix music that gets people pumped.

Using AI requires prompting effectively, which requires good writing skills to write clear and precise instructions that guide the AI to produce desired outcomes. Prompting AI effectively requires understanding structure, flow and impact. You need to know how to shape raw information, such as milestones throughout your career when you achieved quantitative results, into a compelling narrative.

So, what’s the best way to gain and enhance your writing skills? As with any skill, you’ve got to work at it.

Two rules guide my writing:

Use strong verbs and nouns instead of relying on adverbs, such as “She dashed to the store.” instead of “She ran quickly to the store.” or “He whispered to the child.” instead of “He spoke softly to the child.”
Avoid using long words when a shorter one will do, such as “use” instead of “utilize” or “ask” instead of “inquire.” As attention spans get shorter, I aim for clarity, simplicity and, most importantly, brevity in my writing.

Don’t just string words together; learn to organize your thoughts, think critically, and communicate clearly. Solid writing skills will significantly set you apart from your competition, giving you an advantage in your job search and career.

_____________________________________________________________________

Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.

Business

Politics likely pushed Air Canada toward deal with ‘unheard of’ gains for pilots

Published

1 day ago

September 16, 2024

Anne Joseph

MONTREAL – Politics, public opinion and salary hikes south of the border helped push Air Canada toward a deal that secures major pay gains for pilots, experts say.

Hammered out over the weekend, the would-be agreement includes a cumulative wage hike of nearly 42 per cent over four years — an enormous bump by historical standards — according to one source who was not authorized to speak publicly on the matter. The previous 10-year contract granted increases of just two per cent annually.

The federal government’s stated unwillingness to step in paved the way for a deal, noted John Gradek, after Prime Minister Justin Trudeau made it plain the two sides should hash one out themselves.

“Public opinion basically pressed the federal cabinet, including the prime minister, to keep their hands clear of negotiations and looking at imposing a settlement,” said Gradek, who teaches aviation management at McGill University.

After late-night talks at a hotel near Toronto’s Pearson airport, the country’s biggest airline and the union representing 5,200-plus aviators announced early Sunday morning they had reached a tentative agreement, averting a strike that would have grounded flights and affected some 110,000 passengers daily.

The relative precariousness of the Liberal minority government as well as a push to appear more pro-labour underlay the prime minister’s hands-off approach to the negotiations.

Trudeau said Friday the government would not step in to fix the impasse — unlike during a massive railway work stoppage last month and a strike by WestJet mechanics over the Canada Day long weekend that workers claimed road roughshod over their constitutional right to collective bargaining. Trudeau said the government respects the right to strike and would only intervene if it became apparent no negotiated deal was possible.

“They felt that they really didn’t want to try for a third attempt at intervention and basically said, ‘Let’s let the airline decide how they want to deal with this one,'” said Gradek.

“Air Canada ran out of support as the week wore on, and by the time they got to Friday night, Saturday morning, there was nothing left for them to do but to basically try to get a deal set up and accepted by ALPA (Air Line Pilots Association).”

Trudeau’s government was also unlikely to consider back-to-work legislation after the NDP tore up its agreement to support the Liberal minority in Parliament, Gradek said. Conservative Leader Pierre Poilievre, whose party has traditionally toed a more pro-business line, also said last week that Tories “stand with the pilots” and swore off “pre-empting” the negotiations.

Air Canada CEO Michael Rousseau had asked Ottawa on Thursday to impose binding arbitration pre-emptively — “before any travel disruption starts” — if talks failed. Backed by business leaders, he’d hoped for an effective repeat of the Conservatives’ move to head off a strike in 2012 by legislating Air Canada pilots and ground crew to stick to their posts before any work stoppage could start.

The request may have fallen flat, however. Gradek said he believes there was less anxiety over the fallout from an airline strike than from the countrywide railway shutdown.

He also speculated that public frustration over thousands of cancelled flights would have flowed toward Air Canada rather than Ottawa, prompting the carrier to concede to a deal yielding “unheard of” gains for employees.

“It really was a total collapse of the Air Canada bargaining position,” he said.

Pilots are slated to vote in the coming weeks on the four-year contract.

Last year, pilots at Delta Air Lines, United Airlines and American Airlines secured agreements that included four-year pay boosts ranging from 34 per cent to 40 per cent, ramping up pressure on other carriers to raise wages.

After more than a year of bargaining, Air Canada put forward an offer in August centred around a 30 per cent wage hike over four years.

But the final deal, should union members approve it, grants a 26 per cent increase in the first year alone, retroactive to September 2023, according to the source. Three wage bumps of four per cent would follow in 2024 through 2026.

Passengers may wind up shouldering some of that financial load, one expert noted.

“At the end of the day, it’s all us consumers who are paying,” said Barry Prentice, who heads the University of Manitoba’s transport institute.

Higher fares may be mitigated by the persistence of budget carrier Flair Airlines and the rapid expansion of Porter Airlines — a growing Air Canada rival — as well as waning demand for leisure trips. Corporate travel also remains below pre-COVID-19 levels.

Air Canada said Sunday the tentative contract “recognizes the contributions and professionalism of Air Canada’s pilot group, while providing a framework for the future growth of the airline.”

The union issued a statement saying that, if ratified, the agreement will generate about $1.9 billion of additional value for Air Canada pilots over the course of the deal.

Meanwhile, labour tension with cabin crew looms on the horizon. Air Canada is poised to kick off negotiations with the union representing more than 10,000 flight attendants this year before the contract expires on March 31.

This report by The Canadian Press was first published Sept. 16, 2024.

Companies in this story: (TSX:AC)

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Business

Federal $500M bailout for Muskrat Falls power delays to keep N.S. rate hikes in check

Published

2 days ago

September 16, 2024

Anne Joseph

HALIFAX – Ottawa is negotiating a $500-million bailout for Nova Scotia’s privately owned electric utility, saying the money will be used to prevent a big spike in electricity rates.

Federal Natural Resources Minister Jonathan Wilkinson made the announcement today in Halifax, saying Nova Scotia Power Inc. needs the money to cover higher costs resulting from the delayed delivery of electricity from the Muskrat Falls hydroelectric plant in Labrador.

Wilkinson says that without the money, the subsidiary of Emera Inc. would have had to increase rates by 19 per cent over “the short term.”

Nova Scotia Power CEO Peter Gregg says the deal, once approved by the province’s energy regulator, will keep rate increases limited “to be around the rate of inflation,” as costs are spread over a number of years.

The utility helped pay for construction of an underwater transmission link between Newfoundland and Nova Scotia, but the Muskrat Falls project has not been consistent in delivering electricity over the past five years.

Those delays forced Nova Scotia Power to spend more on generating its own electricity.

This report by The Canadian Press was first published Sept. 16, 2024.

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