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Choke point: How the blockade movement has sent tremors across Canada’s economy and beyond – Financial Post

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Kevin Piper still operates a crane at the Port of Halifax, but with each passing day, there’s less and less work.

This week, one of the port’s largest customers, New Jerseybased Atlantic Container Line (ACL), started diverting its ships to ports in the United States after a rail blockade paralyzed much of Eastern Canada, leaving valuable cargo stranded on the docks in Nova Scotia.

“It’s amazing to me that this has gone on this long,” said Andrew Abbott, ACL’s president. “We’ve always sold clients on the fact that it’s easier (to ship) in Canada.”


Protesters block the Halifax port railway in Halifax, Nova Scotia on Feb. 11.

Laura Cutmore/via Reuters

Earlier this month, what started as a protest of TC Energy Corp.’s plans to build its Coastal GasLink pipeline through the traditional territory of the Wet’suwet’en First Nation in rural British Columbia set off a political and economic crisis that is wreaking havoc across the nation as far away as Halifax.

A clash between the Royal Canadian Mounted Police and protesters in Wet’suwet’en territory inspired others to set up blockades elsewhere, including one that started on Feb. 6 at a crucial choke point on a Canadian National Railway line in Tyendinaga Mohawk Territory, about 200 kilometres east of Toronto. Blocking that one spot has apparently managed to freeze freight traffic throughout almost all of Eastern Canada, and, in turn, hindering work at some of its ports.

The blockade is raising fresh questions about how easily a small group of protesters in a remote part of Western Canada have been able to paralyze the country’s economy

Canada’s rail traffic has been halted before, including at least twice in the past year because of a derailment in February 2019 and a CN labour strike in November. But the current crisis is entering its third week, outlasting the previous incidents, and there are few signs indicating that a resolution is just around the corner.

As a result, the blockade is raising fresh questions about how easily a small group of protesters in a remote part of Western Canada have been able to paralyze the country’s economy, and highlighting concerns about the vulnerability of the country’s infrastructure and its reputation in the world as a reliable economic partner even if the short-term economic fallout is small.


The blockade near Belleville, Ont., which started Feb. 6 shut down CN freight traffic in eastern Canada and VIA passenger services.

Lars Hagberg/AFP via Getty Images

Douglas Porter, chief economist at BMO Financial Group, said the blockades could pose longer-term damages, but it’s difficult to quantify the exact impacts of a rail stoppage.

“I do have to wonder if it will do some lasting damage to Canada’s brand, especially if this is not a one-off event,” he said.

The current blockades were sparked by the proposed construction of the Coastal GasLink pipeline, which would link up to a liquefied natural gas export terminal on the coast of British Columbia. Both the export terminal and the pipeline have drawn foreign investment, from Royal Dutch Shell and a consortium of investors led by U.S.-based private-equity firm KKR & Co. Inc., respectively.

Other energy pipelines, most notably the Trans Mountain Pipeline expansion, which would twin an existing pipeline to carry oil from Alberta to B.C.’s coast, have been slowed or stopped by protests and litigation in the past. Major executives such as Don Lindsey, the chief executive of Teck Resources Ltd., have said the status of such projects will influence whether his company invests in new projects in Canada.

Protests have occurred in the U.S., too, including one that started in 2016 in North Dakota where protesters used sit-ins and lawsuits to delay the construction of the Dakota Access Pipeline for months in hopes that it would be rerouted. More recently, there have been similar attempts in the northeastern U.S. to block the construction of gas pipelines.

It’s a network. If you clog a part, you clog the whole”

CN spokesman Olivier Quenneville

But Jim Bookbinder, a professor at the University of Waterloo in Ontario who studies transportation systems, said it’s important to remember that Canada essentially has only two rail systems: one operated by CN and another by Canadian Pacific Rail Ltd.

“We have two nationwide railways, but only two,” he said. “In the U.S., there’d be a half-dozen and it’d be pretty hard to blockade all of them.”

A CN spokesman declined to offer details, but said a blockade at just one spot affects the entire system.

“It’s a network,” Olivier Quenneville said in an email. “If you clog a part, you clog the whole.”

Bookbinder said that most businesses, even those dependent on a functional rail system for supplies, can withstand the impacts of a temporary stoppage in service because they may have excess inventory on hand or they can sustain paying more for a new source for short periods.

That adaptability is partly why economists aren’t sure about the macroeconomic impact of the current stoppages.

“The question is how long it lasts?” said Nathan Janzen, a senior economist at RBC.


Police serve an injunction to protesters at a rail blockade in St-Lambert, south of Montreal, Que. on Feb. 20.

Ryan Remiorz /

The Canadian Press

Janzen noted that the CN labour strike for one week in November inflicted only minimal damage on the economy. He estimates the strike may have lowered Canadian gross domestic product in November by less than one-tenth of a percentage point.

The small effect is largely because rail traffic accelerates once the stoppage clears up and the broader economy bounces back, even if some businesses suffer more acutely from the disruption.

For example, Saskatoon-based Nutrien Ltd., which mines potash in Western Canada, said the CN strike in November lowered its third-quarter earnings by $10 million, but that the current situation has had minimal impact so far.

The reliability of the Canadian supply chain is becoming a concern for us

Nutrien chief executive Chuck Magro to shareholders

“We don’t think it’s going to have an impact to our deliveries right now,” Nutrien chief executive Chuck Magro told shareholders this week, “but the reliability of the Canadian supply chain is becoming a concern for us.”

At the Port of Halifax, Abbott said the current “headache” may deter his customers from using it in the future, preferring instead to route goods through Baltimore and New York, and Piper, president of the International Longshoreman’s Association of Halifax, is worried other large customers, including the French shipper CMA CGM SA will follow ACL’s lead. Some, he fears, may not come back.

At the moment, new ships are still arriving in Halifax, but Piper said most are not bringing full cargo loads, and he estimates that work is down by 50 per cent.

Some cargo is being off-loaded onto trucks, a more expensive and slower way to move freight. There is also some cargo being loaded onto rails, but it is unable to move far from the port, Piper said.

Much of the cargo at the port, however, is just sitting around as everyone hopes for a resolution that will enable rail traffic to restart.

The slowdown at the Port of Halifax comes at a particularly bad time: the port had charted double-digit growth in traffic and added hundreds of jobs in recent years by marketing itself as the fastest way to move marine cargo into North America’s heartland.

“Our niche is time-sensitive cargo,” Piper said. “The thing with Halifax is, geographically, we’ve got an advantage over some of the ports in the U.S., because when things come into our port, it dumps onto a rail car and is on its way to Chicago before a ship could ever get to New York, Baltimore or wherever.”

Union workers have even staked their pensions — by agreeing to use their funds to provide financial rebates to ships that call there — to entice greater traffic to the port, according to Piper.

“That money could go back to our pockets, but we realized there’s a market here that we could entice shippers to go through Halifax,” he said. “What we lose through our pension, we make up in ship traffic.”

Of course, Halifax is not the only place in Canada that’s suffering. Protests near Toronto, Montreal, Vancouver and other cities have slowed traffic on various roads, and ports at times as well.


Wet’suwet’en hereditary chiefs arrive at the Mohawk Community Centre in Tyendinaga, Ont. on Feb. 21. The B.C. hereditary chiefs thanked the Mohawks for supporting them in opposition to a pipeline project on their traditional territory by blocking a critical rail line between Toronto and Montreal.

Reuters/Chris Helgren

The rail blockade in Ontario forced CN to shut down operations throughout Eastern Canada, temporarily laying off about 450 workers. Via Rail Canada Inc., which operates passenger trains on the same tracks, said it is laying off 1,000 workers until the rail line re-opens and is deemed safe again.

How a blockade in a single spot could affect ports hundreds or even more than 1,000 kilometres away, in Montreal and Halifax, stumps many economists and even rail experts, but it’s clearly something the pipeline protestors have realized they can do.

Although many of the protesters are driven by concerns about climate change, the recent protests have an added layer of complexity because they involve questions about Indigenous rights to traditional land.

The proposed Coastal GasLink pipeline cuts through traditional Wet’suwet’en land, which, like most of British Columbia, was never officially ceded by First Nations to the Government of Canada. Within the Wet’suwet’en community, there are factions that oppose and support the project, and there are unresolved questions about who can speak for the First Nations people.

Drew Fagan, a professor at the University of Toronto’s Munk School of Global Affairs and Public Policy, said the problem’s multiple layers — the protest in B.C. is related to historical grievances held by indigenous people as well as climate change — make it more intractable.

“This is what we call a super-wicked problem,” he said. “We talk about problems that are kind of squishy, not easily measurable, politically controversial, entangled with other problems, with no clear cause and no clear solution as wicked and this is super-wicked.”

• Email: gfriedman@postmedia.com | Twitter:

• Email: gmorgan@nationalpost.com | Twitter:

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Australia's economy likely contracted in Q3 but recovery expected soon – Financial Post

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BENGALURU — Australia’s economy likely contracted in the third quarter as fresh lockdowns weighed on consumer spending and investments, but the extent of the fall was milder than the historic recession recorded last year, a Reuters poll showed.

Despite Australia’s success last year in containing the COVID-19 virus, fresh flare ups and the stay-at-home rule imposed this year severely dented economic activity leading to job cuts and calls for a ramped-up vaccination drive.

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The Nov. 23-26 poll of 24 economists showed the A$2.07 trillion ($1.5 trillion) economy contracted 2.7% during the July-September quarter. Forecasts ranged from -3.8% to -1.9%.

If economists predictions were realized, it would mark a sharp turnaround in economic activity from the 1.8% and 0.7% expansion rates in the January-March and April-June quarters respectively.

“Extended stay-at-home orders in New South Wales and Victoria will have hit consumption, with services spending set to be particularly impacted,” said Felicity Emmett, senior economist at ANZ.

The year-over-year growth was estimated at 3.0% but that was over a decline of 3.6% in the third quarter last year, revealing no substantial growth.

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Data released by the Australian Bureau of Statistics on Thursday showed capital expenditure https://www.reuters.com/markets/rates-bonds/australia-q3-business-investment-slips-outlook-surprisingly-resilient-2021-11-25 fell a real 2.2% in the third quarter but an upgrade to future spending showed analysts were expecting a rapid recovery to take hold.

Construction activity too declined last quarter but at a much smaller rate than expected, showing a recovery was not far off.

“The fact investment held up pretty well, we expect GDP to surpass its pre-delta level this quarter. Consumption will probably rebound very sharply given lockdowns have now ended,” said Marcel Thieliant, senior Australia & New Zealand economist at Capital Economics.

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Despite the setback to economic growth last quarter, economists do not see that trend turning into a full blown recession.

With about 86% of Australia’s adult population now vaccinated and most restrictions eased, a swift recovery is anticipated on higher consumer spending.

“There is a saying that while history doesn’t repeat, it does rhyme. The pattern for GDP in the second half of 2021 is certainly rhyming with the middle quarters of 2020 – a sharp decline followed by a large bounce,” wrote economists at ANZ. ($1 = 1.3986 Australian dollars)

(Reporting by Shaloo Shrivastava; Polling by Md. Manzer Hussian and Devayani Satyan; Editing by Marguerita Choy)

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China's Economy Likely Remained Weak as Factories Slump – Financial Post

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(Bloomberg) — China’s manufacturing activity likely remained subdued in November, with weak domestic demand in the economy outweighing any relief that came from an easing in energy shortages.

The official manufacturing purchasing managers’ index is forecast to improve slightly to 49.7 from 49.2 in October when it’s released Tuesday, according to the median estimate in a Bloomberg survey of economists. That would be the third month it stays below the key 50-mark, indicating a contraction in production. 

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The non-manufacturing gauge, which measures activity in the construction and services sectors, is forecast to fall to 51.5 from 52.4 in the previous month. 

China’s energy shortages, which ravaged factory production in September and October, likely eased this month as coal producers boosted output and inventories rose. However, the housing market crisis shows no signs of ending, and frequent Covid-19 outbreaks continue to curb consumption.

“Supply-side restrictions have improved marginally, so production likely rebounded somewhat,” said Xing Zhaopeng, senior China strategist at Australia & New Zealand Banking Group Ltd. But there’s “not much positive signal on domestic demand,” which continued to weigh on activities, he said.

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Economic growth is forecast to slow to 5.3% next year, according to a Bloomberg survey median, with some economists seeing expansion as low as 4%. Bloomberg Economics forecast growth will come in at 5.7%, as the government will likely target a 5-6% range.

What Bloomberg Economics Says…

“In 2021, policy played a secondary role in setting the growth trajectory. In 2022, it will be pivotal. The extent of the slowdown will hinge largely on what balance China strikes between supporting short-term growth and advancing long-term reforms.

…We see the People’s Bank of China cutting the interest rate on its one-year medium-term lending facility by 20 basis points and the reserve requirement ratio by 100-150 bps by end-2022.”

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— Chang Shu and David Qu

For the rull report, click here

Authorities are trying to moderate the sharp downturn in the property market, while providing targeted support to areas such as small businesses and green technology. Officials will reveal more clues on how much policy easing they plan to provide during two key political meetings in December by the Politburo and the Central Economic Work Conference.

China will adopt a more proactive macroeconomic policy next year to respond to the challenges from an uneven recovery of the global economy and instability in containing the pandemic, the Securities Times, run by the People’s Daily, said in a front-page commentary Monday. 

Authorities have exercised restraint in using monetary and fiscal tools amid an economic slowdown this year, thus creating sufficient space for policy maneuvering next year, according to the commentary.

The slowdown is being cushioned by strong export demand, which likely remained solid in November, judging by latest shipment figures from South Korea.

Consumption and travel continues to be affected by a resurgence in virus cases and the country’s growing determination to stick to its strict Covid Zero strategy. Subway passenger traffic in six major cities of China declined less than 10% in November from October, though the plunge is smaller than that over the August outbreak, according to Xing. 

©2021 Bloomberg L.P.

Bloomberg.com

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China's Economy Likely Remained Weak as Factories Slump – Bloomberg

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China’s manufacturing activity likely remained subdued in November, with weak domestic demand in the economy outweighing any relief that came from an easing in energy shortages.

The official manufacturing purchasing managers’ index is forecast to improve slightly to 49.7 from 49.2 in October when it’s released Tuesday, according to the median estimate in a Bloomberg survey of economists. That would be the third month it stays below the key 50-mark, indicating a contraction in production. 

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