Closing two ports risks more damage to Canada's economy: business groups

Business groups are raising concerns about the broad impact of a new round of labor disruptions in the transportation sector as Canada faces closures at its two largest ports.

Dennis Darby, president and CEO of Canadian Manufacturers & Exporters, said the twin work stoppages in Vancouver and Montreal come at a challenging time as businesses face a year-end crisis, while the U.S. election results have heightened the need to be seen as a reliable trading partner .

“We are in a very difficult situation,” he said on Monday.

The closures come after operations of Canada’s two main railways were halted in August until the government intervened, while B.C.’s ports and the St. Lawrence Seaway were disrupted last year, prompting Darby to say the country would need a new approach to the sector.

“We just can’t keep repeating this because it puts you at a disadvantage.”

He said the incoming US administration will focus first and foremost on America and look for partners to help stimulate the economy. Canada must therefore be particularly aware of the broader implications of these types of disruptions.

Between $400 million and $800 million a day in goods are not moving due to the strikes, posing risks to the entire economy, Darby said. For example, last year’s 13-day port strike in British Columbia noticeably reduced GDP growth, he said.

The disruptions will have a more immediate impact on manufacturers who rely on critical parts coming into Canada, he said, while consumers will feel the pinch if it continues.

The Canadian Chamber of Commerce estimates the total value of disrupted goods is even higher: well over a billion dollars a day, said Pascal Chan, senior director of transportation, infrastructure and construction. He added that the closure of the two ports also damages the country’s reputation.

“With simultaneous disruptions occurring at our major ports on the East Coast and West Coast, we are effectively advertising to the world that Canada is closed for business,” he said in a statement.

Chan called on the government to intervene and end the disputes.

Labor Minister Steven MacKinnon said last week that both negotiations were progressing at an insufficient pace, while on Monday he urged all involved to work something out.

“The parties must understand the urgency of the situation and do the work necessary to reach an agreement. Canadians are counting on them.”

The Maritime Employers Association locked out longshore workers on Sunday evening, after union workers voted almost unanimously to reject a contract offer submitted last week.

The Port of Montreal said essential services will continue, with liquid bulk terminals and the grain terminal remaining open.

The closure in Montreal comes after a separate labor dispute halted container freight shipping at British Columbia ports last Monday.

Negotiations in B.C. resumed on Saturday, but talks quickly broke down without making any progress, the BC Maritime Employers Association said.

Because grain shipments are not affected by the strikes, there is less political pressure to intervene, said Barry Prentice, director of the University of Manitoba’s Transport Institute.

But the shutdowns, part of a series of disruptions, could affect longer-term investment decisions, he said.

“If you have a reputation for being unreliable, then that’s not good for people who want to consider investing in this country or doing business with this country.”

Port of Montreal CEO Julie Gascon warned that the closure will have “catastrophic” consequences if it continues, and that shippers will turn away from Montreal in favor of U.S. ports.

“It’s our reputation at stake,” she said.

This report by The Canadian Press was first published Nov. 11, 2024.