Canada Rail Lockout: Will Container Ships Be Diverted?
Will container ships divert to alternative ports in the United States with the worker lockout at Canada’s two big railroads? Here’s the immediate forecast:
Current situation
August 22, 2024: Despite the lockout of rail workers in Canada, ocean carriers are still likely to continue calling at Canadian ports and hesitate diverting ships too quickly. This is due to longer distances, spill-over congestion, and different tariffs in the United States.
Note: About 66% of cargo arriving at the Port of Vancouver is moved by rail to final destinations in Canada or in the U.S. Midwest.
Diversions may increase
However, some carriers including Hapag-Lloyd have started to review more than 4 vessels bound for Canadian ports that were supposed to arrive after August 24. Should the rail lockout not be resolved quickly, many more container ships might be under review and diversions to U.S. ports such as Seattle-Tacoma, Oakland, and Los Angeles-Long Beach will start to pick-up.
The most impacted goods shipped via rail would be fertilizer, iron ore, grain, cement, salt, potash, coal, cars, wood/timber as well as containers loaded with consumer goods or intermediate parts.
Comparison to 2023 strike in British Columbia
During the 13-day port strike on Canada’s west coast in 2023, more than 17 container ships were eventually diverted to other ports, with many more having been forced to wait at anchor, causing substantial delays. It took several months before the backlog could be cleared.
Risk of solidarity by U.S. West Coast ports
Another risk for ship diversions is that dockworker unions on the U.S. West Coast could decide to not unload Canada-bound cargo out of solidarity with a union of longshoremen in British Columbia that is also threatening to strike, pending a vote by a local of the International Longshore & Warehouse Union.
This situation happened during the port strike in 2023, causing heavy delays for Canada-bound cargo that was left in limbo for two weeks.