Skip to content

Railway shipments plummet amid B.C. port strike, hurting small businesses

Freight volume metric fell 60 per cent in the first week of the job action
Signs displaying “closed” are seen at the Centerm Container Terminal during a strike by International Longshore and Warehouse Union Canada workers, at the port, in Vancouver, B.C., Tuesday, July 11, 2023. Railways are facing a sharp drop-off in container shipments as the strike by B.C. port workers halts more than half of steel-box cargo. THE CANADIAN PRESS/Darryl Dyck

Railways suffered a sharp drop-off in container shipments this month as the strike by B.C. port workers halted more than half of steel-box cargo.

Canadian National Railway Co.’s revenue ton miles — a key industry metric used to gauge income and freight volume — fell 60 per cent in the first week of the job action, according to RBC Dominion Securities analyst Walter Spracklin.

The figure dropped by 45 per cent at Canadian Pacific Kansas City Ltd.

The plunge left the number of containers hauled by Canadian railways last week at barely half the level it reached during the same period in 2022, according to the American Railroad Association.

The corrugated metal boxes, which carry everything from consumer products to auto parts, mark a critical source of cash for Canada’s two main railways, comprising roughly one-quarter of annual revenue.

The International Longshore and Warehouse Union Canada and the BC Maritime Employers Association have until 10:30 a.m. PDT on Thursday to decide if they will accept a federal mediator’s recommendations to end the port strike.

Some 7,400 waterfront workers walked off the job on July 1, with wages, automation and contracting out as the key sticking points in negotiations. The job action has halted shipments in and out of about 30 ports in B.C., including the Port of Vancouver — Canada’s largest.

Spracklin said the plummeting container cargo would likely impact railway earnings, as CN has 37 per cent of its total carloads originating in Vancouver and Prince Rupert, B.C. About 20 per cent of CP’s shipments roll through Vancouver docks.

“That said, we note that in the past, external disruptions including cold weather, blockades, and strikes have not affected share prices or valuation at the Canadian rails, despite the resulting (temporary) negative impact on quarterly results,” he said in a note to investors.

The effect of stalled containers rippled beyond the tracks, hitting small business owners particularly hard. The Canadian Federation of Independent Business said earlier this week that more than half of businesses it surveyed will see their operations affected by the strike.

Paul Edgerton, founder of PureLite Glass in Ajax, Ont., said 60 per cent of the materials he uses to make windows for homes and commercial buildings come from Asia via the West Coast.

“That’s already starting to run out,” he said. “And the recovery period is going to be at least four weeks.”

Of equal concern are the manufacturer’s 21 employees. “How am I going to help them feed their families and pay their bills when I can’t make a sale? Because I have no product to sell.”

The materials PureLite uses on range from glass to polysulfide and silicone, all of it imported.

“Many of our forwarders, they’ve taken the vessel name completely off of the bill of lading. So we don’t even know what boat it’s going to go on — there’s no date when it’s going to arrive,” Edgerton said.

Components from alternate source countries such as the United States are either unavailable or “through the roof in price.”

“It has a tremendous impact,” he said — even if the strike is resolved Thursday.

READ ALSO: Union and employers consider mediator’s deal that would end B.C. port strike