Port of Montreal is a key international and domestic gateway of critical importance to the Canadian economy.
It is the second largest container port in Canada and the largest on Canada’s East Coast. The Port handles $275 million worth of cargo daily, and supports more than 19,000 direct and indirect jobs.
The economic impacts of the pandemic has already placed our transportation system under unprecedented stress. Canadian ports, rail lines, and trucking companies are working at full capacity to keep goods available for Canadians.
In this context, the strike at the Port of Montreal is especially harmful to the Canadian economy. Every week, the strike at the Port of Montreal is estimated to cost the Canadian economy between $40 million and $100 million in permanent losses.
Negative economic impacts from the labour situation at the Port of Montreal were visible long before the start of the full strike declared on April 23. With last August’s strike temporarily addressed with a truce, and not a new collective agreement, maritime shippers and rail carriers had begun to avoid the Port of Montreal.
Container traffic at the Port had fallen by about 10% by March, 2021.
The situation further deteriorated with the start of the partial strike on April 13, which reduced the Port’s capacity by 30% or $90 million worth of cargo per week. Canadian exporters struggled to secure transport for their products, and containers accumulated at the Port.
The strike at the Port of Montreal is only the latest disruption in an exceptionally challenging time for the transportation sector and the Canadian economy.
Over the last two years, shippers and Canadian businesses have absorbed impacts from international trade tensions, rail blockades, lockdowns, major container shortages, the blockage of the Suez Canal, and a protracted and historic economic crisis due to COVID-19.
The transportation system is foundational to the health of the Canadian economy. Disruptions in the transportation network cause cascading negative economic effects across the entire country. These negative impacts have been accumulating, with each new disruption causing profound, and in some cases irreparable, damage.
Although the local economy of Montreal is hardest hit by the strike, losses are being profoundly felt across Quebec, Ontario, and beyond, due to the nature of Canada’s integrated transportation system. Even companies that do not use the Port of Montreal are experiencing negative impacts– their goods are being affected by disruptions in railyards hundreds of kilometers away.
These negative impacts disproportionately hurt small and medium businesses. Many large corporations have secured alternative shipping arrangements through other ports. Small and medium enterprises in Québec and Ontario do not always have the resources to do the same.
Many of these small and medium businesses have already seen lower revenues and higher costs due to the pandemic. Some have signaled they may need to close.
Consequences are particularly profound for key sectors and critical infrastructure, such as time-sensitive food and medical products that are key to the quality of life of Canadians:
Hospitals and drug manufacturers could quickly face shortages of dialysis products and ingredients required for the production of key medications, including medicines necessary for the treatment of severe physical and mental conditions.
It is not practical to only move critical goods. As of yesterday (April 29), no critical containers were being moved. There were 15 critical containers on the dock, and 121 critical containers on ships destined for the Port of Montreal, for a total of 136 critical containers impacted by the strike. These critical goods include COVID-related products, high-priority medical equipment, and pharmaceuticals.
Millions of Canadians rely on the Port of Montreal for food imports. As the strike continues, millions of dollars of fresh produce will spoil, causing higher costs and food insecurity.
Agricultural producers will soon struggle to obtain key fertilizers critical for spring planting, which is needed to produce food for Canadians. If fertilizer does not arrive on time, farmers will be forced to plant their crops late, which will shrink Canada’s harvest and cost farmers millions of dollars in lost income.
Canada’s automotive industry depends on just-in-time supply chains, with the Port of Montreal as a key gateway for engines and other vital components. The strike threatens the uninterrupted operation of Canada’s automotive factories.
Canada’s forest industry has already spent tens of thousands of dollars to reroute shipments, often through U.S. ports. This makes Canadian exports less competitive and hurts local companies.
The construction industry, which employs close to 1.5 million people, stands to be a key partner in Canada’s economic recovery. However, the strike is occurring at the beginning of the construction season, which threatens companies’ ability to secure materials, and complete projects on time and on budget.
The longer this disruption lasts, the greater the economic damage.
Some of these negative effects were on full display during the previous strike at the Port on Montreal in August, 2020:
Critical goods, including key medical products, were stranded at the Port of Montreal for days.
The transportation system was unable to cope effectively. Alternative ports, such as Halifax and Saint John, did not have the spare capacity to manage the surge in traffic, as companies attempted to reroute orders away from Montréal. Rail lines from these ports were at full capacity, and trucking companies could not keep up with demand.
The Canadian Federation of Independent Business estimated that 40% of SMEs in Quebec were impacted.
[ATIP redacted]
The Forest Products Association of Canada estimated that the forest products industry suffered [ATIP redacted]
The strike cost wholesalers approximately $600 million in lost sales.
Even after the strike ended, it took three months to clear the backlog of containers. The impacts of even relatively short disruptions can last for months.
Furthermore, this labour disruption, the second in less than a year, is damaging Canada’s reputation as a reliable trading partner.
As the economy recovers from the effects of the pandemic, Canada’s ability to attract investment and create jobs has never been more important.
A strong transportation system reinforces the growth of a healthy economy. It is critical that Canada’s transportation system remains open, efficient, and fluid. It is critical that the Port of Montreal continues to serve Canadians at this time.
