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CANADA RAIL ROAD STRIKES TO HAVE MAJOR IMPACT ON BOTH IMPORTS AND EXPORTS
August 9, 2024

Online freight shipping marketplace and platform Freightos said in a new report that a possible strike of nearly 10,000 Canadian rail workers represented by the Teamsters Union could disrupt the country's imports and exports, especially ahead of the peak season.

 

Freightos said the rail workers may strike early next week, pending a ruling by the Canada Industrial Relations Board (CIRB) on Friday, August 9.

 

The dispute involved the Canadian National Railway Company (CN) and Canadian Pacific Kansas City Limited (CPKC) over issues related to working conditions, wages, and fatigue management.

 

"A strike or lockout could greatly affect both imports and exports in Canada. Importers and exporters looking to get cargo moving will need to resort to other modes of transport to move their goods," Freightos said in a statement, adding that the CIRB will determine what essential services, if any, will be required to move if a stoppage of work goes into effect.

 

According to the Railway Association of Canada, Canadian railways transported half of the country's exports in 2022, totalling more than $276 billion worth of goods.

 

Significant impacts could be felt across many industries, including the agriculture sector, an industry that relies heavily on rail to transport goods.

 

The online freight shipping marketplace and platform noted that moving goods within the country would be primarily supported by transloading and trucking goods to final destinations.

 

"These solutions would be costly and time-consuming, however, and are not a long-term strategy for most importers," Freightos said, noting that both CN and CPKC are firmly committed to reaching a negotiated agreement that prevents any work stoppage.

 

In terms of ocean freight Trans-Pacific Eastbound (TPEB), from Asia to North America, Freightos said volumes remain strong, exceeding last year's numbers on the Transpacific route.

 

"We're seeing structurally blank sailings due to Cape of Good Hope (COGH) routings and port congestion in Asia and North America. Due to weather conditions around the COGH, please expect further delays and capacity challenges en route to the US East Coast (EC)," the report said.

 

It added that since extra loader (XL) space was injected into the Transpacific trade lane, there's been "less space pressure" on the US West Coast (WC), specifically the Pacific Southwest (PSW), from China's main ports.

 

Meanwhile, it added that on a positive note, water levels at the Gatun Lake in Panama have recovered, and local authorities have softened the Panama Canal's weight restrictions.

 

For ocean freight Far East Westbound (FEWB) from Asia to Europe, Freightos noted that THE Alliance announced three more void plans for September due to vessel delays, continuously impacting available capacity in the market.

 

It said that demand for the last week of August and early September has slowed down a bit compared to the June and July market. Floating rates remain on the higher side, and with blank sailings in place, the outlook for space remains tight.

 

Freightos added that long-term named account business remains restricted by carriers for space and equipment priority.

 

"For urgent cargo with a target delivery date, we recommend selecting premium options as soon as possible for an earlier estimated time of departure (ETD) and space with higher equipment priority," the report said.

 

Freightos said for the Trans-Atlantic Westbound (TAWB) trade lane—from any major port in Europe to the United States, the congestion in the Mediterranean and North Europe, along with schedule reliability issues and blank sailings, remains the same, leading to increased rates for September 1.

 

Equipment deficits in certain areas of South/East Germany and the Hinterlands also remain an issue. At German ports, there are no further strikes expected so far.

 

"Of primary concern is the potential strike in the US," Freightos said.

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