Shippers and forwarders are relieved, but some wonder whether the Port of Montreal’s concerns are over.
Canada’s second-largest port was back operating again last week after a sudden five-day lockout of longshoremen by employers. Operators scrambled for alternatives, and diverted five ships to the Port of Halifax, Nova Scotia, closer to the Atlantic trade lanes than Montreal but remote from the established landside supply chains that serve Montreal.
Over the longer term, some believe the attractions of the Port of New York and New Jersey were not lost on those depending on Montreal to handle their cargo.
|Montreal serves primarily central Canada and the U.S. Midwest and, to a smaller extent, the U.S. Northeast. What would an alternative gateway be for shippers now using Montreal? “It’s easy to say Halifax, but it’s easier to say New York,” said Christopher Gillespie, president of the forwarder Gillespie and Munro.
Most of those concerned with shipping through Montreal see obvious immediate costs to the port’s first break in labor relations in 15 years, but nothing very major. For the future, however, some are concerned about the port’s reliability.
Five container vessels were in port July 26 or were scheduled to arrive that day. Longshore workers and employers resumed failed contract negotiations under an agreement to remain peaceful at least until mid-October; something close to normal operations had begun.
Trains moved out to Toronto, Detroit and Chicago with import cargo, including large components such as engines and drive trains for U.S. and Canadian automobile assembly plants. “In this case, the subject components were critical to the new model start-ups at a number of plants in both Canada and the U.S.,” Mark Nantais, president of the Canadian Vehicle Manufacturers Association, told The Journal of Commerce.
“Many key auto components enter Canada at that point (Montreal),” Nantais said. “Several manufacturing plants, having just completed new model changeovers, were expecting to reopen over the next couple of days.” The Canadian Vehicle Manufacturers Association represents Ford, General Motors and Chrysler in Canada and truck and bus maker Navistar Canada.
Canadian Pacific Railway, the main rail carrier serving Montreal, and Canadian National Railway, resumed export cargo shipments from inland terminals to Montreal and delayed imports to Canadian and U.S. destinations.
Underused Halifax handled five diverted container ships after the Montreal branch of the Maritime Employers Association locked out 850-plus longshoremen of the Canadian Union of Public Employees. However, Gillespie believes Halifax is not necessarily the best alternative to Montreal, because it is tied to just one railroad, Canadian National.
“Halifax is the first thought,” he said. “But when the low-water issue came up (shipping lines sometimes levy low-water surcharges when permissible drafts are lowered at Montreal), we started moving cargo to Halifax . . . and the railway just couldn’t accommodate it.
“We move a lot of cargo to New York now, tens of thousands of tons of commodity cargo being railed down there and loaded into containers and shipped out,” Gillespie said.
William Gottlieb, president of David Kirsch Forwarders, said two ships were manifested to Montreal, re-manifested to Halifax, and re-manifested back to Montreal. He said he hoped charges for repositioning and enforced storage would be kept to a minimum.
“We hope everyone licks their own little wounds and doesn’t stick it to the customers,” he said. Railways and shipping lines had suspended demurrage and other storage charges during the lockout but resumed them last Monday.
“Rates are going up, and space is at a premium on many routes,” Gottlieb said.
Negotiations for a contract to replace the 2005 agreement that expired at the end of 2008 began July 26 under federal mediation, with a mid-October target deadline. It should be resolved before then because the one big issue is the one behind the employer lockout in the first place.
The MEA unilaterally broke the agreement clauses providing job security and guaranteed pay for 107 of the total longshore work force, so these workers would turn out to load or unload vessels at any time. It gave three days’ notice to the union, and the union responded by stopping overtime work. The MEA then answered with a lockout citing union “pressure tactics.”
Both sides have rescinded “pressure tactics” until an agreement is reached.
Twenty-seven trade and transportation associations remain concerned “about the reliability of the Port of Montreal going forward,” said Jean-Michel Laurin, vice president of the Canadian Manufacturers and Exporters.
“Member companies were saying not only that Canadian operations would be affected, but actually the first impact would be felt in the United States,” Laurin said. “The first calls were worries about exports to Europe, missing deadlines and having to pay penalties, but then came the calls about imports. The auto sector was one of the key sectors that was going to be impacted.”
For many years, half the containers handled at Montreal — the port now sees more than 1.25 million loaded TEUs — were shipped to or from the U.S. That ratio has declined with increased cargo from Canada, but is still well in the 40 percent range.
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