A strike has shut down all shipping on the St. Lawrence Seaway, a key artery that moves tens of thousands of metric tons of cargo daily between the Great Lakes and the eastern seaports of the U.S. and Canada.
Since last Sunday, around 360 employees of the St. Lawrence Seaway Management Corp. (SLSMC), the Canadian not-for-profit company that manages the waterway, walked out on their jobs in a dispute over wages.
Despite the small number of people on the picket line—compared with the thousands of UAW members of the auto industry—the Seaway workers’ strike is dealing a blow to the U.S. and Canada economy as millions of dollars worth of goods are stuck at ports.
The SLSMC and Unifor, the union representing the striking workers returned to the negotiation table on Friday. In an email to Barron’s, the SLSMC says it’s “hopeful” that the Canadian government will help mediate and bring a “swift resolution” to the strike.
“We remain open to discussion and hope that the employer will reconsider its position for the good of all,” Unifor Quebec Director Daniel Cloutier said in a press release this week. Unifor says it won’t comment further until talks have wrapped up.
Barron’s took a look at the Seaway’s traffic data to see which industries could be affected the most if a resolution isn’t reached soon.
The St. Lawrence Seaway stretches more than 2,300 miles from the Atlantic Ocean to the western tip of Lake Superior in Minnesota and Wisconsin, consisting of a network of locks, canals, and ports along the rivers and lakes. Striking workers operate infrastructure on the Canadian side.
Last year, cargo-loaded vessels sailed through the Seaway more than 2,000 times, moving over 36 million metric tons of goods. Those commodities, valued at nearly $13 billion, have brought the SLSMC nearly $78 million in toll revenue, according to the company’s reports.
Mined products are a major group of cargo moving through the Seaway. In 2022, iron ore was the most transported commodity, making up 17% of the total tonnage. Salt made up 9%, while coal and petroleum coke each accounted for nearly 5%, according to data from SLSMC.
“There’s a lot of iron ore that’s mined in eastern Quebec and brought by ship to the west to steel mills in the Great Lakes,” says Steve Fisher, executive director of the American Great Lakes Ports Association (AGLPA), a trade group representing the U.S. commercial ports and users on the Great Lakes.
Hamilton, Ontario, located just west of Toronto, is a big steelmaking center in Canada, he said, while the U.S. has many steel mills in Cleveland, Detroit, and northwest Indiana.
Another major group of cargo shipped through the Seaway are agricultural products. Wheat made up 14% of the total tonnage in transit last year, followed by soybeans and corn, accounting for 7% and 4%, respectively, according to SLSMC data.
Many agricultural products from the Midwest of the U.S. and Canada are loaded for export at Great Lakes ports, and then moved by ships through the Seaway to overseas markets, often to Africa, the Mediterranean, Europe.
“The conflict in Ukraine has already affected the supply of grain, and now North American grain is not moving. This could further affect consumers around the world,” says Jason Card, director of communications at the Chamber of Marine Commerce (CMC), a nonprofit association representing more than 100 marine industry stakeholders.
Automakers and auto parts manufacturers in the Great Lakes region, which imports processed steel products like sheet metal from overseas, has also been impacted. A lot of steel products are also imported to be reheated and shaped in the region’s steel mills to fit different uses.
The strike, which started on Sunday, has shut down 13 Canada-controlled locks between Lake Erie and Montreal, and already affected more than120 vessels carrying over 635,000 metric tons of cargo, according to the SLSMC.
“Right now, the grain that feeds the world is not moving; salt used to maintain safety on roads in winter is not moving; iron ore to support steelmaking and the auto sector is not moving; and construction supplies used in the building of homes and infrastructure are not moving,” says Card. “This strike has the potential to have serious impacts on the quality of life in North America and around the world.”
While companies might have some inventories in stock to muddle through a week, if the strike lasts longer, things could “become problematic very soon,” says AGLPA’s Fisher.
Some companies are already making plans to reroute their ships to alternative ports on the East Coast, and then transport the goods to the Midwest by truck or rail, he told Barron’s. That, however, would mean much higher costs.
A prolonged strike would also put jobs at risk. About 67,000 people are employed directly or indirectly through the shipping activities at the Seaway, according to a July study by maritime consulting firm Martin Associates. Those jobs provided $4.2 billion in annual wages.
“These [idled and rerouted] ships were going to come to our ports and create jobs here. We have longshoremen that unload the ships and truck drivers that move the cargo to the nearby businesses. They are paid by the hour, and all that is lost,” says Fisher.
CMC estimates that the strike’s impact on the U.S. and Canadian economies alone could be as much as $72 million a day and is set to increase if the strike prolongs.
Many impacted companies feel frustrated about the slow progress in the labor dispute, says Fisher, who is calling for the Canadian government to step in to facilitate a more effective conversation.
Even if the negotiations fail, the Chamber of Marine Commerce expects the government to take “immediate action” to restore traffic on the Seaway.
“This is one of the busiest times for traffic on the Seaway, and the longer the strike drags on, the more marine shipping capacity for this year will be lost,” says CMC’s Card.
Write to Evie Liu at [email protected]
Read the full article here