U.S. Labor Strife Providing a Boost to West Canadian Ports

Canadian ports, like the port of Prince Rupert, are finding success as a shipping alternative to American ports troubled by a possible longshoremen strike.

Shipping ports in the Western United States have been seeing some trouble brewing from labor disputes as well as the severe congestion of local railways. The Canadian port of Prince Rupert is seizing this opportunity by the horns. Prince Rupert is a remote western Canadian port most well known for its slogan "Where Canada’s Wilderness Begins."

With a possible longshoremen strike looming on the U.S. West Coast container ships sailing across the northern Pacific are setting course for British Columbia to avoid delays. These ships are carrying more cargo than ever and traffic in Prince Rupert has exploded 49 percent in July over last year, according to data compiled by Bloomberg Intelligence. In contrast, the port of Seattle - the port of Prince Rupert’s closest major U.S. rival, saw its traffic volume plummet 19 percent (year over year) in July 2014.

Container traffic has seen a steady increase in volume on both sides of the North American continent. The increase in container demand is a strong indicator of the strength of the rebounding U.S. economy. However, as issues still remain in U.S. ports Canadian shipping companies are poised to take advantage of the situation. The Montreal based, Canadian National Railway Co., for example, is one of the best positioned companies to benefit from the added traffic as it has connection exclusivity with Prince Rupert. Furthermore, Canadian National Railway Co.’s rail lines are the linchpin in making the port the fastest sea-and-land route linking East Asia and the Midwestern United States, according to the Prince Rupert Port Authority.

Another advantage Prince Rupert touts is the ability to transfer inbound containers directly onto trains, rather than routing them on trucks through distribution centers, something other West Coast ports must do. This type of shipping, known as inter-modal freight, which uses different modes of transportation is soaring for Canadian National. The company’s inter-modal revenue has seen a 17 percent increase to $654 million in the second quarter.

However, not all is coming up roses for Prince Rupert. With the increased traffic, the Canadian port has seen some growing pains. Earlier this month, the amount of time that containers sat on the dock waiting to be loaded onto trains rose to approximately ten days, compared with about two days under normal conditions. And, like any other business, the question remains whether Prince Rupert will be a victim of its own success; or they will rise to meet the challenge of new customers.