Shippers moving freight between the U.S. and Canada on trucks may be faced with lengthy border delays as soon as Friday unless the Canadian government reaches a new labor deal with its border agents.
The two parties, which are currently in mediated talks, have been operating without a contract for over two years. However, a majority of the 9,500 members of the Public Service Alliance of Canada, the union representing border agents, last month authorized a strike in case a deal is not reached.
As many border agents are deemed essential workers in Canada, the country's border cannot be fully shut down by labor actions. Still, logistics experts say the labor negotiations pose a risk for supply chains, as failed contract talks could result in severe productivity declines, which could lead to slowdowns and delays at key border crossings.
Any trade disruption would disproportionately impact the agriculture industry, which is already bracing for the potential of rail strikes at Canadian National Railway and Canadian Pacific Kansas City. Highly perishable shipments that need to be speedily delivered would likely be at risk, potentially impacting food prices.
Here's what industry experts say shippers can expect and potential workarounds if no deal is reached before Thursday.
What is the immediate impact if there is no new labor agreement?
Shippers can expect lengthy delays due to longer processing times at Canadian border crossings like what occurred during the last contract dispute in 2021, according to Mike Burkhart, VP of North American Surface Transportation C.H. Robinson Worldwide. He oversees the broker’s transportation operations in Canada and Mexico.
“The biggest impact would be on freight traveling into Canada by truck, because a border agent must physically be present to review the customs paperwork and scan the barcode on it,” Burkhart wrote in an email to Supply Chain Dive. The brokerage manages more than 650,000 shipments across the Canadian border annually.
A slowdown in the process could lead to wait times of four to five hours, which was the case during the 2021 strike, Burkhart said.
Those delays would be felt quickly on supply chains, including agriculture, which depends on fast and timely shipments to prevent product spoilage.
But it wouldn’t stop there. The ripple effect from a work slowdown would be felt across all freight transportation modes as ocean, air and rail shipments could be delayed by a strike if they’re flagged for inspection, Burkhart said. Some shipments are automatically flagged for spot checks, and there are also triggers indicating an inspection is needed for shipments deemed high-risk.
“Under normal conditions, customs will inform us they’re sending an inspector out in 24 hours to two weeks,” he said. “During a strike, that could become much more unpredictable.”
Even at this late stage what can shippers do to mitigate service disruption?
Jason Mansur, VP of enterprise partnerships at Valley Companies, a Hudson, Wisconsin-based broker, said his firm has been preparing clients since early May, but expects more urgent requests to emerge in the coming days.
While Mansur predicted an agreement may be reached quickly, given the billions of dollars trade in the balance, he noted a prolonged strike could lead to a backlog that could take days or weeks to clear.
“If the business hasn’t prepared for it then they need to react accordingly,” Mansur said in an email. “If shippers aren’t ahead of the game now, it’s imperative to put a plan into action.”
That may include oversupplying vendors and clients in short order as well as alternative shipping options including aligning with air freight providers and working with supply chains to adjust timelines to accommodate shipping delays, Mansur said.
Burkhart said shippers should be working on contingencies now. Options could include routing freight away from busier crossings like the Detroit-Windsor tunnel and planning more shipments outside of peak travel times.
Another strategy would be to move non-time-sensitive freight to rail and minimize the amount of freight shipped on trucks, he said. Air shipping should be considered for high-value or urgent freight.
“It’s better to be prepared than to start scoping out your alternatives only after a strike starts,” Burkhart said.
Sarah Zimmerman contributed to this report.
