Canada Markets

Despite today's quiet holiday trade and this season of good cheer, a tense situation is brewing within the U.S. Pacific Northwest grain terminals, an area which ships about 25% of the United States grain exports worth billions of dollars.

At stake now is largely potential terminal upgrades and automation that will reduce overall labor requirements at terminals owned by Louis Dreyfus Commodities at Seattle, Wash. and Portland, Ore., a terminal owned by United Grain Corp at Vancouver, Wash. and a Columbia Grain facility in Portland. A fourth company, Telco, a joint venture between Cargill and CHS, dropped off the list of involved facilities.

Grain handlers, who are members of the International Longshore and Warehouse Union, voted on the weekend, and results were announced at noon today (Pacific time): 93% voted again the contract. The union had urged members to vote against what was said to be the "last, best and final offer."

Terminal owners are poised to lockout workers pending the results of this vote, but as of this posting, haven't announced yet their next actions. On standby is a company prepared to provide relief workers, along with standby tugboats, armed guards and the Coast Guard, to enforce traffic restrictions on the water and maintain operations.

Earlier this fall, I suggested this action was a growing movement at West Coast port facilities which started in California and included facilities along the entire West Coast of the U.S. This particular action also has the ability to spread inland to barges upriver which are operated by affiliated unions. There's growing speculation that the importance of these port facilities may bring on the involvement of President Barack Obama's administration to bring an end to any work stoppages.

One can only wonder how these issues can affect Canadian terminal facilities only hours north. Given speculation that global wheat importers may be forced to turn to North America for their wheat supplies, and recent U.S. sales made to Egypt are an early sign that this may be starting to happen, one could only imagine the potential added pressure on the Canadian pipeline should slowdowns on the U.S. side of the border occur. Also, labor issues along the U.S. West Coast of the U.S. could potentially continue to spread north which would certainly be an undesirable consequence.

One can only hope that a peaceful resolution is quickly found to settle this issue.

I would like to wish everyone a very Merry Christmas and hope that all have a safe and enjoyable season filled with the many blessings the season has to offer.

Cliff Jamieson can be reached at cliff.jamieson@telvetndtn.com

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