archibald cboc supply chain resilience 2010

8/2/2019 Archibald CBoC Supply Chain Resilience 2010

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Report October 2010

Keep It Moving

Improving the Resiliencyof Global Supply Chains

NiNl Siy N Pbli Sy


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Preface

Whether a supply chain disruption is caused by a lockout,

strike, or security incident, it can have ramifications far

beyond a single organization. The 2002 lockout of long-

shoremen at U.S. West Coast ports and the 2005 truckers

strike at Port Metro Vancouver demonstrate this all too

well. With this realization, public and private organizations

have had to modify their business and security operations.

The Conference Board of Canadas Centre for National

Security took an in-depth look at these disruptions and

studied the consequences for supply chain security

and resiliency. This report describes the findings and

captures the discussions of the research mission to the

Port of Long Beach, the Port of Los Angeles, and Port

Metro Vancouver. It also outlines a number of lessons

and innovations that organizations have taken to mini-

mize the effect of disruptions on supply chains and

ensure port security.

Keep It Moving: Improving the Resiliency of Global Supply Chains

byAndrew Archibaldand Bjorn Rutten

About The ConferenceBoard of CanadaWe are:

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research organization in Canada.

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Forecasts and research often involve numerous assumptions and datasources, and are subject to inherent risks and uncertainties. This information

is not intended as specific investment, accounting, legal, or tax advice.


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NNS

xecutve Suar

hapter 1Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Growing Complexity and Fragility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Understanding the Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

hapter 2Four Meals From Anarchy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Truckers Blockade New Brunswick . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Immediate Impacts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Fair Warning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Critical Lessons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

hapter 3The Complexity of Global Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Shutting Down the Coast. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Reconstituting the Port . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Critical Lessons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

hapter 4Making Systems Visible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Two Strikes in Vancouver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Merging Supply Chain Stability, Security, and Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Transparency in the Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Managing Perceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Critical Lessons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

hapter 5Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Building Resilient Supply Chains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

ppendx Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27


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Acknowledgements

The Centre for National Security (CNS) brings together senior leaders from the public and private sectors to

address key issues affecting Canadas national security and public safety. This report is a summary of a meeting

held for CNS members, and was produced under the direction of Gilles Rhaume, John Neily, and the Centres

steering committee. The authors would like to acknowledge and thank both Dave Mugridge and Eric White for

taking the time to comment and provide guidance on this report.

The primary authors are Andrew Archibald and Bjorn Rutten.

The CNS research team would like to thank all of the individuals who shared their thoughts and insights

during the meeting. We would also like to express our appreciation to the members of the Centre for National

Security, including:

The Conference Board of Canada is solely responsible for the content of this report, including any errors

or omissions.

Adams and Reese

Alberta Emergency Management Agency

Bell Canada

Bruce Power

Calgary Police Service

Canada Border Services Agency

Canadian Electricity Association

Canadian Energy Pipeline Association

Cisco Systems Canada

City of Ottawa

Commissionaires Ottawa

Justice Institute of British Columbia

Microsoft Canada

Motorola

New Brunswick Department of Public Safety

Public Safety Canada

Royal Canadian Mounted Police

Symantec


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Find this report and other Conference Board research at wwwe-rarca

T

he growth of global trade has led to a global

dependence on raw materials and products

from distant places. As such, the shipping

industry has developed the capability to move goods

across vast oceans to take advantage of assets available

worldwide such as resources, labour, and expertise.

However, the benefit of this system also comes with risk.

Complex global supply chains involve a diverse group

of public and private organizations, and are susceptible

to a host of riskssuch as inclement weather, threats to

maritime security, mechanical failures, labour disrup-

tions, and political or policy changes. A severe stormcan slow down shipping just as much as a border

closure, a port closure, or political instability can.

To understand the risks and challenges caused by supply

chain disruptions, members of The Conference Board of

Canadas Centre for National Security (CNS) engaged

in a research mission to explore how critical nodes in

global shipping were preparing for future disruptions.

Travelling to the Port of Long Beach, the Port of Los

Angeles, and Port Metro Vancouveras well as engaging

the New Brunswick Department of Public SafetyCNS

participants met with leaders who have responded to, and

are preparing for, major disruptions to supply chains. This

report is the culmination of the discussions, presentations,

experiences, and expertise shared between practitioners

and members of the Centre for National Security.

lNiNg m iSPiNS

2005 kS blk

After a summer of rising fuel costs, a number of

truck drivers in New Brunswick began blockading

the Trans-Canada Highway on Labour Day weekend

in 2005. Beginning on the Trans-Canada Highway near

Edmunston, but spreading to other parts of the province

over four days, trucking ground to a halt in a region

with few transportation alternatives.

Keep It MovingImproving the Resiliencyof Global Supply Chains

i Smmy

t a gance

Although global supply chains are beneficial,

the system has many inherent risks and

challenges.

Some of the members of the Conference

Boards Centre for National Security engaged

in a research mission to understand how

ports are preparing for the risk of major

supply chain disruptions.

This report is the culmination of the discus-sions, presentations, experiences, and expertise

shared between individuals who have prepared

for, and responded to, major port disruptions

in recent years, and the members of the Centre

for National Security.


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ii | Keep It MovingOctober 2010


The effects of the blockade were almost immediate.

Within hours, the impact was felt locally and in less than

36 hours, regionally. In two days, consumables such as

eggs, milk, liquor, and cigarettes were noticeably less

available, while supplies for medical and critical infra-

structure facilities were dwindling.

identfn crtca dependences, and the ost vunerae

routes or nodes n supp chans, are essenta to deveopn

the approprate contnenc pans

The lessons learned from this incident include:

Supp chan dsruptonswhatever the causecan

have edate oca pacts on ctes and reons

The dependency of most communities on a steadysupply of goodsfood, fuels, chemicals, medical

suppliesreinforce the importance of ensuring

that transportation routes remain unobstructed.

Identifying critical dependencies, and the most

vulnerable routes or nodes in supply chains, are

essential to developing the appropriate contingency

plans. Taking a proactive, holistic approachwhich

includes both the public and private sectors to prevent,

mitigate, and manage disruptions for continuity of

operationsis a necessity.

nderstandn that the te to faure of crtca

nfrastructure s as portant as understandn nter-

dependences When assessing how to avoid the

cascading effects of critical infrastructure failure

(e.g., the number of organizations that rely on the

products and services of another organization), know-

ing the length of time between one failure and the next

provides emergency managers and responders with

a more sophisticated understanding of the crisis they

may be facing.

2002 WS S P lk

The truckers blockade in New Brunswick demonstrated

the speed at which a disruption can impact a region, but

the 2002 lockout of port workers on the U.S. West Coast

shows the complexity of global supply chains.

Due to a protracted bargaining process to negotiate a

new contract between the International Longshore and

Warehouse Union (ILWU) and the terminal operators and

shipping companies represented by the Pacific Maritime

Association, the union workers were locked out of the

West Coast Port facilities for 10 days. The ripple effect

of the port closures was felt around the globe.

As the ships stopped being offloaded at U.S. Pacific ports,alternative facilities were sought. However, there were

few viable options because of the amount of paperwork,

advance notice required, operational capacity, and a

lack of additional capacity. With more than 250 ships

waiting off the U.S. West Coast ports, and an estimated

cost of $2 billion to the U.S economy per day, the fed-

eral government ordered the two sides to resume work.

The end of the lockout was not the end of the backlog.

Stopping the offloading was much easier than reconsti-

tuting it, as docks were crowded and overwhelmed by thenumber of goods in need of transportation. Three months

after the conclusion of the lockout, some coastal facilities

were still working through the backlog.

Lessons learned by the organizations involved with the

2002 lockout include:

he end of a supp chan dsrupton s not the end of

the proe Once conditions have evolved to a point

where operations can resume, serious consequences

must still be addressed. Advance planning on how

services will resume and be prioritized requires as

much attention as how to avoid having them stopped

in the first place.

econsttuton of supp chan operatons shoud e ed

prvate sector oranzatons worn wth puc author-

tes While no-one fully understands all aspects of a

global supply chain, stakeholders need to recognize

that no-one knows global supply chains better than

the private sector organizations that run key elements

of these systems. However, there is a need to be aware

of which critical products need to reach their final

destination in a timely manner. Working with public

authorities can aid in this identification, and govern-

ments can shape the conditions necessary to expedite

a return to normal operations.

Port operators ust e predctae Supply chains face

minor disruptions on an on-going basisweather,

earthquakes, disease outbreaks, labour disruptions,

etc. Many companies are adept at finding alter-

nate routes to their final destinations, in the most


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The Conference Board of Canada | iii


cost-effective ways. Despite their flexibility, when

companies have to reroute from a port or destination

too many times, ports risk losing their business for

good, as organizations seek greater predictability.

It is in the interest of port facilities to work with

stakeholders to ensure that the risks and impactsof a shutdown are effectively mitigated.

ort per cent of contaner traffc at Port metro ancouver

s handed trucs n and etween the ternas

kS SikS P m N

The complexity of the global supply chains passing

through a critical nodesuch as the U.S. West Coast

ports and Port Metro Vancouverneeds to be visiblefor the node to operate efficiently. This was learned

during the 1999 and 2005 truckers strikes at Vancouvers

port facilities.

Forty per cent of container traffic at Port Metro Vancouver

is handled by trucks in and between the terminals. When

the truckers protested rising fuel costs and low rates of

pay in 1999, and again in 2005, rail capacity was used

up and the congestion was felt as far away as Toronto,

Montral, and Halifax. To overcome the immediate

congestion and backlogs in the future, Port Metro

Vancouver and its partners launched several initiatives

to build trust and to boost the transparency of supply

chains going through the ports facilities. The increased

visibility gives them greater predictability and security.

budn supp chan transparenc heps copettors

oo eond the protecton of on ther usness to the

protecton of the entre ssteMaking sophisticatedbusiness decisions requires an understanding of

an organizations context. But in complex global

supply chains, most organizations are unable todo so. By exchanging data that is relevant to other

supply chain partners, companies can collectively

make better operational decisions that are of benefit

to themselves, their customers, and others in the

supply chain. Understanding the dependencies

and interdependencies that exist can help all stake-

holders improve their levels of preparedness and

response capabilities.

Supp chan transparenc ads wth rs assessents

Required by law for many international shipments,

the sharing of cargo information between public andprivate organizations can aid in the management of

risk while boosting transparency of the goods entering

a port facility. By categorizing cargo as high- or low-

risk, an incentive is created to be transparent and to

share information. This applies to both domestic and

foreign cargo as it passes through port facilities.

manan the perceptons and expectatons of supp

chan partners s fundaenta to udn confdenceWith networks distributed around the world, ship-

ping companies often make their decisions without

the benefit of first-hand information. If shippers

believe there will be problems at a port, they will make

decisions to reduce risk. Communicating constantly

to reinforce stability and reliability, and to build trust,

is essential to ensure that stakeholders around the

world base decisions on facts.


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9/42


gWiNg mPliy N giliy

With the development of global trade,

countries have come to depend heavily

on raw materials and goods that cross vast

oceans from distant countries and continents. It would

be difficult to overstate the importance of todays global

supply chains.

The global shipping industry is capable of moving goods

great distances efficiently in order to take advantage ofresources, labour, and expertise available worldwide. The

efficiency of this system depends on safe, secure, and

open borders, quick intermodal transitions (e.g., from

truck to ship to rail), and limited disruptions to this

international system.

he reance on just-n-te shppn eans that dsruptons

to the sste can have devastatn pacts

While todays global supply chains have brought many

benefits, they also come with their own risks. These supply

chains are systems within systems within systems. They

comprise many organizations from numerous industries,

and are broadly distributed around the globe. As such,

these systems are extremely complex, and open to a wide

range of threats. The reliance on just-in-time shipping,

while reducing warehousing costs, means that disruptions

to the system can have devastating impacts within very

short periods of time. With little inventory on hand, or

goods with a short shelf life, disruptions to a supply chain

can have disastrous implications on a global scale within

a matter of dayslocal effects can be felt within hours.

Delays have the potential to cause significant difficulties

that span continents. In some industries, the window for

construction, manufacturing, or selling is short, and delays

result in missed opportunities or major increases in cost.

Introduction

P 1

hapter Suar

Transportation delays have the potential

to cause significant difficulties that span

continents. In some industries, the window

for construction, manufacturing, or selling

is short, and delays result in missed oppor-

tunities or major increases in cost.

We must look at systematic solutions to ensure

that organizations and jurisdictions can avoid

supply chain disruptions, and respond effect-

ively when found in the midst of one.

To better understand the complexities and the

challenges of supply chains, the Conference

Boards research team used three case studies,

of varying size and scope, which demonstrate

the impact that disruptions can have.


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2 | Keep It MovingOctober 2010


That said, it is important to recognize that supply chain

disruptions occur frequently. As some have described

it, this is an outdoor sport and accidents happen.

Companies have to contend with inclement weather of

all kinds, mechanical failures, strikes, changing market

conditions, political and policy changes, and threats tomaritime security.

And, while adjusting to fluctuations can be done, its noteasy to do, nor is it desirable. This is especially true at

a major port where shipping, trucking, and rail systems

all intersectthereby creating a critical node. When a

disruption first occurs at one node, one would think that

rerouting the traffic is a viable option. However, there

are a number of factors that make rerouting cargo on

short notice difficult and something that most stake-

holders try to avoid.

iily iNg

To begin with, the paperwork required to export and

import goods is filled out and submitted days in advance

of arrival. Since the September 11 terrorist attacks, a num-

ber of countries have implemented security programs that

require information to be transmitted to customs officials

prior to the ship entering territorial waters. According

to one industry leader, . . . loading and discharging a

5,000 TEU ship involves close to 40,000 documentsand some 6,000 to 7,000 customs transactions.1

Another more serious stumbling block to rerouting cargo

is that many other facilities are typically operating near

capacity. While the recent economic decline has reduced

activity at many ports, it is expected that previous levels

will be recoveredand that increased port capacity will

be required in the years ahead. Without sufficient capacity,

a disruption at one node will create further congestion at

other ports that may not be able to take on additional work.

If the cargo can be offloaded at another port, moving the

cargo to its final destination may prove to be a significant

challenge. Rail and truck capacity are arranged days, and

sometimes weeks, ahead of arrival. Therefore, diverting

1 Statement by C.C. Tung, Chairman and CEO, Orient Overseas Ltd. asquoted in Vickerman, Marine Terminal, slide 126.

Securn goa Supp hans

Many supply chains that end in North America begin at

manufacturing facilities in foreign countries. With many

stakeholders involved, and transactions made far beyond

the continent of North America, it is an ongoing challenge

to manage the man-made threats along the supply routes.

Typically, goods are manufactured and then transferred

via intermodal transport to consolidation or port facilities

where concerns over corruption and the ability to secure

cargo exist. Once a container is on a ship destined for North

America, it is likely to reach North American shores without

extraordinary intervention.

After containers are off-loaded at a North American port,

the intermodal transportation continues. In some cases,

containers are not opened until they reach the inner

continent via road and rail.

This means that the security of supply chains to Canada and

the United States are highly dependent on measures taken

at foreign facilities. Foreign ports must provide manifests

to Canadian and U.S. ports before containers are loaded

onto ships. If containers are considered a high risk, they are

screened before being loaded. Screening all containers will

be a requirement of foreign ports for cargo destined to the

United States, starting in 2012. Foreign countries are criticizing

this rule, and hope that it will not proceed because it will

involve considerable costs and cause significant delay. So

far, it has been found that building relationships, ensuring

transparency at steps along the way, and filtering potential

high-risk shipments are proving successful.

Source: The Conference Board of Canada.

he Standardzaton of Shppn

Since the 1950s, there has been an increased movement

toward containerization (the use of standard-sized containers

for the shipping of cargo by ship, rail, and truck). Containers

are measured in twenty-foot equivalent units (TEUs), as somecontainers are approximately 20 feet in length (1 TEU) and

others are 40 feet in length (2 TEUs).

Most container ships transport 5,000 TEUs (or approximately

3,000 containers), though it is not uncommon for larger

ships to carry between 8,000 and 10,000 TEUs. Some

newer ships in Europe carry 14,000 TEUs, and the next

generation of ships will carry as many as 19,000 TEUs.

Today, the greatest restrictions on capacity are the depth

and width of harbours and canals such as the Panama

Canalor major shipping lanes, such as the Straits of

Malacca between the Indian and Pacific Oceans.



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The Conference Board of Canada | 3


cargo means that trucks and railcars also need to be

diverted and schedules altered. Additional labour is

also required to offload containers from the ships to

the trucks or trains. And not all ports have the ability

to rapidly scale their labour force in response.

Finally, diverting cargo is more expensive. In some cases,

it may actually be cheaper to divert entire ships to distant

ports. For example, if the point of origin is in Asia and

the final destination is toward eastern North America, it

may make more sense for the ship to pass through the

Panama Canal and offload at an East Coast port, rather

than to unload at a West Coast port and ship by truck or

rail across the country. This takes more time, but would

avoid congestion and the higher cost of rail or truck

transportation. However, this is only feasible if all the

goods have a similar destination and the vessel was notschedule to make multiple stops at West Coast ports.

s our dependenc on oa supp chans has rown, t s

essenta that we understand n deta what woud happen

f those crtca sstes stopped worn

Fundamentally, the ability of shippers to adjust to

changing global conditionse.g., weather, congestion,

labour disruptionsgives them the ability to make

permanent changes to their trade routes if they do not

perceive sufficient levels of predictability and reliability

in portions of the system.

NSNiNg iSkS

As our dependency on global supply chains has grown, it

is essential that we understand in detail what would hap-

pen if those critical systems stopped working. Likewise,

we must look at systematic solutions to ensure organiza-

tions and jurisdictions can avoid these situations and

respond effectively when found in the midst of one.

In the spring of 2009, members of The Conference Board

of Canadas Centre for National Security (CNS) engaged

in a research mission to understand, specifically, how

ports are preparing for the possible risk of major supply

chain disruptions. CNS members travelled to the ports

of Long Beach and Los Angeles in California, and Port

Metro Vancouver in British Columbia to meet with the

individuals who have prepared for, and responded, to

major port disruptions in recent years. Over the courseof the three-day research mission, the CNS members

met with representatives of the:

Alameda Corridor Transportation Authority

American President Lines

Burlington Northern Santa Fe Railroad

British Columbia Trucking Association

California Office of Homeland Security

International Longshoremen and Warehouse Union

Los Angeles Port Police

Port of Long Beach

Port of Los Angeles Port Metro Vancouver

hese studes effectve deonstrate the chaenes

caused the supp chan dsrupton

Furthermore, the Centre for National Security members

engaged the New Brunswick Department of Public Safety

to learn about the realities that the Maritime provinces

face when supply chains are disrupted.

PP

To better understand the complexities and the challenges

of supply chains, The Conference Board of Canadas

research team used three case studies of varying size and

scope that demonstrate the impact disruptions can have.

While these case studies are not the typical incidents we

have studied in the past, these three studies effectively

demonstrate the challenges caused by the supply chain

disruptionwhether the cause is man-made, accidental,

or natural in origin. Specifically, we have examined the

following incidents:

he 1999 and 2005 rucers Stres at Port metro

ancouverIn 1999, truck owners and operators

who handled 40 per cent of container traffic at the

port of Vancouver stopped working in protest of

low pay and a number of other issues. After 30 days,


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they resumed work with a new agreement. However,

by 2005, rising fuel prices and the resurfacing of issues

led to a wildcat strike of nearly 1,000 container

truckers.2 After available rail capacity was used up,

the backlog began to be felt in Toronto, Montral,

and Halifax.3 he 2002 West oast Port locoutBecause of a pro-

longed and escalating contract dispute, the shippers

and terminal operators at U.S. West Coast ports

at Long Beach and Los Angeles locked out the

International Longshore and Warehouse Union

employees on September 30, 2002. Despite the

fact that the lockout lasted only 10 days, more than

250 ships were lined up offshore, and the economic

impact was estimated to be $2 billion per day.4

he 2005 rucers bocade n New brunswcRising

fuel costs in the summer of 2005 led to disruptionson the highways of New Brunswick. Truck drivers

pulled over on the side of the Trans-Canada

Highway and created a line of traffic that stretched

over 15 kilometres in some areas.5 Food and goods

required for the functioning of critical infrastructure

were caught in the disruption. Shortages on store

shelves occurred quickly as the transportation of

consumer goods ground to a halt.

The leaders who experienced these disruptions shared,

with CNS participants, what is being done to boost

securitynot only at these critical nodes, but also

throughout the entire supply chain.

2 CBC News, B.C. Port Strike.

3 Flavelle, Port Logjam Takes Toll.

4 Conan, Analysis: West Coast Port Lockout; Nyhan, RipplesFrom Port Lockout.

5 CBC News Online, N.B. Truckers Protest Gas Hikes.

he entre for Natona Securt

To help improve the capacity of public and private sector leaders to address

national security challenges and improve resiliency, The Conference Board

established the Centre for National Security (CNS).

The objective of the Centre is to build leadership capacity to identify, mitigate,and respond to national security and public safety threats. The Centre focuses

on helping leaders develop a mutual understanding of these threats, and finding

ways to improve our collective resiliency.

In the most recent research mission, CNS members were able to see firsthand

the barriers toand solutions forenhancing supply chain and port security.

Travelling to the Californian ports of Los Angeles and Long Beach, and to the port

of Vancouver, B.C., members heard the lessons learned from the disruptions at

three of North Americas key ports.


Ships stretch over the horizon during a typical day at the Port of Long Beach.Photo by Andrew Archibald


13/42


In a 2004 story reported by The Sunday Times, MI5

(the United Kingdoms security agency) suggested

that an interruption to the food supply system would

lead quickly to large-scale disorder, looting, and rioting.

The phrase M15 used was that Britain is four meals

from anarchy.1

The concept is useful for examining how a region or

country would respond to a food shortage and the kinds

of behaviours that the public would exhibit. These ideas

are particularly valuable for developing tabletop scenarios

1 Iredale and Grimston, Britain Four Meals Away.

designed to reveal threats to, or vulnerabilities of, supply

chains, and for understanding the nuanced consequencesof a sustained interruption to the food supply system.

But, in 2005, this scenario moved from being a tabletop

exercise to a reality in Eastern Canada when a truckers

blockade of the Trans-Canada Highway brought traffic to

a standstill and stopped the supply of goodsincluding

foodto the region.

her exstn contracts dd not accoodate the rapd

and severe fue cost fuctuaton

kS blk NW bNSWik

With fuel costs rising throughout the summer of 2005,

many independent truck drivers operating in Atlantic

Canada (and elsewhere) were beginning to see their

profits drop, or totally disappear, by September because

their existing contracts did not accommodate the rapid

and severe fuel cost fluctuation. In todays context, the

$0.85 per litre price they were protesting seems very low.

But at the time, it represented a significant increase. To

draw attention to the issue, and to demand tax relief

measures, truckers in the region began organizing

protests to coincide with the Labour Day weekend.2

2 Easton, Why the Elastic Broke.

Four Meals From Anarchy

P 2

hapter Suar

Chapter 2 examines, in detail, the 2005

New Brunswick truckers blockade of the

Trans-Canada Highway.

The chapter also discusses the impact of

the blockade, how it spread, how it affected

the delivery of essential goodsincluding

perishable foodsand how the problem

was eventually resolved.

A number of critical lessons can be learnedfrom the event, and are outlined in the chapter.


14/42



On Monday, September 5, 2005, local protests emerged

around the community of Edmundston, near the Canada

U.S. border. The protests were small and were considered

a local concern for police in the area. 3 Non-commercial

traffic on the Trans-Canada Highway was still able to

pass without delay.4

On Tuesday, more truckers joined the Edmundston

protest; approximately 200 trucks had stopped along

the major highways around the town. There were also

reports of smaller protests developing elsewhere in the

province.5 As the volume of trucks increased, the ability

of traffic to continue to flow through the region was

significantly reduced.


4 Transport Canada, Transportation in Canada, 2005.


As the number of protesters increased, authorities

developed plans to manage the effects of blockades

on the regions transportation corridors. Part of one

enforcement option was to hire tow truck companies to

remove the trucks and allow other traffic to pass freely.

However, very few vehicles were capable of towingsuch large trucks, and some companies were hesitant

to tow the trucks for fear of losing the future business

of their core customers.6

s the voue of trucs ncreased, the at of

traffc to contnue to fow throuh the reon was

snfcant reduced

By Wednesday, September 7, media reported that morethan 300 trucks had stopped near Edmundston creating

a line of traffic over 15 kilometres long.7 Drivers who

were on the Trans-Canada Highway nearing the region

were stopped and presented with a petition against the

rising cost of fuel.8 Throughout the day, reports received

by provincial authorities indicated that six other protests

had developed within New Brunswick. By the end of

the day, the blockade near Edmundston had grown to

400 trucks.9

With the protests spreading across the province and truck

traffic stopped, communities in New Brunswick and

Nova Scotia began to feel the impacts.10 The availability

of many consumables including eggs, milk, liquor,

and cigaretteswas noticeably reduced. As concerns of

shortages grew, there were reports of people purchasing

goods in larger amountsthus further reducing supplies.11

6 Ibid.

7 CBC News Online, N.B. Truckers Protest Gas Hikes.

8 Ibid.


10 Ibid.

11 Ibid.

Road Map of New Brunswick

Source: New Brunswick Department of Transportation.


15/42



PS Wi lS

On September 8, media reports indicated that the Royal

Canadian Mounted Police (RCMP) had stated that

protests stretched across the province.12 Despite the

coordinated appearance of the protests, no specific

leaders were apparent for authorities to engage withand undertake negotiations. By this time, more than

1,000 trucks had stopped on the sides of the highways,

and the transportation of consumer products ground

to a halt.13

The protests had become more of a movement as an

increasing number of trucks stopped on the edges of

the highways. The largely spontaneous nature of the

blockades, the expansion to 11 different locations, and

the lack of clear leaders, created serious challenges to

resolving the situation.

more than 1,000 trucs had stopped on the sdes of the

hhwas, and the transportaton of consuer products

round to a hat

In addition, political leaders and senior emergency

services personnel in adjoining jurisdictions were

concerned that the blockade would spill over. In fact,

one protest did occur in Nova Scotia, near the New

Brunswick border.

igiNg kP SPPly iNS miNg

With truck transportation impeded, and no end in sight

to the blockade, concern was growing in the private

sector. Food producers and distributorswho rely

on just-in-time delivery to ensure their products reach

consumerswere concerned about the spoilage of

many goods, and began to raise their concerns.

The Canadian Restaurant and Foodservices Association

(CRFA) shared, in a letter to the Prime Minister of Canada

and the premiers of the Atlantic Provinces, that its mem-

bers object to having supplies, essential to the operation

12 CBC News Online, N.B. Truckers Beef Up Protest.

13 CBC News Online, Truckers Face Tickets.

of restaurantsheld hostage. The letter continued to note

that transport trucks carrying perishable products such as

beef, chicken, fish, and fresh fruits and vegetables were

caught in the blockade. This was creating shortages for

CRFA members.14

Likewise, the president of the Canadian Council of

Grocery Distributors (CCGD) called for government

and law enforcement agencies to act now to avoid

further spoilage, lack of access to food and groceries,

and lost business.15

immi imPS

The impact of the truckers blockades on Eastern Canada

was immediate. Within a matter of hours, local effectswere being feltand those effects became regional in

less than a day and a half.

Soe crtca nfrastructure factes were wthn hours

of shuttn down

By the fourth day, there were food and medical supply

shortages in the region, and contingency planning to

manage goods and services shortages had commenced.16

This led to government officials facing difficult decisions

on whether rationing of food and other critical supplies

would be needed.

Not only were the food and medical sectors affected by

the blockade, but also gasoline and diesel distribution had

been affected, requiring ambulances and other government

services to access government fuel depots. Also, some

critical infrastructure facilitiesdependent on frequent

truck shipments of products to meet environmental

standardswere within hours of shutting down.

14 Canadian Restaurant and Foodservices Association, CFRADemands End.

15 Canadian Council of Grocery Distributors, Illegal Trucker Strike.



16/42



N NW bNSWik

Much of the trade to Atlantic Canada is by road. And

while there are many route options available between

Toronto and Qubec City, virtually all of Atlantic

Canadas eastwest trade occurs on one highway

the Trans-Canada Highway. With the truck blockadespreventing the transportation of goods by road, alternative

methods were explored. But, there were few viable

options, as shown below:

While it may seem obvious that alternate roads could

be used for the transportation of goods by truck, the

situation was more complex than that. Not all roads

are constructed to be able to support the traffic weight

and frequency typically supported by major high-

ways like the Trans-Canada. As a result, alternate

routes would literally have collapsed in a matter of

hours from the increased traffic. Sending trucksparticularly those carrying foodthrough the United

States was not feasible because of the extensive series

of pre-clearances required.

Sending shipments by rail is an alternative. But, the

schedule to ship by rail is set five to seven days in

advance and the system typically runs at full capacity.

Railhead logistics arrangements would have to be

created to arrange local shipping. This meant that it

would have been up to another week before goods

were flowing again if trains were to be used

assuming capacity was available.17

Flying in products and goods would be a very

expensive proposition and offer very limited capacity.

For many critical goodssuch as chemicals, fuel,

or foodthe volume required and the sheer weight

would have made air transportation impractical

except for specific goods of high value.

On September 9, the RCMP were successful in

clearing the most significant blockade of truckers

on the Trans-Canada Highway, south of Edmundston.

With this tactical action, the strategic goal of opening

the roads and allowing the transportation of commercial

goods was finally achieved and most other blockades

ended shortly after.18


18 Ibid.

i WNiNg

Despite the rising fuel prices and the obvious impact that

it would have on those in the transportation industry, the

truckers blockade in New Brunswick caught many off-

guard. But warning signs and parallel situations had pre-sented themselves in previous years in other jurisdictions.

September 1998French truckers blocked ports

and roads as part of a protest against long working

hours. Vehicles were blocking border crossings into

Belgium, Luxembourg, Germany, Italy, Spain, and

the English Channel.19

January 2000French truckers set up 50 blockades

across the country to protest shorter work weeks.

This was the second protest in a three-week period.20

November 2003In Perth, Australia, 200 trucks

blocked the port in protest against unloading delaysthat they claimed were putting them out of business.21

December 2004Several thousand truck drivers in

Cyprus blockaded the islands two main sea ports in

protest of European Union harmonization laws.22

nother chaene s the at to transate other crses

to ones own oranzaton

A challenge for most organizations is to maintain an

environmental scan that would prepare them for the risks

they face. With so many incidents occurring globally, it

is difficult to be constantly assessing to identify where

parallels may exist. However, doing so can help ensure

the readiness of regions to confront threats, understand

vulnerabilities, and manage consequences.

Another challenge is the ability to translate other crises

to ones own organization. Sometimes, the parallels are

not immediately obvious. Therefore, it is necessary to

look beyond the specific conditions or facts and discern

where indirect lessons can be identified and internalized.

19 BBC News, French Truckers Blockade Ferry Ports.

20 The Independent, French Truckers Blockade Roads.

21 AAP General News, WA: Truckers Blockade.

22 EUbusiness, Cyprus Truckers Blockade Ports.


17/42



iil lSSNS

A number of critical lessons can be learned from

the experience of the 2005 truckers blockade in

New Brunswick:

Supp chan dsruptonswhatever the causecanhave edate oca pacts on ctes and reons

The dependency of most communities on a steady

supply of goodsfood, fuels, chemicals, and medical

suppliesreinforce the importance of ensuring

transportation routes remain unobstructed. Identifying

critical dependencies, and the most vulnerable routes

or nodes in supply chains, is essential to developing

the appropriate contingency plans. Taking a pro-active

approachwhich includes both the public and private

sectors to prevent, mitigate, and manage disruptions

for continuity of operationsis a necessity. rses n other countres provde an on-on source of

nforaton aout parae or sar rss to our own

stuatons Learning from others experiences, rather

than learning first-hand, is a far better way to prepare

our organizations and our communities for what may

be inevitable emergencies. While blood lessons

are often learned more quickly, organizations can

benefit from learning from disruptions experienced

by other jurisdictions, making industries and regionsmore prepared. Participating in dialogue with industry

partners and international organizations can aid in

sharing the experiences of others.

nderstandn the te to faure of crtca nfrastruc-

ture s as portant as understandn nterdependencesWhen assessing how to avoid the cascading effects

of critical infrastructure failure (e.g., the number of

organizations that rely on the products and services

of another organization), knowing the length of time

between one failure and the next provides emergency

managers and responders with a more sophisticatedunderstanding of the crisis they may be facing.


18/42


Whereas the truckers blockade in New

Brunswick demonstrated the immediate

local and regional impacts of a supply

chain disruption, the 2002 lockout of the International

Longshore and Warehouse Union at the ports of Long

Beach and Los Angeles shows us the global implications,

as well as the complexities, of reconstituting a supply

chain once it has been stopped.

The five largest port complexes in the United States handle

85 per cent of all U.S. commercean increasing portion

of which is transported in containers. Together, the Port

of Long Beach and the Port of Los Angeles account for

44 per cent of all containers that enter or exit the

United States. As will become evident, haltingoperations at these ports had major repercussions.

SiNg WN S

Over the summer of 2002, the International Longshore

and Warehouse Union (ILWU) and the Pacific Maritime

Association (PMA), which represents shipping com-

panies and terminal operators, attempted to negotiate

a new contract for the 10,500 unionized employees at

U.S. West Coast ports. After more than eight months

of negotiations, tension was growing between the two

sides and no deal had been reached.1

he fve arest port copexes n the nted States hande

85 per cent of a S coerce

The sticking point was PMAs desire to implement new

technology that would improve productivity, security,

and communication between stakeholders, and to auto-

mate key aspects of the shipping process. From the

unions perspective, this would mean a loss of jobs.2

1 CNN Money, Bite of Port Lockout.

2 Farris, Are You Prepared?

The Complexityof Global Networks

P 3

hapter Suar

Chapter 3 examines the 2002 lockout of the

International Longshore and Warehouse Union

at the ports of Long Beach and Los Angeles.

The chapter explains the far-reaching impact

of the lockoutit even affected international

markets.

Although work eventually resumed, the

disruption continued to cause problems

for months, such as a backlog of cargo.

A number of critical lessons can be learned

from the event, and are outlined in the chapter.


19/42



As the negotiations faltered, the ILWU members slowed

work across the West Coast ports. The union argued that it

was simply refusing overtime and following its contracts

to the letter. However, the companies represented by PMA

saw the slowdown as strike with pay.3 As a result, PMA

locked out the workers on September 30. Because roughlyone-third of all U.S. trade (valued at $300 billion in

2002) goes through the West Coast ports, the impact

of the labour dispute would be felt across the globe. 4

iPPl

Ports are a nexus of supply chains, modes of transporta-

tion, and other critical infrastructures. Therefore, a local

disruption in Long Beach and Los Angeles had impli-

cations that reached far beyond the United States. The

10-day lockout led to a number of layoffs and the closing

of manufacturing facilities in some parts of Asia.5

man copanes that were dependent on the effcent

functonn of the ports were ae to tae actons to

tate the pact of the ocout

With an estimated 60 per cent of ships at sea at any given

time, and taking approximately 11 to 13 days to cross the

Pacific Ocean,6 the impending arrival of container ships

created serious cause for concern. After only two days,

more than 100 ships were waiting off the West Coast

to be unloaded.7 By October 4, 162 ships were sitting

idle at the ports, or anchored just offshore, and another

13 were arriving that day.8 As each day passed, the num-

ber of ships continued to grow and pressures mounted

to end the lockout quickly. Local residents began raising

their concerns about the environmental impact of the

ships idling in the port area, the risks of fuel leakages

from the ships, and apprehensions about the foreign

crews coming ashore.

3 Wolk, Behind the West Coast.

4 Ramstack, Shipping Dispute Sends, p. A01.

5 Kok, Presentation and Remarks.

6 Flynn, PrivatePublic Partnerships.

7 Day, Businesses Drawing.

8 Nyhan, Ripples From Port Lockout.

Some companies were able to prepare themselves in

advance for the lockout. Because the negotiation pro-

cess had gone on for months, many companies that were

dependent on the efficient functioning of the ports were

able to take actions to mitigate the impact of the lockout.

For example, some retailers had imported extra productbefore the lockout in preparation for the upcoming holiday

season and some were looking at alternative ways to move

product. Because clothing companies have only a six-week

window to sell their product before it is marked down,

air shipment was a viable, albeit expensive, option.9

urn the ocout, soe traffc dd contnue to fow

throuh the ports

But many organizations were not in a position to stock

up in advance. Manufacturerswho operate on a just-

in-time schedulefaced significant challenges. Lacking

warehouses to stockpile additional parts, many facilities

could not maintain operations for more than a few days.

For example, the joint General Motors and Toyota facil-

ity known as NUMMI could only stockpile enough parts

for five to seven days. The engines and transmissions for

many of the cars built at the Fremont, California facility

came from Japan. On Wednesday, October 2, a NUMMI

spokesperson said they had not received a shipment for

four days and would likely have to stop the assembly

line by the next dayThursday, October 3.10

It is worth noting that during the lockout, some traffic

did continue to flow through the ports. Members of

the Centre for National Security were advised that

four categories of activity were maintained at the ports:

1. The unloading of perishable goods.

2. The flow of military-related ships or goods for

the military.

3. Cruise ships.

4. Goods going to or from Hawaii, as these products

are a lifeline for the state.

9 CNN Money, Bite of Port Lockout.



20/42



It was put forth that these operations continued, in part,

because of political concern. The stakeholders knew there

would be significant backlash and loss of support if these

activities ceased.

Like manufacturers, agricultural importers and exporters

also are dependent on efficient delivery. The size and

perishable nature of agricultural products mean that

any delays in the import and export of goods are

costly, and there are few alternative options.11 When

the lockout occurred, Chiquita Brands International had

18,000 boxes of bananas in a Port of Long Beach ware-

house and another 180,000 boxes en route.12 Apple

producers in Washington State had part of their autumn

harvest awaiting export. One commentator remarked that

it was likely to be our [the U.S.s] first great export of

applesauce, after the fruit had spoiled.13

11 CNN Money, Bite Of Port Lockout.


13 Conan, Analysis: West Coast Port.

SimiNg imP

With the cessation of the loading and unloading of

most goods at all U.S. West Coast ports, many analysts

began estimating the effect it would have. Early estimates

claimed it would cost the U.S. economy $1 billion per

day while the Federal Reserve Bank in San Franciscoestimated that the economic impact would snowball and

could be costing the U.S. economy $2 billion per day.14

Stephen Cohen, a professor from the University of

California at Berkeley who specializes in regional

economics, elaborated on how the lockout could have

such a large impact. He estimated that the jobs of up

to 70,000 people were directly affected by the lockout.

These included the dock workers, truck drivers, and

employees of the shipping companies. Indirectly, Cohen

stated that theres probably another 25,000 people whoprovide services to the import and export companies

and dock workers who also would be affected.15

iNiNg NW S mk

Manufacturers, agriculture producers, and retailers alike

began diverting their vessels to other ports in Canada,

Mexico, and even the U.S. East Coast. However, this

was not always a solution or a feasible option.

ar estates caed t woud cost the S econo

$1 on per da

It was quickly found that the ports in Mexico did not

have the infrastructure to handle a large amount of

the back-logged cargo. The port of Ensenada on the

Baja Peninsula was able to handle nearly 30,000 of the

diverted containers but, with 50 million containers han-

dled annually by the U.S. West Coast ports, there were

many more.16 Moreover, once the cargo was offloaded

south of the U.S. border, there were concerns over the

capacity of rail and trucking companies to move it back

into the United States and on to the final destinations.

14 Nyhan, Ripples From Port.

15 Cohen, Panel interview.

16 Ibid.

he nvronenta ipact of idn

When hundreds of ocean-going vessels are held up because

of disruptions, the subsequent delays and congestion can

have an environmental impact. When handling time is delayed

dockside, the idling of trucks and trains can cause equal con-

cern. In studying the effect that supply chain disruptions can

have, it is important to look beyond the economic impact and

include all three tenets of modern marine policymaritime

security, marine safety, and environmental protectionto

identify the far-reaching effects.

In many cases, much of the information required to study

the potential environmental degradation is already available.For example, the Port of Long Beach collects the emissions

data for many modes of transportation, such as vessels,

trucks, harbour craft, locomotives, and yard equipment. This

information is then compared with the number of twenty-

foot equivalent units (TEUs) handled at the ports facilities.1

The ability to quantify the effects of a supply chain disrup-

tion is critical to understanding the true costs, and the

potential environmental toll is no different.

1 Port of Long Beach, 2009 Air Emissions.



21/42



The situation at the northern ports near Vancouver,

British Columbia was similarthey were operating at

near full capacity and did not have the additional space

needed.17 Furthermore, the longshore workers at British

Columbias ports are affiliated with the International

Longshore and Warehouse Union in the United States,and many people doubted the workers would be willing

to increase productivity and undermine the position of

their southern colleagues.18

Wth the West oast ports shut down and oa supp

chans dsrupted, Presdent bush ased a federa court

to nvoe the Taft-Hartley Acton ctoer 8

With few viable options on the West Coast, other optionswere considered. Since many of todays container vessels

are too large for the Panama Canal, ships began sailing

around Cape Horn at the tip of South America to reach

the eastern ports of the United States. Because of this,

transportation companies based near the Gulf and the

Eastern coast experienced an increase in business.19

In many cases, the shipments were destined for the

Western states, which meant increased costs for some

and increased business for others.20 Typically, it is most

cost-effective to keep cargo on water routes because the

costs are dramatically lower than for any other mode

of transportation. (See Chart 1.) Shippers must weigh

the lower costs against the urgency to deliver the goods

when making their final transportation decisions.

With the West Coast ports shut down and global supply

chains disrupted, President Bush asked a federal court

to invoke the Taft-Hartley Acton October 8. The seldom-

used Taft-Hartley Actof 1947 orders the stakeholders of

a labour dispute back to work for an 80-day cooling off


18 Conan, Analysis: West Coast Port.

19 Ramstack, Shipping Dispute.

20 Ibid.

period.21 With a temporary injunction granted, long-

shore workers resumed operations at U.S. West Coast

ports on the evening of October 9, 2002.22

N N lk, b N PblmS

The fact that the ports were up and running did not mean

an end to the disruption. Analysts estimated that by

October 9, there were more than 250 ships off the coast

waiting to be unloaded.23 In order for the containers to

be offloaded, space was needed at the ports. Clearing the

backlog required additional truck and rail capacity.24

At the end of October, large retailers such as Walmart

had their delivery trucks working overtime to handle

in two weeks what would normally be shipped in a

month and a half.25

Despite the injunction and the resumption of trade, the

dispute continued. The Pacific Maritime Association

accused longshore workers of slowing operations while

21 Wolk, Behind the West Coast.22 Conan, Analysis: West Coast.

23 Ibid.

24 Ibid.

25 Desjardin, Effects of West Coast.

hart 1Distance That One Tonne of Cargo Can Be CarriedWith Five Litres of Fuel(kms)

Source: Huygens, International Perspectives on Shallow DraftShipping, p. 8.

Plane

Truck

Train

Ship

0 100 200 300 400 500 600


22/42



the union said not enough workers were hired to deal

with the backlog. A PMA spokesman shared with media

that We arent making significant progress in unclogging

the cargo pipeline.26

The delay clearing the cargo may have also beenexacerbated by the methods used to resume operations.

For example, ocean carriers and terminal operators

made a string of individual economic decisions in the

absence of any coordinated approach that made the

congestion worse.27

This was seen when carriers, wanting to return to normal

schedules, had their ships loaded with full cargo contain-

ers as quickly as possible. Typically, ships arrive at the

U.S. West Coast ports with full containers, but only 10 per

cent of the returning containers carry goods. This situationresulted in empty containers staying at U.S. West Coast

ports creating further congestion by taking up space and

lowering the number of containers available overseas.28

Without containers making their way back, there were

fewer containers to fill with additional goods destined

for North America.

This experience draws attention to the need forand

value ofa coordinated maritime commerce resumption

policy. By developing agreed-upon standards and pro-

cesses prior to disruptions, organizations can work col-

laboratively to avoid making decisions with unintended

negative consequences.

NSiiNg P

Stopping a port from operating is much easier than

reconstituting operations. A port can be stopped almost

immediately by everything from a major accident to a

labour dispute to a terrorist attack. In fact, the same is

true about many critical infrastructures.

26 Desjardin, Effects of West Coast.

27 Mongelluzzo, Lingering Mayhem, p. 15.

28 Ibid.

For example, during hurricane season in the Southern

United States, it is not uncommon to shut down oil

refineries to protect the workers and the operations.

This can be done quite quickly. But restarting these

complex processes can take as long as two weeks and

must follow a specific sequence.

When operations stop at a port, there is a cascading

effect as a series of complex systems must either find

alternative routes (which is sometimes possible) or cease

their operations (which can be financially devastating).

bk-P Wi bklg

Since ships, trains, and trucks are constantly under way,

the limited storage at port facilities is often quickly

filled when smooth shipping ceases. Before the recent

global economic slowdown, many ports were operating

he esupton of marte oerce

With the recognition that a large disruption to global

maritime trade would quickly have a global impact, many

countries and international organizations are working

toward strategies for maritime commerce resumption.Working collaboratively with partners, Transport Canada is

developing a strategy to ensure the maritime industry is

resilient and can resume operations as soon as possible

and to align the existing plans and boost preparedness of

public and private stakeholders.1

At the international level, 10 economies from the Asia-Pacific

Economic Cooperation studied the trade resumption after

a major disruption to supply chains. Their proposed Trade

Recovery Programme (TRP) advocates a risk-based, total

supply chain security approach, which emphasizes the need

to share the responsibility of ensuring the security of trade

across all nodes of the supply chain.2 Concentrating onpost-incident action to return to normal trade, the TRP

sequences the required steps for economies to make after

a terrorist attack that disrupts trade.

1 Bartley, Canadas Maritime.

2 Asia-Pacific Economic Cooperation, APEC TradeRecovery, p. 1.



23/42



at near capacity. Infrastructure has yet to catch up to

the quantity of shipped goods.29 This tempo means that

there is little additional space to accommodate a build-up

of cargo. In fact, the 10-day lockout of port workers in

September 2002 created a backlog in containers that

lasted well into December.30

SiNg iNmiN

A key element to reconstituting a port is the collection

and sharing of information. Transparency within a supply

chain and between stakeholders is critical to knowing

where exactly certain products and assets are when a

disruption occurs. One lesson learned by the Port of

Long Beach leadership is that information needs to be

provided to the stakeholders in real time.31 Doing so

ensures that organizations can make decisions based

on their own priorities, or allows the markets to dictatehow product is sorted, thereby resulting in less gridlock

at port facilities.

When a dsrupton occurs, t s a atter of hours efore

are copanes en can for updates and nforaton

aout the status of ther caro

When information is shared among stakeholders, the

right allocation of assets can be determined. Everything

from ships, trucks, and rail cars to crane operators and

longshore workers all have to be organized ahead of

time to move the cargo efficiently through the port.

PiiiiN

With the inevitable gridlock that forms after a disruption

at a port, and the finite means of moving containers, cargo

must be prioritized. Representatives from Port Metro

Vancouver shared that when a disruption occurs, it is a

matter of hours before large companies begin calling for

updates and information about the status of their cargo.32

29 Perrone, Remarks Before the Centre for National Security;Benavente, Port Operations.

30 Benavente, Port Operations.

31 Barratta, Business Continuity Model.

32 Kee, Remarks Before the Centre for National Security.

In the case of the 2002 lockout, there was very little

prioritization. The sheer number of containers stacked

five-high in what one expert aptly dubbed colourful

glaciers made it virtually impossible to pick and choose

which cargo would move first. In reality, it was a last

in, first out policy. In other words, the last containers

to arrive were the first to leave because they were at

the top of the stack and were most accessible.33

However, it is important to recognize that, in some cases,

the prioritization of goods is necessary. There are certain

products that are critical to the functioning of commun-

ities. If a shortage occurs, essential services may be

compromised, compounding the challenges created by

the disruption. In these cases, it is essential for the public

and private sectors to cooperate to identify which ship-

ments need to reach their destination faster than others.

A number of initiatives are under way that can help

with the prioritization of goods. Initiatives such as the

Advance Commercial Information and the Automated

Commercial Environment programs from the Canada

Border Services Agency and U.S. Customs and Border

Protection, respectively, are helping to identify cargo

ahead of time. When a disruption occurs, the advance

sharing of information can help move products through

gridlocked facilities.

33 Benavente, Port Operations.

A ship waits to be serviced at the Port of Long Beach. Photo by Andrew Archibald.


24/42



With or without prioritization, it was still necessary to

direct resources in the supply chain for weeks to address

the backlog of cargo. For example, prior to the lockout,

BNSF Railways facility at the Port of Oakland was hand-

ling between 600 and 800 twenty-foot equivalent units

(TEUs) each month. As ships were diverted to the Portof Oakland at the end of the lockout, the rail company

increased the number of TEUs it was handling 10-fold

over a period of just a few days. As a result, additional

rail capacity needed to be diverted from other operations

to handle the increase, and shippers needed to prioritize

what went first.34

Wth or wthout prortzaton, t was st necessar to

drect resources n the supp chan for wees to address

the aco of caro

Ultimately, letting the companieswhich know the

supply chain and their cargo intimately manage the

prioritization process is the most efficient and effective

way to reconstitute the supply chain. These players

already have the required relationships with other

operational-level individuals to identify how best to

get cargo flowing again. They know what is most

important to their clients, how to route goods most

quickly, where bottlenecks will occur, and how best to

navigate a global intermodal supply chain. Additionally,

these companies know how to make decisions about

which ships and containers need to be moved first, and

how to address ships and containers that carry mixed

goods. Added to this is the fact that they are also the

most motivated to rapidly reconstitute operations

because if they are unable to do so, customers will

shift to other service providers.

34 Johanson, Santa Fe Railroad Partnership.

iil lSSNS

The 2002 lockout provides many important lessons

about the implications of major port disruptions.

Three key takeaways are perhaps most important:

he end of a supp chan dsrupton s not the end ofthe proe Once conditions have evolved to a

point where operations can resume, the serious con-

sequences of the disruption must still be addressed.

The many organizations that comprise a supply chain

will seek information about the current status of

operations and will need to coordinate their activities

before the system can resume operations. Planning

how services will resume and be prioritized requires

as much attention as how to avoid having them

stopped in the first place.

econsttuton of supp chan operatons shoud eed prvate sector oranzatons worn wth puc

authortes While no-one fully understands all aspects

of a global supply chain, stakeholders need to recog-

nize that no-one knows them better than the private

sector organizations that run key elements of these

systems. Resuming economic activities is one of the

best ways to bring normalcy to the companies and

regions that have been disrupted. Private sector oper-

ators understand what major clients need first, where

specific containers are in the system, and how best to

move them quickly. That said, there is a need to be

aware of which critical products need to reach their

final destination in a timely manner. Working with

public authorities can aid in this identification.

Port operators are requred to e predctae Supply

chains face minor disruptions on an on-going basis

weather, earthquakes, disease outbreaks, labour dis-

ruptions, etc. Many companies are adept at finding

alternate routes for their products to reach their final

destinations in the most cost-effective ways. Despite

their flexibility, when companies have to reroute from

a port or destination too many times, ports risk losing

their business for good, as organizations seek greater

predictability. It is in the interest of port facilities to

work with stakeholders to ensure that the risks and

impacts of a shutdown are effectively mitigated.


25/42


The sheer scale of operations, the global distribu-

tion of the systems, and the complexity of oper-

ations make it impossible for a single individual

or organization to entirely see a supply chain. Taking

a systems approachunderstanding how organizations

connect to one another, how goods flow, and where

dependencies and interdependencies existis essential

to managing global supply chains. More importantly, a

systems approach is fundamental to successfully restarting

such complicated systems once they have been stopped.

The experiences of Port Metro Vancouver (PMV), and

the actions it has taken over the last several years, pro-

vide a particularly valuable example of how to make

supply chains more visible so they can be more effectively

operated, and how to improve the resiliency of thosesystems in times of crisis.

The ports of Long Beach and Los Angeles have invested

heavily in the protection of their facilitieswith side-

scanning sonar, state-of-the-art camera systems, and a

host of other initiativesbut Port Metro Vancouver has

taken a very different approach to ensuring the continuity

of operations. The port operators have actively engaged

the entire port community, are working closely with sup-

ply chain partners to improve information sharing, and

have established a level of transparency in the system

that optimizes the performance of key stakeholders.

sstes approach s fundaenta to successfu

restartn such copcated sstes

Their approach reflects the multi-use and geographically

distributed nature of the Vancouver port. Unlike many

other ports, which are used almost exclusively by the

shipping community, the Vancouver port waterfront

is a mixed community of residential real estate, retail

and hotel facilities, pleasure craft, yacht clubs, ferries,

and water taxis. Added to this are aircraft that make

approximately 63,000 landings and take-offs at the

Inner Harbour Airport each year.

Making Systems Visible

P 4

hapter Suar

Chapter 3 studies two labour disruptions (truck-

ers strikes) that had serious consequences for

the operations at Port Metro Vancouver.

The chapter examines how the port used

these events as a catalyst to develop simple,

yet sophisticated, approaches to supply chain

management and port security.

Lessons learned have enabled Port Metro

Vancouver to create better supply chaintransparency than most other ports have.


26/42



The approach taken at PMV is also shaped by the dis-

ruptions to its operations that the port has experienced

in recent years. In this chapter, we examine two labour

disruptions that had serious consequences on the oper-

ations at Port Metro Vancouver, and how the port has

used these events as a catalyst to develop simple, yetsophisticated, approaches to supply chain management

and port security.

W SikS iN N

As do many other ports, Port Metro Vancouver has had to

navigate its own share of labour disruptions. Due to the

complexity of ports, it is not surprising that they experi-

ence these situationsin fact, it is surprising that ports

do not experience them more often. The operation of aport requires a wide range of organizations, each fulfilling

critical roles that are often entirely dependent on the suc-

cessful performance of a number of other organizations.

For example, organizations involved in a ports operation

typically include the following:

shipping agents

carriers

stevedores and terminal operators

railroads

truck owners and operators

customs agents

warehousing operators

pilotage and tug boat operators

longshore labour

shippers

freight forwarders and brokers

Like all ports, Port Metro Vancouver manages relation-

ships with a long list of companies that have linkages

around the globe. With so many interests at play in such

a competitive industry, it is not surprising that operations

have periodically been disrupted by labour disputes.

1999kS PS N lb lk

Between July 22 and August 23, 1999, approximately

450 independent truck owners and operators stopped

work at the port to protest low rates and a container

transportation system that limited the productivity

of the drivers.1 The disruption ended after 30 days

when a memorandum of agreement was established that

included increased trip rates and a shift to hourly wages.2

However, the move toward a standard hourly rate didnot occur for many, and rate cutting began to erode the

compensation outlined in the memorandum of agree-

ment. In November 1999, another dispute began as

about 2,000 longshore workers were locked out of

port facilities after months of negotiations that resulted

in a stalemate. The two sides were at odds over the

potential use of a greater number of non-unionized

contract workers.3

Wth so an nterests at pa n such a copettvendustr, t s not surprsn that operatons have

perodca een dsrupted aour dsputes

As the lockout continued, the effects were felt across the

country and organizations looked for alternative methods

to export and import goods. One manufacturing company

in Manitoba resorted to shipping product to Seattle.

However, this was less than optimal due to a one-third

reduction in product weight being shipped because of

differing weight restrictionsVancouvers port facilities

permitted 65,000 pounds to be shipped, whereas Seattle

limited the company to 45,000 pounds.4

At the time, the lockout was estimated to create losses

as high as $100 million a day.5 Despite the costs,

both the Government of Canada and the Government

of British Columbia declined to become involved.

1 Government of Canada, Final Report, p. 6.

2 Ibid.

3 Zalm, Canada Notes.

4 CBC News, B.C. Port Strike Hits Home.

5 Zalm, Canada Notes, p. 49.


27/42



After eight days, a mediators proposed settlement was

accepted by both sides and port operations resumed on

November 15, 1999.6

2005kS SP WkiNg

The next major dispute to hamper supply chains and portoperations came in 2005. Truck owners and operators

argued that they were being paid between $300 and

$400 per day, while operating a truck was costing them

$350 per day.7 Similar to the 1999 truck dispute, rising

fuel costs and dwindling profits led approximately

1,000 truckers, who served the port terminals, to

undertake a wildcat strike on June 25.8

s each wee passed, $32 on worth of oods sat

near the docs, quc resutn n heav coneston

But the term strike is used loosely in this case. The

reality was that there was no single organization behind

the strike. Instead, 90 to 95 per cent of the truckers were

independent owners and operators. While non-unionized,

they shared strong cultural ties as many of the truckers

in the region are from the Punjabi community. Out of

frustration, the truckers simply decided to stop working.

They could not be fired, they could not be legislated back

to work, andsimilar to the truckers blockade in New

Brunswickthere was no-one to negotiate with.

The truckers, specialized in moving shipping containers,

were responsible for transporting 40 per cent of the goods

imported and exported through Vancouvers port. As each

week passed, $32 million worth of goodsincluding

food, furniture, and electronicssat near the docks,

quickly resulting in heavy congestion.

With containers piling up, businesses began looking for

alternatives. At first, for many who were importing, the

solution was as simple as placing an arriving container

6 Eight-Day Lockout Lifted at Some Canadian Ports.

7 CBC News, Vancouver Port Strike Drags On.

8 Ibid.

immediately on a rail car. However, as railroad capacity

was used up, the effects were felt as far away as Toronto,

and other options were needed.9

As the strike continued, carriers began redirecting ships

to other portsin places such as SeattleTacoma, LosAngeles, and Long Beachand offloading Canadian-

bound cargo to avoid the growing delays around

Vancouver. Canadian rail companies also stopped

accepting shipping containers for delivery to the

port of Vancouver. The ports of Montral and

Halifax began to feel the backlog.10

Some organizations were unable to find alternative trans-

portation solutions and had to pay storage fees for the

product that was sitting near the docks.11 In one case,

a company was paying $1,000 per day to store sevencontainers during the strike.12

urn the fna wee of Ju, ntensve dscussons

resuted n a deadoc and the dspute seeed to

have no end

With their hands tied, many businesses could only ride

out the strike and hope that their warehouses had enough

stock. One company observed that because of the strike,

for the first time in 28 years of operations, the firm

almost reached the point where it had no supply. 13

A facilitator between the two sides, appointed by both

the federal and provincial governments, worked through

the month of July to reach an agreement. During the final

week of July, intensive discussions resulted in a deadlock

and the dispute seemed to have no end. 14

9 Flavelle, Port Logjam Takes Toll, p. D02

10 Ibid.

11 Traffic World, Vancouvers Strike Waves, p. 6.

12 Stewart, Small Firms Left to Mop Up.

13 Ibid.

14 Government of Canada, Final Report, p. 9.


28/42



However, on July 29, the facilitation team outlined a

potential solution that required the federal government

to issue an order-in-council, exempting the stakeholders

from compliance with the Competition Act. This cleared

the way for a resolution and on August 4, 2005, the trucks

were once again moving a backlog of six weeks worthof containers.15

At the end of the 2005 truckers striketo break the

gridlock at PMV and to start containers moving again

stakeholders came together and offered a $50 bonus to

drivers for each containe

archibald cboc supply chain resilience 2010

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