A decision by the Canadian government has meant more than 9000 Canadian rail workers must stay in work, a decision that is being appealed in court by Teamsters Canada Rail Conference union and other labour groups.
Teamsters is flagging concerns over workers’ bargaining power.
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Last week, the American Apparel and Footwear Association warned of the threat to US supply chains following the first-ever worker lockout. Canada sends around 75% off all its exports to the US mostly by rail.
The AAFA was particularly concerned of the impact at the critical back-to-school time and just at the start of the holiday inventory rush.
“Amid numerous supply chain disruptions by sea, companies are already diverting cargo and facing distressed trucking routes. It is imperative that all logistics stakeholders continue to work together to support modern and efficient systems, and ensure there are safe and responsible workplaces that power them,” said Steve Lamar, CEO of the AAFA at the time, urging a return to the bargaining table between unions and management to ensure a fair, sustainable long-term deal.
But with the lockout being forced to come to an end and unions in uproar over the government’s stance when it comes to collective bargaining and constitutional rights of workers, industry observers are concerned the fix may only be short term.
Speaking to Just Style, Bob Antoshak citing Jon Gold of the NRF said the drama continues to unfold in Canada between CN/CPKC and the Teamsters.
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By GlobalData“Despite yesterday’s announcement of the Canadian government issuing mandatory arbitration, the Teamsters have issued a 72-hour strike notice to CN. The Canadian government needs to do everything it can to get the parties to the table to negotiate without any further disruptions.”
“This thing may not be over.”
For a few years now, China had been the bugbear with trade restrictions and most US apparel brands and retailers were looking at diversifying sourcing in a long term bid to remove China from supply chains.
But in the last year, the Red Sea supply route has been under threat as an indirect result of the Gaza-Israel conflict.
And global retailers and footwear brands continue to manage the fallout of surging energy prices resulting from the Russia-Ukraine conflict.
Together, these events are seeing the cost of sourcing, spike.
According to the 11th USFIA Benchmarking Study one of the top three business concerns for apparel sourcing executives in 2023 is rising costs of sourcing on the back of macroeconomic pressure.
Macroeconomic data indicates that in May 2023 the US consumer price index (CPI) exceeded 120 (January 2019=100), and the price index of US apparel imports reached 106.5 (January 2019=100), both the highest in the most recent 12 months. Inflation pressure from the macro economy will likely continue to affect US fashion companies’ sourcing costs for the rest of 2023.
Lamar told Just Style the AAFA was “grateful” the Canadian government worked swiftly to intervene and ensure all parties returned to the negotiating table.
“Indeed, millions of workers and consumers around the globe, and global economies, rely on steady, reliable, and effective flow of goods across our global supply chains…This showcased the Trudeau administration’s commitment to safeguarding global supply chains while working towards a fair, sustainable, and long-term deal for Canadian rail workers.”
But he warns of similar concerns involving other parts of the apparel supply chain.
At present, Bangladesh, the third largest apparel supplier to the US, is reeling from the aftermath of student protests which have led to mass civil unrest, factory closures, the ousting of the country’s Prime Minister and a leadership shakeup of the Bangladesh Garment Manufacturers Exporters Associaton (BGMEA).
Several brands have shifted sourcing to nearby locations.
Lamar says the AAFA also has its eye on a potential East Coast labour strike, is monitoring a possible dockworker strike in India, and continues working through the ongoing Red Sea logistics crisis.
Meanwhile, Neil Saunders, an analyst at GlobalData, warned the Canada rail decision, while a “deep crisis has been averted,” it served lessons for retail and apparel sectors about the fragility of supply chains.
“Retailers need to build in slack in terms of delivery times. For some, it is also worth having backup delivery options and alternative modalities.
“The problem is that because these kinds of disruptions do not occur regularly, there is a need to balance putting redundancy into the supply chain with the costs.”
