Economic facts support ILWU claims of employer’s soaring profits

NEWS RELEASE

Economic facts support ILWU claims of employer’s soaring profits

Vancouver, B.C. (July 10, 2023) – Attempts by ILWU Canada to get a fair wage increase in current contract negotiations have been blocked by shipping companies and terminal employers who have seen profits explode during the last three years.

The employers claim longshore workers are greedy and resistant to change and must be forced back to work through legislation to protect the national economy.

This argument has it exactly backwards, according to a study by Dr. Jim Stanford, economist and director of Vancouver’s Centre for Future Work.

He says it is the shipping companies and terminal operators whose greed has disrupted Canada’s economy by contributing to the worst inflation in decades.

The study shows the six biggest global shipping lines control 70 per cent of world shipping, giving them control over prices and practices. All six are members of the powerful BC Maritime Employers Association (BCMEA) which is stonewalling progress in the current negotiations.

Public financial information is available for five of those companies. Together, these five companies alone made over $100 billion in profit in 2022 – up 1500% since 2019. Meanwhile, longshore base wages in BC grew less than 10 per cent over the same three years.

According to the Financial Times (June 22, 2023), from 2020 to 2022 the shipping industry generated as much profit as it had during the previous six decades combined.

Container shipping costs rose fivefold as the global economy reopened. For example, container freight costs from Asia to North America’s West Coast surged from $2000 (US) per unit to over $10,000 at peak in 2022. That helped spark the inflation which has roiled the global economy ever since. Container charges have since moderated, but overall shipping costs including terminal fees remain high.

“The federal government would not intervene to impose contract terms on the shipping companies, protecting Canadians from cost and disruption, and it’s sheer hypocrisy to now argue that government should force longshore workers back to work,” says ILWU Canada president Rob Ashton.

Fees collected by terminal operators have also increased quickly since the pandemic as they took advantage of the disruption to jack up their own charges.

Over the last two years alone, major BC terminal operators increased charges for standard services by 25 per cent or more, far faster than general inflation. The ILWU asked to review their financial statements prior to bargaining but the employers refused. There is no doubt, however, that terminal revenues and profits have swelled in recent years.

They cannot blame longshore workers for higher costs: base wages grew just 6.6 per cent over the same two years, and wages make up only a small portion of total costs in the shipping sector.

The Centre for Work report states: “Clearly, labour is not the source of rising costs in marine shipping, and the resulting inflation. The greed of shippers and terminal operators, who took advantage of an economic and health emergency to fatten their bottom lines, is the source of the problem. Yet now business groups blame workers for disrupted shipping.”

Hourly wages for longshore workers are similar to wages for other skilled industrial jobs. Under the current dispatch system, they face great insecurity in working schedules, often receiving no work at all, and must wait several years to qualify for benefits.

In recent years, wages lagged well behind BC’s sky-high cost of living: the real purchasing power of longshore wages has fallen 2.5 per cent since 2017. And longshore wages have grown slower than wages in the overall Canadian economy.

Rob Ashton

President – ILWU Canada