Montreal port strike snarls scrap metal trade

Containerized ferrous and nonferrous scrap metal exporters shipping out of the port of Montreal are facing higher shipping costs and multi-week delays as a strike by more than 1,000 longshoremen nears its third week.

The strike, which began on 10 August, followed stalled negotiations between the port workers union CUPE Local 375 and the Montreal Port Authority (MPA) for a new collective bargaining agreement. The work stoppage has stranded an estimated 90,000 twenty-foot equivalent units (TEUs) either on the docks or on container ships, according to the port.

The strike has created logistical challenges for scrap exporters and eroded profit margins as shipping lines divert shipments via rail to terminals in Halifax, Nova Scotia, and Saint John, New Brunswick. The diversion charges range from $100-375 per 20ft container and as high as $575 per 40ft container, according to exporters and freight forwarders.

One freight forwarder is passing the diversion charges to its customers but not adding fees for the work to divert the container.

"The charges are to get containers on the rail from Montreal," the forwarder told Argus. "It is better than sitting on the port and accumulating demurrage."

Ferrous scrap containerized exports have been more impacted than nonferrous shipments, according to exporters. Margins on ferrous scrap containers are already so tight that the additional diversion costs are much more damaging, they said.

"Nonferrous we can afford, but on ferrous we cannot put the extra cost into the container," one Canadian exporter said.

The shift in container volumes has had unintended impacts at the terminals in Halifax and Saint John, as the surge in volumes to both ports has outstripped the available workforce and led to congestion.

"They are not set up up for handling that kind of traffic," a second Canadian exporter said, noting that they have not been able to move export containers as a result.

Meanwhile, the strike has not had any impact yet on the bulk ferrous scrap export market.Argus confirmed that there are currently no vessels being loaded. Exporters have instead been selling into the domestic market.

Prior to the strike, Canada ferrous scrap shipments from the port of Montreal were on track to top last year, with first half exports totaling 108,940t, up 1.3pc from 107,506t in the first half of 2019, according customs data. India (32,246t), Mexico (26,860t) and Turkey (31,500t) were the top three export destinations for the port through the first half of the year.

By Brad MacAulay