The Port of Montreal is on edge this weekend. Longshoremen who work at the port are set to vote Sunday on terms of a contract between their union (the Canadian Union of Public Employees or CUPE) and the Maritime Employers Association (MEA), which represents marine terminal operators and other transportation companies at the port.  The current truce between the parties expires Sunday and if an agreement is not achieved dockworkers could strike as early as mid-week.
Montreal is the largest port in Eastern Canada. It is located on the St. Lawrence River, the primary outflow from the Great Lakes to the Atlantic. The river and associated St. Lawrence Seaway offers the most direct path between Europe and the North American midwest. Up to C$100 billion of goods and 1.6 million containers on over 2,000 ships flow through the port—a subset of the seaway volume—each year. Grains and food products are some of the largest imports and exports through Montreal by weight. Forests and crude oil are important resources in the region, and over 8 million metric tons of petroleum products were exported from the port last year. 
The contract between Montreal’s longshoremen and the MEA expired more than two years ago. Initial negotiations were unsuccessful, and the relationship boiled over last summer with the union going on repeated strikes—one lasting 12 days that froze or diverted roughly 80,000 containers (twenty-foot equivalent units or TEUs). According to port authorities, the strikes cost companies in the region C$600 million in lost sales.  In August the strikes ended when the parties agreed to a temporary truce, which is set to expire Sunday.
Since August, negotiations have been tense and have not made progress. Working hours are believed to be the primary point of contention (the parties agreed not to speak to the media during the truce). The MEA has also tried to prevent another strike by appealing to the Canada Industrial Relations Board (CIRB) that port operations are an “essential service” and the union was negotiating in bad faith. The CIRB, however, rejected the MEA’s complaint and argued that a port disruption is not “an imminent and serious risk to the health and safety of the public” so it does not qualify as an essential (enough) service to override labor laws. 
In anticipation of the deadline this Sunday, some companies began re-routing shipments through Canada’s West Coast ports and the Port of Halifax weeks ago. Other companies have instructed carriers to divert cargo if a deal is not reached this weekend. After last summer’s strikes, the Canadian National Railway and ports in Halifax and Saint John are better prepared to handle potential diversions despite broader disruptions in global shipping. 
Sunday’s vote will be consequential for the Port of Montreal and the midwest region. It also echoes across multiple stories unfolding in the global economy right now including disruptions at other ports, the union vote at Amazon, a looming deadline for U.S. West Coast ports, and inflation.
In global shipping, the transpacific trade has been hit hard by the strong demand for goods made in China and other countries in Asia. The backlog at Southern California’s ports has begun to ease and conditions may improve by the summer—a milestone at which many of us may be vaccinated—but conditions have deteriorated in New York, New Jersey, and other ports on both the East and West Coasts. 
Port disruptions are largely being driven by strong U.S. and Canadian consumer demand for imports. Container lines have also sped up the return of containers back to Asia, with a greater share returning empty rather than filled with exports. At the same time, Canada has seen exports rebound. After running a significant deficit for most of last year, Canada’s trade has rebalanced when adjusting for retired aircraft. The nation booked its largest trade surplus since 2014 in January, but the surplus was driven by a single airline retiring a large number of planes and shipping them to the U.S. 
Sunday’s vote in Montreal also echoes looming labor negotiations at U.S. West Coast ports that begin next year. And there are already hints that automation could be a serious point of contention following protests in 2019 at the Port of Los Angeles—despite a collective bargaining agreement in place.  The International Longshore and Warehouse Union (ILWU)—which represents workers at 29 ports in California, Oregon, and Washington—will elect a new leader in September in advance of the next round of contract negotiations. The ILWU’s current contract with the Pacific Maritime Association (PMA) was signed after significant disruptions at West Coast ports in 2014 and 2015. The ILWU and PMA agreed to a contract extension in 2017, which expires on July 1, 2022. 
Ports are not the only echo of union activities. A few weeks ago, I wrote about the unionization effort at an Amazon distribution center in Bessemer, Alabama.  Employees of the facility are currently voting on whether to be represented by the Retail, Wholesale, and Department Store Union (RWDSU), an organization that also represents thousands of other workers at poultry plants and department stores like Macy’s and H&M. Amazon is now the second-largest employer in the U.S. and if successful the unionization effort in Alabama would be the first Amazon facility in the U.S. Ballots were sent to the approximately 6,000 employees who work in the Bessemer facility on February 8 and must be signed and received by the National Labor Relations Board (NLRB) before March 30. If a majority of votes are in favor of unionization, the NLRB will recognize the union and their right to bargain for a contract with Amazon. 
Amazon is known for its sophisticated performance management systems including a “gamification” program where employees earn digital rewards for performance and competing with other employees.  It also has been accused of relying on a high-churn employment model to sustain the demands of working in its warehouses.  According to a report in Recode, leaders inside of Amazon are treating the vote in Alabama as a crisis. One former Amazon executive considers unionization as “likely the single biggest threat to [Amazon’s] business model.” 
Amid the union dynamics, the broader labor market continues slowly improving with 379,000 non-farm jobs added in February.  This is movement in the right direction but it was too small to budge the unemployment rate—which at 6.2 percent is almost double pre-pandemic levels—and little relief for the 10 million Americans still unemployed.
While the labor market is moving in the right direction, net wages are not. According to the latest numbers from the U.S. Bureau of Labor Statistics, real average hourly earnings decreased 0.2 percent from January to February.  Technically, (unadjusted) average earnings increased 0.2 percent. This was offset by a 0.4 percent increase in the Consumer Price Index (CPI-U), which means the slight increase in wages could buy fewer products and services due to inflation.
If there is a hot word in the financial markets right now it is “inflation” (ok, and “bitcoin”). According to Kim Chipman at Bloomberg, there is nowhere to hide from inflation fears that are gripping global markets.  It is true the CPI-U is increasing and our wages are buying less. Recent price increases in commodities had some suggesting we may be heading into a supercycle where supply is so insufficient that prices rise for years or longer.  That supercycle, however, may have been short-lived. Oil, grains, and other commodities contracted yesterday after announcements from the Federal Reserve and gains in the U.S. dollar. 
On Wednesday, Federal Reserve Chair Jerome Powell pledged to keep his foot on the gas pedal by maintaining the benchmark overnight interest rate near zero for the foreseeable future despite concerns about inflation. The Federal Reserve does expect inflation to jump to 2.4 percent this year as the economy continues to grow with the stimulus checks that went out this week, COVID-19 cases coming down, coronavirus vaccine distribution expanding and public health restrictions loosening. This rise in inflation, however, is expected to be temporary and fall back to the Federal Reserve’s target of 2 percent in 2022. 
Powell also said the U.S. is on track for the strongest growth in nearly 40 years. 
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What I’m Reading
New Algorithm Breaks Speed Limit for Solving Linear Equations by Kevin Hartnett in Quanta
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 https://www.joc.com/port-news/us-ports/new-normal-la-lb-means-port-congestion-least-until-summer_20210311.html; https://www.joc.com/port-news/us-ports/depot-closure-empty-returns-snarling-ny-nj-port-truckers_20210312.html
 https://www.bloomberg.com/news/articles/2021-03-18/nowhere-to-hide-from-inflation-fears-as-commodities-join-rout; https://www.bloomberg.com/news/articles/2021-03-19/oil-s-plunge-was-sign-of-a-market-that-got-too-bullish-too-fast