Impacts of the Canadian Trucker Blockade: How Can Businesses Prepare for Disruptions?
What started as a protest against cross border COVID-19 vaccine mandates in Canada is now part of a worldwide protest movement, with similar truck convoy protests taking place in France, Belgium and New Zealand.
Politico reported that the truck convoy protests, which are organized under the hashtag #FreedomConvoy, have garnered support from anti-vaccine groups in the US, Europe and across the world from social networks like Telegram. Adding to the complexity of the situation is the rise of misinformation pushed by overseas content mills in Bangladesh, Romania and Vietnam, with many such mills beginning to promote more disruptive convoys, potentially leading to more supply chain delays in the future.
What was the blockade's effect on the supply chain?
In the wake of severe and ongoing disruptions as a result of COVID-19, global markets are now more than ever susceptible to supply chain breakdowns. The recent Freedom Convoy blockades are one such example. Protestors blocked traffic in both directions on Ambassador Bridge, a key link between the cities of Detroit and Windsor. The route is North America’s busiest land border crossing, and it is a main artery for the supply chain and the transportation of goods.
The blockage resulted in hardships for large companies. Several major automotive manufacturers, including Toyota, Ford and GM have cut back on production because of the protests. Parts shortages in particular have slowed the process.
“This blockade is the latest shoe to drop in the string of supply chain challenges during the past two years and represents yet another challenge for businesses, their senior management and supply chain professionals to navigate,” said Scott Hill, a member of Varnum’s Corporate Practice Team and the firm’s Executive Partner. “While the impact of this particular challenge has been felt most acutely in the Midwest on a near-term basis, with substantial delays in deliveries to an already strained auto industry, these effects will linger and be felt across the country in the coming weeks, as the Ambassador Bridge accounts for 25 percent of all trade – about $360 million a day – between Canada and the U.S.”
Toyota noted a significant slowdown on its RAV4 vehicle manufacturing, and Ford stated that it was running several plants at reduced capacity. Likewise, GM halted production entirely at a Michigan factory, lacking the needed components for a line of sport utility vehicles.
Legislators and politicians in the U.S. have already responded to the matter. On February 9th, the White House announced it was working with automotive companies and Canadian officials to circumvent any disruptions.
What are the impacts of social media movements and supply chain blockades?
The truck convoy movement has grown in popularity, with supporters using messaging apps like Telegram to organize food and supply deliveries along protest routes.
A recent bulletin from the Department of Homeland Security warned that truck convoys may start in California and end up in Washington, D.C., potentially causing more delays and traffic disruptions. Such protests have the potential to impact economic activity, with the previously blocked Ambassador Bridge between Windsor and Detroit generating $13.5 million per hour in economic activity.
While the bridge remains open for now, local officials are worried that the protestors could return. Jennifer King, attorney for the city of Windsor, told Ontario Superior Court Chief Justice Geoffrey Morawetz in a hearing that “there is a real and present threat” that protests could restart their blockade of the Ambassador Bridge.
While the protestors have used less moderated platforms like Telegram, the movement is also popular on more mainstream platforms like Facebook, which recently shut down a page with 140,000 supporters for violating its guidelines against promoting QAnon, a far right conspiracy theory.
“Given the ‘success’ of the blockade, there could be further instances of organizing activity around key ports or trade zones, not only in the U.S. and Canada, but across the globe. Businesses have worked hard to re-imagine and dissect their supply chains over the past two years,” said Mr. Hill. “This type of development is yet another contingency businesses must build into their process mapping and scenario planning as they continue to optimize their supply relationships and their ability to secure critical components related to their manufacturing processes.”
Trucks have become an important part of supply chain infrastructure as backlogs have become more common at ports, with trucks carrying 72 percent of goods in the U.S. If blockades such as the Freedom Convoy occur more frequently, supply chain delays and economic impacts could become more common.
How can companies prepare for supply chain disruptions?
Given the significant legal ramifications of a supply chain breakdown, companies should prepare carefully and develop contingency plans for this eventuality. Ensuring that supply chains are as streamlined and failsafe as possible will ensure that any disruptions are as minimal as possible.
Companies may take any number of approaches to mitigate these problems. One such option is the adoption of new sources in the supply chain. Shifting from a single source of materials to a wider network of materials can ensure that delays are shorter than anticipated. Additional preparation for complicated state and federal transportation laws will also ensure any hang-ups are avoided.
“We've seen steady improvement in supply-chain related contingency planning since the pandemic commenced. This disruption is but the latest reminder of the need for thorough diligence up and down the chain, as companies evaluate supply relationships,” Mr. Hills said. ”This type of exogenous event also demonstrates the need for dual-source, multi-channel procurement and underscores the need for manufacturers to truly understand the flow of their inputs and outputs.”
Regular communication up and down the supply chain is equally important. Proactive correspondence with suppliers allows all parties to prepare accordingly. Further, indicating likely shortages or delays demonstrates an honest effort to meet previous agreements. To accomplish this, it may be necessary to implement new internal and external channels, to allow for speedy communication.
“It will be very difficult if not impossible to pursue legal claims against the protesters. However, this, once again, serves as a reminder of the importance of well-thought-out force majeure clauses in both supply and commercial contracts with customers and trade counterparties alike,” said Mr. Hill.
Rachel Popa also contributed to this article.