(Montreal) Bob Ballantyne broke a cord on his blinds in early July, and his repairman in Ottawa still hasn’t been able to replace the broken part. He told her that with the supply chain issues, he can’t get the part he needs.
Posted at 4:13 p.m.
Mr. Ballantyne is not alone. The pandemic has sent shockwaves through the global supply chain, and backlogs are piling up as freight volumes decline in North America this year.
The delays stem from several choke points along the chain, including saturated warehouses, staffing shortages and rail capacity. Ultimately, the longer wait times and additional costs are passed on to consumers.
In the first half of 2022, container volumes at the Port of Vancouver fell 7% from the same period a year earlier. However, containers remained at its docks for nearly six days on average, almost twice as long as in 2019, and a 41% increase from 2021.
This “dwell time” increased in July to more than six and a half days. Meanwhile, cargo ships lay at anchor for an average of 9.6 days before docking at the country’s biggest port due to buildups over the past month. This wait time is twice as long as last year.
“It’s like Lego bricks,” says Robert Lewis-Manning, president of the Chamber of Shipping of British Columbia. They are piled up and there is no more place to put them. »
In Montreal, Canada’s second busiest port, containers are waiting four times longer than the 2019 average and vessel turnover is also well above 2019 levels and a year ago.
The lack of warehouse space in distribution centers on the outskirts of Toronto, Montreal and Vancouver is one of the reasons for this congestion.
“Warehouses in Ontario and Quebec are largely full,” adds Lewis-Manning. The problem is, there’s something behind it that can’t go where it needs to go. And it is perhaps an essential part of a manufacturing operation. Ultimately, the consumer will pay the price. »
Storage charges, contract extension penalties and “demurrage” charges – issued by a shipping company when freight exceeds the allotted time at a terminal – end up appearing in the retail price, in addition to freight rates. higher and overtime workers.
Importers who “overcorrect”
Ironically, delays caused by full warehouses are partly the result of importers’ response to previous supply chain disruptions.
“When people anticipate a shortage or capacity constraint, they overcorrect. And that actually amplifies the challenge,” says Peter Xotta, chief operating officer at the Vancouver Fraser Port Authority, citing what he called a “whiplash effect.”
“If the goods arrive two months later than expected, you may miss that window for the barbecues, parasols and garden furniture you were looking for in June”, underlines the vice-president for port performance and sustainable development of the Port of Montreal, Daniel Dagenais.
Once the sales window is over for these seasonal products, they must either be physically stored until the following year or be subject to deep discounts.
Canadian Tire said earlier this month that its merchandise levels were up 18% from a year earlier, meaning it has less flexibility to stock off-season items.
Shippers and ocean carrier operators see the railroad as a critical bottleneck.
Grain volumes fell last year due to a drought, but the railroads “still had problems,” said John Corey, president of the Freight Management Association of Canada.
Grain yield – often the primary source of commodity revenue for Canadian National Railway Company (CN) and Canadian Pacific Railway (CP) – is expected to return to historical averages this year, which raises questions about other expeditions that might be set aside to deal with the larger harvest.
“The amount of rail capacity that there is with various rail lines, that’s really what has a big impact,” adds Mr. Xotta.
Stakeholders, from wheat and canola exporters to lumber producers, are concerned as demand for Canadian grain, potash and coal increases due to shortages caused by the Russian invasion of Ukraine.
“All of these Asian imports that come in containers and the largely bulk exports that go to Asia…are all competing for that same rail service,” adds Lewis-Manning.
“I think we’re going to see a real mess on the West Coast,” he adds.
Shortage of truckers
A severe shortage of truckers marks another snag in the chain. The sector saw record vacancies in the first quarter, with 25,560 unfilled driver positions between January and March, according to Trucking HR Canada.
Additionally, the fallout from heavily lagging U.S. ports like nearby Los Angeles and Long Beach is further adding to port congestion, while labor shortages in warehouses are also clogging the flow of goods.
“You get to a point where one more drop and you start to overflow. And we started to overflow, ”laments the president of the Shipping Federation of Canada, Chris Hall.
Canada’s two main rail lines have poured money into network upgrades and new carriages while scrambling to hire workers after laying off thousands in the first year of the pandemic .
CN and CP hope to hire more than 3,800 workers this year, some 1,850 of whom have already been on board since Dec. 31. The job market, especially for conductors and engineers, nevertheless remains tighter than it has been for decades and it takes up to nine months to train a few crews.
CN spokesman Jonathan Abecassis said the railroad had set up temporary storage capacity in Montreal and Toronto, as the Port of Vancouver did in February. CP President and CEO Keith Creel assured analysts on a call last month that the company was flexible: “We have the capacity. We do not hold any cargo at West Coast or East Coast ports to enter our inland terminals. »
This is cold comfort for Mr. Ballantyne, who is still waiting for his blinds to be repaired. The latest news is that the component could be replaced by next month, but there is no guarantee.