Bob Ballantyne broke a cord on his blinds in early July, and his mechanic in Ottawa still couldn’t replace the broken part. He told her that he can’t get the part he needs due to the problems in the supply chain.
Posted at 4:13pm
Mr. Ballantyne is not alone. The pandemic has sent shockwaves through the global supply chain, and backlogs are piling up as North American cargo volumes fall this year.
The delays are due to several bottlenecks along the chain, including overcrowded warehouses, staff shortages and rail capacity. Ultimately, the longer waiting times and additional costs are passed on to consumers.
In the first half of 2022, container volume at the Port of Vancouver fell by 7% compared to the same period last year. However, containers stayed at their docks for nearly six days on average, nearly double the time in 2019 and a 41% increase from 2021.
This “duration” increased to more than six and a half days in July. Meanwhile, cargo ships lay at anchor for an average of 9.6 days before docking at the country’s largest port due to build-ups over the past month. This waiting time is twice as long as last year.
“It’s like Lego bricks,” says Robert Lewis-Manning, president of the British Columbia Chamber of Shipping. They pile up and there is no more room for them. »
In Montreal, Canada’s second-busiest port, containers are waiting four times longer than the 2019 average, and ship turnover is also well above the level of 2019 and a year ago.
The lack of storage space in the 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 that there’s something behind it that can’t get where it belongs. And it may be an essential part of a manufacturing process. In the end, the consumer pays the price. »
Storage fees, contract extension penalties, and demurrage — levied by a shipping company when cargo exceeds the allotted time at a terminal — are reflected in the retail price, in addition to higher freight rates and overtime for workers.
Importers who “overcorrect”
Ironically, delays from full warehouses are in part the result of importers responding to previous supply chain disruptions.
“When people anticipate shortage or capacity constraints, they overcorrect. And that adds to the challenge,” says Peter Xotta, chief operating officer at the Vancouver Fraser Port Authority, calling what he called a “whiplash effect.”
“If goods arrive two months later than expected, you may be missing out on the window for the grills, umbrellas and patio furniture you were looking for in June,” said Port of Montreal Vice President of Port Performance and Sustainable Development Daniel Dagenais.
When the sales window for these seasonal products has expired, they either have to be physically stored until the following year or large discounts are granted.
Canadian Tire said earlier this month that its inventories are up 18% year over year, meaning it has less flexibility to stock off-season items.
Shippers and shipping companies see the railways as a critical bottleneck.
Grain levels fell last year due to a drought, but the railroads “still struggled,” said John Corey, president of the Freight Management Association of Canada.
Grain yield — often the main source of commodities revenue for the Canadian National Railway Company (CN) and Canadian Pacific Railway (CP) — is expected to return to historical averages this year, raising questions about other expeditions that may be set aside the larger one Harvest.
“The amount of track capacity that there is on different railway lines really has a big impact,” adds Mr. Xotta.
Stakeholders from wheat and canola exporters to timber producers are concerned as demand for Canadian grain, potash and coal increases due to shortages from Russia’s invasion of Ukraine.
“All these Asian imports that come in containers and the mostly bulk exports that go to Asia are all competing for the same rail service,” adds Lewis-Manning.
“I think we’re going to see real chaos on the west coast,” he adds.
lack of truckers
A severe shortage of truckers marks another snag in the chain. According to Trucking HR Canada, the sector had a record first-quarter vacancies with 25,560 unfilled driver positions between January and March.
In addition, the consequences of severely lagging US ports such as nearby Los Angeles and Long Beach are contributing to port congestion, while warehouse labor shortages are also hampering the flow of goods.
“You come to a point where one more drop and you start overflowing. And we started defecting,” laments Shipping Federation of Canada President Chris Hall.
Canada’s two major 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.