Supply-chain congestion in Canada shows no signs of abating heading into the holiday seasons, although the level of dysfunction is less severe than in the United States, where the federal government has intervened to try to unclog key transportation bottlenecks.
On Wednesday, U.S. President Joe Biden said his administration struck a deal with the Port of Los Angeles to move to 24/7 operations, in the hope of addressing the massive backlog of container ships floating off the coast of California. Several large American companies, including UPS, Walmart and FedEx, also said Wednesday that they would extend their hours to deal with delivery delays.
Canadian supply chains are also gummed up, although the key problem is not insufficient port capacity, said Robert Lewis-Manning, president of the Chamber of Shipping. Vancouver’s main ports already operate around the clock, and have not had the same labour challenges as the major ports on the West Coast of the U.S., he said.
“The biggest problem in the Canadian supply chain is that there’s not enough land space. There’s too many containers to move out of terminals, to get to warehouses, and to unpack and move them on trucks,” Mr. Lewis-Manning said.
The COVID-19 pandemic has warped supply chains around the world, making it harder to source consumer products and manufacturing inputs, while pushing up prices and fuelling concerns about persistently high inflation. The situation is the result of surging demand for goods manufactured in Asia, combined with factory shutdowns, a shortage of shipping containers and severe disruptions to labour markets.
Dave Earle, president and chief executive officer of the BC Trucking Association, said that even small delays in shipments can quickly compound, leading to problems across the warehousing and transportation network.
“Because we run in a world of lean production with ‘just-in-time delivery,’ everything gets held up. So if you’ve got a product that needs five precursors, three are available, and two aren’t, nothing moves until everything is available,” Mr. Earle said.
Several of the large companies that responded to Mr. Biden’s call to extend their operating hours are holding back on changes in Canada.
“Canada as a whole is impacted by these global supply chain challenges, however, not to the same degree as the U.S.,” said Adam Grachnik, director of corporate affairs with Walmart Canada.
“At Walmart Canada, we planned for supply chain issues by buying up and buying earlier than ever before. By buying earlier and accounting for extra lead time to move goods, we will be well-positioned for the season,” he said.
Rudolf Douqué, international communications manager with UPS, said the company’s changes in operating hours “are specific to the situation in the United States,” and added that “UPS Canada is well-prepared for peak season.”
While the shipping backlog may not be as extreme in Canada as the U.S., it’s still causing a major challenge for Canadian importers. Martin Lieberman, managing partner of Lamour Group, which imports clothing for retailers Joe Fresh and New Balance, said that before the pandemic, his company used to allocate around 120 days from the time of a purchase order to when the customer received it. The company is now allocating around 180 days, Mr. Lieberman said at a virtual Canadian Club event on Wednesday.
“Whereas our in-transit inventory was previously 10 per cent, it’s probably 40 per cent today. It’s like a broken leg, we have to learn how to deal with it,” he said.
At the same time, he said the federal government needs to be doing more to address supply-chain problems, by fast-tracking key transportation infrastructure projects, and create a task force to address supply-chain problems.
“The government has to realize that they’re losing money daily by this supply-chain issue,” he said.
Transport Canada “is actively monitoring the impacts that the global supply chain challenges are having on Canadian port, terminal, railway and trucking operations,” Sau Sau Liu, senior communications adviser with the department, said in an e-mail.
“We are in close contact with the transportation industry network to assess the fluidity of Canadian cargo movements, congestion points and potential solutions such as the implementation of active traffic management measures in British Columbia to support efficient port/intermodal operations.”
The Port of Montreal, Canada’s second-biggest port, is seeing “nowhere close” to the same level of congestion hitting Los Angeles, said Daniel Dagenais, the port’s vice-president of operations. “Our ports in Canada, and certainly Montreal, are not going through this type of ordeal,” he said.
Montreal did experience a 36-per-cent surge in inbound container traffic starting around May of this year that caught port officials by surprise, Mr. Dagenais said, adding that roughly 20 per cent of the containers subsequently shipped out were empty and slated for repositioning in Asia. One of the reasons that could explain the surge is that shippers redirected cargo to Montreal from busier ports as its operations returned to normal after a strike paralyzed operations in the spring, he said.
Although Montreal continues to process higher-than-normal container volumes, operations are “relatively fluid” and there are no vessels anchored waiting to dock, Mr. Dagenais said. Performance statistics for the port through the first week of October show that containers from incoming ships are currently spending 3.5 days on average on Montreal’s docks before they are loaded onto trains, down from about seven days this past summer.
At the Port of Vancouver, the “dwell time” for freight temporarily left at terminals has been relatively normal, though concerns linger about other parts of the supply chain such as delays in transferring goods to and from warehouses.
At the Deltaport and Vanterm terminals, imported goods are spending three days or fewer on dock, which is considered a fast turnaround. At the Centerm terminal, the dwell time is from three to five days.
Overall, cargo through Canada’s largest port has continued to move steadily, despite disruptions in other parts of the supply chain, the Port of Vancouver said.
Like in Montreal, the Vancouver port has managed to avoid the massive terminal congestion experienced on the U.S. West Coast, including at Los Angeles and Long Beach, Calif.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.