The sea container crisis worsens | The western producer
Transport Canada’s response to the long-standing shipping container crisis fell short of Pulse Canada’s expectations.
The government says it recognizes the challenges of accessing containers and outgoing ship slots for Canadian exporters.
“This is a phenomenon of a global market condition that affects global container traffic,” Transport Canada spokesperson Sau Sau Liu said in an email.
“We are closely monitoring international developments and will be examining their implications for the Canadian context. “
Greg Northey, vice president of corporate affairs at Pulse Canada, said it was an unsatisfactory response from Ottawa.
“The industry has made it clear that it is not enough for Canada to just sit back and watch how our international competitors are working to solve this problem,” he said.
“The federal government has tools at its disposal, but its current inaction is jeopardizing the competitiveness of Canadian shippers of pulses and special crops and the Canadian economy in general.
Pulse Canada wants the Canadian government to follow the lead of the United States, where a presidential executive order authorized the Federal Maritime Commission and the Surface Transportation Board to investigate the consolidation and pricing practices of steamboats.
Stephen Paul, vice president of supply chain management at Ray-Mont Logistics, said it’s at least a shot at shipping companies.
“This definitely gives them a warning that they are being watched and that they are going to be watched closely,” he said during a recent webinar hosted by the Canadian Special Crops Association.
The container crisis started in earnest in September 2020. A year later, the situation has only gotten worse.
The fundamental problem is the sharp increase in demand for consumer goods from China linked to COVID.
There is such a withdrawal from China to fill the containers that the shipping companies send them back empty rather than waiting for them to be filled with return products like crops.
Shippers earn four to five times the usual amount for transporting containers full of consumer goods out of China, so there is a significant financial incentive to get them back there as soon as possible.
Hapag-Lloyd and the Shipping Federation of Canada were contacted for this story but did not respond.
Steven Pocklington, president of CFT Corp., an international logistics company, estimates that 60% of 20-foot containers and 80% of 40-foot containers return to Asia empty.
This leads to a shortage of containers and an increase in costs. Paul estimates that there will be half of the normal container supply available to transloaders like Ray-Mont during the September-October period, when the new crop is expected to move to overseas markets.
“We have already started the process of firing half of (our) staff,” he said.
Northey said the shipping companies were canceling traditional container routes to focus on returning empty containers to China.
“It seems almost every week that we are losing shipping routes right now,” he said.
Paul said Hapag-Lloyd is withdrawing service in South America and Mediterranean Shipping Company has “significantly reduced” its service to South America and the Indian subcontinent.
These are just two examples of the multitude of canceled routes from the west coast.
There should still be decent access to China and Southeast Asia from Vancouver, but it will be difficult to serve markets in South America, the Indian subcontinent and the Mediterranean basin.
The situation is much better in Montreal because there is not the same attraction for containers outside this port.
Transloaders like Ray-Mont are scrambling to bring additional container capacity to Montreal where there are empty containers available for filling.
There is also a continuous movement of containers to bulk transport where possible.
Northey said those lucky enough to get their outgoing product into a container are moved to the next ship as priority is given to empty containers.
This can cause a 60-80 day delay in waiting for the next ship. Detention and demurrage charges erode any profit associated with the shipment.
Northey said the container shortage issue is particularly problematic for the pulse and special crops industry, which includes many small exporters providing niche products to buyers who do not want to buy produce in bulk.
About 30 percent of Canada’s peas, over 50 percent of its lentils, and the vast majority of its specialty crops travel by container to markets around the world.
“It really touched us,” he said.
“There is a lot of concern in the industry.
Jordan Atkins, vice president of WTC Group, a transshipment company, said the container crisis was not in sight.
“We are seeing that the demand driving these imbalances continues for at least the next six to eight months,” he told delegates attending the CSCA webinar.
Atkins said there has been a dramatic decrease in source loading of inland containers as shippers have to pay an additional US $ 5,000-6,000 to get containers filled in Alberta or Saskatchewan instead. than at ports.
Shippers of pulses and special crops are considering filing a complaint with the Competition Bureau over the actions of the shipping companies, but would much prefer a Transport Canada investigation.
The concern is that ocean carriers are making a lot of money on this new business model and may continue to snub land transportation exports for the foreseeable future.
Paul said carriers are making up for decades of losses and are unlikely to change their practices unless governments tell them to.
Even if that happens, he wonders what impact it will have.
The government can order them to devote a certain amount of space to return containers, but it cannot regulate the price they charge for that space, so everything can be a moot point, he said.
Exporters cannot afford the $ 10,000 to $ 14,000 per container that importers pay, Paul said.