Canada's supply chain is at risk' warning, as congestion hits port of Vancouver

Release date: 2021-10-12
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'Canada's supply chain is at risk' warning, as congestion hits port of Vancouver

The brakes have been applied hard on traffic flows at the port of Vancouver.

In a matter of weeks, Canada’s premier ocean gateway has gone from a relatively fluid situation to serious congestion that has raised alarms that retailers could miss out in the peak shopping season.

In the summer, Vancouver Fraser Port Authority (VFPA) tabled record results for the first half of 2021, with overall throughput rising 7% over H1 20 and the container count going up 24% to 1.9m teu. Cargo was flowing with only minor disruption, raising hopes it could accommodate traffic from shippers looking to avoid the logjam at US west coast ports.

But between mid-August and late September, the situation took a major turn for the worse: a surge of imports before the holidays filled warehouses in the area to the rafters and boxes have piled up at marine terminals.

At the same time, chassis are in short supply, a situation that has been aggravated by the fact that shipping lines have restricted their intake of empty boxes following a year-on-year surge of 92% in outbound empties in August. Hence, a lot of boxes are sitting on chassis with nowhere to go, while full units are piling up on the docks.

And as terminal operators struggle with high import volumes and empty boxes, there are not enough appointment slots for trucks, which has slowed down the flow of containers from the port.

In the week ended 2 October, the percentage of truck trips completed in under 90 minutes fell at three of the port’s four container facilities. Overall, however, truck turn times have not deteriorated significantly, so far. They slipped from an average of 38.75 minutes in August to 39.5 minutes last month.

Nevertheless, trucking has turned into another challenge at the port, as available capacity has shrunk dramatically. The Port Transportation Association (PTA), which represents the trucking industry, has warned for some time about driver shortages that could hamper operations in the face of a surge in traffic.

Delays in vessel arrivals have not helped the situation. On-time arrivals have slumped to 16%.

Inland shippers are facing further headaches. The rise in traffic has pushed up transloading activity, resulting in a shortage of 53ft containers. At rail operator Canadian Pacific (CP), intermodal volumes rose 17% in the seven weeks to mid-September. Back at the port, container lines have tried to restrict the movement of containers into the interior, which has contributed to the shortage of units to accommodate rising intermodal demand.

According to one report, the fee CP charges customers to guarantee a 53ft box for their traffic has shot up, from $300 to $1,500.

According to the PTA, the situation in Vancouver has never been this bad. It has warned that “Canada’s supply chain is at risk without immediate intervention from the authorities”.

The port itself has little leeway to alleviate the situation. Expansion of the Vanterm container facility is in progress, but won’t be completed in the coming weeks. This project will add 600,000 teu to the port’s capacity, but that is not enough to meet projected demand either.

The port authority is pushing for approval for the construction of a second container facility at Roberts Bank, near Deltaport. This would boost capacity by 2.4m teu, a 50% increase on existing capacity. However, if the project goes ahead, it will not be ready until the first half of the 2030s, according to VFPA.

VFPA president and CEO Robin Silvester warned last month that, notwithstanding the boost from the Vanterm expansion, the port will be facing logjams and congestion between 2025 and 2028.

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