Container crisis hits farmers’ wallets: shipper

Source: www.producer.com

A global shipping snafu that has balled up the links in Canada’s supply chain for containerized goods will ultimately mean fewer dollars in the pockets of Western Canadian farmers.

Export companies and freight forwarders who spoke with The Western Producer last week said global demand for the shipping containers remains unusually high, particularly among shippers in China and other Asian countries.

In Canada, pulse and special crops exporters are struggling to secure adequate supplies of empty containers amid rising prices and heightened global demand.

What’s more, outbound shipping containers that have already been packed continue to pile up at port and inland locations across Canada as ocean freighters carry empty boxes back to Asia rather than backhauling North American goods.

Jordan Atkins, vice-president of WTC Group Inc., a Vancouver-based freight forwarding and logistics company, said high demand for containerized freight and limited supplies of empty containers have pushed Canadian export programs well behind schedule, resulting in costly contract penalties and lost sales.

“Right now, getting an export load out of North America is extremely difficult,” Atkins said last week.

“Steamship lines are prioritizing empties to be repositioned out of North America so they can get back to Asia and get reloaded with Asian goods as quickly as possible.”

In Canada, exporters and logistics companies are working harder and paying more to execute existing sales contracts, Atkins said.

New sales have also slowed.

“It’s not that we’re not seeing any new shipping orders coming in,” he said.

“There are just significantly less. Shippers are being very cautious because their margins are getting tighter and you can very quickly run into costs that eclipse the value of the product you’re shipping.”

Demian Gallego, director of trade and merchandising with Global Food and Ingredients Inc. (GFI), said the 2020-21 shipping season has been one of the “most challenging” in recent years.

The Toronto-based export company collects and processes pulse crops in Canada’s prairie provinces and ships them in containers to buyers in China, Pakistan, India and other countries around the world.

“We’re bracing ourselves for a $500 increase per container this year,” said Gallego, whose company operates collection facilities in Saskatchewan in Lajord, Sedley and Zealandia.

Available storage space at GFI’s prairie facilities is tighter than usual, and producer deliveries are being delayed, he added.

Uncertainty over rail movements of inbound and outbound containers — to and from the West Coast — has been an ongoing concern.

“It does affect us on our execution and on what we can pay the farmers,” Gallego said.

“That’s the bottom line. Our margins go down and somehow or another, we have to compensate for that because the market itself will not pay more.”

Atkins described conditions in 2020 as a perfect storm for disruptions in the container trade.

Following the economic downturn caused by COVID-19, North American demand for Asian consumer goods began to grow rapidly.

A spike in at-home, online shopping during recent COVID lockdowns was a contributing factor.

The result was rising demand for containerized freight services, particularly among Asian shippers.

“The Asian market is extremely hot right now,” Atkins said.

“Carriers are running up their rates coming out of China and are able to extract significantly more revenue for moves from Asia to North America than they can from moves anywhere else in the world.”

Higher freight costs are just one of the factors affecting Canadian exporters, he added.

Service uncertainty is another.

“At this point, there’s really no way to tell in advance what bookings will or will not be accepted by steamship lines because they are changing day to day,” Atkins said.

“We’re still seeing a lot of last minute changes and last minute cancellations of bookings … and that means (Canadian) shippers are missing multiple sales opportunities.”

Greg Northey, vice-president of industry relations at Pulse Canada, said congestion and shipping backups at west coast container terminals has worsened.

“This has been an ongoing issue probably since September, but it’s definitely been heightened in the past month,” he said.

Canadian shippers continue to execute sales contracts, but the logistical hurdles they’re facing aren’t likely to disappear any time soon, he added.

“We’re still looking at months and months, and probably into the new grain year, until there’s some semblance of a supply chain that’s functioning a bit better.”

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