Feds ignore container crisis: shippers

Canada’s pulse and special crops sectors want Transport Canada to take marine shipping companies to task for neglecting containerized exports.

But so far their calls have fallen on deaf ears.

“We need a government partner and we don’t have one,” said Greg Northey, vice-president of corporate affairs with Pulse Canada.

A coalition of container shippers from different sectors of the Canadian economy have sent multiple letters to minister Omar Alghabra expressing the need for an investigation into the practices of steamship lines.

“Quite frankly, the response we have gotten is nothing. Nothing,” said Northey.

That is in stark contrast to what is happening on the issue in the United States.

U.S. President Joe Biden issued an executive order on July 9 calling on federal agencies to strengthen oversight and enforcement of regulations to maintain market

competition and prevent unfair monopolistic practices.

The U.S. Specialty Soy and Grains Alliance said the order applies to a broad swath of the economy but ocean carriers and railroads “occupied centre stage” of the order.

The Federal Maritime Commission (FMC) said it welcomed the call for the Justice Department to collaborate with FMC to investigate ocean carriers and possibly issue fines for uncompetitive practices, said the alliance in a news release.

The group says 10 ocean container lines control 85 percent of container shipping around the globe and they operate in three vessel-sharing alliances.

Pulse Canada and the Canadian Special Crops Association want a similar investigation launched in this country.

The container crisis began at the start of the COVID pandemic when China stopped shipping containers to importing countries. There were a number of cancelled sailings during the January through May 2020 period.

Then everything flipflopped. The four-month lull was followed by a period of huge demand for Chinese consumer goods.

Any available container that was emptied at ports in North America and elsewhere around

the world was quickly shipped back empty to China instead of being filled with commodities for the backhaul.

Shippers are making four to five times the regular amount for hauling containers filled with consumer goods out of China so there is a mad rush to get containers back and get them refilled with consumer goods.

“It just made no sense for them to provide empty containers to Canadian exporters or U.S. exporters or European exporters,” said Northey.

That has resulted in a global container crisis. Northey estimates there has been a 50 percent reduction in capacity at Canadian transload facilities in the past six to eight months.

Shipping lines are cancelling traditional container routes to destinations in Southeast Asia and elsewhere in order to focus on getting empty containers back to China.

“It seems almost weekly we’re losing shipping routes right now,” he said.

Those fortunate enough to get their outgoing product into a container are getting rolled over to the next vessel because priority is being given to empty containers.

That can result in a 60- to 80-day delay waiting for the next ship. Detention and demurrage costs are eating up any profit associated with the shipment.

Northey said this is a particularly big problem for the pulse and special crops industry, which is comprised of many small exporters supplying niche products and buyers who don’t want to purchase bulk commodities.

About 30 percent of Canada’s peas, more than 50 percent of its lentils and the vast majority of its special crops travel by container to markets around the world.

“It has hit us really hard,” he said.

The lack of containers is “significantly worse” than it was heading into last year’s harvest, when the issue first started to surface.

“There’s a lot of concern in the sector,” he said.

About 75 exporters, transloaders and trade-forwarders attended a Canadian Special Crops Association webinar last week on the topic.

They stressed the need for federal government involvement in the issue. The group is considering launching a Competition Bureau complaint but a Transport Canada investigation is the more preferred option.

They want an investigation into why shipping lines are failing to provide export containers, cancelling trade routes and causing demurrage fees at ports.

Has the response of the shipping lines been proportional to the problem? Have shipping lines been providing a fair level of service to Canadian container exporters?

The concern is that the ocean carriers are making big money on this new business model and may continue to thumb their noses at backhaul exports for the foreseeable future.

“The marine carriers are making decisions that are making it harder and harder for exporters to do what they need to do,” said Northey.

Contact sean.pratt@producer.com