Canadian supply chains nowhere near normal yet
- January 7, 2022
Don’t be fooled by signs that North America’s supply chains are getting back to normal at major entry points. Canadian metalworking shops should continue to expect supply chain issues for the foreseeable future. Here’s why:
Trucks are back on British Columbia highways after severe flooding tore apart the province’s road infrastructure and the parking lot of ships doesn’t exist any more at the Port of Los Angeles, the continent’s largest entry point for imported shipments. But the visuals don’t quite match with reality.
For example, the parking lot of ships at the Port of Los Angeles, which became an international symbol for the supply chain chaos of 2021, has been cleared because the port slowed the rate at which ships are coming in. There are still dozens of ships slowly drifting toward the Port of Los Angeles but far enough off shore they’re not readily visible. A record-setting 10.7 million 20-foot containers passed through the port in 2021, a 13% increase from the previous record set in 2018. That’s not expected to ease in 2022, according to what Gene Seroka, executive director at the port, recently told CNN Business.
It’s a similar story in British Columbia as it recovers its road network from severe flooding. Round the clock repairs are creating a sense of stability but travel times remain much slower than normal. For example, a commercial run from the Fraser Valley to Kelowna used to take six hours. Now it takes 12 so the truck driver must spend the night in his truck and it takes another 12 hours to return. Dave Earle, head of the British Columbia Trucking Association, told the media the province is still months away from anything that would be considered a full recovery.
And there is trouble brewing at the border, as we noted yesterday in our story Severe disruption of cross-border supply chains feared. The Canadian and U.S. governments have announced that truck drivers crossing the border must be fully vaccinated. The new rules go into effect January 15 for those entering Canada and about a week later for those entering the U.S.
Both motor carrier and shipper groups in Canada anticipate the regulations will cause severe disruptions to the cross-border supply chains handling the more than $650 billion in trade between the two countries. The Canadian trucking industry is expecting a loss of 12,000 to 16,000 (10-15%) cross-border commercial drivers if the mandate takes effect this month. And if Ottawa continues to pursue plans to also mandate vaccinations for drivers involved in federally regulated domestic transport that figure could jump to as high as 30,000 losses.
Air cargo is also under stress, due to Covid-related issues, particularly with cargo flights in and out of China. The next two months could see significant disruptions due to China enforcing its “zero-Covid” policy ahead of its new year celebrations and the start of the Beijing Olympics. Freight forwarders expect few charter flights to be approved and restrictions on other flights to be in place.
What happened with Hong Kong’s Cathay Pacific Airlines illustrates the pressure air carriers are under. The carrier had to suspend cargo flights for a week due to stricter quarantine requirements for air crews.
The rapid spread of the Omicron variant in North America is also certain to have an impact. Ontario is Canada’s industrial heartland yet Dr. Kieran Moore, the province’s chief medical officer of health, recently warned that all sectors can expect to face 20 to 30 per cent of staff either calling in sick or having to self-isolate due to Omicron.