Port of Vancouver descends into ‘distress’ as B.C. flooding severs rail lines, highways

Date: Wednesday, December 1, 2021
Source: The Globe and Mail

Extreme weather in British Columbia has exacerbated a bottleneck of cargo ships, holding up consumer goods arriving from Asia and delaying exports of bulk commodities from the West Coast.

On Sunday morning, there was a backlog of 54 ships at anchorage, up from 40 on Nov. 19, according to data from the Vancouver Fraser Port Authority. The vessels included nine container ships in and around the Port of Vancouver, another 13 waiting to fill up with coal and 16 with grain.

Before the pandemic, it was much easier to get a berth time slot instead of having ships at anchor, with about a dozen or so vessels waiting their turns on a typical day, said Marko Dekovic, the vice-president of public affairs for GCT Global Container Terminals Inc., which operates two sites that handle containers in the Vancouver region.

Mr. Dekovic has been nervously watching a growing number of ships having to drop anchor in and around Canada’s largest port. The Port of Vancouver has four container terminals and more than 20 other marine facilities for bulk shipments and an array of cargo.

“If ships keep coming but rails aren’t moving, we can’t accept any more ships,” Mr. Dekovic told The Globe and Mail during a tour of GCT’s Deltaport container terminal in the Vancouver suburb of Delta.

Two years ago, he had confidence in the sailing schedule because towering ship-to-shore cranes were handling imports and exports like clockwork. But it has been a logistical nightmare since record levels of rainfall triggered flooding and mudslides in the B.C. Interior and the Fraser Valley, severing highways and rail lines in and out of Vancouver on Nov. 15.

The provincial government declared a state of emergency two days later, and the Port of Vancouver has descended into what Premier John Horgan called a state of “distress.”

The transportation chaos that has ensued serves as a cautionary tale, with industry experts saying Canada’s supply chain is tenuous and that it will likely take months, not weeks, to recover from the lingering effects of the pandemic and now the floods.

On Nov. 24, Deltaport finally saw trains trickling in again, but the rail traffic is far less than normal. Highway access for trucks is either plagued with delays or still blocked. This past weekend, sections of three highways were closed as a precaution because of heavy rainfall.

Rail and trucking delays have been widespread, disrupting, for instance, the transport from Quebec of paperboard used to make signs and boxes in B.C. And after Asian components arrive in Vancouver, getting them on trucks to original equipment manufacturers in Ontario is increasingly complicated.

“It’s all connected,” Mr. Dekovic said, as a ship-to-shore crane placed one container after another onto a steady stream of “bomb carts” – the rugged trucks that go “bombing around” to shuttle the reusable steel boxes within the sprawling terminal.

Freight trucks driving in from industrial storage locations need to return empty containers to docks. Thousands of empty containers have piled up at industrial sites and docks in the Vancouver region. Deltaport, however, can’t quickly load those empties onto ships because the terminal’s three berths are tied up by vessels that are already delayed.

The problem of more ships at anchor dates back to the fall of 2020, when consumers stuck at home under pandemic lockdowns began ordering goods online in droves. Shortages of dock workers globally, as well as new health protocols for ship crews, contributed to the longer preparation required to set sail, and ships began backing up along trade routes around the world.

Deltaport and other terminals had managed to stay “fluid” during most of the pandemic, moving freight despite all the challenges. But in a sign of the chaotic times, instead of waiting for containers to be loaded with Canadian goods, shipping companies are paying to send them to Asia empty so they can be filled faster for the return trip to Canada. For every two containers arriving from overseas this year, one is sent back empty.

The Vancouver Fraser Port Authority believes more industrial land is needed to store containers away from docks to help reduce bottlenecks and spur Canadian exports.

“Shipping lines are simply rushing containers back empty to Asia, leaving Canada’s exporters empty-handed,” said Robin Silvester, the port authority’s president, during a speech Thursday to the Greater Vancouver Board of Trade.

At the Deltaport site, which covers 85 hectares, Canada’s largest container terminal has been a shadow of its former self. Early last week, it operated at only a fifth of its normal activity because rail lines had been shut down for eight days. Cantilever rail-mounted gantry cranes that normally handle containers for trains didn’t have anything to load or unload.

Port of Vancouver spokeswoman Matti Polychronis said that even before the pandemic, extreme winter weather would disrupt supply chains, with anchorages reaching their maximum capacity.

This time it’s different because the bottlenecks are prolonged, Mr. Dekovic said. Many of those vessels at anchor in the Salish Sea are in passages near Vancouver Island and the Gulf Islands. Others wait on or near Burrard Inlet, along downtown Vancouver’s waterfront.

When ships do find a berth, they take longer than usual to unload and load. MSC Flavia, sailing under the flag of Panama, left South Korea on Oct. 22 for its journey across the Pacific Ocean with its load of containers and dropped anchor on Nov. 12, before docking at Deltaport on Nov. 17.

It faced delays as it waited for containers to arrive by train for loading. After discharging containers and finally loading, the ship is expected to depart later this week – about 10 days behind schedule.

At the Coast 2000 industrial storage site in the Vancouver suburb of Richmond, empty containers are stacked six or seven high. “We continue to have very high levels of inventory of empty containers with the surge of imports that’s coming into Vancouver,” said Matthew May, president of Western IntermodeX Ltd.

IntermodeX provides storage for containers and is the parent company of Coast 2000, which leases land from the Port of Vancouver. “We need to move empty containers more frequently, but also stuff the boxes for export whenever possible,” Mr. May said, walking past a stack of refrigerated containers.

With demand for services outpacing supply, prices for transporting containers have soared globally over the past 20 months. Drewry Shipping Consultants Ltd.’s world container index has slipped since September, though at US$9,186 for shipping a 40-foot container last week, the barometer has more than tripled over a year ago.

The volatile Baltic Dry Index, a leading indicator of shipping rates for transporting dry raw materials over key global routes, is up sharply since the start of the pandemic, but has tumbled since early October amid concerns about slower-than-anticipated demand for bulk commodities in China.

Dennis Darby, the president of Canadian Manufacturers & Exporters, said many of his member companies rely on components imported from Asia or need to export goods across the Pacific.

Expanding container capacity would help, but Canada’s shipping, trucking and rail sectors are only as strong as their weakest link. A series of setbacks – from congested ports to busted highways to broken rail lines – has exposed how easy it is for Canada’s supply chain to go from seamless to chaotic. “It’s the tenuous nature of the thin supply chain,” Mr. Darby said.

Whenever there is trade disruption on the West Coast, it creates far-reaching delays that stretch eastward all the way to manufacturers on the Prairies and into Ontario and Quebec. Before the pandemic, one manufacturer of springs, tines and other goods made of wire could get materials from South Korea in three months. Now the wait is twice that.

“With the Port of Vancouver in distress, the rest of Canada feels that,” Mr. Horgan said Friday night during a joint news conference in Victoria with Prime Minister Justin Trudeau. “We have more storms ahead of us – it’s only November.”


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