Thirty percent of Canada’s pulses ship by container, and one-third of that business was lost for a couple of months
Containerized shipments of pulses and other agricultural products are back on track after a temporary derailment this spring.
“From a port perspective, the container availability has improved dramatically,” said Stephen Paul, vice-president of supply chain logistics with Ray-Mont Logistics.
Companies that were “scrounging” for the metal boxes in March and April now have an ample supply.
COVID-19 disrupted the inflow of containers into North America as the number of blank sailings from China blossomed in the spring.
The cancellation of container vessels was caused by the lack of North American demand for Chinese consumer products because people were forced to stay at home instead of visiting shopping malls.
Canada’s agriculture sector takes advantage of the backhaul opportunity of that import business, filling what would otherwise be empty returning containers with crops and other products.
An estimated 30 percent of Canada’s pulses are shipped by container. Paul estimates about one-third of that business was lost for a couple of months due to the scarcity of empty containers.
Late spring and early summer is usually a slow time for pulse demand but that wasn’t the case this year.
COVID-19 created a surge in demand for Canada’s peas, lentils, chickpeas and beans as overseas customers stockpiled.
In addition, there was already pent-up demand in the system as early-season pulse movement was slow.
Lastly, India kickstarted unexpected additional demand by slashing the import duty on lentils to 10 percent from 30 percent between June 2 and Aug. 31.
So there was a lack of containers when international demand was hot and now there is an abundance when Canadian supply appears to be drying up.
“All of the pulses are starting to either whittle away or the farmers are waiting to see what’s in store for new crop,” said Paul.
Marlene Boersch, managing partner of Mercantile Consulting Venture, said Canada still managed to move a lot of pulses in May as unanticipated demand hit.
Canada shipped out 326,494 tonnes of lentils that month, which is unusual for that time of year. Another 401,320 tonnes of peas moved, which was also surprisingly good.
That is going to usurp carryout stocks of those two commodities.
She does not expect that demand to falter heading into the new crop year.
“We are right in the swing of things,” said Boersch.
She thinks COVID-19 has rekindled demand for pulses like chickpeas and beans and she anticipates another strong export program in 2020-21.
In that respect, the improved flow of containers is happening at a good time, just before the 2020 harvest.
But Paul worries that shipping lines will refuse to leave empty containers sitting in North American ports until post-harvest.
They want to make up for lost sales during the COVID-19 lockdown and are unlikely to leave non-revenue generating assets sit idle.
Transloaders like Ray-Mont are in constant communication with the vessel lines that own the containers trying to convince them to leave enough supply in North American ports to meet the forthcoming demand.
“It’s a difficult conversation to have,” he said.
Boersch said there has always been a problem co-ordinating container availability for backhaul products like agricultural goods.
“We seem to be, both on the bulk and container side, the industry of last resort, although we are always there,” she said.
Railways and ocean carriers are under the impression that if agricultural products aren’t moved today it’s no big deal. They forget that there are many competitors around the world, said Boersch, that can steal Canada’s lunch.
Paul’s other big concern is what will happen when the inevitable second wave of COVID-19 hits.
Will economies around the world go back into lockdown just as an expected strong shipping season for pulses hits its stride?
“If that happens in the fall, coinciding with a sharp demand forthcoming, it could just be catastrophic,” he said.