Container Crunch Coalition asks Ottawa to get to the bottom of a shortage plaguing the pulse and special crop sectors
Pulse Canada and other commodity groups and shipping organizations have formed a coalition to urge Ottawa to take action on the container crisis.
The Container Crunch Coalition is calling on Transport Canada to investigate why the crunch is happening, who is behind it and how it can be fixed.
The group also wants Transport Canada to create a joint industry-government task force to identify immediate actions that can be taken to reduce the current supply chain disruptions.
Greg Northey, vice-president of corporate affairs with Pulse Canada, said similar actions have been taken by governments in the United States, the European Union and Australia.
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“Anybody who has been impacted by this, their governments are taking it very seriously,” he said.
That has not been the case in Canada. The issue has been largely shrugged off by the ruling Liberals, although it seems to be gaining some traction of late.
“We’re getting the sense that there is definitely a little more focus on this issue,” said Northey.
The coalition, which includes groups like the Western Canadian Shippers Coalition and the Freight Management Association of Canada, hopes to make it a priority issue for government when Parliament resumes later this month.
It has created a website at containercrunch.ca to draw attention to the issue. The site includes a letter that people can send to prime minister Justin Trudeau urging him to take action.
There have been reports that container prices are finally starting to ease.
Freight forwarding company Shifl says container spot rates for shipping a 40-foot container from China to Los Angeles have been cut in half to US$8,500 from $17,500 in September.
Company founder Shabsie Levy believes it is the start of a return to normality for container freight rates.
“People were saying, this is just a short-term thing. It’s just going to last for one sailing. That was a month ago and it’s still lasting,” he said.
Levy said shipping lines are starting to provide discounts for shippers willing to sign three-year freight rate contracts.
“That should show you that they know Christmas is coming to an end,” he said.
“They know that sooner or later this thing is over and whatever they can grab now and commit for longer term, they’re going to be better off.”
Levy believes rates could rise again heading into Chinese New Year on Feb. 1, 2022, but then they will drop down as low as $2,000 per container out of China later in the year due to an economic slowdown in that country.
“The second you have vessels leaving China and they are not full to capacity and now you have sales people within the carriers fighting for space, that’s when the price is just going to tank,” he said.
Northey said its dangerous to draw any conclusions from the observations of one freight forwarding firm that may have a specific contract or agreement with certain shipping lines.
He prefers to look to indices like Freightos that track what is happening right across the container shipping sector. Those indices show rates are still at peak levels.
In fact, the cost of an outbound export container out of the Port of Vancouver increased by about $1,000 between October and November to around $4,000. That is well above the typical level of under $1,000.
The projections he has seen call for continued high rates through the end of 2022 and perhaps rolling into 2023.
“It’s going to take a long time before it gets cleared up,” he said.
That means pulses and special crop shippers will continue to face reduced profit margins and increased shipping times, with containers sitting at port for up to 80 days.
That is why the coalition intends to ratchet up the pressure on politicians to do something about the container crunch sooner rather than later.
