The usual post-harvest flow of pulses moving to overseas markets in containers off the West Coast will be more like a trickle this year.
“We’re anticipating probably a quarter of the volume to move through Vancouver in the coming year versus historical trends,” said Stephen Paul, vice-president of supply chain logistics for Ray-Mont Logistics.
He told delegates attending the 2021 virtual Pulse and Special Crops Convention that he is encouraging exporters to consider alternative gateways for export due to the container crunch at Vancouver.
The main alternative is shipping through the Port of Montreal on the East Coast but that won’t be a panacea either, said Jordan Atkins, vice-president of WTC Group.
Container supply is finite off of the East Coast and ports there are likely to struggle to keep up with the looming demand.
“We have spent the better part of 10 years shipping most of Canada’s pulses out of Vancouver,” he said.
“That’s where the capacity has been built up. That’s where transload terminals have made their investments.”
Paul agreed that there is going to be a “capacity crunch” on the East Coast as well.
“The facilities here on the East Coast have not been accustomed to volumes of any significant size in close to a decade,” he said.
When the lentil container business shifted to Vancouver the container facilities in Montreal switched to handling soybeans and dry beans, so there will be stiff competition from those two commodities as well.
“It won’t be a blanket open door,” said Paul.
Some container traffic will switch to bulk but Atkins noted that there are only a handful of buyers in India and the Middle East that can handle 30,000 to 40,000 tonnes of pulses at a time versus hundreds that can take 50 to 70 containers.
Steven Pocklington, president of CFT Corp., said a traditional shipment of pulses from Vancouver to India that used to take 40 days now takes 60 to 90 days. He advised exporters to pick routes with the least amount of trans-shipment ports.
Chris Welsh, an independent freight transport and logistics consultant with Chris Welsh Consulting, said the container crisis is largely due to one development.
“The global container shipping market is becoming increasingly concentrated,” he said.
Twenty years ago there were 100 shipping lines competing with one another. Ten years ago there were 30.
Today there are eight lines belonging to three shipping alliances that have between 86 and 98 percent market share of the four main east-west liner trades.
“The alliances operate in lockstep with one another,” he said.
They have between 200 and 300 vessel sharing agreements, he added, and inform one another about future strategic investments.
And in many markets, including Canada and the United States, they are exempt from competition laws.
Welsh said the shipping lines have a vested interest in maintaining the current shortfall of containers because their costs have remained stagnant while freight rates and revenues have been skyrocketing.
Maersk is forecasting a US$24 billion profit for 2021, while the industry as a whole is poised to make in excess of $100 billion.
“This is unprecedented,” said Welsh.
Meanwhile, the shipping lines are getting failing grades from customers for service measures like consistency and reliability.
Shippers have been confronted by a shortage of containers for export, the withdrawal of historic shipping lines, cancelled or delayed sailings, skipped ports and breaches of contract.
Welsh said government regulation is the only way to bring the shipping companies back into line.
“We’ve got to get them competing against each other,” he said.
“It may sound fanciful but they actually do it in the aviation sector.”
Atkins said he originally thought the container crunch would be sorted out by the end of this year but he’s now thinking it may not be resolved until harvest 2022.
Paul was even more pessimistic. He believes the shipping lines are eager to continue manipulating prices as long as they can.
“They could drag this out potentially for another couple of years,” he said.