Agri-food exporters are among the groups caught in a shortage of ocean shipping capacity that threatens Canada’s economic recovery, warns a Montreal freight forwarder.
The dearth of export container capacity from Canadian ports “is more harmful to the recovery of our economy than the high value of the loonie,” says Jean-Paul Gobeil, director of international markets for Cyberfreight.
He said agri-food companies are major users of export containers and feeling the pinch along with machinery, wood products and mineral companies.
The pace of the recovery has caught shipping lines with too much capacity in mothballs and they may not even recover by the summer, Gobeil warns. “The situation is a disaster. I’ve been in this business for 35 years and I’ve seen nothing like it. It’s out and out blackmail.”
The shipping lines are using the capacity shortage to force up rates but they’re already charging at or above 2008 levels, he says. Without enough ships in service, the lines aren’t cashing in on all the available business. That action makes him doubt the sincerity of statements from the lines that they’re working to correct the situation.
Ted Chazin, supervisor of claims and special projects with Milgram International Shipping of Montreal, says the Canadian economy is recovering quickly from last year’s recession on the basis of strong international demand for its products. But it can take eight weeks to get a slot on a container ship. “That delay means we’re not as competitive as overseas rivals.
“The carriers are really rationing space,” he adds. Trying to find out what’s happening is complicated because the carriers “are not really being clear on what they’re doing.”
The Canadian International Freight Forwarders Association has been trying to raise the alarm about the situation. CIFFA executive director Ruth Snowden says the situation is much like the headaches American exporters face. “The lack of export capacity is in some instances causing foreign buyers to go elsewhere. Shippers are in a position to lose orders and the situation is becoming very serious for our economy.”
The issue has yet to attract much attention, but she wonders, “How can a sophisticated and experienced trading country like Canada accept such an intolerable decline in service to export customers?”
In a recent bulletin to its members, CIFFA included the contents of a letter from Maersk Line CEO Eivind Kolding. He says shippers and ocean carriers alike are “experiencing an instant change in the market,” which has led to volatility and made business-as-usual impossible. “We realize that this abrupt change in market conditions has not been managed well by us in all instances, causing undue problems, for which we apologize,” he says.
“A particular challenge has been an extraordinary amount of overbookings on many of our sailings,” he says, promising to find ways to alleviate the problems. He suggests it could take to the summer for the situation to right itself because lines are afraid of bringing too much capacity online.
Mr. Gobeil said shippers are being hit with late delivery charges because containers often wait in Montreal, Halifax and Vancouver for weeks before loading onto a ship. Then they might wait for a few more weeks in a transshipment port before being delivered.