Lack of shipping containers causing bike shortages, headaches for Canadian farm exporters
CBC Radio | Posted: April 13, 2021 8:00 AM | Last Updated: April 13, 2021
Changes in consumer demand mean shipping containers are leaving Canada empty, analysts say
A bike shortage this spring has left consumers and bike stores scrambling, but the reasons behind it are also affecting the ability of Canadian exporters to get their products to markets a continent away.
Trouble finding a good set of two wheels is one symptom of a larger problem that's happening at sea and in the world's ports.
High demand for shipping containers, or sea cans, is making it harder for bikes and other bulky consumer goods to make their way to Canada, and for agricultural and lumber products to leave Canada for Asia.
In fact, to meet the demand for sea cans, shipping lines are moving empty containers out of Canadian ports instead of taking the time to fill them with export products, such as lentils or lumber.
As a result, getting Canadian products onto ships has become increasingly difficult over the past few months, according to industry groups such as the Freight Management Association of Canada and Pulse Canada.
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Farmers can't send crops offshore
Agricultural groups say the problem is restricting their ability to ship crops overseas.
Jeff English of the advocacy group Pulse Canada, told The Cost of Living the situation is incredibly challenging for farmers who export. His group represents lentil, soybean and other legume growers.
"One of Canada's biggest selling features … is our ability to supply. We're there when countries need us, when buyers need us. Our ability to supply is only as good as the last time we did it," said English.
Pulse growers are among the agricultural players saying Canadian farmers do not have enough access to shipping containers to get their products to markets including China, the leading buyer of Canadian peas in 2020, according to the trade group.
The Freight Management Association of Canada has said demand for space on international shipping routes is high — and supplies of containers have been low. The Ottawa-based trade group said ocean container shipping has been heavily impacted by shifts in demand due to COVID-19.
The conflict stems from importers and exporters being eager to get in-demand, empty sea cans back to Asia to fill with also-in-demand consumer goods waiting to be imported, according to agricultural trade groups and shipping companies interviewed by CBC Radio's The Cost of Living.
They would rather take an empty container out of Vancouver, immediately load it to a vessel and take it back to China. - Jordan Atkins, vice-president of logistics company WTC Group
That means companies do not want to take the time to load Canadian exports into empty shipping containers at Canadian ports, according to Jordan Atkins, vice-president of logistics company WTC Group.
The time to load product such as pulses into the sea cans in Canada, then unload the exported product overseas in Asia, means additional time waiting for the shipping containers to be ready for re-use.
Lost revenue is worth it to exporters
According to industry players such as Atkins, after Canadian ports receive shipping containers full of consumer goods from overseas, the emptied sea cans would normally be filled with raw Canadian materials and sent back across the ocean to Asia.
Often, the shipping containers are loaded onto trains or trucks and sent to the rest of Canada to be filled with goods such as pulses or lumber before returning to port, said Atkins, whose company specializes in transloading — the process of transferring goods from one mode of transportation to another.
High demand for shipping containers themselves means in some cases this isn't happening, he said.
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"[Shippers] would rather take an empty container out of Vancouver, immediately load it to a vessel, and take it back to China … we're talking a matter of days, just a few days that they're trying to shave off."
While companies may lose revenue from declining to ship Canadian exports, Atkins said it's worth it for those businesses.
"They would rather just pay to move the empty [sea can] themselves and gain that extra few days," he said, adding that his company's terminals for loading shipping containers are running at less than 50 per cent capacity, compared to what they would normally expect this time of year.
Governments asked to take action
These decisions have been building for months, with German shipping company Hapag-Lloyd announcing back in October that it would not ship agricultural products from North America.
The U.S. trade group Speciality Soya and Grains Alliance called the decision a "blow" and said it was so Hapag-Lloyd could "quickly reposition empty containers" back to Asia. The organization said the decision could "cause major hardships" for the agricultural community.
Even non-agricultural companies are feeling financial pain over these decisions, with Nike reporting in March that its North American revenue declined by 10 per cent due to port congestion and a shortage of global container space.
Business leaders have asked the federal government what it plans to do to support Canadian exporters who can't get their material out to port.
In a letter sent to the Minister of Transport at the end of March, the Freight Management Association of Canada criticized what it called "unreasonable" actions on the part of maritime carriers.
It warned that pulse growers and lumber exporters are "losing international sales" while shipping companies are sending empty containers back to Asia.
Bikes need a lot of sea can space
Demand for imports in North America is part of why there is such a need for empty shipping containers in Asia. The low availability of sea cans partially explains why stores like Calgary's Bow Cycle can't meet demand for imported goods.
"We have about 25 per cent of the normal amount of stock this time of year," said co-owner Kevin Senior.
"I was just on the phone with a supplier that said they were supposed to be having bikes shipped this week, and actually they are shipping next week because they can't get a container."
According to Senior, part of the problem is the general bulkiness of bicycles. A six metre long shipping container can only fit around 250 bicycles, meaning bike manufacturers also need a lot of the sea cans which are in short supply.
It's not just bikes and lentils
Overall demand on global supply chains has gone up in the last year, according to shipping analyst Alan Murphy, partly due to a shift in buying habits due to the COVID-19 pandemic.
With consumers spending so much more time at home, Murphy suggested money is going toward goods rather than services.
"Household goods, washing machines, tumble dryers, range cookers," said Murphy in an interview with The Cost of Living, listing off just some of the large items in increasing demand by North American consumers.
The CEO of Sea-Intelligence, a supply chain research firm, monitors shipping lanes or the routes international vessels take when moving goods across borders.
"Exercise bikes, forget about getting an exercise bike in the next six months. Gaming consoles have been ripped off the shelves," said Murphy. "Really, all the commodities we've seen grow speak to this overwhelming shift from services to goods."
Produced and reported by Tracy Johnson, with Anis Heydari.
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