This letter was sent to the Minister of Transport by one of our member firms. We find it succinct and to the point. It
is time for the whole community to stand up and voice its woes! And we encourage you - the intermediaries -- and the Export/Import community to lodge similar commentaries with the Ministry of Transport, your
local MP and the Opposition parties...
Subject: Intermodal Transportation in Canada
Dear Mr. Lapierre,
The following letter is composed with the intent
of drawing to your attention the very serious situation affecting Canadian Intermodal Transportation and the extremely adverse impact it has had and continues to have on our international trade.
In a
recent article which appeared in the March 21st. edition of the Montreal La Presse, the difficult situation of the west coast ports and the impact of the delays on Canadian importers was highlighted.
However, this is but the tip of the iceberg and you are well aware that the situation at the ports is not exclusive to Vancouver or the west coast alone. The impact is also severely affecting our Canadian
exporters and manufacturers on both coasts, whom are quickly losing their ability to deliver materials in a timely fashion and within quoted costs.
Furthermore, the context of the article in question,
leading one to believe that the ports are alone in having underestimated trade with the Pacific Rim countries and China is very simplistic and certainly not a true reflection of the problem at hand. It is
false to ask the port authorities alone to bear the brunt of error on this issue as all the participants in the logistics chain known as intermodalism, missed the proverbial "boat" when forecasting
our nation's forthcoming needs.
What is most upsetting is the fact that the health of intermodal transportation has been deteriorating for more than 24 months and only now that it is finally having an
impact on the Canadian consumer, do the responsible authorities finally decide that something has to be done. From the writers point of view however, thanks to the lack of a global solution, the remedies
being applied by each participant in the logistics chain are at the detriment of another.
To highlight this situation, a recent decision by Canadian National Railways obligates Canadian exporters to
"reserve" in advance a specific date to return full containers to Montreal and / or Toronto for transportation to vessels sailing from either Vancouver or Halifax. Failure to cancel a reservation
results in monetary penalties being assessed to the exporter. The results have been to say the least, unsatisfactory. Where the railway was able before to handle all the cargo destined for a particular
vessel within the specified dates for delivery, today we can rarely obtain sufficient "reservations" to insure all the cargo for a specific vessel arrives on time to load together on the contracted
vessel. The result is that Vancouver & Halifax find themselves with containers left over from a prior vessels added to the current inflow for the vessel at hand and the next vessel forthcoming. A
complete mess, that adds to the congestion and confusion on the ports.
In order to try and rectify this situation, certain terminal operators in Vancouver recently decided to limit the receiving
period for outbound full containers, from the existing 10 day period to 5 days only. Should containers arrive beforehand; a "storage" fee will be applied against the exporter. Should an exporter
ask that a container be held to complete and order with a forthcoming unit, he is again penalized with storage.
Under these conditions, I ask you to evaluate the chances of success a Canadian exporter
whom produces his goods in Sept Isle or Thunder Bay has of making the window allocated by the rails and the ports, and delivering to his client in Japan a full and complete order. Let us not even take into
consideration the potential of weather delays or vehicle breakdown on the road transportation leg to CN in Montreal or Toronto!
The following points will highlight just some of the problems these delays create:
1) Ocean carriers can no longer book their vessels in accordance with available space or weight (draft) restrictions
and must overbook the vessels to compensate for late cargo.
2) The CBSA can no longer identify cargo which has been declared under the "Advance Commercial Information" ACI program for a
particular vessel and hence our security and that of foreign countries with whom we transact is being compromised.
3) Canadian exporters can no longer accept to sell under letters of credit that
stipulate "no partial shipments allowed" for fear of having orders rejected or having to compensate foreign buyers for delays. Not to mention the adverse affect this is having on their reputation
to deliver and the additional banking fees.
4) The Port authorities and stevedores must constantly double and triple handle the same cargo in order to align same for a given vessel. An additional
burden given the influx of import cargo congested on the same port facilities.
5) Road haulers unable to obtain reservations at CN find themselves with equipment tied up pending a delivery
appointment. This is resulting in higher costs to the road hauler, a loss of productivity and a shortage of equipment available. It is at the point where some transport companies have completely refused to
handle containers destined to Canadian National Railways.
6) Foreign buyers face additional costs as they must now customs clear two or three shipments instead of one, face granting monetary discounts
due to shipping delays, cancelled orders, etc.
In addition to the above, the secondary effect of our inability to move full loads in and out of the major ports is that both extremities of the country
face a chronic shortage of empty containers. The rails are having so much difficulty handling full loads that they will not even entertain returning empties from Toronto or Montreal to say Halifax or
Vancouver in a timely fashion. The result is that Maritime and Western Canadian shippers have to wait for days or even weeks to obtain equipment to load their export cargo. The import flow to these areas is
by far insufficient to meet the export demands.
Another fact to consider is the fragility of the transportation network as a whole. There is absolutely no margin left for error at any level. Recently
CN averted a possible strike which, combined with difficult winter conditions, would have had disastrous effects on our economy. Canada is operating its intermodal system presently at near capacity levels.
What will we do when the larger generation vessels start to arrive? What will we do if one of the ports has a strike? What will we do when the import "peak season" starts from the Far East? What
will we do when next winter brings its lot of bad weather and derailments?
The real question Sir, is what do you intend to do? Someone has to be in a position to gather all the intervening bodies to
elaborate a truly integrated plan to correct this situation, insure it is properly financed and guarantee it's execution within agreed timeframes. This cannot be left up to each individual party or the
current chaotic situation will only worsen, whilst each one plays a game of me, myself and I.
The terminology "intermodalism" came into being with the advent of containers in the very early
70's. Success of this concept was based on a standard shipping unit(s) or containers which could be handled in an expeditious manner by various modes of transport to reduce overall costs, shipping time,
pilferage and facilitate world trade. To attain this goal, the "logistics chain" had to be created by all the parties involved. Of course we all know that a chain is only as strong as its weakest
link. Hence the strength of our system rests upon all the parties contributing to a structured plan to correct the current situation. It cannot be done by one party alone.
During the 80's and 90's we
sometimes made remarks about the pains of shipping to or from certain "underdeveloped" ports of the world. We often made jest of the rail systems in certain countries and we felt we understood why
the economies of these countries were so poor. Here we stand some 20 years later falling behind many of these countries. Whilst in India they give contracts to firms from Dubai to upgrade their ports, whilst
Havana Cuba becomes a platform for numerous shipping companies to hub their operations in the Caribbean, Canada is letting its infrastructure deteriorate to the point where we may one day be on the receiving
end of the jest. Time is not a luxury that we have and concrete action must be taken quickly if we are to correct this situation and return to the leading position we once held.
On behalf of not only
our import and export clients, but all of those in Canada, we ask that you intervene in a strong manner to insure that constructive solutions are put in place before our community suffers any further damage
from the inability of the transport network to perform the services we pay for. |
