Supply-chain logjams around the world are likely to persist for several more months with containers remaining as elusive as ever, according to the head of Canada’s second-largest port.
“2022 will be another difficult year for the supply chain,” Martin Imbleau, chief executive of the Montreal Port Authority, said Monday in a phone interview.
Major ports in North America and elsewhere are facing bottlenecks as demand for goods skyrockets following two years of pandemic-induced output curbs in countries including China. Those delays, along with shortages of key components such as semiconductors, have contributed to accelerating inflation worldwide. In the shipping world, container prices have soared, rising as much as five times from their pre-pandemic levels.
Global consumption is continuing to grow, “which exacerbates inflation and the issues surrounding container availability,” Imbleau said. “The uncertainty regarding the reopening in China is another issue. Ports are working but many large cities have shut down.”
While the world probably has enough containers to meet demand, they can be hard to find.
“It’s not that there’s a lack of containers globally, but more that containers are not at the right place at the right time,” Imbleau said. “There are places where you have thousands of containers sitting idle because people aren’t able to load them, and other places where there is a shortage of containers – for instance, for exporting Quebec cranberries or other food products. This means you have to find the containers on the spot market, which costs a lot more. But this lack of capacity won’t last forever.”
Imbleau spoke after the MPA reported a three per cent decline in overall cargo volumes — to 34 million tons — for 2021. Container volumes bucked the trend, rising 7.5 per cent thanks to increases in textile products and building materials. Revenue from operations was little changed at about $118 million.
None of the 2,034 container ships that called the Port of Montreal last year spent time waiting at anchorage, MPA data show.
Longer loading and offloading slots are a key reason why Montreal has been spared the bottlenecks now commonplace at U.S. ports such as Los Angeles and Long Beach. Ships get between two and three days to load and unload their cargo in Montreal, which allows them to overcome any sailing delays, Imbleau said.
“We have very long slots because we want to give vessels the time to fully load and unload,” he said. “In other ports, such as Los Angeles, if a ship is late and misses its slot, it’s forced to wait a few days — sometimes a few weeks — to find another slot. This is where our business model helps. Ships won’t wait when they’re late.”
Volumes in Montreal have seen very little impact from the war in Ukraine, Imbleau said. Trade with Russia and Ukraine represents a “marginal” part of the port’s business, he said.
Even so, the CEO said he’s concerned about the potential impacts of the conflict on global food exports.
“The wild card for the next few months is the situation in Ukraine, and how part of the logistical chain is going to have to be redirected,” he said. “This war could throw another wrench into the supply chain, and right now it doesn’t smell good. I’m not worried so much about Montreal and our importers and exporters, but more about the global logistical chain and the humanitarian impacts of the conflict. Hundreds of millions of people depend on the region for food.”
An extended conflict could also deprive the shipping industry of the hundreds of Russian and Ukrainian sailors it currently employs.
“There are a lot of Russian and Ukrainian crews, and there is a lot of uncertainty regarding their availability,” Imbleau said. “This too could exacerbate the crisis that we’re living through.”