Looming import surge adds urgency to Vancouver rail container backlog
Stakeholders at the Port of Vancouver say Canada’s largest port has two months to dig out of its backlog of rail containers and vessels before peak season volumes begin arriving this summer because the gateway has no buffer capacity to handle the import surge.
It won’t be easy. Forwarders, railroads, and trucking interests are concerned that stubbornly elevated rail container dwell times and vessel delays at anchor — two key indicators of congestion — have become a “new normal” that could worsen bottlenecks when import volumes increase as expected this summer.
What’s even more worrying is that Vancouver’s congestion woes failed to improve — and even worsened — during a first quarter that saw containerized imports fall almost 10 percent from a year earlier.
Port stakeholders in mid-March told JOC.com they expected the worst congestion problems would be over in three to four weeks. But as of late April, key congestion indicators were pointing in the wrong direction.
“Everyone always says it will get better in three to four weeks, but no one really knows,” Maksim Mihic, CEO and general manager of DP World (Canada), which operates the Centerm and Fraser Surrey Docks terminals in Vancouver, told JOC.com Friday.
Average rail container dwells at Vancouver for the week of April 25 were about seven days, or twice the dwells last summer when cargo flow at the port was fluid. Average delays of vessels at anchor are now 7.3 days, compared with no delays last fall, according to data on the port’s website.
With a surge of imports projected in the coming weeks, there will be no relief any time soon. According to the port’s website, imports totaled 45,544 TEU for the week of April 18, were projected to climb to 50,272 TEU for the week of April 25, and jump higher still to 53,768 TEU for the week of May 2. By comparison, weekly import volumes in mid-March were less than 40,000 TEU.
Vancouver’s containerized imports in the first quarter were 433,870 TEU, down 9.7 percent from 480,658 TEU in Q1 2021, according to PIERS, a JOC.com sister product within IHS Markit.
Heavy dependence on rail
Rail container dwell times are a key concern of port stakeholders because much of the cargo volume at Vancouver moves via intermodal rail. Direct intermodal rail carries 65 to 70 percent of Vancouver’s total import containers, and transloading of marine containers to rail adds another 10 percent, said Philip Davies, partner in Davies Transportation Consulting. When rail containers back up at the terminals, congestion worsens.
Vancouver has been slammed by excessive rail container dwells since December due to a series of weather-related emergencies including wildfires, an atmospheric river of rainstorms and subsequent flooding, and then sub-freezing winter temperatures in Western Canada. Rail container dwell times shot up from an average of three days in November to 8.1 days in December, 7.5 days in January, 5.9 days in February, and 5.7 days in March, according to numbers provided by the port.
North American West Coast ports depend on rail container dwell times of three days or less in order to remain fluid, so dwells of twice that level are troublesome, especially if they continue month after month. For example, in Los Angeles-Long Beach, which has struggled with congestion problems for the past year, average rail container dwell times in March were 7.7 days, up from 5.2 days in February, according to the Pacific Merchant Shipping Association.
David Bennett, COO of the Canadian-based forwarder Farrow, told JOC.com that whether it is Vancouver or a US West Coast port, it is troubling when ports, terminal operators, and especially customers accept such elevated dwell times as a new standard of operating.
“They’re throwing in the towel and saying this is the new normal,” Bennett said. “This is not acceptable.”
While a Vancouver port spokesperson told JOC.com that Canadian National and Canadian Pacific railroads are returning to rail car supply levels the port expects to see, others in the supply chain say that is not happening quickly enough.
“The flow is not what it should be. We are not getting enough [rail container] match-backs,” Mihic said. The marine terminals each week need a steady return of rail cars and containers from the eastern half of the continent so they will have enough capacity to move inbound containers off the terminals, he said.
“There just aren’t enough cars in the North American system to flow enough [cars] back,” a rail industry source who did not want to be identified told JOC.com Monday.
CP said in a statement to JOC.com its intermodal volumes in Vancouver are up substantially so far this year amid operational challenges in its network.
“CP is experiencing an imbalance in demand between imports and exports at Vancouver, and the team is working closely with customers to address the issue and reduce on-dock dwell during this period of consistently strong demand,” the statement said.
Chicago ramps fluid
Operations at the CN and CP rail ramps in Chicago remain fluid, according to forwarders with customers who ship through those facilities. Chicago-area forwarder RIM Logistics said the CN and CP ramps in Chicago are filling up, but he has not seen any serious delays yet. Both Canadian railroads use Chicago as their gateway to the US market. “It seems like the problem is on the port end,” said Kevin Krause, director of international product at RIM Logistics.
David Earle, president and CEO of the British Columbia Trucking Association, said adding lengthy rail car dwells to a landside supply chain in metropolitan Vancouver that is experiencing less than 1 percent vacancy rates at warehouses, labor shortages in the warehouse and trucking sectors, and no available land on which to expand the infrastructure, is highly troubling.
“There is no buffer in the supply chain,” Earle said. “There is a very thin veneer of stability, with absolutely nothing in reserve.”
DP World’s Vancouver terminals, Centerm and Fraser Surrey Docks, on Friday had rail container dwell times of seven days or higher, according to port numbers.
GCT Canada operates two container terminals in Vancouver. Deltaport, the largest of Vancouver’s four container terminals, on Friday had average rail container dwell times of three to five days. At GCT Canada’s Vanterm terminal, the CP dwells were seven days or higher, according to port numbers.
Nevertheless, a GCT Canada spokesperson told JOC.com the rail container dwells were not affecting productivity at its terminals. “There are no operational challenges at GCT terminals,” the spokesperson said. “In fact, last week, GCT Deltaport moved more containers in a week than ever in our 25-year history.”
Source: The Journal of Commerce
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