Coquihalla Highway

Image Credit: Flickr/B.C. Ministry of Transportation and Infrastructure

This story was originally published Nov. 30, 2021.

The closure of all the highways in and out of the Lower Mainland triggered some panic buying in the Thompson-Okanagan earlier this month.

That might not have happened if people had a better understanding of how the supply chain works in Canada.

READ MORE: Supply lines broken by flooding have people in Kamloops, Kelowna stocking up perishables, and toilet paper

While Vancouver is the major west coast port, the vast majority of goods coming from Asia are loaded onto trains bound for Toronto, Montreal, Chicago and the eastern U.S.

Calgary is the central hub for domestic goods for western Canada based on the fact that it’s only a day’s drive to major western Canada cities like Vancouver and Winnipeg, Lyndon Dorrington, terminal manager for Van Kam Freightways Ltd. in Surrey explained to iNFOnews.ca.

That doesn’t mean there weren’t disruptions when the highways closed on Nov. 15, especially for goods grown or made in the Lower Mainland.

“The supply chain has just redirected,” Dorrington said. “For example, some of the food products that would come into the Lower Mainland and be distributed from here to all points in B.C. are being coordinated from Alberta into those Interior points.”

Normally, Van Kam has overnight truck service from Vancouver to both Kelowna and Kamloops (with terminals in other B.C. cities) and uses three major highways.

Highway 1 through the Fraser Canyon was used for Prince George freight, Highway 3 to haul to Castlegar and Cranbrook and the Coquihalla to Kelowna and Kamloops.

With Highway 3 being the only open route, Van Kam has to take its turn getting through when it is open. Since food and medical supplies are mixed in with other goods on their trucks, they are considered to be hauling essential goods and qualify to use that route.

Customers have been asked to hold back on less essential shipments until the roads are more useable in order to keep warehouses like Van Kam’s from filling up.

When it comes to freight from Asia, that’s a different story and one that has been unfolding for months.

READ MORE: Kamloops, Okanagan retailers ask customers to shop early for Christmas due to supply chain problems

“If the rain never happened and it had just been sunny for the last two weeks, we would still have this biblical problem,” Chris Locher, co-owner of Locher Evers International, told iNFOnews.ca. “Of course, it’s much, much worse but we’ve been fighting this problem for the last eight weeks or longer.”

Locher Evers is a large “freight forwarding” company in New Westminster. It takes shipping containers from ocean-going ships, unloads them in their warehouse then sends them out by truck or train.

Before the road washouts, they were swamped by a shift in world trade that started when COVID shut down manufacturing plants in China. A few months later, North Americans discovered buying online, at drive-thrus and store pickups. Being cooped up at home, they started spending big time.

While some supply chain issues stem from the fact that the demand for goods in North America outstrips supply, there’s also been a huge disruption in the shipping industry.

To help fill the demand, massive container ships rushed to west coast ports.

“Ships have now overwhelmed the land-based infrastructure in North America and Europe,” Locher said. “That includes the port terminals, the railroads, the number of trucks, the warehouses, the number of drivers that are available.”

A lot of cargo is funneled through the two west coast Canadian ports with the vast majority of products from Asia heading to Toronto, Montreal and Chicago – with some being dropped off in Calgary to be trucked back to places like the Okanagan and Kamloops.

For the most part, trains just pass through Kamloops. If someone there buys a full container from China, it’s easier to ship it by truck so the container can be returned to Vancouver for a quicker to return to China. If it continues back east, it can be a month before it’s back on board a ship.

The two west coast Canadian ports are handling so much cargo because they have a number of advantages over their U.S. counterparts.

For one thing, Prince Rupert is two days closer to China and Vancouver is one day closer to China than San Francisco is, Locher said.

For another thing, the Canadian ports have rail lines in them so containers can be loaded directly onto rail cars, rather than having to be offloaded onto trucks that drive them to the rail lines as is the case in many American ports, Locher said.

Plus, Canada has two national rail lines. The U.S. has none, Locher said.

That means cargo offloaded in Los Angeles or San Francisco is shipped by train to Chicago, offloaded onto trucks then reloaded onto different rail lines.

The bottleneck in Vancouver has meant, for the past eight weeks or so, container ships can sit in English Bay for a week or more, Locher said.

It’s not unusual for cargo ships to anchor in the harbour waiting for coal, potash or other cargo but container ships are a different story.

“If you see container ships at anchor in English Bay, you know something is wrong,” Locher said. “If everything is going right, they do not anchor. They come in on a fixed schedule, just like airlines.”

He’s counted as many as five container ships waiting in harbour. In Seattle, it can be twice that number and in Los Angeles, it gets up to 80.

Since each ship will usually offload at Prince Rupert, Vancouver and Seattle, each delay further slows down the delivery of goods.

During normal times, empty containers are shipped to off-dock yards waiting to be filled and shipped back overseas. That’s a good situation for exporters because importers pay such high freight rates that exporters get a bargain.

Since the demand for empty containers in China is so great and the ships can travel faster with empty containers that don’t have to be offloaded and emptied, that means they would rather take the empty containers than have them filled with cargo. If a huge container ship can make a couple of extra trips a year that way, it’s more money in their pockets, Locher said.

Now, with so much cargo filling up warehouses and not enough trucks or rail cars to ship it out, those off-dock lots are being used to store full containers. That means the trucks that transport the containers are driving around with empty containers with nowhere to dump them and, of course, no way to pick up full ones.

When iNFOnews.ca talked to Locher last Friday, his crew had just unloaded the last of their backlogged containers. Since more will be arriving this week, he was frantically searching for two trucks to load and send to Ohio, three for Chicago, two for Winnipeg and one each for Calgary and Edmonton. He also had 10 53-foot CP Rail containers waiting for the train to get through and needed another 15 more containers, all to go to Toronto.

He was able to get one truck to Toronto routed through the U.S. but that cost $16,000 versus a normal $5,000.

He had no trucks destined for the Thompson or Okanagan.

“We can live without a Coquihalla for awhile,” Locher said. “We can live without the Fraser Canyon for awhile and we all just have to go on Number 3. It’s a horrible inconvenience but we can live with that. We can’t live with both railroads out in the Fraser Canyon.”

READ MORE: Trains roll into Vancouver after CP Rail restores limited service following mudslides

Normally CN and CP share the two lines running through the canyon, each being a one-way route that continues through Kamloops. Now, only CP has its Fraser Canyon line open. CN is running on the old B.C. Rail line from North Vancouver through Lillooet to Prince George.

That line doesn’t connect to its line through Kamloops.

While the Nov. 15 slides are unprecedented, they do reinforce the idea that the supply chain network needs a rethink to bring in more alternatives, Trevor Heaver, retired Professor Emeritus at the Sauder School of Business at UBC, told iNFOnews.ca.

“You get resilience by redundancy – having more than you need, having alternatives available to your supply and for your shipping,” he said. “I’m going to buy from Thailand, but do I ship it through Halifax or do I ship it through Vancouver? No, I ship it through both because that gives me the ongoing ability to switch. Do I use Maersk or do I use Zip (both freight shipping companies)? Why don’t I use both because, if I have a problem with one, I’m OK with the other.”

That may also mean becoming less dependent on “just in time” shipping of products and going back to having more regional warehousing as was done 10 or 15 years ago.

It will likely take more than one catastrophic storm to trigger such a change.

“It will be greater in the short run if these dramatic events continue to take place as they are forecast,” Heaver said. “We will see significant changes as companies try to be more flexible.”

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