Congested supply chains could start to resolve in mid-2022

By Chris Stoodley

When North America went into lockdown last year due to COVID-19, there was a surge in people spending their money on imported goods.

As people found themselves stuck inside their homes, they began purchasing new products such as at-home workout equipment, electronics and baking gear.

Ever since then, supply chains around the world have been clogged up with increased demand — and it's been affecting the entire system.

“If we look at the issues that everybody is experiencing with the supply chain right now, it started in the summer of 2020 when we saw COVID's first wave start to recede,” Karen Kancens, vice president of the Shipping Federation of Canada, said. “Here in North America, people started buying lots of goods, especially in a context when you couldn't really spend your money on services because we were still in lockdowns.

“It's a surge that's still ongoing over a year later; it's been surprising in how sustained the surge is, and it's put a huge amount of strain on the transportation system overall.”

Since a majority of the goods people are purchasing are made in Asia, they arrive in North America on cargo ships.

That means there's a long process with several procedures that take place before the cargo gets to its final destination.

For instance, cargo ships must be unloaded in marine terminals, the cargo will then sit inside storage for a period of time, then reloaded onto ground transportation, and then they're often unloaded again into another storage space or distribution centre.

“It's a complex system,” Kancens told CityNews Halifax. “A lot of interdependent parts and it's just under enormous strain right now. It's really a system that's having difficulty efficiently handling the amount of goods that are flowing through it.”

It's a difficult issue to fix.

When considering supply chain systems, its goal is to operate effectively and handle surges with minimal issues.

However, you also need to balance that with a system that can operate cost-effectively and efficiently during normal times.

“How do you find that balance?” she said. “It's not an easy question to answer.”

She added that currently, a lot of the solutions in supply chain and transportation issues lie in infrastructure — and they're not solutions that can be implemented quickly. Most of the solutions require things such as more physical space and time.

“The only thing that we can all bear in mind [is], generally speaking, this is an anomaly in terms of the surge,” she said. “Conditions are expected to return to normal at some point, so we just have to do our best to come up with operational solutions.

“There are no magic bullets for this one, I think.”

Moreover, there are other issues and barriers that are impacting the system.

For one, there's currently a shortage of cargo containers both on the import and export sides.

Moreover, some foreign seafarers are also facing a lack of accessibility to COVID-19 vaccines.

If a foreign ship must dock in Canada, they're subject to entry requirements which sometimes might include mandatory double-vaccination.

While it's impossible to be certain when these conditions will level out and return to normal, Kancens said it all depends on when demand starts to stabilize.

She said it's commonly thought that by mid-2022, conditions will start to ease.

“If that's the case on the demand side, then it will take some time for the transportation system to sort itself out for delays and congestion to resolve,” she said. “Most likely third or fourth quarter of 2022. But quite frankly, we're all guessing at this point because nobody really thought the surge would last for this long.”

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