Companies suffer from a shortage of containers

Economic analysis – The Covid-19 pandemic has destabilized global container supply chains, and many Quebec companies suffer from a shortage of metal funds. However, they will have to endure their problems patiently, because there is no real alternative to this unique crisis since the international trade in containers was brought in in the 1950s, specialists say.

Talk to Alain Létourneau, CEO of Prograin, a soybean exporter from Saint-Césaire, Montérégie, that exports Quebec farmers’ produce to Asia and Europe, in addition to operating three plants himself. Currently, the businessman is ripping his hair as he struggles to find empty containers in Montreal or anywhere else in Canada to ship soybeans to his Asian customers.

“We have never seen a situation like this before.” “It’s as if supply chains are derailed,” the businessman says over the phone.

Usually, this multinational Quebec company needs 600 to 800 containers per month to get its products to its customers. “However, at the moment, we can only reach 80% of this capacity,” says Alain Létourneau, specifying that this is roughly 480 to 640 containers per month.

Needless to say, this situation has a huge impact on his work.

The Prograin Seed Plant in Saint-Césaire is operating at 85% of its capacity. Transportation costs have risen dramatically. The company recently had to cancel a shift.

Its customers are also very anxious, especially in Asia. In particular, the company supplies Vitasoy, a major holding company in Hong Kong that produces and markets many types of soybean-based beverages worldwide, and is sold in North America in particular.

Alain LeTorno admits that there is no alternative to his problem.

Prograin is still unable to air soybeans to Asia, he says sarcastically. This is why he cuts his fingers so that the situation will return to normal as soon as possible.

Alain LeTorno noted that “there is no strike at all” in the port of Montreal, because another labor dispute will complicate its life even more – in August 2020, the port was paralyzed by a strike that lasted about ten days.

On March 12, the Association of Maritime Employers (AEM) made a final offer to the Longshoremen Federation. Tensions are tense between the two, with Middle East Airlines filing a complaint on February 1 against the union before the Canadian Industrial Relations Board (CIRB) to negotiate in bad faith.

The CIRB this week rejected the employers’ complaint, but reportedly slapped the union’s fingers Journalism.

Prograin has struggled to find empty containers in Montreal or anywhere else in North America. (Image: Prograin)

This global shortage of containers is affecting many companies around the world, according to The New York Times.

Around the world, the epidemic has severely disrupted international trade, raising the cost of transporting goods and adding a new challenge to the global economic recovery.

Why? Because the Corona virus has stopped choreography to move goods from one continent to another, when governments, companies and consumers scrambled to purchase medical equipment and products, not to mention goods related to working remotely (furniture, computers, etc.).

As a result, global supply chains that took decades to build – taking into account global demand and international and seasonal production chains – are out of sync.

In short, containers often end up in the wrong quantities, in the wrong place, at the wrong time.

This is called the perfect storm in operations management.

Stephan Allary, managing director of Eurofret Canada, an international freight forwarder and customs broker from Blainville (on the northern shore of Montreal), feels the shock wave of this container shortage.

His company serves 1,625 importers and exporters, 95% of whom are small and medium enterprises in Quebec. The entrepreneur says that the production of many of his customers is affected by this crisis.

“We have a Quebec customer that imports ingredients from Asia. However, due to this shortage of containers, this company is unable to complete the assembly of a product at its plant for sale in Canada and the United States.

Stéphane Alary emphasizes that this shortage of containers may also be a problem in importing seasonal products ready in time for the coming summer in Quebec, that is, from barbecues to pool accessories.

Regionalization of logistics chains

Christian Sever, president of Solimpex, the Montreal consultancy and training company in international trade, hopes this crisis will spark deep thinking in the formation of supply chains for Quebec companies, as this crisis will take some time to resolve.

In terms of supplies, he believes supplier networks need more regionalization, being more in North America, and thus less reliance on containers sailing in the oceans.

“Transferring production is part of the solution, but hardly anyone has implemented this policy,” regrets the specialist.

At the marketing level, companies can also diversify their geographical markets, in order to reduce the risk of suffering from container shortages on a major trade route, for example between the west coast of North America and major Chinese ports.

Alan Leitorno of Prograin is confident that he will publish this strategy next year, while holding certain quantities (of the 2021 soybean crop) for the European market, where the container shortages are less evident.

In 2020, the Chinese bought all Prograin volumes, so Saint-Césaire’s shipments are only concentrated at the epicenter of this container crisis, the Pacific.

And the current global crisis.