Dearth of Rail Cars Causes Box Crisis on Canadian West Coast
Lloyd's List/Internet - 4/13/04

An acute rail car supply shortage has grounded more than 10,000 containers from Asia at Canadian west coast ports, creating serious problems for lines, shippers and terminal operators. 

While Canadian National Railway reports its service with Vancouver, Canada’s largest port, is “totally fluid”,  Canadian Pacific Railway has become the focal point of an intermodal crisis that shows few signs of abating. Containers are piling up at the three container terminals of the Port of Vancouver as well as at nearby Fraser River Port where, earlier this week, CP Ships launched a second Pacific Gateway service.  CP Rail is striving to systematically work through the backlog in eastbound shipments destined for the US Midwest and Central Canada, but declines to say how long it will take to eliminate the backlog. Some industry observers have suggested it could take several weeks.

Customers of CP Rail have been told to expect delays of about 10 days from time of vessel arrival to the loading of containers to rail cars, but freight forwarders are complaining about delays of up to 20 days.  “It’s having a devastating effect on services, equipment supply, our customer base and financial aspects,” said David Bedwell, Vancouver-based executive vice-president of China Ocean Shipping (Canada) Inc.  “There are few alternatives, and we have had to divert some cargo to US Pacific Northwest ports,” he added.  While no shipping lines have yet cancelled calls to Vancouver or Fraser River Port, several were discharging US-destined cargo at Seattle.

Burlington Northern railway was also reported to be running some cars to Fraser Port from the US and returning the US cargo via Seattle.  Robert Ballantyne, who heads Canada’s largest shipper group, the Canadian Industrial Transportation Association, said that “our members are worried that this has happened — Vancouver is the prime gateway for Canadian trade with the Far East.”  The industry association’s 130 members account for an annual freight bill of approximately C$1bn (US$750m).  “It’s no consolation that there are comparable problems on US railroads,” Mr. Ballantyne said. “North American railways, much more so than ports and shipping lines, appear to have underestimated the strong surge in traffic growth with Asia.”

Transit times from Vancouver to Montreal are longer than the actual sea leg from some Asian ports to Vancouver, noted George Kuhn, executive director of the Canadian International Freight Forwarder Association.  “The infrastructure is an issue,” commented freight forwarder Louis Girard, managing director of UTI Canada Inc. in Toronto. “The ships arrive on time, discharge their cargo and rail line infrastructure lets us all down. Our customers are missing deadlines and facing vendor-related penalties as a result of the delayed deliveries by the rail lines.”  Major retailers using CP Rail for eastbound shipments from Vancouver include Canadian Tire and Hudson Bay.  The railway has attributed the car shortages to “an unusual surge in demand for railcars due to increased import and export volumes.”

In addition, the recent strike at Canadian National Railway put more pressure on railcar supply. “This increased demand for rail services came at a time when the CPR system still had not fully recovered from avalanches and derailments incurred in February,” said the Calgary-based carrier.  Worst hit have been Vancouver’s Deltaport and Fraser Surrey Docks. Each has between 60,000-70,000 ft of CP Rail traffic on the ground — the equivalent of about 7,000 TEU. The overall backlog on Canada’s west coast of over 210,000 ft of intermodal boxes represents 35 typical freight trains 6,000 ft long each.

In the US, meanwhile, carrier and port officials said they had yet to register similar shortages and the attendant delays so far this year, though there are fears that rising congestion as trans-Pacific volumes surge could lead to problems when the shipping season gets under way in earnest.  John van de Merwe, president of CMA-CGM America, said: “Obviously, it is getting bad in Canada, but we have not experienced any shortages of rail cars from our providers in the US. Our major contract is with BNSF and they have been able to fully satisfy our needs on the west coast.”  A spokesman for the Port of Long Beach expressed a similar view. He noted, however, that Union Pacific railway was experiencing difficulties meeting demand due to a recent heavy wave of retirements and consequent rail crew shortages. The company expects to hire 4,000 staff this year after taking on more than 2,300 people in 2003 and has asked some customers to divert shipments from rail to truck as it struggles to keep pace with demand.  “They have a lot of equipment scattered around the country. They are training new people now, and they are saying that by early summer when the shipping season really gets under way they will have enough people to handle it.”