Delivery woes of pulp and other forest products exporters compounded by container truckers strike at Vancouver, British Columbia, port; 'we're choking,' says logistics manager for NBSK producer
March 12, 2014
(Industry Intelligence Inc.)
– The strike by Unifor-Vancouver Container Truckers’ Association at Port Metro Vancouver in British Columbia is paralyzing the shipment of containerized pulp through the port, on top of an already-critical delivery situation driven by railcar shortages, industry sources said.
The strike by the unionized workers began March 10 but it followed a work stoppage at the port by many independent truckers that began Feb. 26.
The port strike “just makes things critical now,” said a logistics manager for a large Western Canadian NBSK producer. “The containers “are not getting out at all, zero,” he said. “It’s every commodity that stops moving.”
Pulp producers in the interior of British Columbia depend on both containers and break bulk, to varying degrees for each, depending on the producer. Pulp producers along the British Columbia coast are able to ship by break bulk, so they have been able to continue their deliveries.
The Financial Post reported today that Canadian National Railway Co. (CN) has issued a notice to its forestry customers that it is unable to take all of their lumber shipments because of the backlog that is building at the port’s container terminals. CN said it is thus unable to transfer its forestry shipments at so-called “stuffing facilities” in Vancouver where forestry products, mainly pulp, are transferred from its railcars to trucks and then shipped to the port, The Financial Post reported.
And The Globe and Mail reported today that the strike could force sawmills to close and employees to be laid off as logs pile up at mills. It said lumber mills across the north of British Columbia have already been told to stop sending forest products to the Lower Mainland.
Pulp producers have been enduring railcar shortages all year as severe winter weather conditions have continued unabated. Echoing others, the aforementioned logistics manager said his company has been shorted this year by about 50% on railcars needed to transport pulp from mill operations and that there aren’t enough trucks available to compensate for the railcar shortage.
“We can’t ship out of the port at all and we’re not getting rail cars. We’re at the point where something’s going to break soon,” he said. On top of that, empty containers are being loaded on vessels to relieve congestion, so two or three weeks hence the empty containers won’t be available, he said.
Warehouses are filling up with pulp and some mills are on the verge of putting product on their mill parking lots and covering them with tarps, or they have already done so, even though there is still snow on the ground, he said, describing this approach as “a last-ditch attempt.” (Sources began reporting the tarped-pulp situation earlier this year and this week a source also named an eastern Canadian pulp operation said to be resorting to this.)
On Friday, the federal government ordered rail companies to add more grain cars to move a bumper crop from the Prairies that has sat in storage as a cold snap reduced train traffic, The Globe and Mail reported today. Although the grain is finally moving by rail, the port strike "raises the real possibility of another slowdown in getting the grain to market," the publication reported.
Rail companies had been dedicating ever more of their quotas to crude oil and chemical loads, leaving a record crop of wheat and canola in silos, thus the “Fair Rail Service Act” is being enforced in order to ensure that the rail companies deliver the 2013 crop by firm delivery dates or else face severe fines, the Motley Fool reported on March 10.
As for the pulp industry compared to the grain industry, the NBSK logistics manager said, “We don’t have that kind of clout.” He and others said cutbacks on railroad equipment and labor, compounded by this year’s sustained severe winter conditions, are taking their toll. Rather than seeing improved rail-related conditions by February, they have instead gotten progressively worse, he said.
“Week after week of shipping 50% of our car supply—now we’re choking” at the pulp operations, he said.
He said his company typically is able to fulfill customers’ orders, but “we’re starting to get behind because of the rail situation. It’s getting worse.”
He said North American customers are pretty understanding because they hearing the same problems from all of their regular supply sources and that this supplier “got cars today and others didn’t” and vice versa.
As for customers in China, he said, "I don’t think they’ve realized the critical mess we’re in.” Noting that it takes 18 to 25 days for delivery after the vessels have sailed, he said, “I don’t think they realize the port has not shipped at all.”