B.C. flooding might have ripple effect on Quebec’s supply chain

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McGill University lecturer and logistics specialist John Gradek has a message for Quebecers who keep putting off their Christmas shopping .

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“Whatever you see on the shelves today, get it,” he said in a telephone interview. Gradek coordinates McGill’s aviation management program. “You’ve got thousands of containers sitting off the coast of British Columbia on ships with a whole bunch of Christmas goods. We have no idea how long it’s going to take to replenish the shelves.”

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Extreme rain in British Columbia this month has damaged road and rail links and cut off access to the Port of Vancouver — Canada’s busiest harbour. The devastation deals another hammer blow to a supply chain already weakened by 20 months of the COVID-19 pandemic and a series of transport disruptions compounded by shortages of truck drivers and other key personnel.

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Most major retailers have already received their orders in anticipation of next week’s Black Friday, which means “there shouldn’t be too many visible impacts other than the ones that are already evident,” said Jean-Guy Côté, head of the Quebec Retail Council. “We don’t think the problems in Vancouver will make things worse.”

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Manufacturers and retailers across the country have had to overcome multiple supply hiccups of late, starting with a 2019 strike at Canadian National Railway and continuing with last year’s rail blockades, two work stoppages at the Port of Montreal and numerous factory shutdowns in Asia, Europe and North America because of COVID-19 outbreaks.

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Put together, those events have resulted in wild swings in demand, product shortages, shipping delays and sharp price increases for raw materials and other key components.

Shipping containers now require 73 days to cross the Pacific Ocean and dock at their port of destination, with much of the time spent waiting offshore, according to Freightos.com, a global freight booking platform. That’s more than double the 20-to-30-day average that was the norm before last year.

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Costs, too, have soared. Sending a container full of ceramics by boat from Turkey to Quebec costs about $20,000, almost seven times the pre-pandemic price, according to Yannick Lapointe, head of commercial operations at Profil Design, a floor-coverings retailer in St-Eustache. The same container now costs $30,000 to reach Quebec from Asia, up from about $5,000 before the pandemic, he said.

“We’re paying more for transportation than we are for materials,” Lapointe said in an interview. “It’s crazy.”

Adds Véronique Proulx, head of Manufacturiers et Exportateurs du Québec: “Our entire ecosystem has been thrown upside down and this has been going on for two years.” Her group represents about 1,100 Quebec manufacturers.

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While nobody is suggesting basic food items will be in short supply here, Vancouver’s status as a key entry point for thousands of Asian-made consumer goods means the latest weather-induced disruption will have a ripple effect on all points east, including Quebec, industry experts and insiders said. This could include temporarily affecting the supply of anything from clothes to sporting goods to toys, they said.

“It’s been 20 months now that the supply chain has been made fragile by international and domestic issues,” Francis Mailly, head of government relations for Quebec at the Retail Council of Canada, said in an interview. “Many of our members have taken steps to mitigate risks and boost inventory in anticipation of the holidays, but what’s happening at the Port of Vancouver is obviously going to have an impact. It compounds an already difficult situation.”

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Supply networks always face increased strain in the lead-up to the holiday season.

“If you go Christmas shopping on Dec. 24, it can be difficult to find everything that you’re looking for, and the pressure this year is even greater,” Mailly said. “That’s why it’s a good idea to shop as early as possible. If you’re looking for specific goods for the holiday season, it would be a good idea to be flexible. Some people may need to consider alternatives for some gifts because everything may not be in stock.”

Supply chains in the province will probably return to normal by mid-2022, according to Quebec Retail Council estimates.

Most experts polled by the Oxford Economics research firm in mid-November predicted the global supply-chain bottlenecks will end sometime in the second half of 2022 as businesses rebuild inventories. Still, risks including materials and labour shortages remain, Oxford Economics said.

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While the problems in Vancouver are probably short-term, “the question is, when is the next disruption coming?” Gradek said. “The 100-year floods or 100-year ice storms that we’ve seen in recent years, these are no longer 100-year events. Are they going to become five-year events or three-year events in the future? That’s something we need to think about.”

In the meantime, several Quebec retailers are mulling changes to their supply practices.

Some have taken to buying extra quantities of materials to ensure they can withstand further hiccups. That’s the case with Profil Design, which has tripled ceramics inventories and is renting space in four new warehouses to store the goods, Lapointe said.

“Our store has been around for 30 years and we’ve always operated the same way, but right now it’s as if we’re having to learn a completely new way of doing business,” he said. “Every month we have to learn a new reality.”

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Other companies are exploring alternatives in Mexico and the U.S. to better diversify their supply chain and make it more robust, Côté said.

“We have to reconfigure the supply chains, make them shorter, more local, and figure out Plan Bs and Plan Cs so that you have alternative courses of action if problems emerge,” said Gradek. “Supply chains have become long and thin. It doesn’t take a lot of force to break them.”

ftomesco@postmedia.com