B.C. flooding will result in products not getting to market and higher prices: Economist
Catastrophic flooding in British Columbia has crippled rail lines and washed out essential highways, making it likely that Canadian consumers will face higher prices and shortages of in-demand items in the months to come.
Residents of Chilliwack, Hope, and other communities in B.C.'s Fraser Valley as well as parts of the province's Interior region are already experiencing long lineups at gas stations and vacant shelves at grocery stores, as flooding and mudslides block delivery of essential supplies.
But experts say the ripple effects of what is unfolding in B.C. will ultimately affect the entire country, as no Canadian is immune to a supply chain disaster of this magnitude. The Port of Vancouver - which said Tuesday that it had lost rail access with routes operated by both Canadian Pacific Railway and Canadian National Railway damaged by floods and landslides - is Canada's largest port, handling $240-billion in goods annually.
With highway truck routes throughout B.C. also damaged, the port is now essentially cut off from the rest of the country.
“When we get major events like this, it impacts the entire system,'' said Martin Gooch, chief executive of consulting firm Value Chain Management International. “In the shorter-term, it's going to be mainly those people in B.C., Alberta and possibly a little bit further east that are most affected. But ultimately, it could affect most of the country.''
All types of food products, from frozen fish to fresh produce to shelf-stable goods, are imported into Canada through the Port of Vancouver and then shipped across the rest of the country. Gooch said consumers could see shortages of specific items on grocery store shelves and “longer term, it's going to affect food prices.''
On the retail front, a vast majority of items Canadians use every day - everything from clothing to sporting goods to electronics - enter the country from Southeast Asia via Vancouver. Retail analyst Bruce Winder said retailers will feel the impact of the B.C. flood at the peak of the busy holiday season.
“It's brutal,'' Winder said. “Supply chains for retail have been under siege for some time now due to the pandemic. And this is going to add to the shortage at the worst possible time.''
On Wednesday, both CP and CN said their rail lines remain suspended, with CP adding “no time estimate'' exists for when service will resume.
However, Greg Wilson - a B.C.-based spokesperson for the Retail Council of Canada - said he's optimistic it will be soon.
“The railways have a great history of resilience, and we're pretty confident that within a relatively short period of time they'll get the rail lines running again,'' he said. “Our biggest concern is the highways.''
All major highways between B.C.'s Lower Mainland and the Interior were severed, some in several locations, when record rainfall washed away bridges and roads over a 24-hour period starting Sunday.
On Wednesday, B.C. Transportation Minister Rob Fleming said Highway 3 is likely to be the quickest route to reopen, possibly by the end of the weekend, but damage to Highway 1 and the Coquihalla Highway is so extreme that geotechnical assessments won't be possible until conditions are drier.
“The larger retailers all have supply chain professionals who have been working through the weekend to figure out how to get goods past blocked highways and how to source goods from elsewhere,'' Wilson said. “But in every possible way, it's harder for the smaller entities.''
Wilson said while panic buying isn't necessary and will only exacerbate the problem, “patience is an asset'' for consumers right now.
“If you're looking for a specific type of fridge, toy or electronic item, even some apparel items, you may find that you'll have trouble. But there will be lots of other products on the shelves, it just may not be the one you want,'' he said.
Alberta Premier Jason Kenney warned Wednesday that the supply chain disruptions the world has already been dealing with due to the COVID-19 pandemic are about to “become very acute now for Alberta, and the rest of Canada.''
“A lot of the trucking and rail traffic that brings goods from the Port of Vancouver to Alberta will now have to transit through the States of Washington and Montana,'' Kenney told reporters.
The widespread flooding in British Columbia is also affecting the country's energy infrastructure. On Sunday, the Trans Mountain pipeline - Canada's only pipeline system carrying oil from Alberta to the West Coast - was shut down temporarily as a precaution due to the flooding situation in the area of Hope, B.C.
Trans Mountain Corp. spokeswoman Ali Hounsell said in an update on Wednesday that the pipeline remains shut down and it's too early to know when it might resume operations. She said crews have been able to assess the length of the 1,500-km pipeline by air, but still need to obtain ground access in certain locations.
“We have a team working around the clock to prepare and plan for the restart of the pipeline,'' Hounsell said, adding that while there's no indication that any oil has leaked as a result of the extreme weather, it may be necessary to repair or re-establish protective ground cover in areas where the pipe has been exposed due to flooding.
Enbridge Inc. also shut down a 30-inch segment of a natural gas pipeline in the Coquihalla River Valley as a precautionary measure on Tuesday morning.
In a statement Wednesday, the Canadian Association of Petroleum Producers, which represents Canada's oil and gas industry, said it is still monitoring the flooding situation as it unfolds and it is too early to assess impacts.