Nov 18, 2021
Floods leave Canada grain stranded in 'disastrous' supply chaos
Mountains of wheat and canola are stranded in Canada after storms blocked access to the Port of Vancouver during peak shipping season.
There’s no rail access to Canada’a biggest port after days of torrential rain and landslides. About 20 vessels are waiting for deliveries, while a couple hundred thousand tons of grain are stuck in transit, according to Quorum, a company that monitors Canada’s grain transportation system.
It’s so bad that some exporters may even be forced to declare force majeure to avoid penalties as they won’t be able to make deliveries on time, said Wade Sobkowich, executive director of the Western Grain Elevator Association.
Force majeure is a contractual clause that allows deliveries to be suspended due to factors beyond a company’s control, such as natural disasters.
Federal government officials said they’re working with industries to restore supply chains for essential goods and have met with representatives of railways, the trucking industry and the Vancouver port.
“We are examining all options, including down south,” Transport Minister Omar Alghabra said about transportation options.
British Columbia opened one highway for westbound travelers who had been stranded for days in Hope, about 150 kilometers (93 miles) east of Vancouver. Highway 3, which runs east to Alberta, could open to traffic by Sunday, the government said.
As roads are repaired there will be limited access but it will take an “extended period of time” before some other roads open, B.C. Public Safety Minister Mike Farnworth told media.
The province is likely to implement emergency measures to limit non-essential travel, and a possible order to prevent hoarding and price gouging in the coming days, Farnworth said.
Canada is one of the world’s largest grain exporters and about half of its shipments go through Vancouver. The disruption comes during the busiest time for grain shipping and as global supply chains are already struggling with congestion and backlogs.
“This is disastrous,” Quorum President Mark Hemmes said. “You’ve got rail lines that run into the terminal from Canadian origins cut off. All of the highways are cut off. And it’s Canada’s biggest port.”
There is only enough grain at export terminals to continue shipments for the next four to seven days, he said.
The rail line outages may be resolved in coming weeks but the impacts of the stoppage will last for months, according to Greg Cherewyk, president of industry group Pulse Canada.
A widespread drought that shrunk Canada’s output has helped push up crop prices, with canola trading near all-time highs. Logistical challenges in Canada and elsewhere are threatening to boost prices even further, said Neil Townsend, chief market analyst at FarmLink in Winnipeg, Manitoba.
“It’s a bad situation but it would be an even worse situation if we had a regular crop or a bumper crop,” Townsend said, noting that less grain is moving through the system this year.
The drought also contributed to extreme wildfires in the province in the summer, which temporarily closed both main rail tracks and caused a supply chain bottleneck near the Vancouver port.
“We have gone from devastating forest fires to catastrophic floods in the span of three months. We are going to have to adapt to these emerging realities and prevent them from getting worse,” Jonathan Wilkinson, the federal minister of natural resources, said at a news conference.