Manitoba container trucks gear down as a result of trade volatility, rail disruption

A segment of Manitoba's trucking industry has been forced to shift into a lower gear after eight solid months of international trade volatility and railway disruptions.

China's six-month ban on Canadian pork exports in 2019, the eight-day Canadian National Railway strike in November, the COVID-19 crisis and the ongoing CN and Canadian Pacific rail blockades have taken a cumulative toll on container truck companies, industry experts say.

"Big picture, the supply chain is very interrelated. Anything that hits a train, for the most part, at some point has spent time on a truck," said Terry Shaw, executive director of the Manitoba Trucking Association.

"Everything is interconnected, and a blockade or stoppage in one area has ripples beyond that area, and a stoppage of one mode of transportation has effects beyond that mode of transportation."

Shaw said Manitoba trucking companies that move shipping containers short distances are reporting a downturn in business, as trade declines on both sides of the Pacific Ocean due to uncertainty and reduced demand.

The transportation industry was already struggling to recover from the Chinese refusal to accept Canadian pork and the CN Rail strike when the COVID-19 outbreak hit the world's biggest economy and supporters of Wet'suwet'en hereditary chiefs — who are opposed to a natural-gas pipeline in British Columbia — erected railway blockades.

Shaw said both the blockades and the Chinese economy are inhibiting container traffic, but he's particularly concerned about reduced Chinese demand, "just because it's been going on longer and just because of the sheer amount of trade we engage with them."

Smaller firms 'really hurting'

Larger Manitoba trucking companies that do business with railways are better positioned to absorb the downturn, Shaw said, adding smaller firms, are "really hurting."

Prairie International Container and Dray Service is one of those smaller companies. The Winnipeg firm, which employs 30 people and does most of its business with railways, is shipping about half of the loads it usually ships at this time of year — about 35 loads a week instead of 70 — said general manager Jeffrey Odway.

The rail blockades hit his business at a time when it was already vulnerable, he said.

"It's been pretty dramatic. For one, in June when we had the pork ban, it pushed a lot of our business — probably half of our business — off to the side until November. Then the rail strike put us behind the eightball for probably about two weeks. The virus, we're not sure about, because we haven't seen a lot of stuff that's going on," he said.

"The blockades, unfortunately for us, are impactful. A lot of our customers have either cancelled orders or postponed orders and that directly impacts us from a load standpoint every week and from a revenue standpoint. Being a smaller carrier really impacts us from a sustainability standpoint."

Odway said he's doing his best to meet customer demand, but even if the rail blockades end immediately, it will take months before supply chains fully recover.

"You're talking 12, 16 weeks for the backlog to get cleared up. When you have 500 trains parked across Canada — and they're just parked — you've got a lot of freight to move," he said.

"The last rail strike took weeks and weeks to get over, and this is probably worse from a flow standpoint."

Generally speaking, most of the goods that move longer distances by rail — fuel, agricultural products, seed, grain and fertilizer — are heavy, bulky and don't have to arrive as quickly as the more breakable, higher-value goods that are shipped long distances on a just-in-time basis by truck, Shaw said.

Some customers may choose to move their orders onto trucks, but the time and labour involved would drive up the cost, Odway said.

A large invisible industry

If the blockades continue, there will probably be more layoffs in the transportation industry, said Barry Prentice, a professor of supply-chain management at the University of Manitoba's Asper School of Business.

"Transportation is our largest invisible industry. It's all around us all the time and it's critically important, but nobody pays any attention until all of a sudden something happens and it's not there, and then we realise what the impact is," he said.

That impact will also hit consumers, said Odway, who expects more volatility in his industry.

"I would say there's probably gonna be more disruptions. Just from my vantage point, since June, we've seen a lot of up and down and I think people should be prepared for the inevitable — which is price hikes," he said.

"They're going to go to the store they're going to wonder why lettuce is up this week, or whatever that might be that's coming by truck or train.

"So there's probably some impact from it down the road. When that is, I don't know."