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Shipping container crisis

What do old crop soybeans stuck in Ontario elevators mean for the 2021 harvest?

“We’re in a situation now where we are trying to get silos emptied before harvest starts, and it’s looking like that’s not going to happen. Again, it’s because we can’t ship them.” – Martin Vanderloo

A shortage of shipping containers to export last year’s Identity Preserved soybeans is plugging elevators just as Ontario farmers prepare for a record harvest this fall. 

Martin Vanderloo, president of Huran Commodities Ltd., says he’s facing the most difficult shipping conditions he’s ever seen, a crisis he attributes to a change in how shipping companies manage storage containers. 

Why it matters: Ontario is a major producer of identity-preserved soybeans. An inability to deliver product could have repercussions from foreign buyers, along with clogging up elevator space for new crop.

Instead of allowing containers that arrived with imports from Asia to remain on Canadian shores for product loading, shipping companies are finding it more lucrative to send them back empty. Doing so has allowed ship owners to capitalize on a more profitable east to west trade.

“The customer normally gets a period of time to load, but steamships are saying ‘forget it. We’re not interested,” says Vanderloo. “They are shipping empties back to China right away because it’s way more lucrative.

“We’re in a situation now where we are trying to get silos emptied before harvest starts, and it’s looking like that’s not going to happen. Again, it’s because we can’t ship them.”

The situation means that the ability to store corn and soybeans in Ontario elevators could be tighter than usual.

Old crop IP soybeans are being hit particularly hard, according to Matt Renkema, grain business manager for Sevita International, because overseas companies are paying eight or 10 times the going rate for storage space. 

“Say for example if we go from Toronto to Shanghai, let’s say it’s $2,000. The other way around, the shipping companies are getting $20,000.”

Some avenues still open

Brian Innes, executive director for Soy Canada, also says the greatest shipping challenges are being observed in IP soybeans, though other commodities including pulses face similar barriers. 

Such challenges are not new, however, due to the on-demand relationship inherent in food-grade crop markets. Alternatives to Chinese-based shipping from other ports are available, with both Renkema and Innes indicating some success in that regard. 

“The logistics team is finding ways to get around it. We’re going to be OK but we’re certainly shipping more later than we would like,” Renkema says. 

Colin Richardson, export manager for Snobelen Farms Ltd., says his company has stayed on track with expected shipping dates and volumes. However, it has been “a tremendously difficult year and a half” considering all that has happened since the start of 2020. 

“Beginning in early 2020 there were additional circumstances that exacerbated that congestion. We had rail blockades forming throughout B.C., Ontario and Quebec as a protest to the pipeline construction out West. This shut down CNR service east of Toronto. 

“The pandemic produced a lot of fear including fears of decreased consumer demand of food products, while alternatively leading a dramatic surge in import demand into North America for consumer goods.

“We are extremely lucky that we have the staff and knowledge to deal with a lot of these issues. It has no doubt been a tremendous amount of work to navigate on a day-by-day basis.”

Still, Richardson says circumstances in the container freight market are “totally unprecedented,” and from his perspective, there is no sign of change in sight. 

Labour disruptions ongoing

Shipping containers aside, Innes says ongoing labour challenges and supply chain disruptions due to the pandemic continue to throw wrenches into the global logistical system. 

For Vanderloo, labour disputes associated with the port of Montreal are particularly concerning. Together with all other factors, he says some customers have come to see Canadian grain sellers as unreliable. 

“It’s been ongoing for years and still isn’t resolved, how it is a union can hold the country for ransom. Farmers, exporters, processors – we all rely on transportation. How one single group can hold that up is beyond me,” he says. “This has impacted our business.”

Vanderloo says the ideal solution is an immediate increase in available shipping container space. The worst-case scenario, on the other hand, would see farmers lined up at elevators that have no capacity for the new crop. 

About the author

Contributor

Matt McIntosh

Matt is a freelance writer based between Essex County and Chatham-Kent. He is interested in all things scientific, as well as rock n' roll, hunting and history. He also works with his parents on their sixth-generation family farm.

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