Delays of as much as a month on the Port of Vancouver, pushed by heightened car imports and a scarcity of railcars, are prompting automakers that ship automobiles via the West Coast logistics hub to enact elaborate contingency plans to get automobiles to Canadian sellers.

Going through weeks of ready at Vancouver’s Annacis Auto Terminal, Hyundai Auto Canada, for one, has begun diverting vessels to ports in the US, the place automobiles are offloaded, positioned on railcars and shipped throughout the border into Canada.

The rerouting isn’t any easy process, mentioned firm CEO Don Romano, but it surely beats a month of idling off the coast of Vancouver, particularly when the ship is due again throughout the Pacific Ocean to select up one other load.

“It’s a tragic state of affairs,” Romano mentioned.

“It’s important to be very environment friendly. A ship has to depart and berth on a really particular timeframe so it could possibly get again and decide up extra after which ship extra. The margin of error is simply too small.”

For now, the automaker is selecting up the tab for the logistical gymnastics, he added. If the problems persist, the prices will all be labored into Hyundai’s car pricing, which means shoppers will find yourself paying for Vancouver’s port issues.

David Adams, president of the International Automakers of Canada, mentioned half a dozen of the abroad automakers the group represents have flagged the identical subject.

VEHICLES ‘NEED TO BE HERE IN CANADA’

“In some instances [they] don’t actually have a date the place they’re going to be allowed to land. So, they find yourself diverting these shipments right down to the U.S., and it creates a complete different logistical nightmare when it comes to getting the automobiles from the port within the U.S. to the place they have to be right here in Canada.”

As of mid-June, Romano mentioned one ship laden with about 4,000 automobiles was ready off Vancouver, whereas one other vessel was en path to Canada. He mentioned 89 per cent of the automobiles Hyundai sells in Canada are imported from South Korea, with the stability inbuilt the US.

Nearly all of Hyundai’s trans-Pacific imports are nonetheless arriving at Canadian sellers by way of Vancouver, Romano mentioned. However the delays, which have been ongoing since heavy flooding wreaked havoc on British Columbia’s infrastructure in late 2021, have prompted the corporate to redirect shipments that face longer wait instances.

Whereas prospects have develop into accustomed to delays since COVID-19, the Port of Vancouver is now the most important impediment for Canadian sellers seeking to increase car inventories, mentioned Huw Williams, public affairs director on the Canadian Car Sellers Affiliation.

The delays, Williams mentioned, damage each productiveness and competitiveness, particularly at a time when demand for automobiles stays elevated.   

“We don’t need additional delays. We wish to be ready to fulfill that buyer demand.”

The Port of Vancouver, which encompasses 29 separate terminals sprawled throughout the Burrard Inlet and Fraser River that encircle downtown Vancouver, Burnaby and Richmond, has two auto terminals. The bigger of the 2 is on Annacis Island within the Fraser River, the opposite is in close by Richmond. Collectively, they account for practically 100 per cent of the automobiles shipped to Canada from Asia.

‘EXTREMELY HIGH VOLUMES’

Each auto terminals are federally owned, however operated by Wallenius Wilhelmsen Logistics.

Dan Emerson, vice-president of Canadian operations on the worldwide delivery firm, acknowledged the delays, and mentioned the 2 terminals are seeing “extraordinarily excessive volumes” as auto shipments climb from their pandemic lows.

“All OEMs try to restock their sellers on the identical time, inside a really quick timeframe of some months, so we’re experiencing elevated vessel calls with very massive volumes per name,” he wrote in an e mail.

A nationwide railcar scarcity, Emerson mentioned, is exacerbating the issue, stopping offloaded automobiles from being effectively transported out of the terminals. Automakers handle their agreements with railroads straight, Emerson added, so Wallenius Wilhelmsen performs a coordination function however “doesn’t management the railcar provide.”

The corporate is “working tirelessly” to handle the quantity via liaising with the automakers, vessel operators, railroads and trucking firms concerned, Emerson mentioned.

ONE OF THE WORST PORTS IN THE WORLD

Delays on the two auto terminals are additionally only one merchandise on a laundry record of issues at Canada’s busiest port. A Might report from the World Financial institution and S&P International Market Intelligence, ranked the Port of Vancouver 347^th on effectivity out of 348 container ports assessed globally.

Andrew Wynn-Williams, divisional vice-president for British Columbia with trade group Canadian Producers and Exporters, mentioned points on the port have been worsened due to the pandemic and B.C.’s 2021 floods.

Shortfalls within the delivery hub’s underlying infrastructure, nevertheless, are the actual supply of the issues, he added. He pointed to a number of railway chokepoints and an absence of space for storing in land-strapped Metro Vancouver as two of the important thing issues the federal authorities and native stakeholders are working to deal with.

“There’s no fast repair. If somebody’s anticipating the port to enhance proper now, that’s not going to occur,” he informed Automotive Information Canada.

RELIEF COMING?

Some aid for automakers, alternatively, seems to be on the horizon.

The Annacis terminal is halfway via an growth challenge that may add additional car capability as import volumes from Asia proceed to develop. The challenge, on monitor to be accomplished subsequent 12 months, will increase capability to 480,000 automobiles per 12 months, from 352,000, based on Alex Munro, a spokesperson for the Port of Vancouver.

However the considerably increased capability on the island terminal following the growth relies on railcar provide, Emerson warned, which means if the scarcity of railcars isn’t solved the positioning received’t attain its nameplate throughput.

The seasonality of the automotive enterprise additionally creates challenges, Emerson mentioned.

“We will use assist from the OEM’s to higher handle vessels flows into Canada by offering a balanced quantity all year long versus delivery excessive volumes over 5 to 6 months.”

Romano acknowledged the automotive enterprise is at present at “peak seasonality,” and mentioned delays on the port ought to subside within the second half of the 12 months as volumes decline. Longer-term, nevertheless, he mentioned he fears the delays might persist as imports from Asia tick up over the following 5 to 10 years.

“We’re seeing extra automobiles coming from Asian nations like Vietnam and China. Tesla’s now delivery from China to Canada. So, we’re seeing heaps extra trans-Pacific exercise.”

As volumes climb, the federal authorities should guarantee Canada’s port infrastructure can sustain, he added. This might imply ongoing enhancements in Vancouver, or added terminals able to dealing with automobiles at different West Coast hubs, corresponding to Prince Rupert, Romano mentioned.