Good day, Madam Chair and members of the committee. Thank you for the invitation to speak about our view on logistics issues with transportation containers as a comparison.
I represent N. Tepperman Limited, which has operated a chain of retail stores in six cities in southern Ontario for 97 years. We sell furniture, mattresses, appliances and electronics. Many of my comments are based on our business challenges. I have submitted a written brief, with references, that goes into more detail.
We are experiencing many challenges in the supply chain, specifically importing containers to Canada. Some are related to steamship lines. Others refer to inland challenges with delays, reduced planning ability and cartel-like pricing, leading to massive price increases for Canadian consumers. We are witnessing Canadian inland bottlenecks due to several factors: infrastructure and ownership interest in ports and rail that are not Canadian-focused, congestion at ocean container terminals, congestion at rail terminals at port and destination, lack of available resources and lack of available equipment.
In the first half of 2022, container volumes at the Port of Vancouver dropped 7%, but containers sat on the port’s docks for six days, twice as long as 2019. Despite the drop in overall volume, Vancouver’s performance and efficiency continue to fall, leading to longer wait times. Out of 370 ports around the globe, the Port of Vancouver is ranked 368th—the world’s third-worst port.
Tepperman’s ocean freight containers go to west coast Canadian ports and end up on rail. The world uses 40-foot containers to ship goods from overseas. Only half of CN and 10% of CP cars are designed for 40-foot containers, causing blockages and delays and leading to additional charges levied by rail companies. Cargo destined for the Toronto area is off-loaded at the Brampton rail terminal. We have seen unprecedented wait times of 10-plus hours this year in Brampton for drivers to pick up containers.
Another issue with inland terminals is the buildup of empty containers that need to be returned. In some cases, steamship lines have refused to offer freight pricing to Toronto due to the wait times involved with shipping empties back. Prepandemic, we had a fixed-price contract for ocean containers, but steamship lines have refused to honour our contract pricing since early 2020. Prepandemic, we were able to ship a full container from Asia to Canada for $3,500. That increased to $30,000 in early 2022, an increase of over 800%, while steamship lines reported record profits. The price-fixing of ocean freight increased costs exponentially, causing some of our furniture to double in price by early 2022.
Recently, due to extremely low demand, container costs started to drop. Last May, steamship lines tried to force us to sign a three-year contract at a rate of $16,500 per container. Today we are seeing pricing at around $7,500, but they are already talking about blank sailing. That is a practice of strategically removing some vessels and port calls from their posted schedules, forcing customers to buy into the few remaining ships at premium prices. As this behaviour continues to be unregulated, shippers and producers face the prospect of additional price increases in the future.
While one might assume that these issues are impacting Canada and the U.S. equally, this is not the case. Canadian importers often pay more. If demand suddenly spikes, we expect that steamship lines will immediately and aggressively increase their pricing. Although freight costs may not return to $30,000 per container, we believe they could easily double.
In closing, Tepperman’s is guided by the principles of being a good employer and providing great value to our customers. This international shipping crisis challenges those principles and threatens our continued operations. We hope our government can intervene to protect retail, wholesale and manufacturing sectors and ultimately Canadians across our nation.
Thank you for your time.