Thank you very much.
It's a pleasure to be here today.
I'm Karen Kancens, vice-president of the Shipping Federation of Canada. We're the national association that represents owners, operators and agents of ocean ships that carry Canada's imports and exports to and from world markets.
Our members' ships load and unload cargo at ports all across Canada. They carry everything from containerized consumer and manufactured goods to dry bulk commodities like grain and iron ore, liquid bulks like crude oil and oil products, and project cargoes such as heavy machinery and industrial parts. These ships, which are all ocean-going and foreign-flagged, carry virtually all of Canada's international seaborne trade, and they play an essential role in connecting Canada's importers and exporters to customers throughout the world.
Although we all tend to view Canada's supply chain challenges through our own particular lens, I think we can all agree that the system has been under tremendous stress over the last two years. I think we can also agree that a lot of that stress has been precipitated by two key factors. First we had the global lockdowns and worker shortages created by the COVID pandemic, and then the resulting and unprecedented surge in demand for imported consumer goods, most of which arrive in North America on board container ships from Asia.
These events have wreaked havoc on our transportation system—and I'm talking internationally here—by causing everything from chronic congestion and slow turnaround times at ports and terminals to shortages of vessel space and equipment and delays at many touchpoints along the inland transportation system, including on the truck, rail and warehousing sides. Although we're still facing those pressures, we're confident that these conditions will eventually subside, especially as COVID-19 transitions from pandemic to endemic status, and as the current level of demand for imported goods returns to more normal levels.
One thing we often hear is that the current state of the supply chain has been nothing but good news for container carriers, and that their ability to enter into alliances and other types of collaborative agreements is one of the main factors that have made container shipping capacity so scarce and profits so high. According to that line of thought, Canada should provide for greater regulation of the container sector, mainly by prohibiting shipping lines from entering into such agreements altogether.
That action would do very little to resolve any of the bottlenecks, delays or pricing issues that supply chain stakeholders are currently facing and, indeed, could potentially disincentivize some carriers from serving the Canadian market altogether. Operational agreements between container lines are essential components of the global service network, and most carriers rely on them to offset the extremely high capital costs of operating in the container shipping market.
Under these agreements, partners agree to share vessel space and operational resources, which allows them to offer regular service across a wider range of ports on larger and more efficient vessels than would be possible if they were all operating individually. About 80% of the world's container shipping services are provided through some form of operational agreements, and I can't overstate their role in ensuring the availability of stable, cost-effective transportation services for the movement of the world's trade.
If focusing on shipping alliances is, in our view, a kind of misguided response to addressing our current challenges, what kinds of actions should we be taking to strengthen our supply chain and especially its ability to weather future shocks and disruptions? I would suggest that we need to focus on three key factors: infrastructure, digitization and capacity.
First, we need a national coordinated approach to infrastructure investment, one that's linked to Canada's trade growth and trade diversification agenda, supported by clear objectives for approved projects and clear metrics for measuring success.
Second, we need a national supply chain digitization strategy that focuses on connecting the digital platforms that ports and other stakeholders have already built and leveraging the resulting benefits to optimize the performance of the system as a whole.
Finally, and perhaps more importantly, we need to find ways of temporarily injecting more capacity into our transportation system in response to specific needs. Among other things, this could mean making better use of underutilized trade corridors, simplifying reporting requirements when ships need to change their ports of call, or removing regulatory barriers that make it difficult to use all available assets in a given situation.
We think it's this combination of long-term strategies and short-term solutions that represents the best means of positioning our supply chain for success, whatever the future holds.
I will stop there and I am very happy to answer any questions.
Thank you.