The State of the Transport Industry

The transport sector has seen some amazing innovation in technology and processes that have helped grow this amazing industry into what it is today. However, we are currently experiencing some interesting challenges that will likely have an impact on how we transport goods and the availability of said goods. With this in mind we wanted to highlight some of these challenges and the impact we will likely see in the marketplace over the coming year.

The CN Rail Issue

CN is currently experiencing congestion. With this backup, it is leading to local carriers experiencing issues with cargo not arriving on time or being delayed which causes further delays down the supply chain.

Michael Brodie, Assistant Vice President of Sales & Marketing for Musket, did some research into the issue and the problems are numerous:

1. Volume Coming from Asia: Some of the Asian ports were closed for an extended period of time due to COVID related issues; this resulted in a lot of containers left sitting and these units are now coming into Canada. It is easy to see how heavy the traffic is on the west coast as it seems like every rail car moving from Vancouver to Toronto is full at the moment.
2. Quebec Spring Thaw: During the thaw period, more volume is pushed from road to rail due to weight restrictions. Penalties are introduced and MAX over the road weights are dropped, pushing heavier cargo to the rail. This has resulted in additional volume coming in from Montreal and the Maritimes over the past 2 months.
3. Staffing Shortage: CN laid off 3,500 workers at the very beginning of the pandemic in early 2020. While much of the industry has resumed normal operation, CN has not been able to solve their staffing shortage. Due to COVID relief and benefit programs, much like many other industries, it's been increasingly difficult to find labour workers over the past year. With the government actively paying people to stay home, and other people simply not wanting to work, CN is unable to bring in staff over the weekend because the staff are not available.

How This Impacts the Local Market

"Each and every transaction at the rail terminal is slower than it was 3 months ago," states Brodie. "This creates a massive ripple effect on the entire trucking community. CN/CP plays such a large part in the supply chain that even a carrier like Musket (with a terminal and deliveries we can do in conjunction with linehaul) are being heavily penalized by the turnaround times at the rail. In the past a driver could do 4 deliveries on a good day, including pick up/empty and return to local depots; currently we're lucky to complete 2 deliveries in a day. While our capacity of drivers/trucks has grown (around 10% over 2 years) our productivity has decreased by 50%."

Musket isn't alone in this situation; many competitors are sharing similar stories. With so much relying so heavily on the rail network, transport companies are having to find alternate ways to fulfill carrier orders and keep business rolling.

On May 10^th, CN advised Musket they wouldn't have RVs available until May 14^th unless carriers cancel what they've already booked during that period. That's a 4-day time frame in which transport companies cannot prepull, pick up for direct delivery, or return exports.

"We've never seen it that bad," said Brodie. "During that same time period, a container may arrive and would get 2 days free at the rail. By the time the next RV is available this container may be in storage for 2 days already. Now that we've secured that RV, maybe it's our drivers 2nd or 3rd move of the day. If their first move was out of CN and it took 3-4 hours to pick up that unit, the driver has likely already missed the next RV."

And thus, a ripple effect is created that's felt all the way down the supply chain.

Brodie, and Musket as a company, sympathize with what CN is going through, as it bears similarity to what the truckers are seeing: an influx of volume due to global supply chain issues and a lack of labour due to fallout from COVID. They simply cannot keep up and the industry will likely feel the effects of this issue for quite some time.