The devastating flooding in British Columbia is expected to just exacerbate an already challenging situation throughout Canada’s supply chain network.
Recently, the Canadian Federation of Independent Business issued a report saying supply chain issues are casting a shadow over the holiday season for small businesses at a time when many are facing increasing costs while still not back to normal sales levels.
In a recent CFIB survey, supply chain challenges were the second biggest concern for businesses heading into the fall (64 per cent), but they take the top spot in sectors like wholesale (84 per cent), construction (80 per cent) and retail (78 per cent).
“When you look at pictures of major infrastructure routes that are just broken (in B.C.), that’s all the information I need to know that this is going to create some major bottlenecks to cross-Canada shipping,” said Dan Kelly, President and CEO of the CFIB. “It’s obviously going to be most acute in British Columbia itself because there are communities that are not going to be served to get their products out or necessary products in. British Columbia itself is going to cut off some people from supply chains.
“But it has big national implications as well. It’s absolutely brutal timing because we already have supply chain issues and we just sever this big link on some of the major routes for both train and roadway. It seems like some of the highway system is reopening again and there are some alternatives. It’s good that the governments are trying to get those goods to go through the US. All of that though adds additional time delays and costs.
“We don’t know the full extent of damage just yet – how significant it’s going to be. But when you look at the broken highways and overpasses that are no longer there. Those things are not solved in days. Those sorts of things are solved in months. Sometimes years. I don’t know about long-term but certainly medium-term negative repercussions from the infrastructure damage that we’ve seen.”
Bruce Winder, author of RETAIL Before, During & After COVID-19 and President of Bruce Winder Retail, said the disaster in B.C. has brought mayhem to the natural flow of goods into and out of the West Coast of Canada.
“The flooding and corresponding damage to railways and truck lanes demonstrates how dependent Canada is on the port of Vancouver and surrounding infrastructure,” said Winder. “These issues have come at arguably the worst time of the year as we approach the one-month countdown to December 25th. Retailers and service providers have been scrambling to use other ports and trucking lanes through the United States and Northern B.C. to attempt to meet demand – at added cost. This situation arrives in the most challenged holiday shipping season on record, as a perfect storm of COVID-19, raw material shortages, lower carrier capacity, staff shortages, and a surge in consumer demand have increased lead-times and have led to empty shelves at select retailers.
“Those retailers who brought stock in early for promotions (Amazon and others) and with flexible supply chains (ability to use Air and U.S. ports) will win holiday 2021 in my opinion. Customers may need to be more flexible in gifts that they procure for loved ones as choice could be limited. I assume it will be another couple of weeks before we see things start to get somewhat back to normal. With the two major rail providers reopening routes this week hopefully this will create some relief for retailers, manufacturers, and service providers in an already challenging year.”
Michael Kehoe, an Alberta-based retail specialist, said the immediate effects from the weather event-related closure of the transportation corridors in British Columbia will be impacting other regions of Canada for several months.
“With many key highway and rail transportation routes closed and some expected to be reopening with limited capacity, retailers and consumers will be affected in various ways. This is a wake-up call for companies dependent on the busy ports on the West Coast to re-evaluate their supply chain strategies. Too often we take for granted the infrastructure and those behind it in our just-in-time, quick service world,” said Kehoe, broker/owner of Fairfield Commercial Real Estate in Calgary.
Recently, the CFIB said that the share of businesses reporting that product input costs are causing difficulties has increased sharply on CFIB’s Business Barometer since the start of the year. In October 2021, 44 per cent of businesses reported this was an issue, compared to 28 per cent in January. The shortage of input products is also now holding back the growth of 31 per cent of businesses, more than double the January rate of 15 per cent.
The organization said that not surprisingly, added cost pressures have a big impact on businesses’ average price plans: in January 2021, businesses planned to increase prices by an average of 2.1 per cent over the next 12 months. In October, the average price intention reached a staggering 3.9 per cent, by far the highest on record since 2009 when CFIB started releasing monthly Barometer results.