These are factors that have led to increased supply chain costs in late 2021 and 2022. This is not meant to be an exhaustive list, but a rough summary for reference.

Other factors may be in play. Please let me know what I’ve missed!

• Extreme Driver Shortage (Aging Demographic, few new entries into the market, driver training schools closed during 2 years of COVID)
• Double Vaccination Government Mandate reducing cross-border capacity.  Less US Trucks coming to Canada.
• Driver wage increases – Open war on signing bonuses and wage increases due to lack of driver training and vaccine mandates. $10k signing bonus on the table.
• New Trucks & Trailers – Back ordered over 1 year, prices skyrocketing.  Owners forced to cannibalize their own fleets to keep running. Used trailer costs triple year over year ($30k CAD for an 8 year old trailer).
• Parts for trucks and trailers – typically sourced off-shore.  Ocean Container Service in turmoil (more below) creating extreme scarcity of parts and negatively impacting down time.
• Consumer Spending on goods (rather than services) four times greater during 2020, 2021.  Huge spike in demand for capacity and warehousing.
• Manufacturers now doubling down on raw material orders so as to not get caught short. Creates bottlenecks where warehouses are full.
• Global weather patterns continue to disrupt the flow of goods both in North America (BC Floods, California Wildfires, etc.) and around the world.
• Offshore strikes, drayage Strikes, Border Protestors – all impacted the flow of goods.
• Russia/Ukraine conflict further adding to the problems. Warnings of food shortages.
• Fuel costs skyrocketing with oil prices in winter 2022
• Extreme port congestion continues into its 2^nd year. Ships offshore waiting an average of 30 days to come into port.
  • Major ports closed due to COVID outbreaks in Vietnam, China, and elsewhere
  • US federal investigations into ocean freight oligopolies price gouging
  • On Dec 10 2022, there were 74 ships in the water waiting to be unloaded at the Port of Vancouver (just the Port of Vancouver for this example, but every other port across the planet is in the same sort of predicament). 74 ships equals approximately 888,000 containers, which equals approximately 2500 fully loaded summer trains (as opposed to winter trains that have to be cut shorter to get the air brakes to work). With 252 working days per year, that’s 10 fully loaded trains per day for an entire year just to clean up the Vancouver backlog.

 

Tim Duffy & Peter Jenkins