In short supply: Canada’s supply chain issues and how short line railways can help

Photo provided by Great Western Railway.

On Apr. 5, 2022, the Western Canadian Short Line Railway Association (WCSLRA) held its member meeting and trade show in Saskatoon. We learned more about the current state of the supply chain from John Corey, president of the Freight Management Association of Canada, and caught up with Andrew Glastetter, president of the WCSLRA and general manager of Great Western Railway, to talk about how short line rail can make an impact on the issues at hand.

A perfect storm

Corey spoke to attendees about the impact COVID had, and is still having, on our supply chain. He noted that while the world came to a stop in March 2020, there was a slight bump in optimism in May 2020. At that point, things were starting to look better for the supply chain. However, it wouldn’t last. The supply chain had first been hit by blockades in February 2020, then COVID in March. By January 2021, demand for containers would start to present issues for ocean carriers. The hits kept coming as April 2021 brought strike action at the Port of Montreal followed by a summer of wildfires in B.C and then flooding in the beleaguered province in November. “There were the floods in British Columbia, and that one event literally broke the supply chain. It severed the TransCanada highway and both the CN and CP main lines going through from Alberta to British Columbia,” said Corey. “To the credit of the railways, they managed to get lines back up and running in what seemed like a week, which was pretty amazing considering the damage that was done.” Mother Nature was not finished with B.C. yet, however. December 2021 would bring exceptionally cold weather to the region, which was yet another shock to the system.

2022 would be no better for the supply chain, as blockades at Coutts, Alta., Emerson, Man. and Windsor, Ont. cost the Canadian economy hundreds of millions of dollars. “Those types of things are bad enough for the economy, but they are extremely bad for Canada’s reputation as a reliable place to do business,” said Corey. The short-lived strike at CP Rail in March is also an issue that still affects the supply chain. “The effects of that strike were felt before and are still going to be felt after,” said Corey. The effects of these events on the supply chain are staggering.

Learning the lessons

As various regions of the world climb toward economic recovery, the issues within the supply chain have been exposed. Corey noted the three areas where action needs to be taken to get the supply chain back on its feet—labour, infrastructure and data. First, while the cross-border vaccine mandate shone a light on the trucking industry, it is not the major issue facing the sector. The real cause for concern is the average age of truckers and what it means for the supply chain. “The average age is something like 52 or 53 years old,” said Corey. “It’s a lifestyle people aren’t interested in. There appears to be a huge shortage of truck drivers in Canada and in North America.” Plus, it’s not just trucking being affected by labour issues. Railways and ports are also having trouble finding qualified labour, and on top of that, they are also dealing with work stoppages. “I know that they have collective bargaining agreements and I know collective bargaining is important, but having a strike is incredibly disruptive to the supply chain and to the Canadian economy,” said Corey. “And as I said, it’s not just the economic effect. It’s the reputation of Canada as a reliable place to do business and as a reliable trading partner.” He noted that collective bargaining should be allowed to run its course, and if that doesn’t work, that back-to-work legislation is not a long-term solution. Instead, he sees value in mandatory arbitration so parties can get back to work and an arbitrator can find a settlement that works.

Next, Canada’s infrastructure showed its weaknesses in 2021. “It never became more apparent that there was a problem with the infrastructure when the BC floods literally cut the mainline railways and … the TransCanada highway,” said Corey. “There needs to be resiliency in the supply chain.” He noted that in his opinion, precision schedule railroading does not help with resiliency because its elimination of capacity does offer any “cushion” to deal with issues.

As well, infrastructure security remains an issue. “Obviously another issue is security of the infrastructure. We saw that with blockades at the Ambassador Bridge and the blockades in early 2020. I think the answer to that is that we need to enforce the law. You cannot blockade a rail line. You cannot shut down a bridge. You can’t block the border. These are essential points of entry and essential infrastructure that is needed to keep the Canadian economy rolling. And there has to be some alternative to blockade,” said Corey.

Finally, data and the use of data must be addressed, according to Corey. “Information and technology are here to stay, and carriers are starting to use big data. I think one of the problems with data is that shippers have no access to it,” said Corey. He says that the transparent data, and access to it, is vital for shippers to know what is happening in the marketplace. As well, data must also be secure from hackers and cyberattacks.

Making change

Corey noted that the federal government has acknowledged the issues facing the supply chain and is making moves to address concerns. In March 2022, the federal minister of transport, Hon. Omar Alghabra, announced the appointment of Jean Gattuso and Louise Yako as co-chairs for the National Supply Chain Task Force which was announced in January 2022. “Transport Canada has recognized that supply chain is a very important component of the Canadian economy, and we need to make sure it’s healthy and functions properly,” said Corey.

Also, there is hope at Canada’s ports and points of entry. Both the Port of Montreal and the Port of Vancouver are expanding. The Gordie Howe International Bridge at Windsor, Ont. will expand a vital point of entry. Corey also notes that doubling or tripling rail track and making more relevant investments will help stabilize infrastructure to help avoid future problems. “It’s just a matter of how that’s going to be done, and who’s going to pay for it,” he said.

Enter the short line

With all the challenges facing the Canadian supply chain, what can be done to help alleviate some of them? The answer in part may lie in the short line railway system. Short lines showed their innovative help in the early days of the pandemic, helping to store unneeded cars to keep Class 1 rail carriers—deemed essential—and their goods moving. According to Andrew Glastetter, that is just one of the ways short line rails can help. “Short line railways are often the ‘first mile’ and ‘last mile’ in Canada’s rail system,” said Glastetter. “We’re focused on lines off the Class 1 main lines. Because of this, we can help handle rail supply chain issues before they become a problem.” Beyond capacity management, short lines can also offer both loading and repair services for rail that can save both time and money for everyone involved.

Both Corey and Glastetter see short line railways as a “pressure relief valve” for major rail carriers, able to assist at a moment’s notice when needed. “Our entrepreneurial way of thinking, plus our size allows us to be nimble and flexible immediately,” Glastetter said. “When there is congestion on a line, or disruption, we can spring into action to move cars off lines to keep goods moving by freeing up capacity for the major carriers.”

Corey echoes Glastetter’s sentiments. “Short lines can fit well into a model that sees the value they offer. With the right development of customers along their track, plus the support they can offer Class 1 rail, we can see how short lines can improve the country’s supply chain and how they can support it when disruptions occur.” Glastetter also sees how short lines can support the supply chain at Canada’s ports. “The Port of Vancouver is a popular port to move goods around the world and that shows no signs of slowing because of the size of ship it can accommodate. However, it also means that any ripple can affect movement of goods quickly,” he said. “The ports at Thunder Bay and Churchill have the potential to ease congestion, and short lines can help get the goods to them and then out to market. I know that Churchill has its challenges, but with the right infrastructure and government investment, that port, plus short lines can positively impact the supply chain in new ways.”

As various levels of government and industry grapple with the ongoing supply chain issues around the world, innovative thinking with partners in all levels of the chain, such as short line rail and smaller ports, will be key to addressing them.

The supply chain crisis, national trade corridors, and Saskatchewan