Canadian Rail Disruptions / Coronavirus Impacts Continue

From the desk of Captain Jeffrey Monroe, MM, AMPE

CANADIAN RAIL BLOCKAGE IMPACTING MARITIME SHIPMENTS

Canada’s international and domestic cargo movements are being impacted by rail blockades impacting rail lines in Canada over proposed pipeline construction. Grain shipments have been impacted significantly for example. Over the last month, grain shipments to Canadian ports dropped by 475,000 metric tons from a year earlier, costing the industry as much as C$130 million ($98 million) from lost sales, contract penalties, and demurrage according to grain handlers in Canada. There are approximately 53 ships waiting for grain in Vancouver and Prince Rupert. In addition, the rail blockade in eastern Ontario has led to backlogs at Canada's three biggest ports. Several large shippers have moved cargo through US ports to handle international cargo. The protests along Canadian National Railway tracks, located east of Belleville, Ontario, has shut down CN's eastern network. That portion of the system represents approximately 25% of its total operations closing down shipments from the Pacific to Atlantic Coasts. Transportation interests have called on Prime Minister Trudeau to intervene in ending the blockade.

WORLDWIDE CORONAVIRUS IMPACTS CONTINUE

The impact of the Coronavirus epidemic which has begun to reach well beyond Chinese borders is having an impact of national economies as well as the international shipping trade. The price of crude oil has dropped to around $55 per barrel, LNG exports from the US have dropped off, mineral shipments and agricultural cargoes have dropped off and commodity prices have dropped on the global market. There is an increasing volume of cargoes building up at export ports and shippers are looking at alternative locations and markets to absorb some of the glut of cargoes. In particular, the production of LNG in the US has created excess supply and slowing worldwide markets and lower prices are creating a surplus of gas volumes in LNG export locations. Production and cargo shipments are linked to cargo movements and with manufacturing slowing particularly in China, energy import demand and consumable commodity demand have decreased due to quarantines in numerous Chinese metropolitan areas. Further export issues are expected as the virus continues to spread worldwide.

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