By Keith Norbury
The COVID-19 pandemic reduced cargo volumes at container terminals on both western and eastern ports of Canada this spring and summer. The good news is that terminal operators contacted by Canadian Sailings have reported no serious cases of COVID-19 or no cases at all. And they have largely managed to avoid employee layoffs.
From January to June, container traffic at Global Container Terminals Inc.’s two operations in the Port of Vancouver was down 5.9 per cent, said Chris Ng, Vice-President of Sales and Marketing for GCT Canada. Compared with the West Coast of North America as a whole — from Prince Rupert to Los Angeles-Long Beach — the Vancouver figures aren’t so bad. “When you look at that, the entire West Coast it’s down about 12 per cent,” Mr. Ng said in a phone interview.
At the port of Montreal, inbound and outbound volumes at the two container terminals of Montreal Gateway Terminals “have been impacted by the decrease in demand,” Michael Fratianni, MGT’s Chief Executive, said by email. “However, the decline in cargo has been somewhat less severe than originally anticipated, at least for now.” Mr. Fratianni didn’t respond to questions about how much the pandemic affected volumes or what commodities and markets were most affected.
Montreal container volumes slide
Figures from Montreal Port Authority reveal that from January to July 2020, cumulative volumes of twenty-foot equivalent unit containers (TEUs) were down 6.04 per cent, to 949,482 TEUs, compared with that period in 2019. The year-over-year decline started in April at 1.6 per cent, fell by 15.1 per cent in May, recovered slightly to a drop of 10.5 per cent in June, and then fell by 18.8 per cent in July.
MGT is one of two major terminal operators in Montreal, the other being Termont Terminals Inc.
Empire Stevedoring Co. Ltd. also operates a small container terminal, at Bickerdike Pier, to load and unload Oceanex vessels serving St. John’s, Newfoundland and Labrador. Andrew Chodos, Empire’s President and CEO, reported a big dip of 25 to 30 per cent in container volumes in March and April. “We’ve been clawing our way back, not 100 per cent but it started to rise again,” Mr. Chodos said. Empire also experienced “several months of miserable, miserable throughputs” in its roll-on, roll-off automobile business. “We’re still down but not as badly,” Mr. Chodos said of the container business. “It’s been picking up the last couple of months and the domestic market has gotten better.” The containers bring in consumer goods, food, pharmaceuticals and other commodities by truck, much of which is destined for big box retailers like Walmart and Costco on Newfoundland.
Vancouver volumes also down
On the West Coast, figures from Port of Vancouver show that total TEUs traffic for the first seven months of 2020 was down 6.4 per cent to 1,868,036 TEUs. Exports dropped the most — 9.9 per cent, while imports were down 3.2 per cent. GCT Canada’s share of container traffic at its two terminals — Deltaport and Vanterm — is about 70 per cent, Mr. Ng pointed out.
One of the factors in the decline was an increase in void or blank sailings, Mr. Ng said. “Voided sailings means there’s nothing coming in and nothing going out that week. And the pattern really started from the pandemic on the Asian side first.” That was because China’s COVID-19 lockdown coincided with the Chinese New Year. That New Year period was extended, which resulted in manufacturing halting for almost all of February.
“As demand diminished, and as manufacturing stopped in China, most ships stopped coming to us because there was no freight to bring,” Mr. Ng said. Most of those sailings would simply have been cancelled, he said. However, in some cases, the sailings would be “sub-optimal,” with utilization of 60 to 70 per cent.
Port Vancouver figures show that for the first seven months of 2020, the number of empty import TEUs increased 140.6 per cent, to 39,719 from 16,507 in the same period in 2019. At the same time, the number of empty export TEUs dropped 12.9 per cent to 261,051 from 299,780.
When China began restarting its factories as it got the pandemic under control, that’s when the pandemic reached North America. “Consumer demand back on our side of the ocean started to dwindle,” Mr. Ng said. “Cargo owners here started deferring and delaying their shipments until the lockdown had terminated over here.”
“My first pandemic”
Mr. Ng, who has been in the business for 20 years, admitted he has never seen a phenomenon have such an impact on the container trade. “This is really my first pandemic,” Mr. Ng said. “It’s a great learning experience. So I think we’re in a position that will be very good for the next one. I say that tongue in cheek, for sure.” Early on, trade in basic consumer goods, like fashion items, slowed down. But since the end of the second quarter, household goods and hardware, for example, started to pick up.
“Because no one’s really traveling, there are a lot of home improvement projects,” Mr. Ng said. “So what we’re seeing is a higher than a seasonal increase from the Home Depots and the Canadian Tires.” Seasonal products, like barbecues, also began arriving in great numbers for a similar reason. So did personal protective equipment, which was in short supply early in the pandemic.
One export side, the nine per cent drop included major categories like agricultural products. However, export volumes rebounded in the second quarter, up about 14 per cent from the first quarter, but still down six to seven per cent compared with 2019.
Despite the slump, GCT has avoided layoffs at its Vancouver terminals. “Everyone’s running lean and taking capacity out, but we’ve been working on a lot of other projects at the same time,” Mr. Ng said. That includes maintaining equipment and working on finishing up Deltaport’s intermodal yard reconfiguration project.
Empire’s Montreal terminal has also avoided layoffs, Mr. Chodos said. “I think that’s kind of helped us a little bit,” Mr. Chodos said. “We’ve suffered a little bit more maybe than we should have, but we’re a third-generation family company that was founded by my grandfather. So we’re not going to panic and flush the people down the toilet.” At any given time, the terminal employs about 25 people, plus the gangs of longshore workers, whose numbers vary from 60 to 120 depending on activity at the terminal.
At MGT, Mr. Fratianni said, “There have been some minor adjustments made to employment levels, and certainly we have seen a reduction in operating hours worked by stevedores.” Also complicating matters this summer were labour disputes at the port with the unions representing longshore workers. Truces in those disputes were eventually reached before press time.
Positive test news
Empire has reported no positive tests of COVID-19 at its Montreal terminal, although Mr. Chodos noted that “a couple of people got tested because they were worried.” GCT Canada also reported no COVID-19 cases at its Vancouver terminals. “All in all, and quite fortunately, there’s been 100 per cent buy-in from the union,” Mr. Ng. said. “The attitude is protect the business. All of us are in this together. And, knock on wood, so far we haven’t had any outbreaks at either one of our facilities.”
Meanwhile, MGT had six or seven cases, none of which were very serious, Mr. Fratianni said. He too reported that the employer and the unions are on the same page with respect to COVID-19 measures. “Our protocols and procedures are discussed in depth with the health and safety parity committees (employer and union). The teams have worked collaboratively over the last several months and continue to review procedures to ensure we adjust to any new developments,” Mr. Fratianni said. MGT has enacted “a strict sanitation protocol that was vetted by medical professionals,” Mr. Fratianni said. Proper cleaning of machines and workspaces is now part of the daily routine. “In fact, it is performed multiple times per day.” MGT has even posted a 25-page COVID-19 guide on its website. The guide includes detailed procedures for cleaning such equipment as the cabs of gantry cranes, top handlers, and forklifts.
Mr. Chodos said Empire has made great use of Mr. Clean and elbow grease. “One of the guys who works for us used to work at the hospital,” Mr. Chodos said with a laugh. “He knows how to clean and to clean properly.” Getting an early start on cleaning and other COVID-19 protocols was crucial to ensure buy-in from the employees — “making sure people from the unions, guys who are regularly here, see that we’re doing it, that we’re not just saying we’re doing it,” Mr. Chodos said.
Another key part of the protocol is assuring employees that they won’t suffer repercussions if they do get sick. “We’re telling people to be honest and just let us know if there’s a problem. That’s the key: you’re not going to fire anybody because they got sick,” Mr. Chodos said.
GCT’s protocols include cleaning of all machinery between shifts, as well as providing PPEs to longshore workers, particularly when they have to go into the holds of ships. GCT has also hired a third-party shuttle company to move workers around at designated dispatch times. “There’s a lot of staff that we call boots on the ground, our superintendents who’ve been working every day on the terminal, just to make sure that operations are running efficiently but also now safeguarding physical distancing,” Mr. Ng said.
The protocols also extend to the terminal gates and apply to truck drivers and railway workers accessing the terminals, he added. “When I say that there have been zero incidences, that extends out to railway partners and also the trucking community,” Ng said.
At MGT, Mr. Fratianni said the terminals have received “complete cooperation” from shipping lines and other partners, although he didn’t provide any details about those protocols. He did, however, mention that the terminals have created “separate pathways for entering and exiting the terminal” to ensure physical distancing during shift changes.
“Ensuring the health and safety of our employees has been priority one,” Mr. Fratianni said. “From a Covid 19 perspective, it has been a significant challenge ensuring that the workplace is safe for our employees. However, I can confidently state that MGT has adjusted and adapted well to the new public health guidelines.”
“Delicate” recovery expected
Looking ahead, Mr. Fratianni sees a gradual improvement in business for the rest of 2020, with “continued modest improvement in 2021.” He doubts that even development of an effective vaccine or other COVID-19 treatment breakthrough will have much of an impact over the next six to 18 months. “I feel the industry, which has been designated as essential, has been somewhat excluded from government aid programs, despite a drop in business and a spike in costs related to COVID-19,” Mr. Fratianni said.
Mr. Ng at GCT also doubts that a vaccine alone will be enough to restore the economy to pre-pandemic health. “I don’t think travel is going to be returning to the way it was in 2021,” Mr. Ng said. “So I think in general the cargo volumes in 2021 are still going to be delicate. We don’t expect that big hockey-stick recovery. Some are even predicting right now we may be right in the midpoint of a W.”
Mr. Chodos also doesn’t anticipate his container business to return to 100 per cent normality any time soon, although a vaccine “would be nice.” In the absence of a vaccine, he said, “We just have to be vigilant. Everybody’s got to be careful and watch out for their fellow man these days — man or woman.”