What a difference just a few months makes. Six months ago, I would not have anticipated writing an article that references the closure of Canada’s borders to all but essential travellers, the need for ocean carriers to cancel sailings and otherwise manage capacity due to an unprecedented economic downturn, the virtual shutdown of the cruise industry, nor the inability of crew members around the world to return home at the end of their contracts.
And yet, despite the unsurpassed breadth and scale of the COVID situation, the international shipping industry has proved resilient in overcoming significant operational and commercial challenges. This has included the well-publicized difficulties of enabling seafarers to leave their vessels and return home to their families. Although these challenges have started to ease somewhat, there remain bottlenecks in every corner of the world. Here in Canada, the government recognized the key role that seafarers play in moving trade and delivering essential supplies from the outset, and Transport Canada, Immigration Canada, and the Canada Border Services Agency worked with the industry to identify necessary improvements to expedite the crew change process. Although there remain issues that need to be resolved, the crew change situation in Canada is moving in the right direction.
The maritime sector that has been hardest hit by the pandemic is undoubtedly the cruise business. Like the airline industry, with few people travelling and restrictions imposed by governments everywhere, it is difficult to predict when cruise ships will resume their itineraries. However, it is not only the cruise lines themselves that are hurting, but all the other services that are related to this sector. This includes ship agents who have had to adjust staffing as their revenues have dried up, as well as port authorities and service providers such as pilots, tour operators, etc. – all of whom continue to see significant financial impacts from the shuttering of the cruise industry over the past six months.
On the cargo side, just as China was opening up from its lockdown and resuming production of manufactured goods this spring, Europe and North America were closing down, causing demand to all but disappear. This placed tremendous pressure on ship owners and operators to implement measures to offset the drop in freight and revenue, and a number of major trade lanes experienced “blank” sailings as shipping companies cut capacity to meet demand. However, such action is a short-term fix at best, and any return to COVID restrictions that causes a drop in consumer spending will have further negative consequences for ship owners.
In order to assess COVID’s impacts on ocean shipping activity here in Canada, we compared the number of pilotage assignments across the country between January 1 and July 30, 2020 with the number of assignments over the same period last year (all foreign flag ships entering Canadian ports use the services of a pilot). Leaving cruise ship assignments (which fell by 100 per cent) out of the calculations, we saw 1 per cent fewer vessel calls on the west coast, 11 per cent fewer in the St. Lawrence and Great Lakes, and 7 per cent fewer calls in Atlantic Canada. Despite the economic damage brought about by the pandemic – including forced shut-downs, government stay-at-home orders and stringent border restrictions – international trade has kept moving to and from Canadian ports. And, in a context where there was no playbook for addressing the many issues that appeared out of nowhere and threatened to halt marine commerce, we must make special mention of the essential role that Transport Canada has played in working with stakeholders to keep trade moving safely and securely throughout this country, all the while observing guidelines issued by the Public Health Agency of Canada.
Maintaining the fluidity of trade throughout this pandemic has required a highly coordinated effort among many players, and the resulting lessons learned will likely accelerate the industry’s transition towards “digitalization” in a bid to optimize supply chains and lower the cost of trade overall. Digitalization of supply chains will enable all stakeholders to gain better insight and visibility into the performance of supply chains, making it easier to not only respond to efficiency challenges in real time, but to potentially predict and address such challenges before they occur.
Although we have seen many negative impacts from this black swan event, we have also witnessed a number of positive outcomes that will serve our industry well in the future. We know that business is ready, willing and able to transition to a remote work environment as necessary; that digitalization of our supply chains is well underway and will only increase going forward; and that cooperation among stakeholders is an antidote for the most difficult challenges. Through all of the fear and effort to contain this pandemic, the world witnessed people employed in international transportation working together to keep trade and essential goods moving – from the vessel crews who brave the high seas, to the pilots who guide ocean vessels safely into port, to the longshoremen who load and discharge the cargo, to the truck and rail operators who deliver goods on the first and last legs of their journey. The transportation industry’s role in the Canadian economy and the well-being of all Canadians has never been more visible nor has the importance of ocean shipping in delivering Canada’s international trade and critical supplies.