Canadian National Railway (CN) is shuttling laden import containers from the ports of Vancouver and Prince Rupert to auxiliary storage yards in the eastern half of Canada to help clear the backlog of marine containers that has accumulated at the West Coast ports.
Yet the new storage, which CN says is already speeding up freight delivery, is adding to incremental costs for intermodal shippers already dealing with rising per diem fees and chassis and driver shortages in eastern Canada.
In a statement to JOC.com, CN said the opening of additional yard space in Toronto and Montreal is the result of requests from the country’s transport ministry, the ports, and trade groups looking to relieve “the surge of Canadian imports that are dwelling on dock or on an anchored vessel on the West Coast.”
Inland bottlenecks, most notably a lack of drayage capacity and chassis in Toronto and Montreal, have resulted in higher rail dwells at Prince Rupert and Vancouver, slowing the inland movement of imports since last summer. Average dwell times for rail containers at Vancouver terminals exceeded seven days in the first week of August, about the same as in late June, according to data from the Vancouver Fraser Port Authority. Dwells of longer than three days cause congestion problems, according to terminal operators.
In response, CN has started moving marine containers to one of four “relief” yards — two existing CN intermodal terminals in Mississauga and Valleyfield, near Montreal, and two third-party operated sites in Brampton and Mississauga — according to a Maersk customer advisory posted Tuesday. CN did not specify which containers, nor under what circumstances, freight would be diverted to one of the relief yards.
Effective Aug. 9, CN will charge shippers a shuttle fee of $300 per container for boxes moved to these relief yards, except for the Valleyfield yard, which will cost $550. Shippers will have one day of free time at the facilities, per the Maersk notice, which did not specify what demurrage charges would accrue after the expiration of free time.
CN said the fees cover the cost of operating the yards, adding that in helping to alleviate the backlog in Vancouver and Prince Rupert, the railroad has “moved containers as close as possible to their intended destinations.”
“The fees help offset the costs associated with that effort, especially in the context of a resource shortage of drayage and warehousing,” CN said in the statement. “The results of these efforts have been successful which, in turn, has decreased vessels at anchor as well as ground counts at the container terminals.”
New fees compound truck, chassis shortages
The CN shuttle fee comes ahead of other new costs facing intermodal shippers. Canadian Pacific Railway (CP) issued a new tariff effective Aug. 26 that raises demurrage for marine containers that linger at 11 of the railroad’s Canadian and US ramps.
The increases range from $75 to $125 per day for the first three days of storage past free time. Demurrage for subsequent days will increase by $75 to $275 per day, according to the notice.
CP said in a statement to JOC.com the tariffs were changed “to encourage customers to pick up containers in a timely manner to create more supply chain capacity for all stakeholders. We expect these changes to improve fluidity at those terminals.”
Bruce Rodgers, executive director of the Canadian International Freight Forwarders Association (CIFFA), told JOC.com the association’s members not only face the new shuttle fee, but additional trucking and demurrage costs if their freight gets diverted to the relief yards.
“This change has resulted in additional costs due to moving the containers between yards, splitting of shipments, and storage charges due to inability to obtain reservations,” Rodgers said.
In addition to the western Canada port backlog, a lack of truck and chassis capacity on the receiving end has exacerbated congestion at the eastern rail ramps, Chris Ford, who chairs CIFFA’s drayage practice, told JOC.com. He added that Canada’s largest chassis manufacturer won’t be able to deliver enough equipment to relieve the deficit for another year.
“There is little to no drayage capacity in Ontario, little to no container storage capacity in Ontario, and there is a container chassis shortage in Ontario,” Ford said. “The situation is a mess.”