Soy Canada presents on container challenges to the House of Commons agriculture committee
March 3, 2022 – Ottawa, ON – Effective transportation corridors are the lifeblood of our soybean industry, and we’re pleased the Committee is studying the important role for government in enabling our products to get to market. Right now, your study is very timely because our inability to have competitive container service for our exports is making our sector uncompetitive.
I’m here representing the soybean value chain. Soy Canada includes members from all segments of the value chain, from seed suppliers, growers, processors, and exporters. We have a diverse industry with soybeans grown from the Atlantic Ocean to the Rocky Mountains. Soybeans are the 3rd most valuable crop in Canada, being the most valuable source of farm revenue from crops in Ontario and Quebec. We produce world leading food grade soybeans for things like soy milk, tofu, and miso, as well as commodity beans that are crushed into meal for livestock and oil for humans and biofuel.
With more than 70% of our production exported, we are very focused on global markets and what our sector needs to be competitive.
Container service is essential for our sector as all of our food grade production is shipped in containers – approximately 40,000 containers a year flow from farmers’ fields and our processing plants in Manitoba, Ontario and Quebec to markets in Asia, the Middle East and Europe.
Unfortunately, because of poor container service we’re losing value and market share to competitors in the US who are getting better container service. The best way to illustrate the problem is to describe what our exporters face.
We are facing discriminatory pricing
- Prices for container service from Canada have soared relative to the US.
- While US prices have risen 30-40%, prices in Canada have soared 100-150%
We do not have sufficient access to empty containers to ship our products
- Access to empty containers is restricted by shipping lines as they focus profits over service. This means they are denying service to Canadian shippers while they make record profits.
- As this committee has heard, and has been widely reported, international container shipping lines are making record profits – in 2021 alone, five times more than they made in the previous decade. These profits have been extracted from us and put Canada at a competitive disadvantage.
We face poor service with little recourse due to the market power exerted by the shipping lines
- There is little competition as three shipping alliances dominate global trade.
- It’s even worse in Canada, where in Montreal one line controls 70% of the container movement.
- There’s little competition and we’re subject to the whims of whatever price, level of service, or when empty containers are offered.
Members will be aware that the global shipping lines and supply chains are complex, but that is not a reason to exempt shipping lines from the normal limits imposed upon business through the Competition Bureau.
As members of the Container Crunch coalition that spans both agricultural and non-agricultural shippers, we have been consistent in asking for the federal government to show leadership and help our country have access to competitive container service.
We ask that:
- The government immediately open an investigation under section 49 of the Canada Transportation Act to investigate what is contributing to the current container disruptions and better inform the legislative and regulatory changes required to address the competitive failures in the shipping industry.
- The government name a Supply Chain Commissioner to lead the recently announced industry-government task force to bring together stakeholders to identify immediate solutions to address supply chain disruptions, specific to containerized shipping.
These two actions are critical next steps for us to identify immediate solutions to the poor service we’re facing.
They will help us move past the current situation where we can’t consistently meet our commitments to customers, where we’re rendered less competitive by discriminatory rates, towards a situation where operations and financial performance are improved for all.
When given a level playing field, Canada’s world leading soybean industry can compete around the world.
We have an incredible ability in Canada to turn the sun, rain, soil, technology and Canadian know-how into abundant food for the world.
We can do everything right but fail to capture our full potential if we cannot get our product to customers with competitive container service.
You, as a Committee, are playing an essential role in bringing attention to poor container service we’re receiving and recommending solutions.
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