Lately, North America has lived in a world of supply chain disruptions. Why? COVID has had long-lasting effects on the transportation of freight and grains throughout the continent — even the globe.
“You can’t ignore macro-economic effects,” says Barry Prentice, director of the Transportation Institute and professor of supply chain management at the University of Manitoba. “We’ve got some really large disturbances that have occurred — the interest rates and inflation in particular.”
Add in uncertainty from the disruption in Ukraine — a big supplier of grain — and there’s quite a bit of disruption to the supply chain.
“The railways tell me they’re like meat in the sandwich — they’ve got container problems at the port, and then they’ve got container problems with the receivers because they don’t have the warehouse space,” he adds. “It’s a very unusual time.”
One exciting thing on the horizon for North American transportation, though? The rail merger of CP Rail and Kansas City Southern — which, in return, might provide a direct rail link from Canada down to Mexico. While the merger hasn’t been approved, it would be a win for grain farmers in particular.
“It encourages more shipments, and there are no overlaps that are going to be terminated or made redundant,” Prentice says. “It also has an environmental side — with a more efficient rail line, they’ll be able to compete with trucking, which ships more perishable products.”
Prentice notes that today, you wouldn’t ship items, such as potatoes and carrots, by rail to Mexico today. But with this merger, it would be possible to ship to Mexico in refrigerated containers on the rail line.
“In the seed business, you’d see seed potatoes in that category,” he says. “I’m sure we see potatoes now to Mexico, but I suspect they’re probably going by truck. Rail is less expensive, and it’ll be a benefit to everyone to have that link.”
Though this new line won’t fix all of North America’s shipping troubles, Prentice believes this will help stimulate more trade between Mexico and Canada in the long term, but current disruptions remain global.
“Our supply chain issues are global in terms of their perspective,” he says, adding that right now, the industry is just trying to cope.
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