After a year of record-high volumes, the Port of Vancouver could see even more traffic in the aftermath of attacks on cargo vessels in the Red Sea, says the port’s CEO.
“We know that the Red Sea impacts have caused significant rerouting of cargo for vessel operators to all markets,” Peter Xotta, head of the Vancouver Fraser Port Authority, said in an interview Friday.
“I expect that that could result in an increase in the short term for cargo into the Port of Vancouver,” he said. “We have seen a bump in volume in the early part of 2024 – some of that could be partly related to those events.”
Whether the trend continues depends on events closer to the Suez Canal, which container ships have largely avoided for months due to the ongoing conflict in the region.
Since December, maritime attacks by Iran-backed Houthi militants have pushed shippers to steer clear of the Red Sea and reroute around Africa, adding weeks to the journey.
On March 6, fighters struck the bulk carrier True Confidence, killing three civilians. They were the first deaths since the militants began to target ships linked to Israel, the U.S. and the U.K.
A smattering of cargo vessels have opted to head east across the Pacific Ocean to North America from parts of Asia rather than make the prolonged westward voyage around the Cape of Good Hope.
“Any of these things that create greater volatility in the supply chain ultimately impact its performance and its cost,” Xotta said. “So greater stability is a good thing.”
Last year, an unprecedented 150.4 million tonnes of bulk, breakbulk and container goods traversed the docks at Canada’s largest port, the Vancouver Fraser Port Authority said.
The surge marked a six per cent increase from 2022, despite a sputtering global economy and a big drop in container shipments.
Bulk exports — wheat, canola and petroleum, especially — drove the increase, as did container exports and auto imports.
However, overstocked retail inventories and cooling demand dragged down container imports — and container shipments overall — the port authority said.
“It was a mixed year at the Port of Vancouver, with growth in some sectors and softening in others,” the federal agency said in a release.
“With the pandemic early on, we saw very strong consumer purchasing driving container volumes,” Xotta said in the interview.
He also noted the subsequent decline in spending on consumer items amid a higher cost of living and expenditures diverted increasingly toward services rather than products.
“One could foreshadow that through the course of 2024 and certainly early 2025 we’ll start to see recovery,” he said. “At least that’s our hope.”
A big drop in household goods — the category accounting for nearly a third of inbound container items, from towels to televisions — drove a 12 per cent decrease in container shipments overall at the port.
Some 79 per cent of household products came from China, with Vietnam and South Korea as distant runners-up. Fewer imported construction materials and industrial and auto parts also fuelled the fall in container figures.
The increase in container exports — especially containers filled with wood pulp and special crops like lentils going to India — helped make up for the decrease in inbound shipments.
An economic slowdown, a 13-day strike by B.C. dockworkers in July, and ongoing problems along the Red Sea and Panama Canal trade routes all created difficulties for smooth operations at the port, according to Xotta.
Despite these challenges, the 12 per cent overall increase in exports to 142 countries demonstrated the importance of a variety of shipment types and international partners, he said.
The increase in bulk exports was driven by grain and crude oil, with China and the U.S. being the main recipients, following a successful crop and a record oil output from Alberta. However, fewer exports of forest products and fertilizer reduced the overall figures.
At the same time, the number of vehicles entering Canada through the port increased by 36 per cent to over 454,000, as manufacturers improved their supply chains.
But for many shippers, the year started with challenges.
A drought in Central America added to the problems during the Red Sea crisis. The dry spell has reduced the water levels in the Panama Canal, which is used to raise and lower ships at twelve locks, leading officials to decrease the number of ships passing through the waterway.
“I expect that people will be considering the potential of Canadian supply chains as a result,” Xotta said.
On the other hand, routes between East Asia and the West Coast are generally less affected. While shipping rates from East Asia to the western United States have tripled over the past year, rates on cargo going the opposite way have decreased by 28 per cent, as reported by freight analytics firm Xeneta.
Rates for cargo ships traveling between Asia and Europe have significantly increased for both directions.
