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Canadians are used to seeing products in stores and don't realize the importance of supply chain reliability.
Published date May 17, 2024 • Last updated 16 hours ago • Reading time 3 minutes
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Workers at both Canadian National Railway and Canadian Pacific Kansas City can retire on May 22nd.Photo Credit: Picasa / Photo Credit: Matt Landry
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In a vast and resource-rich country like Canada, you would expect logistics to be a priority, as it is an important backbone of the economy. But it remains one of the most undervalued aspects of our economic infrastructure.
Canadians are largely unaware of the complexities of supply chains and are accustomed to products appearing seamlessly on store shelves. This perception belies the harsh reality. Canada has one of the world's worst reputations for logistics efficiency and is on the brink of another devastating labor dispute.
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An impending strike involving Canadian National (CN) and Canadian Pacific Kansas City (CPKC) threatens to cripple the nation's largest rail network. The CN spans 32,000 kilometers, transports 300 million tons of cargo annually, and is essential for connecting eastern and western Canada with the southern United States.
This potential strike is the third rail dispute in five years, and the fifth if you include the Montreal-Vancouver port dispute, and highlights the chronic weaknesses in our nation's logistics system.
The timing coincided with the peak period for exports. For example, Canada exported more than 2.6 million tonnes of grain last June. Strikes during this period could cause economic losses in excess of $35 million each day, not to mention cascading effects on global supply chains.
The frequency of these disruptions has damaged Canada's reputation for reliable transportation and sourcing, particularly impacting the food and beverage sector. The sector relies heavily on both a steady supply of manufacturing raw materials and the distribution of finished products across the country.
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Recurring labor disputes and logistics bottlenecks pose a threat to the economic stability of our country's agri-food industry every year.
The pandemic severely tested our nation's already fragile infrastructure, and lockdowns and additional attacks exacerbated the situation.
Disruptions often compromise the cold chain, leading to reduced food quality and safety. In times of supply irregularities, overripe produce and prematurely spoiled dairy products have become common.
Our nation's logistics framework, including roads, bridges, railways and ports, is severely underfunded. According to World Bank and S&P Global Market Intelligence rankings, the Port of Vancouver ranks as her second worst port in the world in terms of efficiency.
All of Canada's major ports rank poorly internationally, and Canada's airports do a little better.
In response, Finance Minister Chrystia Freeland's recently announced federal budget proposes a meager amount of less than $5 billion for strategic infrastructure to support exports, but the scale of improvements needed If you think about it, it's just a drop in the bucket.
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This lack of investment means that the important role of logistics in the national economy is seriously underestimated.
Recognizing the food supply chain as an essential service nationally is essential to safeguarding the sustainability and competitiveness of Canada's food economy. This assessment will help stabilize expectations and plans for agri-food companies, from farmers to retailers.
Furthermore, logistics operations should be elevated to a national priority, reflecting the strategic importance of this sector to economic sovereignty. Rather than leaving recognition of this need to the public, the federal government must take the lead in reminding us of the vital role of logistics.
Canada's vast landscape, combined with the challenges posed by climate change, requires a planned and strategic approach to logistics. While the East is blessed with the St. Lawrence Seaway, the rest of the country requires deliberate efforts to remain competitive.
As we face these continuing logistical challenges, it becomes clear that addressing them is not just a matter of economic policy, but one of national importance.
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It's time for Ottawa to step up and champion a strong national logistics strategy to ensure the veins and arteries that keep our economy's beating heart are healthy and resilient.
Sylvain Charlebois is a professor and senior director of the Agricultural and Food Analysis Laboratory at Dalhousie University, co-host of the Food Professor Podcast, and former faculty member at the University of Regina.
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