Catastrophic flooding in British Columbia could result in shortages of consumer goods, higher diesel and gasoline prices, and an added wrench in Canada’s manufacturing supply chains at a time when global trade is already facing record logjams tied to the economic recovery from the COVID-19 pandemic.
B.C. Premier John Horgan declared a state of emergency on Wednesday, after flooding devastated the southern part of the province.
Washouts and landslides have halted railway access to the Port of Vancouver, Canada’s largest maritime hub, which handles $240 billion of trade in goods annually. Torrential rains have also cut off major transport routes between B.C.’s Lower Mainland and the province’s interior.
The weather emergency has also prompted the temporary closure of Trans Mountain Pipeline, which carries oil from Alberta to the West Coast.
While it’s too early to estimate how the latest natural disaster might affect Canada’s GDP, “this is going to be a huge impact for all of Canada, but particularly for Western Canada,” Kent Fellows, a professor of economics at the University of Calgary, told Global News.
The supply chain disruptions could result in shortages of food and consumer goods, as well as manufacturing inputs, Fellows says. A prolonged shutdown of the Trans Mountain pipeline network could lead to localized gasoline and diesel shortages in B.C., he warns.
Although the floods have already triggered hoarding and panic buying in some parts of B.C., any actual shortages would take a least a few days, if not weeks, to materialize, several experts told Global News.
Disruptions to key transport routes mean farmers in B.C.’s Fraser Valley are currently having to dump perishables like milk and eggs simply because there are no trucks transporting the products to market, says Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University.
“There’s a lot of waste going on, unfortunately,” he says.
The phenomenon could affect the supply of eggs and dairy products in the province, including the greater Vancouver area, over the coming weeks, he warns.
The effect of the flooding will also likely reverberate throughout manufacturing supply chains across Canada, says Andrew Wynn-Williams, vice president for British Columbia of the Canadian Manufacturers and Exporters (CME).
“The Lower Mainland is one of the largest manufacturing centres in the country,” he notes, adding that the region is currently isolated from the rest of Canada.
While some factories will be working through existing inventories, “the reality is … that that’s not going to last very long,” he adds.
But the bigger impact on trade flows is linked to the Port of Vancouver, a key gateway for imports from the U.S. and the Asia-Pacific region and for Canadian commodity exports headed to China, says Fellows.
While some of that volume would likely be re-routed through the Port of Prince Rupert and the U.S.-Canada border, if necessary, American ports and supply chains are already dealing with extraordinary backlogs tied to the ripple effects of the pandemic, Fellows notes.
Currently, the Port of Vancouver still has capacity for incoming ships to anchor in local waters, says Robert Lewis-Manning, president of the Chamber of Shipping.
But “there’s only so much space for ships to anchor, and I suspect we’ll probably reach that capacity within the next few days … and then ships will start to queue offshore,” Lewis-Manning warns.
Significant delays offloading ships through the port would affect inventory levels for some retailers across Canada, he adds.
“There is a potential impact on holiday shopping, and that’s related to sort of our imports from the Asia-Pacific region,” Fellows says, adding that consumer electronics could be among the product categories affected.
Still, to what extent the flooding will cause further upset to Canada’s supply chain depends on how quickly transport routes, and particularly rail lines, are restored, he adds.
Canadian Pacific Railway (CP) said operations between Spences Bridge and Falls Creek, B.C., remain suspended following multiple track outages.
Canadian National Railway (CN) said in a statement the emergency is still affecting northbound and eastbound traffic from Vancouver, as well as inbound traffic to Vancouver from east and north of Kamloops.
Neither CP nor CN provided a timeline for when service might resume.
— with files from Global News’ Abigail Bimman and the Canadian Press