Oceanex fears shortages in Newfoundland with suspended sailing

Oceanex, which said it delivers nearly 50% of the freight to Newfoundland, has suspended a weekly sailing from Montreal to the Port of St. John’s “in response to impacts of COVID-19 on the sustainability of operations.”

Executive Chairman Sid Hynes told American Shipper on Thursday, “As the economic impacts of recent public health measures continue to unfold, it is apparent that current and expected levels of cargo volume are insufficient to sustain all three of Oceanex’s sailings given the high costs associated with ship operations.” 

The suspension of the weekly sailing of the Oceanex Avalon to St. John’s went into effect Tuesday.

“Oceanex recognizes the complexities of the supply chain, particularly the reliance of grocery retailers on well-established transportation networks which include this Oceanex service, and the difficulties that will arise in breaking this vital link,” Hynes said.

CBC News reported Monday that Newfoundland only has a five-day supply of food and losing Oceanex’s services could lead to critical shortages. Hynes told CBC that Oceanex was losing some C$2 million a week because of a volume drop during the coronavirus pandemic.

But during a video update on COVID-19 Tuesday, Labrador and Newfoundland Premier Dwight Ball said there is no danger of consumers not receiving shipped goods.

“We’ve had numerous calls with Marine Atlantic, with the trucking industry and with local wholesalers,” Ball said, adding that he had “heard from many truckers and they are willing to step up. They say that they have capacity within the system to meet the demands of our province.”

Oceanex Inc. provides door-to-door freight transportation services from throughout North America to Newfoundland. The company said, “With no fixed links to the mainland, marine transport is the only viable option to move the large volumes of cargo needed to support daily life in the province. Oceanex’s service can be best thought of as a floating railway connecting the ports of Montreal and Halifax directly to the capital city of St. John’s.” 

Hynes said the short-sea shipper reached out to Transport Canada three weeks ago “to flag the likely disruption in the food transportation supply chain and to work collaboratively on a solution to maintain existing levels of service to the province.”

That proposed solution was a government subsidy, according to CNBC. Transport Canada did not respond to a query from American Shipper.

During his video conference this week, Ball said, “I’ve had many conversations with Minister Seamus O’Regan on this issue, and we both know this is too critical to ignore and that the federal government is looking at all options to make sure the supply chain stays in place.”

Ball reiterated that ferry operator Marine Atlantic has the capacity to deliver food and medical supplies to Newfoundland.

“We need to remember that although Oceanex is a big supplier, they’re a big mover of goods, we also have Marine Atlantic and they too have capacity in their system,” Ball said. “So we have the trucking capacity and we have Marine Atlantic capacity and both are willing to step up. We will continue to follow this closely so that Newfoundlanders and Labradorians have food security during this pandemic.”

Hynes told American Shipper on Thursday that without assistance from the federal government, Oceanex has had to temporarily discontinue the weekly sailing “to protect the immediate sustainability of the company.”

The privately owned Oceanex Inc. has been transporting goods to Newfoundland for more than 100 years, according to the company, which said its services have included two weekly sailings from Montreal and one from Halifax to the Port of St. John’s for decades.

“The company handles nearly 50% of all freight into the province and about 75% of the goods destined to the Avalon Peninsula using its three vessels and a fleet of over 3,700 intermodal containers, chassis and trailers to provide its services to customers,” said the company, noting that overland transportation is performed by owner-operators as well as hired drivers for Oceanex’s own fleet in St. John’s and third-party operators. “In St. John’s, in-house drivers and brokers perform about 70% of the deliveries.” 

Oceanex said it carries dry, fresh and frozen foods, pharmaceutical, medical and health care supplies, industrial products, and general goods to Newfoundland.  

Marine Atlantic, which operates a ferry service between Newfoundland and Nova Scotia, tweeted Friday morning, “Working together with our customers, this week our team transported more than 1,300 commercial units to do our part in getting products and supplies to their destination.” 

In an email to American Shipper on Friday, Darrell Mercer, corporate communications officer for Marine Atlantic, said the company is “committed to meeting the needs of our customers and maintaining our essential ferry link to the province of Newfoundland and Labrador.”

“We have a four-vessel fleet, with two vessels currently in service to meet demand. The two vessels in service are utilizing approximately 50% of their overall capacity on a daily basis,” Mercer said. “Should demand increase and additional capacity be required, Marine Atlantic has the ability to add additional crossings to the schedule with the two vessels currently in standby mode.”

Oceanex said the suspension of the weekly sailing of the Avalon, which has a capacity of 1,004 twenty-foot equivalent units, is forcing the company to lay off some employees.

“It is with great regret that we had to advise our personnel that this reduction in service will also result in the temporary layoff of many dedicated and loyal employees,” Hynes said. “This was a very difficult decision for the company, and we will make every effort to get these valued employees back to work as quickly as possible.”

Oceanex did not say how many employees would be laid off.