January 24, 2022 / All Stories, Company News, Mercer Celgar, Mercer Peace River, Products Overcoming logistics challenges: Mercer adapts to North American floods and the current supply chain In November 2021, a series of floods caused by heavy rain affected western North America – with British Columbia (BC), Canada, hit particularly hard, prompting a state of emergency for the province. All major routes through the Fraser Valley, westward into Vancouver and eastward toward Alberta, were impacted. This caused severe short-term and long-term disruption of the transportation corridor that links Vancouver to the rest of BC and Canada. Canadian National Railway (CN) and Canadian Pacific Railway (CP) rail routes were both disrupted, as well as all highways that connect the Lower Mainland with the rest of the province. Though there are alternative routes into northern BC and southbound into Washington state, these are limited by the mountainous topography of the region. Source: The Globe and Mail The disruption to the shipment of goods moving in and out of the Port of Vancouver has impacted many businesses, as there is a backlog of vessels waiting in the harbour to unload their cargo. Without the land space to temporarily store their empty containers, shipping lines are returning to Asia, resulting in additional delays for Canada’s exporters. How Mercer Operations were Affected Mercer Celgar, Mercer Peace River, and Cariboo Pulp & Paper (Mercer’s joint venture with West Fraser) were all affected by the disruption. As rail is our main avenue of transportation, with most exports to Asian markets, the disrupted routes prevented all mill shipments to the West Coast of BC. Because the product could not move out, pushing the warehouse to capacity, Cariboo curtailed operations for 2 weeks. This allowed them time to store excess product outside of the mill, using tarps for protection. The product was unable to be trucked out, at any volume, though the hope was that truck transport could begin sooner than rail. Solutions for our Products Though the corridor links to Vancouver were disrupted, Mercer has been able to request alternate routings by rail through the US by an east route, which will then route back through the west US. Similar to Cariboo, Mercer Celgar experienced an increased volume of product but the mill was able to move this by trucking to a local reloading facility, moving onto a US carrier to Vancouver from there. Mercer Celgar was also able to negotiate additional capacity with warehouse vendors to facilitate local trucking from the mill site and, where appropriate, additional space in strategic warehouse locations in the US. From these locations, we were able to ship direct from the mill eastbound and then south into the US. A solution was found for Mercer Peace River as well. Trucking was instituted from the mill to warehouse locations in Edmonton. We loaded limited export container volume from these locations. Once the product was loaded into containers, they were routed through Prince Rupert to load vessels to Asia. The capacity of the warehouse in Edmonton subsequently remained fluid so the space did not fill up with product as we have seen for others experiencing transport challenges. The Evolving Situation Over a month has passed since the worst of the slides and both Mercer Celgar and Mercer Peace River remain at near capacity for warehouse space. This, more than anything, is indicative of the great job the teams are doing at keeping the mills producing and moving product as transportation corridor issues become resolved. Rail lines are running again, albeit with certain adjustments. Speed restrictions remain throughout the mountains for the railways, affecting the fluidity of the boxcar fleets. The timing of the reopened rail lines coincides with the beginning of winter, and conditions in Alberta have forced CN to shorten trains due to their inability to maintain air pressure in the brake lines. This, however, is quite normal at this time of year; winter conditions are another layer of challenge which affects the inland transportation network from December well into March. Another new normal is the ongoing concerns and precautions due to the COVID-19 pandemic. The ever-evolving situation greatly affects the individuals who are responsible for moving Mercer’s products and stretches beyond North American logistics. Although we find ourselves facing a myriad of obstacles to get product onboard vessels, cargo continues to be loaded despite the challenges throughout the global supply chain. We continue to work with our customers when delays occur in the supply chain and thank them for their consistent support. We know that supply chain challenges and issues will continue well into 2022 but are doing all that we can to work with our supply chain partners to mitigate the potential impact.