Quebec supply chain problems may resurface after slowdown: expert

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The supply chain stalemate may have been resolved this year, but manufacturers such as Quebec are not out of the woods yet.

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Falling demand, a direct result of the global economic slowdown, is the biggest factor driving recent improvements in supply chain problems, according to a panel discussion hosted by the Quebec Chamber of Commerce in Trois-Rivieres on Tuesday.

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The International Monetary Fund (IMF) said Sunday that inflation in most of the world’s 20 largest economies will likely contract next year as long as it remains high. The IMF last month cut its global economic growth forecast for 2023 to 2.7%, and predicted countries accounting for more than a third of his world output would contract this year or next.

“Many supply chain issues appear to have been resolved, but this is only the surface,” Guillaume Dubreuil, head of government relations at shipping company CSL Group, said at a panel discussion. “The problem has not been solved in depth. It just depends on the current economic situation.”

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Luis Duhamel, president of Montreal-based consulting firm LJD Consails, said some companies in Quebec were “full of hands.”

“Things seem to be improving, but I haven’t seen companies dealing with so many issues at the same time in a long time: labor shortages, protectionism and inflation,” he said. I was. “Many companies are still vulnerable and we are not seeing the end of this. It would be an illusion to say that the situation is improving as the solutions will be of a medium and long term nature.” think.

Inflation is rampant in most industries, but prices are falling in some, such as shipping. Container prices, which he had soared to US$20,000 about 18 months ago, have recently fallen to about US$2,700, Dubreuil said.

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Still, “the port is still congested and labor shortages will continue to have an impact for years,” he said. “Until these problems are eradicated, we will see significant price volatility.”

With about half of Quebec’s major industrial sectors importing most of their raw materials, geopolitical events such as the war in Ukraine “make the supply chain very fragile,” said Investissement Québec’s local source. said Stéphane Drouin, Vice President of Procurement and Economic Development.

As a result of the pandemic, businesses in Quebec are increasingly looking for ways to reduce their reliance on far-flung foreign suppliers, Drouin said. Green entrepreneurs are also looking at buying locally as a good way to reduce greenhouse gas emissions, he said.

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“Geopolitical, climatic, logistical and labor risks are not going away,” said Drouin. “Sourcing locally can be a solution for reducing business risk.”

Duhamel said COVID-19 is forcing Quebec entrepreneurs to think differently about supply chains.

“We need to bring our supply chains closer together and make them continental, regional or perhaps local, and this can be achieved through import substitution,” he said.

Quebec imported nearly $102 billion worth of products last year, up 15% from 2020.

Still, moving production back to North America doesn’t solve supply chain problems. This is evidenced by forecasts of an impending shortage of truck drivers in Quebec and other parts of Canada. About 80% of Quebec’s exports are transported by truck.

Due to staff shortages, many trucking companies in Quebec are currently lagging up to 25% of deliveries, Drouin said.

“Not because they’re bad, but because we’re short on drivers,” he said.

Véronique Proulx, Chief Executive Officer of Quebec Manufacturer and Exporter, added:

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