Tackling Supply Chain Vulnerabilities Comes With Challenges

Cargo ships sit at anchor in English Bay, Vancouver, on Feb. 20, 2020, waiting to load or unload at the Port of Vancouver. The Canadian Press/Darryl Dyck

The pandemic and border closures have highlighted the need to bolster vulnerable supply chains to ensure that important needs are met and that business and daily activities aren’t disrupted. But there are a variety of challenges to overcome internationally as well as at home at the federal and provincial government levels and with private industry.

Supply chains came under the spotlight when Canada faced shortages of personal protective equipment (PPE) and other medical supplies at the start of the pandemic.

Geoffrey Hale, political science professor at the University of Lethbridge, says the issue deserves a long look but there are significant impediments to shoring up vulnerable supply chains, which result “partly [from] governing styles and partly from structural issues of fiscal and bureaucratic inertia.”

“It is monstrously complex given the diversity of ownership and regulatory authority over critical infrastructure—which is currently the policy foundation for supply chain security—and the reality of so many interconnecting parts across multiple sectors,” Hale said.

The international front is even more tricky. Last April, then-U.S. president Donald Trump threatened to withhold exports of N-95 masks produced by U.S. company 3M to Canada, a dispute that was quickly resolved. Hale said the 1977 Transit Pipelines agreement between the United States and Canada, which “simply commits each country not to interfere with pipelines and transit,” provides an example for how to prevent mask hoarding in the future.

“We can do with medical supply chains what we have done with the border, and have a reciprocal process to ensure that we are not blindsided,” he said.

In the first months of the pandemic, Canada and many other countries faced a shortage of PPE, while the Chinese regime was hoarding global supplies of PPE.

Between Jan. 24 and Feb. 29, China imported 2.46 billion shipping cartons of supplies for epidemic prevention, valued at 8.21 billion yuan (US$1.158 billion), according to Chinese customs data. Among them were 2.02 billion protective masks and 25.38 million protective suits.

During that time, Chinese authorities, the regime’s foreign affairs ministry, and Chinese embassies in various countries mobilized the Chinese diaspora to help buy up goods from around the world. Meanwhile, China, itself a major manufacturer of such medical supplies, stopped exporting in January—just as the outbreak in China became severe.

As for Canada’s vaccine woes, despite warm relations between the Trudeau government and the Biden administration, Washington has ruled out the possibility of sending vaccines to its northern neighbour. On March 1, White House press secretary Jen Psaki said the United States is focused on “ensuring that every American is vaccinated” and would not discuss sharing vaccines with Canada or any other country until that goal is achieved.

In the Roadmap for a Renewed U.S.-Canada Partnership announced in February, Prime Minister Justin Trudeau and U.S. President Joe Biden committed to strengthening their countries’ mutual supply chains. The agreement specifically calls for strengthening of the Canada-U.S. Critical Minerals Action Plan to help make batteries for zero-emissions vehicles and renewable energy storage as both nations pursue net-zero carbon emissions.

“The Chinese control somewhere between 60 and 70 percent of the world’s supply of rare-earth minerals, and if the price goes up, there becomes a growth and incentive to come up with technological fixes to address this stuff,” Hale said.

Jean-Paul Rodrigue, a Canadian and professor of global studies and geography at Hofstra University in Hempstead, New York, said the green energy pursuit would entail its own supply and infrastructure requirements.

“Putting this into place requires a series of strategies and investments, and the use of raw materials, which are in a sense non-renewable,” he said in an interview.

“Paradoxically, what we may perceive to be green, may be unsustainable. That’s the irony of the whole thing, because most of those new technologies we’re talking about still rely upon natural resources and non-renewable forms of energy to be … designed, to be built. … So that’s a really, really big risk.”

In 2018, the World Bank rated Canada 20th and the United States 14th on the Logistics Performance Index, a weighted ranking of six trade factors, including logistics competence, infrastructure, and timeliness of shipments. Rodrigue said Canadian supply chains are intrinsically more expensive due to a sparse and scattered population, but the pandemic has made it worse.

“Because of all these restrictions, everything is more, you could say, glued. We’re used to nimble supply chains, and COVID—it’s like throwing glue around and people start becoming tangled.”

He said that the government is limited in its knowledge and tools and that private industry plays a larger role in supply chains.

“If you have politics and ideology, it clashes with reality, and that’s the problem these days. Most of our administrators and public figures in the universities are being captured by ideology. And they … don’t understand the complexities.”