As the year begins in 2024, a notable shift is observed in the landscape of warehousing accessibility spanning both Canada and the United States. Even in traditionally constrained markets such as Vancouver, Los Angeles, and Chicago, an increased availability of warehousing space is discernible. This transformation is primarily attributed to the strategic destocking of inventories and the successful culmination of numerous construction endeavors across North America.

Colliers Market report reveals a noteworthy evolution in Canada’s industrial warehouse vacancy rates, ranging from 1.5% in Vancouver to 4.5% in Edmonton. Concurrently, the overall US warehousing vacancy rate has ascended to 4.9% as of the close of Q4 2023. While surpassing pre-pandemic averages, these rates suggest that capacity constraints persist, exerting pressure on costs within the realm of third-party logistics (3PL).

During the crazy times of COVID-19, finding a place to store and move goods was like searching for a needle in a haystack.  Overstocked inventories precipitated a decline in the US vacancy rate to 3.4% by the conclusion of 2022. The subsequent phenomenon of the Great Destocking in 2023 witnessed a substantial 20% downturn in inflation-adjusted US inventories through September, albeit remaining 7% higher than 2019 levels. Consequently, warehousing vacancy rates rose to 4.9% by Q3 2023, below the pre-pandemic average of 7%, coupled with a 4.2% decline in employment.

Looking ahead in 2024, numerous shippers display a cautious stance, deferring warehousing decisions considering the slowing down of economic growth in both Canada and the United States.  In addition, there continues to be the completion of construction industrial warehousing projects.  The trajectory of US Southeast port cities, from Norfolk to Savannah, witnessed a substantial surge in developmental initiatives in 2023, a trend anticipated to endure through 2024. Notably, the warehousing and cross-dock space in Laredo, Texas, the largest US-Mexico border crossing for truck freight, remains constrained. The ongoing diversification in US entry points is poised to incite heightened demand for warehousing and storage at inland nodes as cited in the Journal of Commerce. However, the uncertain events like the Red Sea attacks and the oscillating dynamics of on-shoring and off-shoring initiatives also cause certain companies to look at restocking more inventory to mitigate some of the delays in shipment. 

For more information about your warehousing needs, please contact your local Canaan sales and customer service representative.

Federal officials are involved in preventing a potential third labour stoppage in four years at the Port of Montreal, where dock workers have been without a labour deal since their agreement expired on December 31.  The Maritime Employers Association (MEA) in Montreal, which includes approximately 1,290 longshore workers and 165 checkers, is in ongoing negotiations with union representatives. The Federal Mediation and Conciliation Service experts are assisting in these discussions.

Pressure tactics, like strikes or lockouts, are pending a ruling by the Canada Industrial Relations Board on the MEA’s request to deem all longshoring activities at the port essential. A decision is expected after the parties submit more information by mid-February 2024.  The Port of Montreal experienced labour disputes during the first year of the COVID-19 pandemic, leading to significant supply chain disruptions. The federal government intervened with back-to-work legislation during the second conflict.

Montreal serves as Eastern Canada’s primary trading hub, supporting around 75% of the country’s manufacturing capacity and nearly two-thirds of the population. Ongoing labour negotiations are considered crucial for maintaining a stable business environment.  Preliminary figures indicate a 2% volume decline at the Port of Montreal in 2023, reflecting a global economic slowdown. Container volumes, specifically, dropped by 8.8% due to decreased consumer demand for imports.  Prime Minister Justin Trudeau expressed concern about the potential long-term consequences of a strike at the Port of Montreal, highlighting the impact on supply chains and the risk of customers choosing alternative transportation methods permanently.

For more information, please get in touch with our Canaan Group sales team.

What does the scope expansion of the EU Emissions Trading System (ETS) mean for Ocean Shipping Companies? 

While maritime shipping methods are among the most influential in the world economy, ocean vessels are among the largest emitters of greenhouse gases (GHGs). In response to the industry’s projected emissions growth, starting January 1, 2024, shipping companies will be part of the EU’s Emissions Trading System. As part of this extension, the owners of freight vessels navigating within and to/from the European Economic Area (EEA) will need to pay a portion of greenhouse gas emissions emitted during that sailing.  

The Scope of the International Maritime Organization (IMO) and How It Aligns With The EU Emissions Trading System 

In 2023, the International Maritime Organization (IMO) revised their greenhouse gas emission strategy to include the ambitious goal of complete decarbonization by 2050. The EU ETS (European Union Emissions Trading System) scope expansion into the ocean shipping sector and the IMO (International Maritime Organization) 2023 GHG (greenhouse gas) strategy are two significant, but separate developments aimed at addressing emissions from maritime activities. While they operate independently, efforts are made to ensure alignment and synergy between these initiatives.

The EU ETS operates on a cap-and-trade system that limits the total allowable emissions. Companies are allocated allowances that they can trade which creates a financial incentive for companies to reduce their emissions. The IMO’s 2023 GHG strategy focuses on reducing greenhouse gas emissions from the international shipping industry on a global scale. It outlines specific targets to improve the carbon intensity of shipping and aims to decarbonize the sector over the coming decades. The strategy is not region-specific and applies to international shipping, irrespective of the geographical location of the ship or its ports of call. 

How Will Both Emissions Strategies Affect Canadian Import/Export Companies 

 The implications of the EU ETS and IMO 2023 GHG strategy for Canadian ocean shipping activities are vast and may affect the Canadian economy, shippers, importers, and exporters in various ways.  

In practical terms, costs may be passed to customers in the form of increased shipping rates or surcharges. The mechanism by which these costs present for the customers will vary between shipping companies but may be a general rate increase, fuel surcharge, and environmental surcharge. As a result, Canadian businesses relying on shipping services for importing or exporting goods may experience cost implications across the supply chain. 

Higher compliance costs for Canadian shippers may impact their international competitiveness, particularly in sectors with tight profit margins, potentially disadvantaging Canadian exporters. Changes in global trade dynamics, influenced by international regulations and emissions standards, could lead to shifts in demand for Canadian goods based on the shipping industry’s environmental performance, affecting the flow of goods to and from Canada. 

The shipping industry may explore technological innovations and operational changes to improve fuel efficiency and reduce emissions, potentially mitigating some associated costs over time. 

For more information, please contact the Canaan Group sales team.