U.S. East & Gulf Coast Port Union Contract Negotiations Stalled; Prepare for Oct. Strike
U.S. East & Gulf Coast Port union contract negotiations remain at an impasse as the Sept. 30 expiration deadline approaches. Master union contract negotiations between the ILA (International Longshoreman’s Assoc.), representing 45,000 members, and the USMX (U.S. Maritime Alliance), representing U.S. East & Gulf Coast Ports, remain suspended. The ILA has set a union meeting for Sept. 4 to review wage terms presented to the USMX and to establish strike plans and committees. They have filed the required notices with the government and report preparations are underway from Maine to Texas for an October 1 strike. Analysts have estimated the potential impact of a one-day strike, which could require six days to clear the backlog. A two-week strike beginning in October could take until 2025 before the Ports return to normal operation. In anticipation of a possible strike, importers have begun shipping year-end seasonal goods earlier than usual and diverting shipments to West Coast Ports of Entry.
Descartes has reported that July U.S. container imports into the U.S. were the third highest on record after May and March 2022, respectively. Despite the increased volume, Port transit time delays showed little impact, with negligible improvement or decline. The Ports of Los Angeles (POLA) and Long Beach (POLB) reported July volumes at record highs. Gene Seroka, POLA Executive Director, stated: “We’re now seeing an influx of year-end holiday goods coming across our docks a little bit earlier than usual [helping to drive import growth],” he said. “Importers have told me that with issues in the Red Sea and ongoing East Coast labor talks, they’re being extra cautious this year.” Read more at Maritime Executive ILA and Descartes and Logistics Management Import Volumes.
Canada Railroads to Shut Down Operations after Notification of Lockout & Strike
Canada Rail union members (Teamsters Canada Rail Conference) and Canada’s largest railroads, the CN and CPKC Railroads, disagreed on a union contract and have issued notices of a lockout/strike beginning August 22. After a Canada Industrial Relations Board (CIRB) ruling that no activities need to be maintained in the event of a strike/lockout to protect public health & safety and a 13-day cooling-off period, the Railroads issued a notice that a lockout would occur on Aug. 22, unless a deal can be reached or binding arbitration imposed. The railroads began limiting specific shipments, including hazardous materials and products subject to spoilage. The railroads and Teamsters issued formal 72-hour advance notices of a lockout/strike, which will begin Thursday, August 22, barring any last-minute agreement. A Canada rail disruption will affect U.S. rail traffic connected to the Canadian rail network, including rail traffic from the Canada West Coast Ports of Vancouver and Prince Rupert, which could be diverted to U.S. West Coast Ports, such as Los Angeles and Long Beach. Read More at trains.com
Knight-Swift to Acquire Los Angeles-Based LTL Carrier DHE
Knight-Swift Transportation, a top truckload Carrier, announced it is acquiring the less-than-truckload (LTL) operations of Dependable Highway Express (DHE), based in Los Angeles. Adam Miller, Knight-Swift CEO, stated: “This transaction increases our ability to serve customers in California, Arizona, and Nevada – key markets that are often difficult to enter.”…“It’s a strategic step in our goal of building a nationwide LTL network.” The DHE deal will add 14 terminals and 465 doors to Knight-Swift’s LTL network of 133 terminals and 5,100 doors. The terms of the deal were not disclosed. Dependable will continue to operate its Drayage, Truckload, Warehousing & Distribution, and Third-Party Logistics (3PL) businesses following the Knight-Swift deal. Read More at Transport Topics
Prologis Acquires Majority Share of Mexico Industrial REIT FIBRA Terrafina
Prologis, a top Industrial Real Estate Investment Trust (REIT), reported it had acquired majority ownership share of FIBRA Terrafina, a top REIT in Mexico. FIBRA Terrafina manages approx. 42.2 million sq ft of industrial real estate across several key markets, including 288 industrial warehouses and four land bank properties. Dan Letter, President of Prologis, stated: “This investment comes at a unique moment for Mexico, and it demonstrates our long-standing commitment to one of our most important markets.” According to Prologis Research, nearshoring is a significant demand driver in Mexico. Latin America will continue to grow rent at roughly double the global average, partly driven by nearshoring. For example, every $1 billion U.S. invested in Mexican auto factories can generate 5-10 MSF of local logistics demand.
According to the U.S. Census Bureau, Mexico’s trade with the U.S. totaled $415.4 billion from Jan. through June 2024 – the highest recorded total. In June, the top three exports from Mexico (by value) were computers ($4.4 billion), passenger vehicles ($4.1 billion), and commercial vehicles ($3.3 billion). The top border crossing was Laredo, TX, which handled 249,915 commercial truck crossings between Mexico and the U.S. Read more at Prologis FIBRA Terrafina and Freightwaves Mexico trade.
Power Outages Disrupt Operations at the Port of Los Angeles
Power outages at the Port of Los Angeles have disrupted Port operations and raised concerns over whether the Port and its tenants will have reliable energy to meet the Port’s electrification targets as part of its long-term climate change goals. According to the LA Times and the Los Angeles Dept of Water & Power (DWP), there were three power surges this month and 12 power-related outages this year at the POLA. Power outages, lasting seconds at a time, often require electrical equipment to be reset over several hours. The cause is often unknown and may be due to issues on the user’s side, such as equipment sensitive to minor voltage fluctuations. According to DWP estimates, the Port will need almost twice as much power as it currently uses to meet its goals by the decade’s end. According to Gene Seroka, POLA Executive Director, power surges tend to affect only some of the terminals, and typically, everything is rebooted in a couple of hours. If you have one brief outage a month, that might add up to one lost shift out of 36. “I don’t think it’s shutting down this Port. It is not impacting competitiveness.” But he added: “If I’m a terminal operator and I’ve got to pay workers for a shift that they’re not working, that’s very painful. And so we’ve got to fix it.” Read More at LA Times
Walmart Offering Ocean Freight Services to Walmart Marketplace Sellers
Walmart began offering Ocean Freight services to its Walmart Marketplace sellers, which can take advantage of Walmart’s cost-effective negotiated rates and the company’s shipping and logistics operations. The “Walmart Cross Border” service is provided by Walmart’s FMC-registered non-vessel operating common carrier (NVOCC) and freight forwarding subsidiary offering port-to-door full-container-load ocean freight service from three China Ports (Yiantian, Shanghai, and Ningbo) directly to Walmart’s Fulfillment Centers. Walmart points to the added advantage that items can more quickly become available to customers. Read more at Maritime Executive and Walmart.
SoCal Industrial Real Estate Demand Forecast to Outgrow Supply over the Next 3 Years
In a recent survey of commercial real estate developers and financiers of the SoCal industrial real estate market, respondents expect demand to grow more than supply over the next three years. The Summer 2024 Allen Matkins/UCLA Anderson School of Business Commercial Real Estate Survey and Index, a potential leading indicator of future industrial construction, indicates an improvement in developer sentiment since the previous survey six months ago, with Orange County receiving the most optimism, followed by the Los Angeles and Inland Empire regions receiving less optimism. The biannual survey, taken in Summer 2024, compiles the views of supply-side participants of a 3-year time horizon (2024-2027) – chosen to approximate the average time to complete a new commercial project. About 65% of the respondents expect to be required to hold more equity to achieve a higher investment IRR threshold over the next three years than today. 44% of the panelists started new projects over the last 12 months, and 50% reported plans to start new projects in the coming 12 months. Read More Allen Matkins/UCLA