MARKET BRIEF | August 2024
Canadian Rail Strike Update
As the deadline for negotiations approaches, Canada is bracing for a potentially disruptive nationwide rail strike or lockout, as the country’s two primary railways face the possibility of halting operations in less than two weeks. This looming threat comes after a critical ruling by the Canada Industrial Relations Board, which determined that the work performed by these railways does not constitute an essential service. The decision has significant implications, as it paves the way for a complete work stoppage without any legal obligation for employees to continue their duties, even in the transport of crucial goods. Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) both issued warnings on August 9 stating that lockouts are imminent on August 22 unless new contracts with their employees can be secured. This announcement follows months of on-and-off bargaining between the rail companies and approximately 9,300 conductors, engineers, and yard workers who are represented by the Teamsters Canada Rail Conference (TCRC). The two sides have been negotiating new collective agreements, but progress has been slow, and tensions are now reaching a boiling point. Canada’s labor tribunal has ordered a 13-day cooling-off period as part of its dual decisions last Friday, during which the parties must attempt to reach a deal. However, if no agreement is reached by the end of this period, a countrywide lockout or strike could begin as early as August 22. This week, CPKC and CN took the first step of a phased shutdown of their respective networks with an embargo on shipments of hazardous items.
Walmart Expands Drone Delivery
Walmart is ramping up its drone delivery program by partnering with several technology companies to expand its service across the U.S. This initiative aims to make last-mile deliveries faster and more efficient, potentially setting a new standard for retail logistics. Walmart’s aggressive push into drone technology underscores its commitment to innovation, and could significantly impact the logistics landscape.
Drought Still Affecting Panama Canal
Prolonged drought conditions are causing significant delays in ship transit through the Panama Canal. Water levels have dropped to record lows, forcing canal authorities to limit the number of vessels passing through each day. This has led to a backlog of ships waiting to transit, increasing costs and transit times, and creating challenges for global supply chains.
More Fallout from Yellow Bankruptcy
The bankruptcy of Yellow Corporation, one of the largest trucking companies in the U.S., continues to reverberate through the industry. With over 30,000 employees affected, the collapse of Yellow has led to shifts in freight demand across other carriers, impacting pricing and capacity in the less-than-truckload (LTL) market. The broader implications for supply chains are still unfolding, even a year after the company declared for Chapter 11 bankruptcy protection.
AI-Driven Freight Platforms Gaining Traction
AI-powered freight platforms are gaining momentum as companies look to optimize logistics operations amid ongoing disruptions. Startups and established players alike are investing heavily in AI to enhance route planning, reduce costs, and improve delivery times. The rise of these platforms could signal a major shift in how logistics is managed and executed in the coming years. Some of the more notable platforms in use are Convoy, Loadsmart, Uber Freight, Freightos, and Transfix.
