CIRB Review Pushes Back Possible Rail Strike in Canada

Key Forecasts and Transformations Shaping the 2024 Freight LandscapeThe 2024 freight market is expected to experience significant trends and market shifts, with key factors influencing both air and ocean freight sectors, as well as broader supply chain operations.Key Trends in Air Freight1. Stabilization of Market Rates: Demand for air freight is anticipated to increase, driven partly by nearshoring and changes in consumer spending. However, this will be tempered by constricted capacity that keeps market rates relatively flat for the majority of the year before a potential surge in Q4.2. Impact of Global Conflicts: Ongoing conflict in the Middle East and Ukraine is predicted to affect oil prices, thereby impacting air freight costs significantly.3. Technological Advances: The adoption of technologies such as generative AI for capacity matching and supply chain optimization is also transforming the air freight sector.Key Trends in Ocean Freight1. Overcapacity Issues: The ocean freight sector is likely to face an overcapacity situation, as new capacity outpaces demand. This is reflected in a record low Drewry Supply/Demand Index of 74.3 for 2024, far below the market equilibrium benchmark of 100.2. Rate Management by Carriers: Carriers are expected to employ strategies like blank sailings and slow steaming to manage the excess capacity and stabilize rates, even though low-rate levels are projected.3. Influence of Major Canals: Potential disruptions in the Suez Canal and recovery operations in the Panama Canal are influencing the freight landscape by impacting delivery times and operational strategies.U.S. Customs and Trade Policies1. Enhanced Enforcement: The U.S. Customs and Border Protection (CBP) will escalate enforcement of the Uyghur Forced Labor Prevention Act (UFLPA), placing more responsibility on U.S. importers to ensure compliant supply chains.2. New Data Requirements: Partner Government Agencies (PGAs) will mandate new data elements, changing the compliance landscape for importers.Global Macroeconomic and Logistical Shifts1. Revised GDP Growth: Global GDP growth has been revised downward, influenced by softening economic conditions in APAC and China, but with improved projections in the U.S. for the second half of 2024.2. Nearshoring: The trend of nearshoring, particularly to Mexico, is expected to continue, driven by a noteworthy increase in foreign direct investment in the country. This strategy aims to mitigate supply chain disruptions and enhance operational resilience.3. Contract Logistics Growth: The demand for outsourced logistics services remains strong, with significant growth in contract logistics predicted despite inflationary and geopolitical pressures.In summary, the 2024 freight market is poised for complex dynamics with stabilization in air freight rates, overcapacity in ocean freight, strict enforcement of trade policies, and a strategic shift towards nearshoring to navigate global uncertainties.

In the world of business, the pressure to reduce expenses often leads procurement teams to gravitate toward the cheapest suppliers. While this approach may seem financially prudent initially, the hidden costs associated with choosing the cheapest supplier can be detrimental in the long run. These hidden costs manifest in various forms, deeply impacting overall business performance and profitability.Quality and Material CostsOne of the most immediate risks of opting for the lowest-priced supplier is compromised product quality. Suppliers may cut corners by using inferior materials or substandard production processes to meet the low price point. This leads to products that are prone to defects, reducing customer satisfaction and increasing return rates and warranty claims, thereby negatively impacting your brand reputation and incurring additional costs for repairs, replacements, and customer support.Extended Lead TimesLower-priced suppliers may not have the capability to handle large or complex orders efficiently. They often prioritize more profitable clients, leading to significant delays in delivery times. Extended lead times can disrupt your supply chain, causing stockouts or forcing you to maintain higher inventory levels, which ties up capital and increases storage costs.Poor Supplier ReliabilityInconsistent performance and reliability issues are common with cheaper suppliers. These suppliers might face frequent equipment breakdowns or lack the capability to scale operations. Such inconsistencies can result in missed deadlines, production halts, and, potentially, loss of contracts with key clients. The mode of operation where reliability is not guaranteed can severely disrupt business continuity and increase operational unpredictability.Hidden Costs in Supply Chain and TransportationChoosing a cheaper supplier often leads to hidden costs in the form of inefficient logistics and higher transportation expenses. Suppliers offering lower prices may not optimize routes or schedule deliveries effectively, leading to increased fuel consumption and longer transit times. This inefficiency amplifies transportation costs and can also decrease the freshness or usability of goods upon arrival, particularly in perishable goods industries.Legal and Compliance RisksLow-cost suppliers may not prioritize strict adherence to legal and regulatory standards, leading to non-compliance issues. This can result in fines, legal fees, or even the halting of product sales. In industries such as electronics or pharmaceuticals, non-compliance can be particularly costly and damaging. Ensuring suppliers meet all regulatory requirements is crucial, which might necessitate additional oversight and audits if using low-cost suppliers, adding to the hidden costs.Impact on Supplier RelationshipsChoosing a supplier solely based on cost can strain relationships. Suppliers may feel undervalued and thus less inclined to prioritize your orders or invest in quality improvements for your products. Strong supplier relationships are fundamental to achieving long-term business success. A lack of collaboration and mutual trust can lead to communication breakdowns, thus delaying problem-solving and innovation.Social and Ethical ConsiderationsThe focus on cost-cutting can lead to ethical compromises, such as poor labor practices or unsustainable environmental practices by cheaper suppliers. This can have significant social and reputational consequences for businesses, especially in an era where consumers are increasingly socially conscious. Companies may face backlash or boycotts, resulting in revenue losses far greater than the initial savings from choosing the cheaper supplier.ConclusionWhile selecting the cheapest supplier may seem like a straightforward way to reduce costs, the hidden expenses and risks often outweigh the savings. Ensuring quality, reliability, compliance, and strong supplier relationships are crucial for long-term business success. Businesses must consider the total cost of ownership, including these hidden costs, to make informed procurement decisions. Balancing cost with quality and reliability ultimately aligns with better financial health and sustainability of the business.Embracing a thorough and strategic approach to supplier selection can mitigate these hidden costs, ensuring reliability, quality, and long-term profitability.

Rail Strike Deferred as CIRB Reviews SubmissionsCanadian Pacific Kansas City (CPKC) has announced that a potential rail strike will not occur this month, as they await a decision from the Canada Industrial Relations Board (CIRB). This decision follows a request from CIRB for submissions from CPKC, Canadian National (CN), and the Teamsters Canada Rail Conference (TCRC) union, with a deadline of May 21.Submissions and ReviewThe CIRB has asked for comprehensive submissions from all involved parties, which must be filed by the end of the month. The board will review these submissions to make a well-informed decision regarding the potential strike. Until the CIRB makes its ruling, a legal strike or lockout cannot take place. Furthermore, any potential strike would require a 72-hour notice before commencing.Maintenance of Service AgreementCPKC has proposed to the TCRC that both parties agree on the services that should be maintained in the event of a strike or lockout. This proposal aims to eliminate the need for the CIRB's involvement and provide clarity on the timing of any potential industrial action. Based on past experiences, if no agreement is reached, it is unlikely that a strike can commence within the next 60 days.Background and Government InvolvementEarlier this month, rail workers from both CN and CPKC voted overwhelmingly to strike as early as May 22. In response, the federal government intervened, requesting the CIRB to investigate whether the strike would have safety implications. This move underscores the government’s concern about the broader impacts of such industrial actions on public safety and commerce.Referral：https://www.canadiancattlemen.ca/daily/rail-strike-wont-happen-this-month-cpkc-says/Canada Logistics and Transportation UpdateCustoms Clearance Status- Canada: Normal- UPS Operations: NormalPorts and Railways1. Vancouver Port (Vanterm/Delta/DP): - Container release time: Approximately 3-5 days. - Containers can be loaded onto trains in about 1-2 weeks after unloading in Vancouver and Prince Rupert ports. - Additional fees for returning containers to DP(Centerm) if required by shipping lines.2. Toronto Yard: - Increased wait times for container releases. - Difficulty in returning containers to CMA; some containers require special returns to Etobicoke, with additional fees if not done by the weekend.3. Long Distance/Special Return Addresses: - Additional fees for returning containers to distant or special locations.Amazon Warehouse Update1. Toronto Region: - Normal delivery operations.2. Vancouver Region: - Alleviated congestion at the YVR3 warehouse.3. Edmonton Region: - YEG2 warehouse experiencing congestion, with an expected wait time of 3-5 hours.4. Calgary Region: - YYC6 requires approximately 7 days for appointments, with wait times of 2-5 hours. - YYC4 requires about a week for appointments. Currently, PODs signed at this warehouse can only receive signatures, not stamps.5. Montreal Region: - YOW1 and YOW3 warehouses have wait times of 2-3 hours.Recommendations- For large items, consider transferring them to YYC6 and YGK1 warehouses for better handling.- Be aware of additional fees associated with special return locations and plan accordingly.Check Amazon Fba Warehouse Locations in Canada：https://globalshippingauto.com/amazon-warehouse-locations-canada