The warehouse is overcrowded, and the Canadian logistics industry is struggling

2022-09-20

Canada's commodity-rich economy is reaching its limit

The country is expected to have the strongest growth in the G7 this year, and the vast majority of businesses have said they will struggle to cope with any unexpected demand growth. An obvious manifestation can be found in the huge industrial buildings on both sides of the suburban highways around Toronto and Vancouver.

The rental signs are disappearing and "everyone's warehouse is packed," said Murray Mullen, head of freight at Mullen Group, one of Canada's largest logistics companies.

Nationwide, industrial property availability in major markets has fallen to 2.2% from nearly 3% a year ago, according to Altus Group. In Toronto and Vancouver, the proportion is about 1%.

In some cities near Vancouver Harbor, there is not a square foot of vacant industrial space, according to Colliers International. Yes, powerful Amazon is one reason-in fact, the e-commerce giant has just snapped up another 827,000 square feet of space in the suburban city of Bennabi, according to Colliers. Market Latest Quarterly Report

Delays and disruptions in global supply chains have prompted a reversal of the lean inventory model that collapsed in the early months of the pandemic.

Companies "buy shares not three weeks, not three months, but six months in advance and store them somewhere"; Martin Imbleau, CEO of Montreal Port Authority, said that the bureau positioned itself as a less busy alternative to crowded eastern ports.

The squeeze means that, in addition to paying more for shipments, companies have to pay higher premiums to store them.

Total on Vancouver's industrial land leases rose 40% in three years, according to Altus. So is Toronto. Now, developers are paying millions of dollars per acre, and prices "vary almost every week based on overall demand." Raymond Wong, vice president of Altus, said.

Side >

Mullen would love to find more land for his business, but he says the cost of the Greater Vancouver area could be seven times what it was a decade ago. This is what structural inflation looks like. "Inflation is an asshole. I'm afraid it's out of control now."

-Derek Decloet in Toronto, Stephen Wicary in Ottawa

Concession territory

Wrong directionCongestion barometers at Los Angeles and Long Beach ports worsened in March, ending three straight months of improvement, new data shows. The proportion of Container who stayed at ports for more than five days last month rose to 38.7% from 34.3% in February, according to the Pacific Merchant Shipping Association. The data also showed that the stay time of the railway Container increased from 5.2 days in February to 7.7 days. Improving the flow of goods through Southern California's twin ports is a goal of the Biden administration, which launched a "supply chain barometer" to monitor progress in November. L.A. and Long Beach handle about 42% of all U.S. Container trade with East Asia.

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