MARKET BRIEF | July 2024
Hurricane Beryl Impact
On July 8, Hurricane Beryl made landfall in Houston, Texas, as a Category 1 storm, causing wind damage estimated between $2.5 billion and $3.5 billion. The storm, which hit Texas after initially striking the Caribbean as a Category 4 hurricane, resulted in over 2.7 million power outages in Houston and beyond. Beryl’s prolonged winds, reaching over 90 mph, led to significant destruction. The Caribbean also experienced severe damage, with losses estimated up to $1.5 billion and more than a dozen fatalities.
Canadian Rail Strike Update
The Canada Industrial Relations Board is set to rule by August 9 on whether certain essential rail services must continue during a strike or lockout. This decision impacts potential work stoppages by Canadian National Railway and Canadian Pacific Kansas City. Labor Minister Seamus O’Regan Jr. requested the board’s intervention to determine if crucial shipments should be exempt from strikes, thereby delaying any action until the ruling. Even after the decision, a 72-hour notice must be given before initiating a strike or lockout, unless an extension is ordered.
U.S. East and Gulf Coast Dockworkers Threatening Strike
Dockworkers on the U.S. East and Gulf coasts are poised to strike on October 1, as the current contract between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) expires on September 30. ILA President Harold Daggett announced that negotiations stalled when the union discovered that APM Terminals and Maersk Line (which are both owned by A. P. Moller – Maersk Group) are utilizing an auto gate system that autonomously processes trucks at multiple ports. The union claims this violates their contract. The ILA demands resolution on automation and job security before continuing talks, with members fully supporting strike action if needed.
Container Volumes Exceed Pandemic-Era Numbers
Global demand for container shipping reached a record high of 15.94 million TEUs in May 2024, surpassing the previous peak during the COVID-19 pandemic. This surge, primarily driven by exports from the Far East – particularly China – is causing concerns about the upcoming peak season. Factors such as port congestion, geopolitical tensions, and high shipping volumes ahead of the traditional peak season are contributing to this pressure. Analysts are questioning whether current high volumes will impact the usual peak season shipping patterns.
Walmart Increases Grocery Distribution
Walmart is enhancing its grocery supply chain by integrating advanced automation across its distribution centers. Partnering with Symbotic, Walmart aims to upgrade all 42 of its regional distribution centers with AI-powered robotics over the next eight years. This initiative will accelerate the unloading, sorting, and stocking processes, improving inventory accuracy and efficiency. The high-tech centers will bolster Walmart’s capacity to meet growing demand and support its extensive network of stores, ultimately benefiting customers and employees with faster and more reliable service.
