As the most significant labour dispute at U.S. ports in more than 45 years is looming, port workers in Canada also are enduring labour issues.
Some of the disputes could be drawn out, leading to havoc in North American supply chains. But the situation also is causing companies to rethink their own supply logistics.
In the meantime, the U.S. is calling for reform of a section of trade law that allows shipments with a fair retail value of below $800 to claim the de minimis exemption from taxes and duties. The number of shipments claiming the exemption has soared in recent years as Chinese e-commerce companies expand their reach to U.S. consumers. Changes to the law could mean delays and higher costs for shipments coming into the U.S.
Green Street News sat down with Curtis Spencer, chief executive of logistics firm IMS Worldwide, about the effect these and other events could have on industrial property in Canada.
As the U.S. and Canada are threatened by labour disputes at their ports, what do you think the effect on industrial real estate in Canada will be?
I do think it’ll have an effect, and I was hoping to be able to report that the Canadian ports were not planning to have any labour issues, but as of [Sept. 26], it looked like there is a good potential that they will. I think that their demands are much more in line with what normal requests would be and not so outlandish as the U.S. requests are looking like.
So, I feel like they may get solved a little bit faster. The opportunity for Canadian ports is to take … hundreds of thousands of containers away from U.S. ports in the same way that Prince Rupert took a whole lot of volume away from SeaTac and in fact caused Seattle and Tacoma to merge their two ports together.
So, if there’s any opportunity out there to build more and develop more, the rail infrastructure now is phenomenal with both [Canadian Pacific Railway ] and [Canada National Railway Co.] expanding their networks. You can get to the United States a day cheaper and a day faster by going through Canadian ports.
You mentioned the Port of Prince Rupert, which is becoming more popular as an offloading place for cargo bound for Edmonton and then other places in North America, such as Chicago. Do you see Edmonton having more industrial activity over these issues?
I’m not sure because the end of the line for intermodal, for example, Chicago makes a lot of sense. The … partial end of the line in Edmonton makes sense only if we start having more development going on in Edmonton.
And I think what you’re mentioning is that that could bring more intermodal freight because more activity is going on in Edmonton and that’s a very oil- and gas-centric location. And I think that as long as we continue to keep the oil and gas moving, Canada is in a great position to take advantage of that.
Back in Vancouver, what is the best play now if you are an industrial investor?
I would be in the transload business. I’d be building buildings that are a 1,000 feet long by 200 feet wide and … have three times the truck parking as there are doors. And I would be transloading cross-docking because I think that’s the inland-point intermodal move, that’s the intact move of containers off the port to their destination. I think that’s very robust here in Canada.
What’s not as robust is the transloading that you find a lot in L.A., Long Beach [Calif.]. And I think that’s an area where Canadian real estate could really grow because the rail is here, the rail infrastructure is here. They just need to have more transloading opportunities to put on trucks or on domestic intermodal.
What other parts of Canada do you think could see more movement in industrial development related to transport?
I really think the Toronto market is excellent. It depends on how this discussion of the de minimis [Section] 321 provision goes. [U.S. President Joe] Biden just clamped down on Temu and Shein in order to eliminate them from directly shipping into the United States. However, the option is to have development in Canada where we can put bulk receipts of goods in facilities and then ship individual shipments to the United States, but I’m doing it from Canada, not from Asia. That is a very viable alternative.
So, building facilities for that is the opportunity?
Correct. And you want to build those around the Canadian equivalent of the major U.S. cities. So, you want to build them in the Vancouver area for the Pacific Northwest. You want to build them north of Detroit for the central United States, and you want to build them in Toronto close to the New York, New Jersey market.
What does Canada need to do to increase its port activity and thus the industrial opportunities?
The interesting thing is the growth in the East Coast ports in Canada could really take off if they improve the infrastructure for the rail that would get all the way from Halifax, for example, down into the New England states. To me, that’s a key unfinished project that Canada needs to look at and put some real money and research behind because Halifax can take anything.
There’s deep deepwater ports on the East Coast. There’s just not enough activity going on because of its lack of connectivity to the Northeast of the United States, where the big population centres are.
