511 - Market Update Q1 2024

Our Company delivers exceptional value and quality products to our trading partners. With extensive distribution and expandable capacity, our core products are readily available.

Quarterly Market Update

Quarter 1 | Winter 2024

Restaurant Supply Product Pathway

Q1 2024 Market Update

SUMMARY: Supply flow to North America seeing effects from Middle East and Panama Canal crises

















Post-pandemic demand reduction drove production of Gloves well below industry capacity in 2023. Expectations are that production rates will increase to show mid single- digit gains over prior year.

Attacks on vessels in the Suez canal related to the war in Gaza, and low water levels due to drought in Panama have added up to two weeks to transit times on critical shipping routes to North America.

Port congestion will likely increase in Q1 driven by Gaza war and Panama drought disruption. US diesel costs down 10% since last fall and prices in Canada are lower versus this time last year.


Economy and Supply Chain

Q1 2024 Market Update

SUMMARY: Middle East War & Panama Drought Increasing Transit Times, Shipping Expense, Product Cost

Four of the top five largest container carriers will be avoiding the Red Sea and the Suez Canal until security is restored to the waterway. Together with Israeli shipping line ZIM, who was already diverting its Red Sea traffic, these carriers represent 56 percent of global capacity, meaning an estimated 17 percent of global volumes will be taking a longer, more expensive route from Asia around the southern coast of Africa. Container diversions are adding 7 to 15 days transit time depending on the lane and 15 to 20 percent increase in costs for carriers; the more days freight remain on the ship, the higher the invoice price for the shipment. Shortages of shipping containers, another “ripple” effect of elongated shipping times, are beginning to be reported by some northern China ports. DHL Global Logistics .

Spot rate quotes for trans-pacific cargo shot up from $3,000 per ton to $5,000 in December. The Shanghai Containerized Freight Index was up16% week-on-week in mid-January, up 114% since December. Reuters

Further, ocean freight insurance companies have begun issuing war premiums of $50 or more per cargo ton, adding to voyage invoice costs and ultimately, cost of product, and in addition to longer voyages and higher costs, disruptions to scheduled arrival times will drive congestion at destination ports and some equipment shortages, as empty containers and mis-timed arrivals disrupt normal port operations. Seko Logistics, Freightways In better news, US Federal Reserve policymakers concluded in December that inflationary pressures were easing and that the job market was cooling. In response, the Fed left interest rates unchanged for the third straight time and signaled they expect to cut rates 3 times in 2024. Canada’s inflation status mirrors the US at 3.1% in early January, lower than the full year average for 2023 and when taken with the US rate, generally positive signs for restaurant operators and the businesses that supply them eager for access to investment capital and lowered costs of operation. Reuters, Bank of Canada


Foodservice Industry Perspective

Q1 2024 Market Update

SUMMARY: North American restaurants strengthened in 2023, finishing with strong holiday performance

MasterCard data showed consumer restaurant spending was up 7.8% November 1 thru Christmas Eve. National Restaurant Association

Restaurants continued to increase their hiring at the end of 2023, up 2.5% in December to sustain the industry’s strong rebound from widespread layoffs due to the pandemic and the post -pandemic staffing crisis. Canadian hiring growth versus prior year was 4.9%, strongest since 2019. Technomic, US Bureau of Labor Statistics Canadian consumer confidence continues to trend negatively dropping to its lowest point since the start of the pandemic. Through October, Canadian foodservice industry trailing 12-month performance declined 7.1%. Technomic, Canadian Conference Board .

Real sales growth in 2023 for restaurants – the rate of growth with the affect of price inflation factored-out – was a robust 5.3%, measured through November. US Bureau of Labor Statistics

Economists predicted majority consumption of food would return to restaurants from the temporary pandemic swing to the grocery sector. This event happened in 2022 and the divergence between grocery and restaurant continues to widen as Technomic’s chart of US Labor Bureau data (right) confirms.


Regulatory and Society

Q1 2024 Market Update

SUMMARY: Legal wrangling over plastic and PFAS legislation sets in across the US and Canada

Lawsuits accusing major chemical companies of polluting U.S. drinking water with toxic PFAS chemicals led to over $11 billion in settlements in 2023, with experts predicting that new federal regulations and a growing awareness of the breadth of PFAS contamination in the U.S. will spur more litigation and settlements in the year ahead. Reuters California’s attorney general issued an advisory letter stating intention to make enforcement of violations of the state’s ban on added PFAS in foodservice packaging a “priority” in the coming years. Specific actions and means of enforcement remain unclear, however. About 44% of Americans have a “great deal” of worry about the environment according to a Grub Hub study released in December, a concern that carries over to dining out decisions; 57% of consumers consider sustainability when choosing a restaurant. Restaurants discard large quantities of edible food every day, representing a financial loss and contributing to environmental issues and an industry trend to watch is implementation of data-driven food waste management strategies, techniques and tools, including Internet of Things (IoT), advanced analytics, AI, robotics, and chemical / oil recycling services. Machine learning and predictive analytics are beginning to enable equipped restaurants to minimize over-purchasing and reduce food spoilage, measures with downstream reduction of foodservice industry carbon footprint. Start Us Insights Federal Court in Canada overturned the country’s ban on single -use plastics, deeming the policy “unreasonable and unconstitutional.” The court found that the classification of plastics in the cabinet order was too broad to be listed as toxic under the Canadian Environmental Protection Act. The decision impacts the government’s ban on six single -use plastic items, and Environment Minister Steven Guilbeault is considering an appeal, putting restaurant operators and suppliers in limbo as they await subsequent rulings to clarity the long-term status of single use plastics in their businesses. Resource Productivity & Recovery Authority, MacMillan LLC .


Key Takeaways - Q1 2024

Q1 2024 Market Update

Restauranteurs are optimistic about the state of their industry at the start of 2024. 65% of all operators indicated that they expect sales and traffic to improve over the next two quarters; Independents twice as likely to say their sales and traffic would improve “significantly,” with 18% responding this way versus 9% of chain respondents answering the same. Unilever Foodservice 2024 Industry Report Clarity about interpretation and compliance with legislative bans on added PFAS and single use plastics is, predictably, hard to come by these days … both in our industry, and all other industries, as well. Our recommendation to restaurant operators, buyers and marketers is to continue monitoring news sites for word of new developments from state and local governments as they sort through the implementation and enforcement phases of these bans. It seems likely that costs to transport supplies from overseas are going to rise in the first half of 2024 as the highly interconnected global supply chain contends with war and drought disruption in the Suez and Panama Canals. As in every period of potential disruption, 511 logistics experts are aggressively managing shipping options to stable supply flow and optimized costs for our customers.

AmerCareRoyal Family of Brands

Domestic paper bag, sack & roll paper manufacturing for grocery &

Global sourcing, manufacturing & transportation

Eco-friendly, BPI certified, compostable, Foodservice products

Direct container importing, international sourcing & logistics management

Transformed tooling & design for stock & custom foodservice packaging

Customizable breadth of disposable supplies for Canadian

Broad range of disposable foodservice packaging, gloves, PPE & supplies

Made-in-the-US packaging for foodservice, food processing & retail

container solutions

foodservice operations

merchandise applications

Count on 511 for agility, collaboration and reliability to help your business succeed!


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