canadian transportation & logistics volume 116 issue no. 3 april 2013
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Canadian Transportation & Logistics Volume 116 Issue No. 3 April 2013TRANSCRIPT
SUPPLY CHAINStrategies for the fast-pacedelectronics industry
GLOBAL TRADEHow to expand your small business internationally
APRIL 2013
Published Since 1898
Canada’s Asia-Pacific trade is showing brisk
growth. But so are freight rates.
in like a lion
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ct&l april 2013 3
VOLUME 116 ISSUE NO. 3 APRIL 2013
Published Since 1898
Canada’s Asia-Pacific trade is showing brisk growth. But so are freight rates. PLUS: UPS Canada’s small business director Paul Gaspar discusses cost-effective strategies for Pacific trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
COVER
Features 14. . . SEIZE THE CONTINENTReport from Asia Pacific Foundation of Canada urges Canada to become North American Gateway leader.
16. . . GOING GLOBALDHL Express Canada president Greg Hewitt offers five important tips for expanding your small business internationally.
18. . . WAY WESTCanada’s West Coast gateways look to build more capacity and efficiency to cope with growing freight volumes.
30. . . NEED FOR SPEEDElectronics is fast becoming like the fashion industry – technology comes in and out almost by season. What supply chain strategies can best address this harsh reality?
4 THE VIEW WITH LOUWhy you should care about trucking’s driver demand dilemma.
6 IN THE NEWSPMAC and SCL announce plan to merge. Plus: Can the challenges of our northern roads keep up with the opportunities for development?
34 DASHBOARDTransCore’s Canadian Freight Index pulls back in February; total freight costs for 2012 finish down 2.95% year-over-year; and rail freight continues its upward climb.
36 INSIDE THE NUMBERSA sobering new look at the truck driver demand gap and its impact on shipping strategies.
38 BIGGER PICTUREWhy marine carriers must work with shippers on a realistic approach to fuel costs and transit times.
Departments
Let your voice be heard!Our Annual Shipper’s Choice Awards Survey rating the performance of carriers in all modes is out. Your response will make it a success!
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in like a lion
44 ct&l april 2013
Asignificant portion of Canada’s growth industries rely on for-hire trucking for cost-effective and timely
inbound and outbound transportation. Whether they can continue to do so has been called into question by a recently-released
Conference Board of Canada study. The study takes a hard look at the unfavourable demo-graphic reality for-hire carriers face when it comes to their front-line staff: drivers.
There are more than 300,000 truck drivers in Canada. It is, in fact, one of the most common male occupations in our coun-try. So, at first glance, it’s hard to believe there is a problem.
I’ve been writing about transportation issues for more than two decades now and the “driver shortage” has been an issue I’ve writ-ten about since day one. Yet, somehow, for-hire carriers continue to grow, freight ship-ments continue to move. So why worry now?
According to the Conference Board study, the magnitude of the demand for goods movement, the resulting demand for truck drivers and the particularly unfavourable de-mographic profile of truck drivers mean the trucking industry is about to be hit hard. The unfavourable demographics include the real-ity that the truck driver labour pool is aging more quickly than the total labour force. The average driver age increased 3.7 years be-tween the Census years of 1996 and 2006, while the average increase was two years across all occupations. The average truck driver age is 44.2 years, compared with an average of 40.2 years for the total labour force. More than 20% of the driver popula-tion was over the age of 54.
The truck driver population is not the only occupation challenged by an aging workforce. However, similar occupations fare better when it comes to replenishing their ranks with younger workers. For example, nearly a quarter of delivery and courier ser-vice drivers are under the age of 30 and al-most half of the railway and motor transport labourers. In comparison, just 12% of truck drivers are under 30.
As a result, the Conference Board study forecasts that by 2020 the gap between the
supply of and demand for drivers will be 25,000 and could be as high as 33,000. That means for-hire carriers won’t be able to grow with the demands of their shipper custom-ers. There is no use adding capacity if you don’t have the people to drive the trucks.
In the past, for-hire trucking’s strong pro-ductivity gains – realized through longer trailers, LCVs, technology that reduced out-of-route and deadhead miles, etc. – masked its human resource problems. This time around, however, the industry faces pres-sures that threaten to cut into those produc-tivity gains. Congestion in large urban cen-tres is a growing issue; changes in US Hours-of-Service regulations is certain to re-duce productivity as drivers have fewer hours available to drive and more stringent safety audits will also make a portion of the current driver pool un-hirable.
And, of course, there is the issue of driver pay. When adjusted for inflation, truck driv-er wages have grown at less than 1% per year since 1998. In a tight labour market, it’s pretty hard to attract new entrants when paying those kinds of wages.
I don’t know how the for-hire carrier in-dustry will solve its driver demand gap di-lemma. It has been talking about it for at least 20 years to no avail.
What I do know is that shippers have a vested interest in helping for-hire trucking find an answer. Trucks move 90% of all con-sumer products and foodstuffs within Canada and about 60%, by value, of our trade with the US. The efficiency of truck transportation al-lows shippers to serve customers with little or no standing inventory, which is costly to hold. And don’t forget that productivity gains among for-hire carriers over the past 20 years have to a large extent been passed on to ship-pers. The Conference Board report notes that about 87% of productivity gains by for-hire trucking since 1986 have flowed through to customers in the form of lower prices. That’s value worth hanging on to. CT&L
To find out more about the Conference Board of Canada report, see our Inside the Numbers sec-tion. And let’s continue the conversation about trucking issues at our next Surface Transporta-tion Summit on Oct. 16 at the Mississauga Con-vention Centre. Go to www.ctl.ca to register.
Lou Smyrlis, MCILT
We acknowledge the financial support of the Government of Canada through the Canada Periodical
Fund (CPF) for our publishing activities.
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Volume 116 Issue No. 3 April 2013
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in search of a few good men (and women)Why you should care about trucking’s driver demand dilemma
the view with Lou
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Lou Smyrlis,MCILT
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Web TV: Transportation Matters
• ERB PULLS ITS WEIGHT: Erb Transport reps talk about winning a recent weight-loss competition and the ongoing focus on health and wellness at the company.
• HOW DO YOU STACK UP?: Find out what two of Canada’s top carriers look for when evaluating their customer base.
• THE PRICE OF QUALITY:Is quality service still considered worth paying for? Hear what two trucking industry titans have to say.
5ct&l april 2013
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What’s on CTL.ca?
• CN LAUNCHES ‘COOL’ SERVICE:
CN Rail is tapping into the booming refrigerated goods segment with its new CargoCool refrigerated service.
Blog bits Search our blog archives at ctl.ca • Carolina Billings: What can be done about the wage gap between men and women?
• Dan Goodwill: Looking at deferred packaging and transloading as a way to reduce freight costs.
• Lou Smyrlis: Are there too many roadblocks for northern roads? Salary calculator:
Discover your occupation’s average salary range with the PMAC/Purchasingb2b salary calculator.
Profile: In discussion with Mark Kenny, purchasing coordinator, University of Guelph.
Feature: What’s wrong with the Canadian economy?
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Feature:How to build a warehouse.
Video: Building a cargo ship in under two minutes.
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in thenews
6 ct&l april 2013 www.ctl.ca6
in thenews
Can challenges of our northern roads keep up with opportunities for development?By Lou SmyrlisThe opportunity for developing Canada’s north has finally come, according to trans-portation industry experts speaking at Transport Institute’s Northern Exposure 2 conference in Winnipeg. But can the infra-structure keep up with the opportunities this presents and overcome the challenges it poses?
Aggressive mining and energy explora-tion and development combined with population growth and environmental un-certainties are the new realities for the country’s traditionally isolated northern communities. For example, there is $130 billion worth of mining investments pro-jected over the next five years for Canada, most of it in the north.
“We have not seen this degree of growth since the 1950s. There is more ex-ploration going on in Canada than in any other country in the world. The bottom line is that Canada is on everyone’s radar,” said Guy Ginter, who is currently working with the Moose Cree First Nation as the director of impact and benefit agreement (De Beers) and is also on the board of Kimesskannemenow Corp., the company responsible for building the James Bay Winter Road.
At the same time, the population of re-
mote northern communities is growing at 4-5% while the rest of Canada is growing at about 2%.
Such potential for business combined with population growth will place in-creasing demand on building the north’s road infrastructure, traditionally com-prised of winter roads and service by plane or ship. As Amar Chadha, director of the Manitoba Transportation Division with global engineering firm SNC-Lavalin pointed out, “There is a very clear message from northern communities: They are seeking all-weather roads.”
Yet building all-winter roads to remote northern communities is fraught with challenges. Roads need to be built on firm ground consisting of granular material or bedrock. Much of the north, however, in-cludes predominantly organic deposits, wetlands, fens, peat plateaus and perma-frost. In fact, about one-sixth of the land is covered by lakes and rivers, and building bridges is expensive work – amounting to about $12,000 per square metre, accord-ing to Chadha.
In many cases, road construction in-volves dealing with pristine nature areas with sensitive ecosystems. Road work is often done in winter to minimize the im-pact on the environment which enjoys a very short growing season.
“These aspects of the environment
have to be greatly respected in construc-tion for the north,” Chadha said.
Such considerations, plus lack of access and a shortage of a qualified workforce, make new roads very expensive to con-struct and maintain in the north. Con-struction costs average about $1.3 mil-lion/km for a gravel road and maintenance costs are in the order of $5,000/km per year. That’s about double the cost it takes to build and maintain such roads in south-ern Canada.
And global warming is raising other con-cerns. Melting is causing the soil to move, af-fecting the stability of engineered structures.
“It’s a major engineering challenge. We have to take the long-term impact of glob-al warming into account,” Chadha said.
The winter of 2011/2012 was Cana-da’s third warmest since we started keeping such records in 1948 and the northern part of the country is feeling the impact of global warming the most, according to Dr. Danny Blair, associate dean of science at the University of Winnipeg, and the conference’s luncheon speaker.
Ginter gave examples of winter roads becoming unusable within a couple of days due to sudden spring warming.
Mike Sorobey, vice-president of logistics at The North West Company, sees the im-pact of climate change as a huge hindrance
PMAC and SCL announce plan to merge
With the support of their respective boards of directors, The Purchasing Management Association of Canada (PMAC) and Sup-ply Chain & Logistics Association Canada (SCL) have announced their intent to merge operations.
The new organization, which is subject to the approval of both associations’ mem-berships, would become the Supply Chain Management Association (SCMA). PMAC and SCL will hold votes at their Annual General Meetings, both to be held June 12, in Ottawa and Toronto, respectively.
If approved, members of the two organi-zations would become members of SCMA on Sept. 3.
“It’s a natural evolution,” said PMAC board chair Mike Whelan. “As organizations, our strengths complement each other; by
combining them we can offer supply chain professionals in all disciplines the very best opportunities for professional development, networking, and employment.”
SCMA would retain the best of both as-sociations, including local events, a focus on research, an annual national conference and an annual student case competition, which would become a national event.
Through its 10 provincial and territo-rial Institutes, SCMA will continue to grant the internationally recognized Sup-ply Chain Management Professional (SCMP) designation, provide tactical training through the Supply Management Training program, as well as continuing peer-to-peer education and providing fo-rums for industry networking.
“We are excited about the opportunity this presents for our members,” said SCL board chair Al Norrie. “SCMA will preserve the best SCL has to offer and provide access
to an expanded network of supply chain professionals, top quality supply chain edu-cation, and strong employer advocacy.”
“This chance to re-envision the future for Canadian supply chain professionals through advocacy, research, education and employment opportunities, comes as we prepare to implement a new three-year strategic plan,” said PMAC’s presi-dent and CEO Cheryl Paradowski, who will lead the new association. “The ex-pertise and experience that SCL mem-bers bring to the joint membership and leadership structures can only strength-en our ability to offer supply chain pro-fessionals, and their employers, top-qual-ity education and leading-edge supply chain solutions.”
SCL executive director Alison Toscano said: “I think both SCL and PMAC members will find a home in SCMA. It’s going to be a great organization.”
in thenews
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in thenews
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to northern development and believes “a lot of money” will have to be spent just to maintain the existing infrastructure.
All these factors make for a long devel-opment process for building roads in northern communities – from the initial drafting of government policy to feasibili-ty studies, environmental assessments and producing a detailed design.
“You could be looking anywhere from 10-15 years before building a road. You can understand the frustration from peo-ple wondering why the road is not being built,” Chadha acknowledged.
With so many challenges, building all-weather roads may not be the best option for the north. But John Spacek, assistant deputy minister, Manitoba Infrastructure and Transportation, challenged conference attendees to think of roads in a broader context. Roads, he said, provide mobility and access to the rest of Canada for remote communities. They are what is needed to
bring more goods, better communications technologies and energy options.
“Transportation is key to socio-econom-ic well being,” he emphasized.
Federal, provincial leaders call for simpler, more harmonized trucking regulationsBy Lou SmyrlisCanada’s transport regulations are under review and the person in charge of oversee-ing that review, minister of state for trans-port Steven Fletcher, would like to see fewer of them in the future.
“We are trying to reduce the regulatory burden on business,” Fletcher told the Man-itoba Trucking Association’s Annual Gen-eral Meeting in Winnipeg. “The final report should be ready this spring and we are iden-tifying regulations that should be repealed or amended.”
However, Fletcher said his discussions with the trucking industry have resulted in suggestions for more regulation rather than
less because the industry would like the government to push ahead on legislation on a number of fronts, including electronic on-board recorders to streamline Hours-of-Service reporting, and bobtails that im-prove aerodynamics on trailers.
Steve Ashton, Manitoba’s long-serving minister of infrastructure and transport, also spoke at the well-attended Annual General Meeting and said he shared Fletcher’s zeal for looking at burdensome legislation. His focus has been on improving harmonization.
“When you are operating within four different Western provinces with different regulations, it’s your worst possible night-mare,” Ashton acknowledged.
Ashton said his ministry has made “sig-nificant progress” in working with the Sas-katchewan government to harmonize spring thaw restrictions and RTAC legisla-tion. Manitoba also recently signed a Memorandum of Understanding (MoU) with the three other Western provinces
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New US food safety regs will impact Canadian food haulersBy James MenziesThe impending US Food Safety Modern-ization Act (FSMA) will have major impli-cations for Canadian refrigerated trucking companies that haul in or out of the US, as well as Canadian food companies that ex-port product there.
During a presentation to the Technology and Maintenance Council in Nashville, Tenn., Bud Rodowick, manager of fleet per-formance with Thermo King, said carriers should be communicating with their cus-tomers to find out how they’ll be affected by the sweeping legislation.
The FSMA, described by Rodowick as “the most expansive changes in food safety legislation since 1938,” was enacted Jan. 4, 2011, but sat idle until after the US elec-tion. Now, lawmakers are acting on the leg-islation and putting it into effect.
“This is a huge act that’s very complex and enormous in size,” Rodowick warned, adding it gives the Food and Drug Adminis-tration “sweeping new powers,” including the ability to send people to prison for felo-nies related to the careless or negligent han-dling of food.
Under the new rules, food companies will be required to demonstrate care of their products through the entire supply chain, or from “field to fork.” This, of course, extends to the transportation of their prod-ucts.
There are 450 sections in the act, and four key ones impact transportation provid-ers, Rodowick said. These sections include: preventative controls and hazard analysis, traceability, sanitary transportation of food and the intentional adulteration of food.
To comply with the regulations, food companies will have to produce a written food safety plan, specific to each facility, outlining hazard analysis, preventative con-trols, monitoring procedures, corrective ac-tion procedures, verification procedures and a recall plan. They’ll be required to re-tain all records related to such a plan for two years, and to provide them to FDA upon request.
The new regulations also will require a product tracing system that can be used to
track and trace all food products that are produced in, or imported into, the US. Rodowick said the requirements are likely to include a temperature traceability as-pect, meaning the FDA will want to see
proof that food was transported at the proper temperature throughout its journey.
A final rule is expected to be pub-lished in 2014, with full enforcement in place by 2015.
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Trans-Pacific trade with Asia is con-tinuing to grow in significance for Canadian importers and exporters,
accounting today for nearly one-fifth of Canada’s total two-way merchandise trade of more than $900 billion with the world. While the US remains our leading commer-cial partner, analysts predict this bilateral relationship could slip well below 70% of overall trade within a decade as trade with emerging countries surges. Such a major trend is reflected in the number of visits to China-led Asia by Prime Minister Stephen Harper. And most recently, in March, for-eign minister John Baird made his seventh trip to Asia – a voyage that took him to Hong Kong, Vietnam and Thailand.
Among the top 10 Canadian trading
partners, three come from Asia: China, Ja-pan and South Korea. India does not pres-ently figure in this group, but its potential is widely recognized by shippers.
Several years ago, China overtook the United Kingdom as Canada’s second biggest trade partner. In 2012, Canadian exports to China increased markedly to $19.3 billion from $16.8 billion in 2011. Imports rose to $50.7 billion from $48 billion.
Slower Chinese growth of 7.8% in 2012 made only a minor dent on Canadian com-modity shipments feeding Chinese factories. Also noteworthy: Canadian metallurgical coal exports to Japan rose markedly. As il-lustrated by maritime traffic trends at West Coast ports, containerized Chinese consum-er goods are flowing to Canadian retail out-
lets. The latest economic indicators suggest consumer demand in China will fuel GDP growth still in the high single digits in 2013.
The great bulk of Canada-Asia trade is transported overseas by container and bulk shipping lines, but Vancouver International Airport and Calgary International Airport in particular have become rising airfreight gate-ways for high-value shipments, including machinery and perishables. Large courier companies with strong connections with Asia, such as FedEx, UPS, and DHL, as well as Cargolux and CargoJet, are using top-of-the-line freighter aircraft. And in northern B.C., the scene of mounting mining, forestry and energy developments, the Prince George Airport Authority is attracting new business with the third longest runway in Canada.
Canada’s Asia-Pacific
trade is showing brisk
growth. But so are
freight rates.
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Mike Broad, president of the Shipping Federation of Canada, points out that con-tainer services between Asia and Canada have evolved over the past 35 years from the all-water routes through the ports of Van-couver, Halifax and Saint John, N.B., to the mini-land bridge route between Vancouver and Canadian inland points and to the es-tablishment of container service at the Port of Prince Rupert.
“Canadian importers and exporters,” he told CT&L, “have been, and continue to be, well served by all of the major shipping lines which trade between Asia and North America, due in large part to excellent in-termodal connections between ports and inland points.”
Bob Ballantyne, president of the Cana-dian Industrial Transportation Association, says he has not received acute concerns ex-pressed by CITA members over ocean ship-ping services. “On the other hand, the con-tinuing trend of slow-steaming and ultra slow-steaming may save money for carriers when rates are under pressure – but the downside for shippers is the additional time that inventory is tied up.”
Ballantyne also notes that while Cana-da’s Shipping Conferences Exemption Act permits confidential contracts and gives Ca-nadian shippers the possibility of competi-tive pricing, the continuation of shipping conferences in routes outside of Europe (in-cluding the trans-Pacific trades) is some-thing that shippers would generally like to see abolished.
Ruth Sol, president of the Western Trans-portation Advisory Council (Westac), has a specific vision for the future of Canada’s Pa-cific trade and is critical over certain recent public policy trends in British Columbia.
“Our international priorities for Pacific trade are twofold: reducing trade barriers and locating and accessing best practices to make us more competitive,” she says.
“And here in British Columbia, we need to examine the tendency to oppose develop-ment. Somehow, economic growth has come to be viewed as a necessary evil. The reality is that industry is anxious to build trust with communities by having meaning-ful consultations. We owe it to all Canadi-ans, importers and exporters, employees and taxpayers, local politicians and citizens to grow thoughtfully and appropriately.”
Ocean freight rate hikes on the horizonAmong the persistent irritants facing ship-pers, Ruth Snowden, executive director of the Canadian International Freight Forward-ers Association (CIFFA), singles out the plethora of fuel surcharges and General Rate Increases (GRIs) by carriers. There have been eight increases in the trans-Pacific trades in a 12-month period. “This imposes a huge administrative burden on freight for-warders who must reluctantly re-quote rates to their customers,” Snowden complains.
“Invoicing accuracy from the carriers,” Snowden continues, “is often poor, as quo-tations change so rapidly and are usually handled by e-mail, that forwarders must keep administrative staff just to track that payables are quoted. Volatility in the mar-ket remains one of the key stressors.”
Snowden also noted that shippers expe-rienced “a very poor six or seven weeks of winter service from CN on intermodal cargo coming in from Asia over Canada’s west
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coast ports, which increases frustrations and stress in the trans-Pacific trade.” By mid-March, there were signs of service returning to normal – “just in time for the next round of rate increases, it seems,” she said.
On the freight rate front, recent ocean rates have been running in the US$1,600 to US$1,800 range for 40-ft containers (FEUs) from China-based ports to container yards in Vancouver or Prince Rupert, almost twice as high as the recession-induced lows of a few years ago.
But cash-strapped ocean carriers in the trans-Pacific trades regard such rates as still too ‘shipper-friendly’ and announced their intention to impose a GRI of $400 per FEU this spring. Assuming this plan sticks, the GRI will affect accounts not tied into con-tract rates. A smaller GRI was under consid-eration for westbound shipments. In addi-tion, there will be missed sailings by some carriers to help firm up rates.
Offering the perspective of a major im-porter was Michael Tan, vice-president of supply chain, distribution and transporta-tion with Hudson’s Bay Company. The lat-ter’s overall import volume in 2013, he in-dicated, is expected to total between 3,000 and 4,000 FEUs this year versus about 10,000 FEUs when Zellers was part of the HBC portfolio.
“With the number of steamship lines op-erating in the Pacific trade and the amount of newbuilds coming into the global market-place, together with global demand that re-mains relatively soft, HBC is fully prepared to manage steamship line capacity con-straints and/or increasing freight rate levels in the Pacific trade lanes,” Tan told CT&L.
“Capacity has not been an issue for HBC over the last two years – because of diligent planning and forecasting with our partner carriers.
“We have seen east to west freight rates on a steady rise over the last couple of years, but we lock in our rates for one to two years with a small handful of core carriers, de-pending on market conditions.
“It saves us from having to manage through any volatility in the marketplace during the retail industry’s relatively short two peak seasons each year.”
As far as Tan is concerned, the biggest issue for Canadian importers is “the capaci-ty constraints” through the terminals of Port Metro Vancouver.
“Record levels in 2012 with anticipated high growth rates over the next 10-15 years is going to place a lot of stress on those ports without drastic capacity increase measures such as hours of operations changes,” Tan emphasized.
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CT&L: The great bulk of Canada-Asia trade is transported overseas by container and bulk shipping lines, but some shippers also use airfreight. Why does it make sense to consider airfreight when shipping to and from China?
Gaspar: Airfreight eliminates the expense of warehousing goods and consolidation simplifies customs clearance. Once cleared through customs, the shipments are unload-ed and dispersed to each customer within each country, all within three to five days, depending on the format. The ben-efits of using airfreight include improving cash flow, consoli-dating shipments and getting product to market faster. Based on the product, it may or may not make sense for your business. For example, the ever-changing electronics indus-try can typically sustain the cost of airfreight to meet con-sumer demand. For the reasons mentioned above, it’s even more cost-effective for small businesses to use airfreight for smaller shipments to meet demand because it could elimi-nate the need for warehousing products in destination mar-kets and cash flow is more critical.
CT&L: In terms of available capacity when shipping by air to and from Asia, how are things trending?
Gaspar: Over the past 10 years, there has been a reduction of commercial capacity to and from Canada. With integra-tors like UPS, markets can utilize close-looped networks and commercial lift options to satisfy market demand. As a small business access to capacities could be a challenge howev-er they can partner with and utilize an integrator’s network and leverage to reduce the risk of delays due to capacity constraints. They can also benefit from the integrator’s years of experience and coverage.
CT&L: What would you advise importers/exporters using airfreight and wanting to keep their costs in line?
Gaspar: Focusing on profitability and keeping costs in line are imperative to businesses of all sizes. To keep your costs down, you need to evaluate your options based on your business model and work with a partner who is able to offer you those options. Although airfreight is beneficial for time-sensitive shipments, not all shipments require airfreight. For less urgent requirements, ocean freight services should be considered. Historically, those using this method generally needed to ensure they were shipping in large volumes. How-
ever, there are services available for customers who want to benefit from ocean freight but don’t have enough cargo to fill an ocean container. For example, Less-Than-Container Load (LCL) is offered by UPS between major ports worldwide. This type of service means you can access space within a container that is shared with other customers’ goods. This service can deliver economical usage-based costing, while providing Full-Container-Load (FCL) frequency, routing, on-line visibility and insurance. LCL is extremely beneficial to businesses looking to keep goods moving throughout the supply chain via one point of contact because you can send product as soon as it’s ready rather than waiting until you have a full container.
CT&L: When doing business overseas, arranging for trans-portation is only one part of the equation. Efficiently man-aging customs and other regulations as well as exchange rates are also important. How does UPS help shippers in this regard?
Gaspar: UPS is an expert in managing all aspects of the sup-ply chain. We provide tailored solutions to help customers’ grow their business and offer support to help get their prod-ucts to market faster. This is especially beneficial for small business that may not have the expertise or knowledge to break into new markets. UPS’s Customs Brokerage services, for example, can help you expedite customs clearance, thereby reducing the risk of delays and additional costs. An efficient customs brokerage service is essential for customers who are looking to quickly reach new markets. At UPS, we process hundreds of thousands of shipments on a daily ba-sis. In fact, 99.2% of all customs entries handled by UPS are cleared within one day. Choosing a customs brokerage pro-vider that has facilities in the global trading centres where you do business will allow you to manage your supply chain with consistency, reliability and flexibility. Some additional benefits associated with customs broker-age services include:
■ Electronic customs clearance that begins while your shipments are still in flight■ Expert brokers to handle all complexities and ensure accurate rating of duties and taxes■ Online tracking applications to monitor your shipment throughout its journey
airfreight on a budgetUPS Canada’s small business director Paul Gaspar discusses cost-effective strategies for Pacific trade
storycover
13ct&l april 2013www.ctl.ca
HELPING THE WORLD KEEP PROMISES.®
Old Dominion Freight Line, the Old Dominion logo and Helping The World Keep Promises are service marks or registered service marks of Old Dominion Freight Line, Inc. All other trademarks and service marks identifi ed herein are the intellectual property of their respective owners. © 2013 Old Dominion Freight Line, Inc., Thomasville, N.C. All rights reserved.
OD•DOMESTIC OD•EXPEDITED OD•PEOPLE OD•TECHNOLOGYOD•GLOBAL HELPING THE WORLD KEEP PROMISES.®HELPING THE WORLD KEEP PROMISES.®HELPING THE WORLD KEEP PROMISES.OD DOMESTIC OD EXPEDITED OD PEOPLE OD TECHNOLOGYOD GLOBAL
We may be in shipping, but your business is our business. From Europe, Asia, Canada, Mexico, Alaska, Hawaii and beyond, our LCL/FCL services and global logistics experience ensures your imports and exports get where they need to go. We deliver promises, in any language. odpromises.com/global
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“We would increase the use of Prince Rupert as a gateway to the East Coast, and as an export hub as well,” he continued.
Tan recalled that a few years ago, HBC worked with CN to utilize marine contain-ers for store deliveries originating in Toronto for stores in northern Alberta and northern B.C. that would otherwise go back empty to Prince Rupert. “The same concept could be applied to Pacific trade exports originating from Toronto.”
Tan further noted that the expansion of the Panama Canal in 2015 will enhance the economic viability of an all-water trade route from Asia to the US/Canadian east coasts.
Last year saw container throughput at Port Metro Vancouver (PMV) and the Port of Prince Rupert achieve impressive growth. In the case of the former, box cargo climbed by 8% to 2.7 million twenty-foot equivalent units (TEUs). For the latter, the container total soared 37% to 564,856 TEUs.
Boosting their performance has seen improvements in container dwell times and in rail services to both Canadian and US destinations.
Both ports are, however, facing infra-structure, capacity and other issues (not to-tally addressed) to support trade with fast-
storycover
growing Asian markets.Stephen Brown, president of the Cham-
ber of Shipping of British Columbia, ob-serves that “container drayage capacity at Vancouver’s terminals continues to be chal-lenged on account of trucker preference for day-shift reservations. However, a stake-holder group known as the Container Dray-age Leadership Team is focused on creative solutions to spread the load across night shifts and Saturdays.”
For their part, freight forwarders remain dismayed over customs examination backlogs in Prince Rupert recently described as “a nightmare” by CIFFA. It deplores that aver-age delays for containers identified for exami-nation by the CBSA have attained 13 days.
“When volumes spike, examinations spike,” CIFFA commented, adding: “With little forecasting data available, examination facilities are caught unprepared and cannot handle the increased load.”
Port of Montreal appoints Hong Kong repMeanwhile, on the East Coast, the Port of Halifax is pursuing its strategy of expanding its Asia business through carriers transiting the Suez Canal and has completed dredging of its terminals to accommodate the largest
container vessels calling on the eastern sea-board of North America.
Of special interest, too, is the recent de-cision by the Port of Montreal to appoint a representative in Asia-based Hong Kong: Jeremy Masters. A former senior executive with CP Ships (eventually absorbed by Hapag Lloyd), he knows the Port of Mon-treal well. Last year, Asia was the point of origin or final destination of about 14% of the containers moving through Montreal, which sees an opportunity to increase its share of traffic moving between Asia and North America via the Suez Canal and transshipped at ports in the Mediterra-nean region. “The Port of Montreal has all the advantages necessary to be very com-petitive on this route,” affirms Tony Boe-mi, the port’s vice-president of growth and development. CT&L
For more than two decades vet-eran journalist Leo Ryan has re-ported on key transportation and trade developments in Canada. A former Montreal bureau chief for The Journal of Commerce, he spe-
cializes in port and shipping issues and was awarded the Medal of Merit in 1992 by the then Canadian Port and Harbour Association.
Seize
14 www.ctl.ca14 ct&l april 2013
Canada could become a leader in terms of building a North American Gateway, according to a new report released by the
Asia Pacific Foundation of Canada (APF Canada). The report, “Seizing the Continent: Opportunities for
a North American Gateway,” was authored by George Stalk, The Boston Consulting Group, and Charles McMil-lan of the Schulich School of Business.
According to the report, Canada has become a “front-row player in the rapid evolution of the globalized world economy. Not since Prime Minister John Diefen-baker found terms of agreement with US Presi-dent Dwight Eisenhower in the 1950s to cre-ate the St. Lawrence Seaway, or since Brian Mulroney and Ronald Reagan made free trade between the two countries a reality, have Canadians had the opportunity to take centre stage in globalization.”
Canada’s physical infrastructure (ports, rail-roads, and highways), corporate talent, and gov-ernment are well placed to create a North Amer-ican Gateway (NAG) for the timely, reliable, and cost-effective flow of goods from Asia and Eu-rope into and out of central North America.
The report suggested that if Canada could es-tablish the NAG, thousands of jobs could be gen-erated both here and in the US. While the job-creation potential from an increase in exports resulting from easier and cheaper transportation of goods to export markets is difficult to estimate, it is potentially large and clearly a bonus.
Report urges
Canada to
become
North American
Gateway leader
B y : J u l i a
K u z e l j e v i c h
the continent
“Canadian and US consumers will definitely benefit from the lower cost of delivered goods, be-
cause logistics cost can be as much as 30% of the retail price consumers pay,” said the report.
Realizing this opportunity requires increased manage-ment talent rather than more monetary capital, the report calls for a more “collaborative platform” to enable users and suppliers of logistic services to cooperate in accessing Ca-nadian infrastructure effectively and efficiently for the movement of containers.
“If the collaborative platform is successful, Canada will experience a dramatic increase in North Ameri-
ca’s share of the movement of container and bulk goods. Railroads and ports like Prince Rupert will soon need to expand capacity as more and more end users and liner companies choose – because of reliability, speed, and val-ue – to move their goods though Canada rath-er than the United States,” the report said.
“The collaborative platform is a tool whose users differentiate themselves in their ability to utilize it effectively, but it does guarantee parity or advantaged performance,” the report added.
Challenges to realizing profits through col-laboration come from many factors, however. Collaboration can be a hard sell, said the re-port’s authors.
“Today’s players are focused on optimizing their performance within their segment of the supply chain. Investments needed to dramati-
tradeglobal
15ct&l april 2013www.ctl.ca
cally improve end-to-end (or system) performance may result in a mismatch of monies invested in a segment of the supply chain and another segment that actually enjoys the benefit of the invest-ment,” said the report.
There is also no forum to readily bring the users and suppliers of the North American supply chain together to discuss making NAG a reality – hence, one is needed, according to the report.
“Because the overall benefits accrue from system-wide perfor-mance improvements, the system needs a highly respected and en-ergetic leader to push the changes needed. What we call the NAG already exists today as part of a slow evolution in which end users and liner companies are attracted to Canadian ports and railway access to central North America. Various Canadian gateway initia-tives – most notably the Pacific and Atlantic Gateways – are na-scent efforts to bring elements of the local supply chain into stron-ger collaboration. What we envision is a revolutionary, step-function increase in volumes flowing into and out of Canada as the collab-orative platform enables the integration of users and players in the supply chain and heightens reliability, increases speed, and lowers delivered costs. The NAG we foresee is both a national and an in-ternational venture, with tentacles stretching from Asia, Europe, and Canada and across the United States,” said the report.
With US logistics gridlock a reality, even with the best of inten-tions in the political realm, it cannot be solved quickly. The NAG would be an opportunity for Canada, but in practical terms, it re-quires a clear understanding of the importance of Canada’s trade position, the need to link transportation issues with trade flows, and
HELPING THE WORLD KEEP PROMISES.®
Old Dominion Freight Line, the Old Dominion logo and Helping The World Keep Promises are service marks or registered service marks of Old Dominion Freight Line, Inc. All other trademarks and service marks identifi ed herein are the intellectual property of their respective owners. © 2013 Old Dominion Freight Line, Inc., Thomasville, N.C. All rights reserved.
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the necessity to position Canada for future developments in over-seas markets, especially with the likelihood of new free-trade ar-rangements with the European Union, Japan, and the Trans-Pacific Partnership in Asia.
“What Canada at large-both public and private sectors-faces, and what policymakers increasingly understand, is how Canadi-an industry must fit into global trade and transportation supply chains. Global trade and global logistics are realities. Canada needs to invest in a three-way national strategy to link the Pacific coast ports, the Atlantic coast ports, and the St. Lawrence-Great Lakes corridor. But any such initiatives require a massive educa-tional process in both the public and private sectors, showing Canadians why the country intends to be a global player in inter-national trade and is willing to invest the time and money to design a transportation system that has the global reach to create jobs tomorrow. The intention of this report is to expedite that education process,” said the report.
The Asia Pacific Foundation of Canada has had a long history of involvement in Asia Pacific gateway research and convening, going back to the Asia Pacific Trade and Transportation Forum and the creation of the Greater Vancouver Gateway Council in the early ’90s. CT&L
Features editor Julia Kuzeljevich has been writing about transportation issues for more than a decade. Her meticulously researched articles have garnered several transportation and Canadian Business Press writing awards.
tradeglobal
16 www.ctl.ca16 ct&l april 2013
It’s no secret that international trade is important to the Canadian economy. In 2012, Canadian companies export-ed more than $400 billion worth of merchandise inter-
nationally, a number that continues to rise annually. There are many reasons for these increases, but the seismic shift from big business domination to small business prominence on the global stage may be the most glaring.
There are currently more than one million small-to-medium enterprises (SMEs) in Canada, employing more than 64% of the workforce in this country. With such a large portion of the Canadian workforce working in smaller enterprises, their contribution to international trade is anything but insignificant.
Shipping outside of Canada involves complex logistics along with a lot of other factors for small businesses to consider. If you run a small business and are looking to ship internationally, here are five key considerations:
Do your researchThis may seem obvious, but understanding the countries where you plan to do business is the easiest way to avoid missteps and help your business thrive. Business owners should do their research to determine which countries to do business in and how trade is done there – from different shipping rules to different business practices, cultures and currencies. Just like in Canada, understanding supply and demand for your product will allow you to forecast your potential sales and decide whether you can reach a reasonable profit margin.
Develop your logistics strategyFew SMEs have the luxury of a dedicated shipping department to handle the logistics of shipping outside Canada, yet taking the time to establish a clear and effective export or import strategy is the key to trading success. Working with established logistics partners, like DHL, that have experience in your markets can help you establish a clear strategy. It is also important for you to ensure your business is equipped to handle the demands of international trading.
Navigate customsUnderestimate customs navigation at your own peril! Customs regulations change from country to country, and one size definitely doesn’t fit all. If you make and
B y G r e g H e w i t tpresident, DHL Express (Canada)
important tips for expanding your small business internationally
sell clothing, for example, you should probably know that South Africa and Mexico only accept exports of shoes in odd shoe sizes, so size twelve shoes will have to stay in Canada or be exported elsewhere. The regulations are innumerable, but it is your duty to know them! Government trade departments, Chambers of Commerce and business association Web sites are great resources in understanding the customs regulations in the markets that interest you.
Know your costs and financial risksThink back to when you started your business and all the start-up costs you had to weather. Trading internationally brings another round of start-up costs. Ensure that you have working capital available at every stage to cover extra costs like transport, duties and insurance. Waiting for commissions, orders and payments can also take longer internationally than in the domestic market, and you will need to be aware of changing exchange rates when dealing with foreign currency.
Pay attention to packaging and labellingWhatever your delivery needs, your products need to be packaged properly to reach their destinations safely. The delivery process across countries is rigorous, and damaged products are a sure fire way to lose loyal customers. It is also important to consider how your choice of packaging will affect your shipping costs, and to ensure it doesn’t add unnecessary weight. Finally, pay close attention to clearly labelling your merchandise. An error in classification or value can strand your products in customs, leading to late delivery or excessive taxes.
There is a lot to consider, but no matter what size your enterprise, international trade is within reach. Follow these five tips and your business will break barriers and cross borders. CT&L
Greg Hewitt is president of DHL Express Canada. He leads the day-to-day operations of the business and is responsible for delivering bottom-line results through the effective implementation of key strategic initiatives designed to position the company as employer, provider and investment of choice in the logistics industry.
tradeglobal
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Introducing AddressCompleteTM from Canada Post.AddressComplete enables your business, no matter the size, to eliminate incorrect or incomplete customer address information. Now you can make the most of every customer.
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Way
18 www.ctl.ca18 ct&l april 2013
Canada’s Western gateways are enjoy-ing a growth spurt of sorts, posting record traffic levels and dealing with
some of the resulting growing pains.They are making steady efforts, along with
government and other supply chain stake-holders, to facilitate exports and to eliminate conflicts between the modes.
Port Metro Vancouver is partnering with the federal government on a project that aims to improve the movement of exports through the Asia-Pacific Gateway to Asian markets.
The government is contributing $19.9 million towards the $45-million project, an overpass on the Deltaport Causeway, part of Port Metro Vancouver’s Deltaport Terminal, Road and Rail Improvement Project.
A two-lane overpass will provide grade separation between rail tracks and the Del-taport Causeway access road adjacent to the Deltaport Container Terminal, and will contribute up to 200,000 twenty-foot equivalent units (TEU) of additional ca-pacity annually at Deltaport.
Canada’s West Coast
gateways look to build more
capacity and efficiency to
cope with growing freight
volumes
B y J u l i a K u z e l j e v i c h
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Port Metro Vancouver is already closer to Asia than any other major port in North America. And with unprecedented in f ras t ructure investment in our gateway, we’re getting even closer.
We’re building land-side projects that boost rail and road effi ciency. We’re increasing our container terminal capacity and reducing on-dock dwell through collaboration with supply chain partners. And we’re operating with longshore labour certainty to 2018.
As a result, we’ve taken up to 3 days out of your supply chain. That brings your goods closer to market and you closer to your customers.
is better.Closer
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Port Metro Vancouver is already closer to Asia than any other major port in North America. And with unprecedented in f ras t ructure investment in our gateway, we’re getting even closer.
We’re building land-side projects that boost rail and road effi ciency. We’re increasing our container terminal capacity and reducing on-dock dwell through collaboration with supply chain partners. And we’re operating with longshore labour certainty to 2018.
As a result, we’ve taken up to 3 days out of your supply chain. That brings your goods closer to market and you closer to your customers.
is better.Closer
20 www.ctl.ca20 ct&l april 2013
“This project increases industrial density, adding container ca-pacity at Roberts Bank, while easing the impacts of a growing port on nearby communities,” says Robin Silvester, president and CEO of Port Metro Vancouver.
Silvester has attributed record container traffic in 2012 to im-proved cooperation among port stakeholders such as railways and terminal operators.
An eight-year labour agreement between longshoremen and maritime employers at Port Metro Vancouver, which was signed in 2011, has also eliminated the risk of port labour shutdowns.
Container movements were up 8% in 2012 over the previous year, coming in at 2.7 million TEUs.
Overall tonnage through the port including containers, automo-biles, and commodities such as coal, potash and lumber grew 1.1% compared to 2011, and finished at 123.8 million tonnes – the fourth-highest total tonnage for a North American port.
Forecasts show that container traffic is expected to double in the next 10-15 years and triple by 2030.
Port Metro Vancouver is also focusing on improving trucking through the Vancouver Gateway, by implementing the Smart Fleet trucking strategy, a three-year action plan designed to improve the efficiency and reliability of the container truck sector and reinforce the port’s ongoing collaboration with supply chain partners, port officials announced.
“Given that a large proportion of container traffic moves to and from the terminals by truck, improvements to reliability and effi-ciency are vital. Smart Fleet sets out our action plan to ensure we
are maximizing existing capacity and improving operational effi-ciencies as the Gateway grows to service our nation’s trade require-ments,” said Silvester.
Key initiatives from the Smart Fleet plan include:➪ The expanded use of GPS communications to track supply chain excellence in 2013; ➪ Jointly-funded research (from the port, the industry and the government, via the Clean Transportation Initiative) to identify technology-based solutions to improve sustainability; ➪ A Container Drayage Leadership Team (CDLT) providing a forum for terminal operators and industry leaders to work openly to solve drayage challenges; ➪ A Container Vessel On-time Incentive Program, introduced by Port Metro Vancouver, to encourage container vessel operators to arrive on schedule and thereby contribute to overall supply chain consistency; and➪ A Truck Licensing System (TLS) review design.
As of Feb. 4, Port Metro Vancouver lifted its moratorium on long-haul independent operator permits, with certain conditions, to address the shortage of operators available in the market.
Recently, British Columbia’s coal industry and supporters wrote a letter to the Vancouver Fraser Port Authority to express support for the industry and the economic activity created through-out Canada by the coal supply chain.
A February report from PricewaterhouseCoopers (PwC) showed coal exports from British Columbia totalled $7.1 billion in 2011, which was about 22% of the total dollar value of ex-ports from the province, said report author Janice Plumstead, director of economics and statistics at PwC.
The second largest exporter of coal in North America, Port Metro Vancouver alone handled more than 32 million metric tonnes of coal in 2011, according to a release – with plans to handle more.
But the port is facing opposition from some environmental groups such as the Dogwood Initiative over its growing role as a coal exporting centre, over its approved ex-pansion at Neptune Bulk Terminals in North Vancouver, and a proposal for a new coal terminal at Fraser Surrey Docks in Surrey. High greenhouse gas emissions and the health risks from increased coal dust along transportation routes are cited as issues by environmentalists.
In a letter published on the port Web site in January and copied to government offi-cials and environmental lobbyists, president and CEO Silvester addressed the proposal to expand coal exports to Asia.
“The Surrey, B.C. Fraser Surrey Docks project proposal is to develop a Direct Transfer Coal Facility, which would in-clude handling coal, a new product for its existing terminal.
Should this project proceed, coal would be shipped via rail to FSD then loaded to a
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barge for shipment to Texada Island for overseas export. Port Metro Vancouver ‘upholds the highest standards of project review, dic-tated by the nature of a proposed project and related to the han-dling and movement of goods,’” said Silvester.
He also stressed that the port’s project review, environmental review and decision-making process would be comprehensive in terms of any applications for project permits and addressed con-cerns over coal dust.
“Port Metro Vancouver has been monitoring coal dust at port terminals since the 1970s. The port upholds the highest and best management practices to mitigate fugitive coal dust on terminals. The movement of coal by rail along Canada’s rail corridors is regulated by Transport Canada in accor-dance with the Railway Act. Port Metro Vancouver has been advised that rail service providers take significant steps to minimize fugitive coal dust, such as spraying each rail car at the mine site with a dust suppressant designed to create a crust on top of the coal.
“We recognize and respect that port communities require meaningful and ongo-ing input into the operation and expansion of port facilities, along with transparency in consultation processes and adherence to high environmental standards. We are com-mitted to ensuring that our review of all pro-posed projects meets these high standards. Nonetheless, there are matters that are be-yond our jurisdiction, the scope of our proj-ect review process and our mandate. We urge you to raise your broader concerns about the export of coal with the Govern-ment of Canada,” he said.
Billed as the “shortest trade route to Asia,” the Prince Rupert Port Authority is also seeing an increase in business.
Export trade value through the Port of Prince Rupert has doubled to $4.9B since 2007.
In November, the port celebrated a mile-stone as its Fairview Terminal surpassed original design capacity after just five years of operation. It handled 16.7% more TEUs this January over last year. January imports totalled 30,115 TEUs compared to 25,451 TEUs in January 2012, while exports reached 21,808 TEUs compared to 19,026 TEUs in 2012.
On Nov. 18, the vessel COSCO Vancou-ver moved the 500,000th container, a goal the port said it had envisioned when the break-bulk facility was repurposed into an intermodal terminal in 2007.
“This project leveraged infrastructure in-vestments by the federal and provincial gov-ernments into the Asia-Pacific Gateway. It has made a profound impact on Prince Ru-pert and communities across Canada that now benefit from a direct connection to China, Korea, and other economies of
Southeast Asia,” said Don Krusel, president and CEO of the Prince Rupert Port Authority.
The Prince Rupert Port is also involved in an effort to create a hub around the Prince George area. Working with Initiatives Prince George (IPG), a municipally-owned corporation mandated by the City of Prince George, the aim is to create a sustainable, knowl-edge-based, resource economy that is connected to the world.
“Certainly, it’s our expectation and experience that hubs are here to stay and that we’re able to attract investment,” said Heather Oland, CEO of Initiatives Prince George.
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“We’re seeing significant investment, both in terms of road im-provements from the province in northern B.C., and from CN which has made a remarkable amount of investment in the corridor. We work closely with (the Port of) Prince Rupert because all trains come through the intermodal port. There are still things we would like the private sector to be attracting to do with warehousing and distribution centres. We are trying to attract to our community. The other part of it is we need to attract more long-haul truck drivers,” she said.
The $20 million CN Prince George Intermodal and Transload Facility opened in 2007; after capacity upgrades of $3.2M an-nounced in 2011, the terminal is now handling 700 cars per week. IPG has identified the need to develop its industrial land base over the next 25 years.
“If someone is looking for a parcel serviced by rail we can tell them exactly where they should look. We’ve applied for funding for a boundary road project to serve the light industrial land base. I think the key thing to look at is what your natural competitive ad-vantages are?” she said.
With growth being strong, Krusel has stressed the importance of working in harmony with the surrounding community when it comes to expansion.
“Because we reside in a community of 12-14,000 people com-munity is important. When we start talking about growth one of the first things we think about is jobs, prosperity, and making things happen economically. There’s another side to building community and that’s growing responsibly. We want to ensure we grow right, in a safe, secure and environmentally sustainable way,” he stated.
The port’s proposed Fairview Terminal Phase II Expansion Proj-ect recently received the go-ahead after undergoing environmental review. Prince Rupert and Canadian National Railway plan to ex-pand the terminal by extending the existing wharf structure and expanding the terminal onshore.
Phase one of the Prince George Global Logistics Park develop-ment is also ready to go, consisting of approximately 45ha subdi-vided into 19 light industrial lots ranging in size and price and lo-cated adjacent to the Prince George Airport. Ultimately, the Prince George Global Logistics Park (PGGLP) will encompass 1,200ha, said IPG.
The port could also capitalize on the recent opening of a state-of-the-art intermodal terminal for containerized goods at CN’S Cal-gary Logistics Park, which is strategically located between the ports of Prince Rupert and Vancouver and major cities across Canada and mid-America.
As part of its ongoing strategy, IPG wants to ensure the infra-structure exists to more than double container volumes through the inland port, and to create the capacity to double the export volume of goods moving through the hub of Prince George.
Almost one year into a $90-million Road, Rail and Utility Cor-ridor (RRUC) project, the Port of Prince Rupert, with contributions from the Government of British Columbia and CN Rail is expand-ing capacity and to provide road and rail access, along with utility services, to 1,000 acres of multi-user heavy industrial land that is accessible through the deep-sea terminals at the port.
It will also include the expansion of public road and rail infra-structure on port property to fully develop the project site. CT&L
gatewayswest coast
Port Metro Vancouver's container traffic reached record levels in 2012, and with forecasts showing traffic may double in the next 10-15 years and triple by 2030, the Port is undertaking millions of dollars worth of infrastructure and capacity upgrades.
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KLA_2013_All-Around_CanadianTransport 3/21/13 4:57 PM Page 1
“K” Line America, Inc. • Customer Service (800) 609-3221 • www.kline.com
®
All around the world,
the red “K” Line logo is recognized as a symbol of speedy,
reliable shipping and handling, over the seas and on land.
It embodies the “K” Line ideals – service, innovation, and strength.
Our global network is among the most extensive in the world.
And our strength – the strength of people who do
whatever it takes to best serve you – is greater than ever.
ALL-AROUND CAPABILITIES, ALL AROUND THE WORLD
KLA_2013_All-Around_CanadianTransport 3/21/13 4:57 PM Page 1
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Visit us at supplychaincanada.com
ALISON TOSCANOEXECUTIVE DIRECTOR
SUPPLY CHAIN & LOGISTICS ASSOCIATION CANADA
BOB BALLANTYNE P. ENG., PRESIDENT
CANADIAN INDUSTRIAL TRANSPORTATION
ASSOCIATION
STEVEN BRYCEVICE-PRESIDENT
REIMER ASSOCIATES INC.2013 CONFERENCE CHAIR
On behalf of SCL and CITA it is a pleasure to welcome delegates to our 46th annual conference. This is the �fth conference to be jointly organized by SCL and CITA. This year we have broadened the scope of material to be covered, embracing a more global approach. An inspiring mix of practical case studies, panel debates, expert sessions and interactive workshops will empower delegates to develop the skills and knowledge required to thrive in the supply chain and logistics industry.
Emphasizing our focus on the global impact of the supply chain, our conference agenda will feature several speakers from North America and Europe. Our opening keynote speaker, Robert Vallender is Head of Physical Logistics for Nestle SA International, based in Vevey, Switzerland. He will discuss the importance of awareness and preparation in relation to forces and events that affect global supply chains. We are also very excited to have the involvement of representatives from the Chinese, Indian and European communities who will discuss their own supply chain challenges.
Case studies have always been an integral part of our program, allowing you to learn from industry leaders. We believe you will �nd our series of case studies, presented in the Technology, HR, Turnaround & Growth and 3PL tracks, very relevant to your business and professional development. We would like to extend our thanks to CIFFA, PMAC and the Schulich Executive Education Centre for working with us to provide the appropriate and relevant content for our agenda this year.
As senior leaders in the business, we know a key part of attending our conference is the chance to reconnect with your peers - new and old, sharing experiences, challenges, opportunities and potential solutions. We are pleased once again to have our friends from Halifax Gateway Council sponsor the opening night gala this year, which is one of several opportunities delegates will have to network and connect with each other. Thank you again for joining us, we look forward to meeting as many of you as possible during the duration of our conference. We sincerely hope the topics discussed over the next two days will provide you with the opportunities you need to investigate, plan and develop ways to improve your own supply chain. n
4 Pager Brochure final.indd 1 2013-03-11 4:15 PM
34 ct&l april 2013 www.ctl.ca
dash board
TransCore’s Canadian Freight Index pulls back in FebruaryAfter setting an all-time high record in January, TransCore’s Link Logistics Canadian Freight Index for the spot market saw vol-umes return to a more normal level for February with a 13% decrease in month-over-month volumes. Year-over-year load volumes were also down 11% from February 2012.
Cross-border load postings accounted for 68% of the data sub-mitted by Loadlink’s Canadian-based customers. Cross-border loads destined for provinces within Canada were down 19% year-over-year compared to February 2012. However, cross-border loads from Canada to the US increased 3% year-over year. The top states of origin for loads destined to Canada were Ohio, Pennsylvania, Illinois, Indiana and Michigan, respectively.
Overall load volumes for intra-Canada postings averaged 27%. Although the year-over-year volumes were down 6% from February 2012, the capacity increased year-over year by 6%.
Equipment postings were at expected levels for the month of February. February’s postings decreased 5% from the previous month. In spite of this, postings had a slight increase of 5% from February of the previous year.
The first six columns include monthly index values for years 2008 through 2013. The seventh column indicates the percent-age change from 2012 to 2013. The last column indicates the percentage change from the previous month to the current month. For the purpose of establishing a baseline for the index, January 2002 (index value of 100) has been used.
Total freight costs for 2012 finish down 2.95% year-over-year Results published by the Canadian General Freight Index (CGFI) indicate that the total cost of ground transportation for Canadian shippers increased by 1.14 % in December when com-pared with November results.
The Base Rate Index, which excludes the impact of accesso-rial charges assessed by carriers, increased marginally by 0.34% when compared to November.
Average fuel surcharges assessed by carriers have seen a de-crease from 20.56% of base rates in November to 19.66% in December.
“Even with a slight uptick in December, total freight costs for 2012 finished 2.95% below December of 2011,” said Doug Payne, president and COO of Nulogx. “Looking at 2012, January and February saw increases in total freight costs, however, those gains and more were lost in March to June and for the balance of the year, we saw total freight costs remain relatively flat with a slight uptick in December.”
The CGFI is sponsored by Nulogx, a transportation manage-ment solutions provider, and is used by shippers and carriers to benchmark performance, develop business plans, and secure competitive agreements. It was developed with the assistance of
Dr. Alan Saipe. The most recent results are available at the CGFI Web site, www.cgfi.ca.
Rail freight continues its upward climbCanadian railways carried a total of 26.0 million tonnes of freight traffic in December, an increase of 0.7% from December 2011, according to Statistics Canada. Freight loaded domestically as well as traffic received from US connections both rose during the month, with the US traffic providing the strongest growth.
Domestically, combined loadings of non-intermodal freight (i.e., freight moved via box cars or loaded in bulk) and intermodal freight (i.e., freight moved via containers and trailers on flat cars) rose 0.3% to 23.1 million tonnes.
Non-intermodal freight rose 0.2% to 20.9 million tonnes. Key com-modities that contributed to the growth in tonnage were loadings of fuel oils and crude petroleum, and iron ores and concentrates. At the other end of the spectrum, a number of commodities saw declines in tonnage during the month. Colza seeds (canola), coal and iron and steel (primary or semi-finished) were the principal commodities that led the decline.
Intermodal freight increased 1.4% to 2.2 million tonnes. The gain was solely the result of higher volumes of containerized cargo shipments as trailers loaded on flat cars fell during the month. The Western Division accounted for 60.0% of the domestic freight loadings, down 2.8% to 13.8 million tonnes compared to the same month in 2011. The remainder was loaded in the Eastern Division which saw its loadings increase by 5.4% to 9.3 million tonnes. For statistical purposes, cargo loadings from Thunder Bay, Ont., to the Pacific Coast are classified to the Western Division while loadings from Armstrong, Ont., to the Atlantic Coast are classified to the Eastern Division.
Freight traffic received from US connections gained 3.8% to 2.9 million tonnes. Similar to the domestic scene, both non-intermod-al and intermodal loadings rose in December compared with December 2011.
4.6% year-over-year gain. Year-to-date, compared with the same period in 2012, the tonnage index is up 4.4%. In 2012, tonnage increased 2.3% from 2011.
“Fitting with several other key economic indicators, truck ton-nage is up earlier than we anticipated this year,” ATA chief Economist Bob Costello said. “While I think this is a good sign for the industry and the economy, I’m still concerned that freight ton-nage will slow in the months ahead as the federal government sequester continues and households finish spending their tax re-turns. A little longer term, I think the economy and the industry are poised for a more robust recovery.”
Manufacturing sector records strongest expansion in five months: RBC PMIThe February RBC Canadian Manufac-turing Purchasing Managers’ Index pointed to the strongest expansion in Canada’s manufacturing sector since last September, although the rate of growth was only modest.
The headline RBC PMI – a composite indicator designed to provide a single-figure snapshot of the health of the manufactur-ing sector – indicated a modest improvement in Canadian man-ufacturing business conditions in February. However, at 51.7, the RBC PMI remained below the series average (53.6), despite having risen from the near survey-low of 50.5 in January.
The RBC PMI found that both output and new orders increased in February, partly reflecting greater demand and new client wins. The rates of growth were stronger than in January, but weaker than their respective series averages.
“The Canadian manufacturing sector fended off the February blahs with strengthening output and employment growth,” said Craig Wright, senior vice-president and chief economist, RBC.
“Greater demand from United States, Japan and China played a key role in boosting new export work which helped nudge out-put growth to the fastest pace of growth in the past six months. While it would be premature to suggest that the global economy is treading on a much brighter path, these modest improvements hint that better days may lie ahead.”
The volume of new orders received by Canadian manufacturers increased for the third month running in February. Firms generally
commented on new client wins, although greater global demand, particularly in the United States, Japan and China acted to boost new export work. Overall, the rise in total new orders was moderate and the strongest since last September.
A monthly survey, conducted in associa-tion with Markit, a global financial informa-tion services company, and the Purchasing Management Association of Canada (PMAC), the RBC PMI offers a comprehensive and early indicator of trends in the Canadian manufac-turing sector. FE
trucknews.com Month/Month 2013 ❙ FLEET EXECUTIVE 46
DASHBOARD
JAN
APR
OC
T
JAN
APR JU
L
OC
T
JAN
JUL
OC
T
2010
58
57
56
55
54
53
52
51
50
49
48
2011 2012
Manufacturing sector experiences strongest expansion in five months, though pace remains modest
RBC CANADIAN MANUFACTURING PMI™
50 = no change from previous month
Sou
rce:
RB
C, M
arki
t
High 56.9
Low 50.4
% % 2008 2009 2010 2011 2012 2013 Change Change
Y-O-Y M-O-M
Jan 214 140 171 222 220 228 -4% 25%
Feb 217 117 182 248 222 198 -11% -13%
Mar 264 131 249 337 276
Apr 296 142 261 300 266
May 316 164 283 307 301
Jun 307 185 294 315 295
Jul 264 156 238 245 233
Aug 219 160 240 270 235
Sep 203 180 234 263 200
Oct 186 168 211 251 215
Nov 143 157 215 252 215
Dec 139 168 225 217 182
TransCore Canadian Spot Market Freight Index 2008-2013
TransCore Canadian Spot Market Freight Index 2008-2013
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TF : 1.800.263.0791 E : [email protected]
Who are you reaching out to?
Coming to your rescue. It’s what we do best.
No other Canadian carrier has the resources we do on both sides of the border. We enlist the people, technology and processes to speed things up, not slow them down.
We take a proactive approach to enhancing the efficiency of your supply chain on both a day to day basis and when you need action now. Who are you reaching out to? Take another look at Vitran!
TF : 1.800.263.0791 E : [email protected]
36 ct&l april 2013 www.ctl.ca36
inside the numbers
Angelo SarraciniPresident, Bailey Metal
Products Limited
Keith ReardonV. P. Intermodal Services,
CN Rail
Charles W. Clowdis, Jr.Managing Director, North American Markets, IHS
Global Insight (USA), Inc.
Grace TomaszunManager, N.A. Transportation
McCormick & Company
Mike OwensV. P. Physical Logistics,
Nestlé Canada Inc.
Doug MunroPresident and Owner,
Maritime-Ontario Freight Lines Limited
Carlos M. GomesSenior Economist,
Scotiabank
Douglas NixVice Chairman, Corporate Finance
Associates (CFA) Chairman of CFA’s Transportation and Logistics
Industry Practice Group
Michelle ArseneauManaging Partner,
GX organization
Neil McKennaV. P. Transportation,
Canadian Tire Corporation
Anna PetrovaSenior Supply Chain
Leader, Ferrero
Ron TepperExecutive Chairman & CEO, Consolidated
Fastfrate
Tibor Shanto Principal, Renbor Sales Solutions
Tom CoatesVP and COO,
Lakeside Logistics
Jonathan WahbaV. P. & General Manager,
Canada, Schneider National Inc.
Jeff PriesV. P. Sales & Marketing,
Bison Transport
Jeff LindsayPresident and CEO,
Canada Cartage
Oryst DydynskyPrincipal, DAP
International Trade Consulting
Mike McCarronConsolidation
Consultant, Wheels Group
On October 16th 2013, please plan on joining Canada’s top
Transportation Executives for a day of education & networking.
Introducing the 2013 team of presenters...
FREIGHT BIDS: IS THERE A BETTER WAy FOR CARRIERS AND SHIPPERS TO WORk TOGETHER?
CARRIER PERFORMANCE MANAGEMENT: METRICS THAT DELIVER RESULTS
INTERMODAL TRANSPORTATION: EXPANDING BEyOND ITS NICHE
THE VIEW FROM THE TOP: THE CEO’S PERSPECTIVE ON MAjOR TRANSPORTATION TRENDS
DEDICATED TRANSPORTATION: OUTSOURCING FLEET MANAGEMENT TO A THIRD PARTy
CROSS-BORDER FREIGHT TRANSPORTATION: BEST PRACTICES
TRANSPORTATION SALES: CAN yOU ADAPT TO THE NEW NORMAL?
MERGERS & ACQUISITIONS IN TRANSPORTATION: HOW BIG ARE THE OPPORTUNITIES?
LOOKING AHEAD: ECONOMIC FORECASTS FOR 2014
We have created an agenda that truly addresses the many challenges facing both Shipper and Carrier executives.
2013 Surface TranSporTaTion SummiT agenda
Registration: 7:30 am • Presentations: 8:30 am sharp
Mississauga Convention Centre, 75 Derry Road West, Mississauga, ON
For more information and to register, please visitwww.SurfaceTransportationSummit.com
Jacquie MeyersPresident, Meyers
Transportation Services
2013 Summit Sponsor
Trans Summit 2013 MT.indd 1 13-04-01 2:19 PM
GETTING OLD FASTA sobering new look at the truck driver demand gap and its impact on shipping strategiesThe age of the average Canadian truck driver is increasing more rapidly than the age of the average worker due to fewer young workers choosing driving as a profession, according to new research from the Conference Board of Canada. Meanwhile, the demand for truck drivers will increase as industries that rely on trucking continue to grow. By 2020, the gap between the supply and demand of drivers is expected to be 25,000 and could reach as high as 33,000. This raises concerns not only for motor carriers who will have to forego their company growth plans, but also for many Canadian industries whose growth is reliant on efficient truck transportation. Slower delivery times due to insufficient trucking capacity result in higher in-transit inventory costs and less reliable service destroys JIT shipping strategies and results in higher standing inventory costs.
Getting old fastA sobering new look at the truck driver demand gap The age of the average Canadian truck driver is increasing more rapidly than the age of the aver-age worker due to fewer young workers choosing driving as a profession, according to new re-search from the Conference Board of Canada. Meanwhile, the demand for truck drivers will in-crease as industries that rely on trucking continue to grow. By 2020, the gap between the sup-ply and demand of drivers is ex-pected to be 25,000 and could reach as high as 33,000. This raises concerns not only for mo-tor carriers who will have to fore-go their company growth plans, but also for many Canadian in-dustries whose growth is reliant on effi cient truck transportation. Slower delivery times due to in-suffi cient trucking capacity result in higher in-transit inventory costs and less reliable service de-stroys JIT shipping strategies and results in higher standing inven-tory costs.
Aging of truck drivers and other professions (average age in years)
1996 2006 Increase
Truck drivers 40.5 44.2 3.7 Delivery drivers 36.1 40.9 4.8 Materials handlers 34.7 36.9 2.2 Railway and motor transport labourers 35.6 33.7 -1.9 Dispatchers and radio operators 38.4 40.3 1.9 Transportation route and crew schedulers 40.3 40.7 0.4 Heavy-duty equipment mechanics 39.9 41.8 1.7 Motor vehicle mechanics, technicians and mechanical repairers 37.1 39.7 2.5
For-hire trucking industry supply and demand gap 2020 (000s)
Supply Demand Gap
Atlantic 8.5 10.6 2.0 Quebec 37.2 42.4 5.2 Ontario 71.4 77.3 5.9 Manitoba 7.0 7.6 0.6 Saskatchewan 6.1 7.7 1.6 Alberta 23.3 29.4 6.2 British Columbia 24.3 27.7 3.4 TOTAL 178.0 202.7 24.7
Estimate of driver demand – for-hire trucking 2013 to 2020 (000s)
2013 2015 2020
Atlantic 9.8 10.1 10.6 Quebec 39.0 40.2 42.4 Ontario 65.9 69.8 77.3 Manitoba 6.7 7.1 7.6 Saskatchewan 6.5 6.8 7.7 Alberta 24.6 26.0 29.4 British Columbia 24.4 26.2 27.7 TOTAL 176.9 186.1 202.7
Impact of service levels on shippers’ logistics costs ($)
High Medium Low
Direct transportation cost 18,000 18,000 18,000 Inventory carrying cost 18,000 18,000 18,000 Order processing cost 1,200 1,200 1,200 In-transit carrying cost 3,945 5,260 5,260 Standing inventory cost 1,237 2,473 4,947 Total logistics cost 42,382 44,934 47,047
Angelo SarraciniPresident, Bailey Metal
Products Limited
Keith ReardonV. P. Intermodal Services,
CN Rail
Charles W. Clowdis, Jr.Managing Director, North American Markets, IHS
Global Insight (USA), Inc.
Grace TomaszunManager, N.A. Transportation
McCormick & Company
Mike OwensV. P. Physical Logistics,
Nestlé Canada Inc.
Doug MunroPresident and Owner,
Maritime-Ontario Freight Lines Limited
Carlos M. GomesSenior Economist,
Scotiabank
Douglas NixVice Chairman, Corporate Finance
Associates (CFA) Chairman of CFA’s Transportation and Logistics
Industry Practice Group
Michelle ArseneauManaging Partner,
GX organization
Neil McKennaV. P. Transportation,
Canadian Tire Corporation
Anna PetrovaSenior Supply Chain
Leader, Ferrero
Ron TepperExecutive Chairman & CEO, Consolidated
Fastfrate
Tibor Shanto Principal, Renbor Sales Solutions
Tom CoatesVP and COO,
Lakeside Logistics
Jonathan WahbaV. P. & General Manager,
Canada, Schneider National Inc.
Jeff PriesV. P. Sales & Marketing,
Bison Transport
Jeff LindsayPresident and CEO,
Canada Cartage
Oryst DydynskyPrincipal, DAP
International Trade Consulting
Mike McCarronConsolidation
Consultant, Wheels Group
On October 16th 2013, please plan on joining Canada’s top
Transportation Executives for a day of education & networking.
Introducing the 2013 team of presenters...
FREIGHT BIDS: IS THERE A BETTER WAy FOR CARRIERS AND SHIPPERS TO WORk TOGETHER?
CARRIER PERFORMANCE MANAGEMENT: METRICS THAT DELIVER RESULTS
INTERMODAL TRANSPORTATION: EXPANDING BEyOND ITS NICHE
THE VIEW FROM THE TOP: THE CEO’S PERSPECTIVE ON MAjOR TRANSPORTATION TRENDS
DEDICATED TRANSPORTATION: OUTSOURCING FLEET MANAGEMENT TO A THIRD PARTy
CROSS-BORDER FREIGHT TRANSPORTATION: BEST PRACTICES
TRANSPORTATION SALES: CAN yOU ADAPT TO THE NEW NORMAL?
MERGERS & ACQUISITIONS IN TRANSPORTATION: HOW BIG ARE THE OPPORTUNITIES?
LOOKING AHEAD: ECONOMIC FORECASTS FOR 2014
We have created an agenda that truly addresses the many challenges facing both Shipper and Carrier executives.
2013 Surface TranSporTaTion SummiT agenda
Registration: 7:30 am • Presentations: 8:30 am sharp
Mississauga Convention Centre, 75 Derry Road West, Mississauga, ON
For more information and to register, please visitwww.SurfaceTransportationSummit.com
Jacquie MeyersPresident, Meyers
Transportation Services
2013 Summit Sponsor
Trans Summit 2013 MT.indd 1 13-04-01 2:19 PM
38 ct&l april 2013 www.ctl.ca
Alongside the decision to take vessels out of ser-vice to offset excess capacity in recent years, the practice of “slow steaming” is arguably the
most visible component of the marine shipping indus-try’s continuing strategy to deal with slow worldwide economic growth.
While the practice of slow steaming (reducing the speed of marine ships during ocean transit) has been widely reported, the underlying question is how does it affect organizations involved in global trade on a daily basis?
Although speed is one of the most important factors affecting global trade, sailing speeds are affected by many variables, including trade lane factors, and ship size, type, and weight. The main classes of ship speeds identified by T. Notteboom and P. Carriou in their pre-sentation to the 2009 International Association of Maritime Economists Conference in Copenhagen were listed as: normal (20-25 knots; 37-46 km/hr), slow steaming (18-20 knots; 33-37 km/hr), super slow steaming (15-18 knots; 28-33 km/hr), and minimal cost (12-15 knots; 22-28 km/hr – noted as commercially unacceptable). The current industry stance has many carriers moving from normal speeds of 20-25 knots to slow steaming speeds of 18-20 knots.
The cost savings resulting from slow steaming are significant, as evidenced by Maersk Line’s (the biggest container-shipping company) claim that slow steaming results in fuel savings of as much as 30%, or about $1 million annually for a post-Panamax size container ship. Maersk may well be counting on those savings to com-plement its new fleet of “Triple E” class ships, the larg-est and most efficient container ships afloat. Triple E class vessels will carry up to 18,000 TEUs (twenty-foot containers), yet consume 35% less fuel per container than many other ships.
Excess capacity in the marine industry leads many to classify it as a “buyer’s market,” but shippers may have little leverage against slow steaming practices. According to a 2010 report by A.T. Kearney, the top 10 carriers increased their capacity by 14% versus 8% for the overall market, with the five largest carriers holding 45% market share, and the top 30 carriers hold-ing almost 90% market share. The big carriers are get-ting bigger, and the industry appears to have collec-
tively decided slow steaming is here to stay, a fact sup-ported by a 2011 MAN Diesel & Turbo Web survey of more than 200 global container and bulk shipping industry representatives, indicating that nearly 75% had implemented slow steaming.
Slow steaming may well be part of the answer to improving global marine transportation profitability, but certainly not the only answer. Slow steaming is an industry action, and, as such, requires an equal and offsetting reaction to balance its effect. One such offset is that it may enable carriers to bring more ships into rotation, increasing the frequency of sail-ings. Clearly, process improvements designed to save costs at the expense of customer service (i.e. transit and delivery time) will not be viewed in a positive light by shippers.
And shippers have a role to play in this scenario as well, since any discussion of slow steaming should in-clude the total voyage transit time. Marine transport is essentially port-to-port, but much of the transporta-tion related to international shipping is often land-based. In its response to the Federal Maritime Commission’s slow steaming study in 2011, Maersk Line cited an example of a container movement from Shanghai to Chicago, where the vessel transit time was 12 days compared to a total transit time of 23 to 41 days once all of the inland shipping related require-ments were taken into consideration.
In a 2010 Van Horne Institute study concerning the Panama Canal expansion, the all-water transit time from Shanghai to Prince Rupert, B.C. was cited as 12 days. The Van Horne study calculated that slow steam-ing could add anywhere from three to seven days in transit times, negating the three-day transit time ad-vantage Prince Rupert holds over Vancouver when it comes to shipments from Asia.
Furthermore, in order to maintain the frequency of port calls, carriers would have to add an additional two to three vessels. While this may be just what carriers want to hear, increased sailing frequency and slow steaming are only part of the bigger picture. An inte-grated solution to this problem will require shippers and carriers working together to come up with a suc-cessful – and realistic – approach to fuel costs, transit times and timely market access. CT&L
inside the market dynamics of slow steamingWhy marine carriers must work with shippers on a realistic
approach to fuel costs and transit times
Laurie Turnbull, CITT, P.MM
Laurie Turnbull is a
supply chain consultant with
Cole International, a leading
Canadian logistics company
providing Customs brokerage,
warehousing and worldwide
transportation services.
He can be contacted at
the bigger picture
2013_085_ad_ctl_outlines_03_26.indd 1 13-03-26 1:18 PM
R7
Ad Number: FDX_COR_P127134Publication(s): Canadian Transportation & Logistics
This ad prepared by: SGL Communications • 2 Bloor St. West, Toronto, Ontario • phone 416.413.7495 • fax 416.944.7883 File Location: SGL_A-M:Volumes:SGL_A-M:FedEx-SFX:P12713 FedEx freight ANT:FDX_COR_P127134.indd
JOB SPECIFICS
Client: FedEx FreightCreative Name: Extra Set of ArmsAgency Docket #: FDX COR P29435Main Docket #: SFX COR P29435Art Director: NoneCopy Writer: NonePrint Production: Kay IzzardRetoucher: Jano Kirijian / JeffLive: 7” x 10”Trim: 8.125” x 10.875”Bleed: 8.375” x 11.125”Artwork Scale: 1:1Print Scale: 100%
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INKS:
Cyan
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Univers 67 Bold Condensed, 57 Condensed
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FedEx_Freight_Preferred_Two_Color_Positive_Four_Color.epsAnt_Carton_r2.psd CMYK 340 ppi
This proof was produced by the following department:
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