transportation - canadian shipper · 2011. 6. 1. · eagle’s clutch. purolator 7.875" x...
TRANSCRIPT
& LogisticsTransportation
CANADIANJUNE
TransportationJUNE
Transportation 2011
Transportation 2011
TransportationPublished Since 1898
& LogisticsPublished Since 1898
& LogisticsMARINEWhy there’s new lifefor short sea shipping
GREEN LOGISTICSInside Grand & Toy’ssupply chain restructuring
RAILWhat’s needed toimprove service
Cross-border shipping struggling under the increasingly tight
embrace of legislation
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www.ctl.ca ct&l june 2011 3
VOLUME 114 ISSUE NO. 6 JUNE 2011
Published Since 1898
Efficient cross-border shipping is critical to the Canadian economy but it’s struggling under the increasingly tight embrace of security legislation. Is the worst in rule chang-es behind us? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Features 20 . . . NEW LIFE FOR SHORT SEA SHIPPINGLifting the 25% import duty on ships is sparking a slew of new ship orders. Is it enough to kick start this transportation sector and turn it into a viable option for shippers?
26 . . . A MEASURE OF SUCCESSA dollar saved in supply chain costs is a dollar straight to the bottom line but you need good metrics to find those savings and drive performance.
28 . . . THE NEW VOICE IN THE BOARDROOMThe supply chain has matured beyond a departmental function to an important determiner of the company’s bottom line. Making sure supply chain issues have a voice in the C-Suite is crucial but how do you do it?
30 . . . WHAT’S NEXT FOR RAIL FREIGHT?Shippers and rail officials debate what’s needed in the months ahead as Ottawa gets ready to act on the Rail Freight Service Review.
34 . . . NO TOYING AROUNDGrand & Toy is taking responsible procurement seriously. Read how the company is restructuring its internal supply chain operations and reconfiguring customer relationships to make the shift from goods supplier to sustainability partner.
Thank you for your support!Our Annual Shipper’s Choice Awards Survey rating the
performance of carriers in all modes is now completed andenjoyed very strong response. Results will be published in
our August issue. Winners of our special draws will soon be announced and survey participants will receive their
free copy of the results prior to publication.
COVER
Departments4 THE VIEW WITH LOUWhy Canadian purchasing managers are about to play a leading role in identifying key economic trends.
6 IN THE NEWSGlobal Shippers Forum gets tough on bunker levies as means to reduce carbon emissions, Port of Halifax invests in post Panamax cranes, CTA offers suggestions to streamline flow of transborder goods.
36 INSIDE THE NUMBERSGrowth in freight volumes will place greater strain on supply chain practices that have become less flexible due to cost cuts. How are shippers looking to respond?
37 DASHBOARDCanada’s sizzling spot market cools in April after setting a freight availability record in March, US truck tonnage also softens but increased fuel surcharges offset reductions in base rates.
38 THE BIGGER PICTUREHow shippers are adapting to the “new normal” of capacity shortages and rising rates by shifting their transportation paradigms.
in the
eagle’s clutch
44 ct&l june 2011
The Purchasing Manage- ment Association of Canada did a very
smart thing this month and its actions are certain to have an im-
pact on how Canadian business views supply chain for years to come.
PMAC partnered with Royal Bank of Canada and Markit, a global financial information services company, to launch the monthly RBC Canadian Manufacturing Purchasing
Managers’ Index (PMI). If we look at examples of similar indices in other countries, the PMI should turn out to be a comprehensive and early indicator of trends in the Canadian manufactur-ing sector – and also a showcase for the impor-tance of Canadian supply chains. That’s a large part of the reason why PMAC, whose mandate is to promote the value purchasing managers provide to their companies, was keen to be in-volved with the PMI. As Cheryl Paradowski, president and CEO of PMAC, explained: “What better way to identify that value than to show they have a leading role to play in identify-ing this (economic) data.”
The RBC PMI is based on questionnaire re-sponses from a panel of purchasing or senior executives in more than 400 manufacturing companies in Canada. A large number of the survey panel members are PMAC members. It will be released on the first business day of each month and I know I will be sure to examine it in detail and to share the results with you.
In addition to the headline PMI, which is a composite indicator designed to provide a sin-gle-figure snapshot of the health of the manu-facturing sector, the survey also tracks changes in output, new orders, employment, invento-ries, prices and supplier delivery times.
In addition, Markit Economics, which com-piles the survey on behalf of PMAC and RBC, does similar surveys across 23 countries. This will allow a comparison of Canadian results with that of other countries and the world. Markit started collecting data for the Canadian index back in October of last year.
For years now I have complained that Canada was too far behind other countries in providing
The newly launched Purchasing Managers Index and other research projects are making for more intelligent supply chain
decisions and raising the industry’s profile
valuable statistical information on supply chain-related areas and chastised Ottawa for abandon-ing some of its own efforts in this regard, such as its annual reports on private fleets and for-hire carriers. As a result, too many supply chain decisions were made and too many opinions held in the absence of recent and reliable mar-ket data. In fact, much of the research we have taken on at Canadian Transportation & Logisticsand within our Transportation Media Group has been due to a complete frustration with how little statistical information there was about the Canadian transportation and logistics market. And where it was available it was inconsistent or not reliable because it was too heavily based on data from the US market, which we strong-ly believe is a different market with different practices than our own.
Within the past couple of years, however, I am pleased to see things are starting to change. Supply Chain & Logistics Canada partnered with Industry Canada to provide a series of comprehensive reports, the latest being on global business strategy and innovation with an emphasis on Canadian logistics. The pioneer-ing work done by Philippe Richer at Industry Canada is something I always keep close at hand. The Canadian Industrial Transportation Association has partnered with Dr. Alan Saipe to provide a very detailed annual report on shipping practices. CITA and CITT have part-nered with us to provide an annual look at transportation buying trends and I’ve been for-tunate to share the spotlight with Dr. Saipe at several events over the last few years when he presents the results from his survey as I present our own. Two other indices focused on truck freight have also been very beneficial in creat-ing more intelligent discussion over the past year. Transcore partnered with the University of Manitoba to produce a monthly Canadian Spot Market Freight Index while Nulogx part-nered with much respected Dr. Saipe to pro-duce the monthly Canadian General Freight Index, examining pricing for truck freight. Both those reports appear monthly in our Dashboard section and you can expect the PMI to be included there in future issues.
Supply chain is finally getting the attention it deserves. CT&L
Lou Smyrlis, MCILT
the view with Lou
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We acknowledge the financial support of the Government of Canada through the Canada Periodical
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Volume 114 Issue No. 6 June 2011
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show me the numbers
Blogs • Dan Goodwill of Dan Goodwill and Associates discusses how shippers and carriers can elevate tug-of-war rate increase debates into a solid business partnership.
• Want to grow your profit margins? Empower your supply chain, says editorial director Lou Smyrlis.
• Access to the US market is looking better than it has in 25 years for Mexican truckers, but it’s no done deal, says Cole Group’s Laurie Turnbull. Is the US serious about saying ‘si’ to Mexican trucking?
• With 2010 now behind us, what new trends will lead us into 2020 and what new technologies will emerge that will change the way we do business? IT expert Gagan Goraya offers his predictions.
You Said It . . . “For those organizations who are on top of their game, we can all agree that this would be one of the last stones to turn over in the bid to mitigate what is coming at us: substantial cost increases. As you point out, the larger challenge is having the right fully committed players at the table. In most cases, this will also require a champion at the C level in each organization. This C level needs to be the one who understands the larger picture and who has the strategic foresight to see what is coming and what the leading edge choices are – this being one of the very few. One main point being missed by the decision makers is the potential clout such joint collaborative partnerships could/would bring to the negotiating table with the Goliaths of the their business verticals. Instead of ‘You shall do it this way Mr. Supplier,’ the collaborative group would have the leverage ‘to take it to the giant’ and design rules of engagement which would be more of a two-sided, mutually agreeable and overall improved program. 3PL’s such as ourselves have been pushing the idea for years – we stand ready to be the key facilitators – all we need are the takers! It will be interesting to see who rises to the occasion.”
Martin Kelly of the Wheels Group responding to Dan Goodwill’s blog: Higher freight and fuel costs could spur more horizontal supply chain collaboration.
We now TWEET!
Follow us on Twitter
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Web TV: Transportation Matters
• COST CONUNDRUM: Carrier executives from all modes have been forecasting tightening capacity and, as a result, upward pressure on rates. Are they right?
• THE WHEAT KING:Rob Bryson of Parrish and Heimbecker accepts the award for CITA Supply Chain Executive of the Year.
• CN’S NEW CHASSIS:CN is set to launch its new environmentally-friendly container chassis for the North American intermodal industry.
• YOU CAN’T READ ABOUT THIS: To survive in today’s demanding marketplace, it requires not only better educated employees but staff with the right attitude.
5ct&l june 2011
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6 ct&l june 2011 www.ctl.ca
in thenews
Newly launched Purchasing Managers Index offers early indicator for Canadian manufacturing sectorBy Lou Smyrlis
Starting this month Canada’s purchasing managers will be playing a leading role in identifying key economic trends in the na-tion’s manufacturing sector.
Royal Bank of Canada (RBC), in associ-ation with Markit, a global financial infor-mation services company, and the Purchas-ing Management Association of Canada (PMAC), has launched the monthly RBC Canadian Manufacturing Purchasing Man-agers’ Index (RBC PMI), a comprehensive and early indicator of trends in the Canadi-an manufacturing sector.
The RBC PMI is based on question-naire responses from a panel of purchas-ing or senior executives in more than 400 manufacturing companies in Canada. It will be released on the first business day of each month.
In addition to the headline RBC PMI, which is a composite indicator designed to provide a single-figure snapshot of the health of the manufacturing sector, the sur-vey also tracks changes in output, new or-ders, employment, inventories, prices and supplier delivery times. Index readings above 50.0 signal expansion from the previ-ous month, readings below 50.0 indicate contraction.
“We were keen to be involved because our mandate is to promote the value pur-chasing managers provide to their compa-nies,” explained Cheryl Paradowski, presi-dent and CEO of PMAC. “What better way to identify that value than to show they have a leading role to play in identifying this (economic) data.”
A large number of the survey panel members are PMAC members.
The PMI surveys track “hard data” at surveyed companies and not their opinions of current economic conditions. They are the first indicators of economic conditions to be published each month. For instance, the survey asks “was your business activity higher, the same, or lower than a month ago?” not “do you see the economic climate as favorable at the moment.”
In addition, Markit Economics, which compiles the survey on behalf of PMAC and RBC, does similar surveys across 23 coun-
tries. This will allow a comparison of Cana-dian results with that of other countries and the world, explained Chris Williamson, chief economist, Markit. His company start-ed collecting data for the Canadian index back in October of last year.
Key findings for May’s survey include:-PMI fell for second consecutive month.-Robust rise in employment, but at a
slower rate than the previous month.-Suppliers’ delivery times lengthened
further as vendors struggled to source raw materials.
Business conditions in the Canadian manufacturing sector improved at a slower pace in May, noted Williamson. This re-flected weaker expansion of both output and new orders. However, job creation re-mained solid and broadly similar to that registered during the previous survey peri-od. Suppliers’ delivery times lengthened further, while input prices rose at a marked rate during May.
“The overall index fell slightly during May with declines evident across most of the key components and across all of the re-gions,” said Craig Wright, senior vice presi-dent and chief economist, RBC. “This aligns with our outlook for a moderation in Cana-dian economic growth in the second quarter of the year after a robust start to the year.”
Wright added, however, that the slow-down will be temporary and does not signal that fears of a double dip recession are worth considering.
“We are seeing an environment of un-evenness and uncertainty...But volatile data is typical of turning points in the econ-omy. I am not shocked by the volatility,” Wright said.
The headline RBC PMI registered 54.8 in May, down from 56.3 in April. Neverthe-less, the latest reading posted above the 50.0 no-change level that separates growth from contraction and signalled an improve-ment in overall business conditions for the eighth month running.
Canadian manufacturers received a larg-er amount of new orders during May, al-though the rate of expansion eased. Anec-dotal evidence attributed new order growth to greater demand from both domestic and international markets. Panelists particularly highlighted the US as a key source of new export order wins in May.
Surveyed firms correspondingly in-
creased their output in May. Manufacturers have now raised production levels for eight consecutive months. However, output growth weakened to a slower rate during the latest survey period.
Reflective of new order growth being stronger than that of output, the amount of outstanding work increased fractionally during May. The rate of accumulation was partially limited by firms depleting stocks of finished goods.
GSF rejects any attempt to imposebunker levy charges on shippersThe Global Shippers’ Forum (GSF) has announced that it will oppose any steps by the global shipping industry to impose a bunker levy on shippers as the means of raising money to fund an environmental compensation scheme to reduce carbon emissions.
The International Chamber of Shipping (ICS) unveiled plans to develop a bunker levy scheme it said could collect money from the maritime industry. The ICS says it will lobby for acceptance of such a scheme as a means of heading off regional regula-tion, including emissions trading schemes.
Commenting on the ICS’s bunker levy plans, GSF Secretary General Chris Welsh said: “At its inaugural Board meeting in Leipzig Germany on 27th May, the GSF Board said it would welcome and support a voluntary shipping industry initiative to re-duce carbon emissions through the IMO, but the shipping industry must take direct responsibility for setting and achieving a clear target for reducing its carbon emis-sions. Shipowners need to introduce a rigor-ous scheme targeting operational efficien-cies and other measures to reduce shipping carbon emissions.
“Merely passing on shipping carbon costs to their customers via a bunker levy not only removes shipowner accountability but will not reduce carbon emissions.”
“The shipping industry should move quickly in setting up a voluntary carbon re-duction scheme and in winning political support for this. The GSF would strongly back such an approach and would join the shipping industry in a campaign to secure the support of governments and member states within IMO.”
Many shippers are taking positive mea-sures to decarbonise their supply chains, the
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in thenews
GSF noted in a release. For example, GSF members are closely collaborating on a new project to decarbonise the maritime supply chain from the shippers’ perspective. The outputs from the project will provide a se-ries of tools to allow shippers to take posi-tive steps to reduce their total maritime supply chain carbon emissions.
The GSF was created in 2006 as the suc-cessor to the Tripartite Shippers’ Group, first organised in 1994. Like the Tripartite Shippers’ Group, the GSF has represented the interests of shippers from Asia, Europe, North America, Africa and Oceania. The GSF is focused on the impact of commer-cial developments in the international freight transportation industry and the poli-cy decisions of governments and interna-tional organisations as they affect shippers and receivers of freight.
In February the Freight Transport Asso-ciation (FTA) joined forces with Heriot-
Watt University (HWU) to begin develop-ing a broad range of measures to substantially reduce the carbon intensity of supply chains containing a deep-sea move-ment. The scheme has subsequently been expanded to involve GSF members giving the scheme a global dimension. The outputs from the project will be definitive best-practice guidance on reducing cargo emis-sions in global maritime supply chains.
The template for this best practice guid-ance will be produced in conjunction with shippers and other stakeholders in the mari-time supply chain and the Logistics Re-search Centre at Heriot-Watt University
New investment in super post Panamax cranes signed at Port of HalifaxMacquarie Infrastructure Partners, the own-er of Halterm Container Terminal Limited, will invest in two additional super post-Pan-amax cranes (SPPX) at the Port of Halifax.
In 2012, the Port of Halifax will have four SPPX container berths equipped with seven SPPX cranes following the addition of these new cranes.
“The investment in new cranes is indica-tive of Halterm’s confidence in the long-term strength of the Halifax market,” said Ashley Dinning, CEO of Halterm Contain-er Terminal Limited.
The Port of Halifax has the deepest con-tainer berths on the Eastern Seaboard and can handle vessels of any size. Existing ca-pacity at the Port can accommodate a tri-pling of container volumes. A $35 million terminal project currently underway in-cludes the extension and deepening of the pier which provides operational flexibility to accommodate two of the world’s largest vessels simultaneously.
CTA offers suggestions to streamlineflow of goods between Canada, USThe Canadian Trucking Alliance has sub-mitted a trio of priority issues to the Cana-da-US Regulatory Cooperation Council (RCC) in an effort to help remove costly regulatory barriers to the efficient move-ment of goods.
The RCC was created by Prime Minister Stephen Harper and President Barrack Obama to improve regulatory transparency and coordination between the two coun-tries. It has been given a two-year mandate, and representatives from both countries are currently working towards the development of an agenda to guide future discussions.
The CTA’s suggestions are as follows:1. Streamline the process for moving “in-
transit” goods. The CTA says this will allow for more efficient, lower cost and faster truck transit times for Canadian carriers moving domestic goods through the US. The CTA notes that this would mean either convincing the US to harmonize its current rules or for Canada to adopt the US rules which would, in essence, put a stop to in-transit moves in both countries.
2. Provide the trucking industry on both sides of the border with greater flexibility to reposition foreign empty trailers using for-eign drivers. The goal here would be to re-duce the costs and inefficiencies associated with current Canadian and US restrictions on “spotting” an empty foreign trailer to the pick-up point of its return load home. The CTA notes that this would in no way impact
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current rules that reserve freight move-ments to the domestic industry.
3. Cooperate on the establishment of a North American standard for proven fuel saving devices. The US Environmental Pro-tection Agency has approved a device called a “boat-tail” – an aerodynamic fairing at-tached to the back of a tractor-trailer combi-nation that improves fuel efficiency by 6-8% – but no standard currently exists in Canada. The CTA says the adoption of sim-ilar standards by the two governments will not only reduce trucking costs and produce environmental benefits, but also help ensure the unimpeded flow of vehicles bearing these devices across the border.
“The work of the Regulatory Coopera-tion Council presents an important oppor-tunity to address some fundamental, yet relatively simple issues that drive up the cost and impair the productivity of moving goods between Canada and the US,” says CTA CEO David Bradley.
While Bradley says the CTA is encour-aged by the commitment shown to this pro-cess and to the Beyond Borders initiative by both Prime Minister Harper and President Obama, he cautions that “there is a lot of work to do even to resolve these relatively simple matters.” He says the will must exist in both countries and there are a lot of in-dustries vying for their issues to receive at-tention. In addition, he says officials are still trying to determine where responsibility for certain issues, such as in-transit shipments, should reside – with the RCC or the Beyond Borders Working Group. “These things are being sorted out,” he says. “From our per-spective we really don’t care which forum will deal with them, as long as they are dealt with. We are and we will continue to work closely with the officials leading Canada’s team on both initiatives.”
CN announces capacity improvements at Brampton CN has announced a series of capacity im-provements to accommodate growing con-tainer volumes at its Brampton Intermodal Terminal (BIT).
BIT is Canada’s largest rail intermodal terminal and a key component in CN’s dis-tribution network with almost 60% of the railway’s system-wide intermodal business touching the terminal. CN’s rail intermodal traffic consists primarily of containerized
cargoes moving in cooperation with other transportation modes.
“Intermodal is one of CN’s fastest-grow-ing business segments,” said Claude Mon-geau, president and CEO. “We are investing
in new track, equipment and other infra-structure improvements at BIT to take our intermodal service offering to the next level in efficiently distributing growing overseas container traffic reaching our network over
10 ct&l june 2011 www.ctl.ca
in thenews
Canadian ports as well as rising domestic intermodal shipments across Canada. These investments will increase supply chain effi-ciencies for our customers and help them grow their businesses.”
CN’s BIT improvements include:• The installation of new track and ex-
tension of existing track to increase rail ca-pacity by close to 15%;
• Creation of approximately 25% more
ground space for international containers by staging CN containers offsite;
• Purchasing five new cranes in 2011, after the acquisition of five new ones last fall; and,
• Increasing the labour force by about 10% in 2011.
These customer-focused initiatives fol-low construction of new entry and exit lanes for truckers last December that increased BIT’s gate throughput by 33%.
BIT’s 2011 intermodal volumes through the end of April increased by 12% over fig-ures for the comparable period of 2010.
CN’s total 2010 intermodal volumes in-creased by 17% over 2009 to 1,455,000 units, while intermodal revenues last year rose by 18% to C$1,576 million.
Old Dominion goes on new facility spreeOld Dominion Freight Line has made a se-ries of additions to its services and capabili-ties in recent weeks.
The company has opened a new con-tainer drayage site in Memphis, Tenn., and another in Mobile, Ala., relocated its St. Louis service centre to a 25-acre site in St. Charles, and expanded its Pacific Promise less-than-container load (LCL) service to Taiwan’s three main ports.
The new operation in Memphis will serve all rail heads in the area and will offer pick-up and delivery to any point in the con-tinental US, the company announced. Old Dominion container drayage services in-clude direct point-to-point delivery, loading, unloading, short-term warehousing and con-tainer pools for the convenience of shippers.
Old Dominion Freight Line also opened a new container drayage site to serve all ports and container yards in the Mobile area. The new site will offer pick-up and de-livery to any point in the continental US.
“The Mobile site responds to growing customer demand and expands our cover-age throughout the South in close proximi-ty to traditional drayage markets served by Old Dominion,” said Wayne Bersch, direc-tor of container operations for Old Domin-ion. “This new site allows us to continue to hire new drivers and also use Southeastern-based drivers to serve market needs.”
Old Dominion has been operating con-tainer drayage for more than 50 years and offers direct services from 10 cities in addi-
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DB Schenker of Canada Limited Dell Will Customs Brokers Inc.Delmar International (Canada) Inc.Delta Customs Brokers LimitedDHL Express (Canada) Inc.DHL Global Forwarding (Canada) Inc.Dilas International Ltd.D. L. Zinn Customs Brokers Ltd.Dolbec Y. Logistique/Logistics International Inc.E.A.J. Customs Brokers Inc.E.T.S. Moore Customs BrokersEDI Customs Broker Inc.Elliott Customs Brokers and Storage Ltd.Eurofret Canada Inc.Events on the Move Customs and FreightExpeditors Canada, Inc.Expert Customs Brokers, TransX Group of CompaniesFederal Express Canada Ltd.Federated Customs Brokers Ltd.FedEx Trade Networks Transport & Brokerage (Canada), Inc.Four Points Customs Brokers Frank M. O’Dowd, Inc.Fraser Direct Logistics Ltd.Frontier Supply Chain Solutions Inc.Fyke Logistics Inc.G.W. Nickerson Co. Ltd.Garden City Customs Services Inc.Geo. H. Young & Co. Ltd.Gestion Douanière W2C Inc. Golden Jet International Freight & Customs House Brokers, Inc.Goudreau Cargo International Inc.Greg Gerritsen Inc.H.H. Smith Ltd.H. Kennedy Inc.Hartwick O’Shea & Cartwright LimitedHemisphere Freight & Brokerage Services Inc.Hercules Forwarding Inc.
ICECORP Customs Brokers, Division of ICECORP Logistics Inc.Inland Customs Brokers LimitedIntegral Trade Networks Inc. ISL Customs Brokers, Division of Island Shipping LimitedJ. & B. Customs Brokers Ltd.J.B. Ellis & Co. Ltd.J. D. O’Hearn & Company Ltd.J. René Hébert Ltée.J.W. Smith Customs Brokers Ltd.Jas. C. Norris & Son LimitedJensen Customs Brokers Canada Inc. Jori International Ltd.KDS Marketing DBA, KDS Global LogisticsKing Bros. LimitedKintetsu World Express (Canada) Inc.KN Customs, Kuehne + Nagel Ltd.L.& L. Importing Services Ltd.L.M. Clark Customs Brokers Ltd.L.V. Matthews Customs Broker Ltd.LEI Customs Brokers Inc.LINK + CorporationLivingston International Inc.M.E. & P.E. Samson, Customs BrokersM. Gurza Customs Brokers, Member of the Milgram Group of Companies Maersk Customs Services CanadaMantoria Inc.Merchant Customs Brokers Ltd.Milgram & Company Limitedmkmarin trade services inc.Near North Customs Brokers Inc.Newport Customs Services Inc.Nippon Express Canada Ltd.North American Logistics Services Inc.Omnitrans Inc.Omnitrans (Pacific) Inc.Orbit Brokers & Forwarders Inc. P. Mines Customs Services Inc.Pacific Customs Brokers Ltd.Parkview Customs Brokerage Ltd.Percy H. Davis Ltd.
PF Collins Customs Broker Ltd.Precision Forwarders & Brokers Ltd.Robert Sacco, Customs BrokerR.O.E. Logistics Ltd.Royal Customs Brokers, Division of 56853 Ontario Inc.Russell A. Farrow LimitedS.M. Hewitt (Sarnia) Ltd.Sault Customs Brokerage Ltd.SDV Logistiques/Logistics (Canada) Inc.Seamont Brokerage & Transport Ltd.Secam International Inc.Service Plus International Inc.Shelini Transportation Corp.Stockwell International Trade SolutionsTeam Cargo Logistics Inc.TCS Total Customs Services The Canadian Customs House Ltd.The Commerce Trade Show Logistics GroupThompson, Ahern & Company Ltd.TNT Express (Canada) Ltd. Traders Customs Brokerage Ltd.Transpacific Customs BrokersTri-Ad International Freight Forwarding Ltd.Trillium Customs Brokers Inc.Triumph Express Service Canada United Parcel Service Canada Ltd.Universal Logistics Inc.UPS Supply Chain SolutionsUTi Canada Inc.Vancouver Customs Brokers Ltd.Viacan Customs Brokers Inc.W.G. McKay LimitedW. Pickett & Bros. Customs Broker Inc.Welke Customs Brokers Ltd.White & White Customs BrokersWilliam L. Rutherford LimitedWilliam L. Rutherford (B.C.) LimitedWillson International LimitedWorld Wide Customs Brokers Ltd.Yusen Logistics (Canada) Inc.
And chances are, the experts are already on your team.
Canadian Society of Customs BrokersSuite320,55MurrayStreet,Ottawa,ONK1N5M3(613)562-3543www.cscb.ca
Customs Broker Members:
Membersasof:2011/4/5
CSCB Customs Brokers have:
•unmatchedknowledgeandexperiencein thefast-changingworldofinternationaltrade•theinsidetrackonchangingrulesandregulations, throughCSCB’sinstantupdatesandalerts•theleadingedgeonnewpolicies,business practicesandstrategies,throughCSCB’s professionaldevelopmentcoursesandseminars•thecommitmenttoturnknowledgeinto realvalue—foryourbusiness
Trueleadersareknownbythecompanytheykeep.Soit’snosurprisethatleadingimporters,exportersandtransportcompanieskeepturningtoCSCBmembersforextraordinarycustoms,forwardingandlogisticsservices.
A & A Contract Customs Brokers Ltd.A.B.C. Customs Brokers Ltd.A.D. Rutherford & Co. Ltd.A.E. Horne & Son Ltd.a. hartrodt Canada Ltd. Academy Customs & Traffic Inc.Action Customs Services Inc.Active Customs Brokers Ltd.Affiliated Customs Brokers LimitedAgility Logistics, Co.All Ways Customs Brokers Inc.Alliance Customs Brokers Inc.Alpha Logistiques Inc.Anderson & Brickner Customs Brokers Inc.Atlantic Customs Brokers Ltd.Auburn & Tremblay Customs Brokers Inc.Avalon Customs Brokers Ltd.Axxess International Courtiers en Douanes Inc.Azimuth LogisticsB.I. Logistics Services Inc.B. Zee Brokerage Ltd.BCB CanadaBeaver Brokerage Inc.Bellville Rodair Customs BrokersBGL Brokerage Ltd.Bridgeview Customs Brokers Ltd.Buckland Customs Brokers Ltd.Bun F. White Customs Brokers LimitedCalgary Customs Brokers Ltd.Calyx Transportation Group Inc. Capital Customs Brokers, Division of Apex Business Consultants Ltd.Carson Customs Brokers Ltd.Charles Higgerty LimitedCharter Brokerage Canada Corp.Clear Customs Brokers Ltd.Counselor Customs Brokers Ltd.Courtney Agencies Ltd.CrossBorder Solutions Inc.Daniel Bolduc Customs Consultant Inc.Davidson Customs Brokers Ltd.Davidson & Sons Customs Brokers Ltd.
DB Schenker of Canada Limited Dell Will Customs Brokers Inc.Delmar International (Canada) Inc.Delta Customs Brokers LimitedDHL Express (Canada) Inc.DHL Global Forwarding (Canada) Inc.Dilas International Ltd.D. L. Zinn Customs Brokers Ltd.Dolbec Y. Logistique/Logistics International Inc.E.A.J. Customs Brokers Inc.E.T.S. Moore Customs BrokersEDI Customs Broker Inc.Elliott Customs Brokers and Storage Ltd.Eurofret Canada Inc.Events on the Move Customs and FreightExpeditors Canada, Inc.Expert Customs Brokers, TransX Group of CompaniesFederal Express Canada Ltd.Federated Customs Brokers Ltd.FedEx Trade Networks Transport & Brokerage (Canada), Inc.Four Points Customs Brokers Frank M. O’Dowd, Inc.Fraser Direct Logistics Ltd.Frontier Supply Chain Solutions Inc.Fyke Logistics Inc.G.W. Nickerson Co. Ltd.Garden City Customs Services Inc.Geo. H. Young & Co. Ltd.Gestion Douanière W2C Inc. Golden Jet International Freight & Customs House Brokers, Inc.Goudreau Cargo International Inc.Greg Gerritsen Inc.H.H. Smith Ltd.H. Kennedy Inc.Hartwick O’Shea & Cartwright LimitedHemisphere Freight & Brokerage Services Inc.Hercules Forwarding Inc.
ICECORP Customs Brokers, Division of ICECORP Logistics Inc.Inland Customs Brokers LimitedIntegral Trade Networks Inc. ISL Customs Brokers, Division of Island Shipping LimitedJ. & B. Customs Brokers Ltd.J.B. Ellis & Co. Ltd.J. D. O’Hearn & Company Ltd.J. René Hébert Ltée.J.W. Smith Customs Brokers Ltd.Jas. C. Norris & Son LimitedJensen Customs Brokers Canada Inc. Jori International Ltd.KDS Marketing DBA, KDS Global LogisticsKing Bros. LimitedKintetsu World Express (Canada) Inc.KN Customs, Kuehne + Nagel Ltd.L.& L. Importing Services Ltd.L.M. Clark Customs Brokers Ltd.L.V. Matthews Customs Broker Ltd.LEI Customs Brokers Inc.LINK + CorporationLivingston International Inc.M.E. & P.E. Samson, Customs BrokersM. Gurza Customs Brokers, Member of the Milgram Group of Companies Maersk Customs Services CanadaMantoria Inc.Merchant Customs Brokers Ltd.Milgram & Company Limitedmkmarin trade services inc.Near North Customs Brokers Inc.Newport Customs Services Inc.Nippon Express Canada Ltd.North American Logistics Services Inc.Omnitrans Inc.Omnitrans (Pacific) Inc.Orbit Brokers & Forwarders Inc. P. Mines Customs Services Inc.Pacific Customs Brokers Ltd.Parkview Customs Brokerage Ltd.Percy H. Davis Ltd.
PF Collins Customs Broker Ltd.Precision Forwarders & Brokers Ltd.Robert Sacco, Customs BrokerR.O.E. Logistics Ltd.Royal Customs Brokers, Division of 56853 Ontario Inc.Russell A. Farrow LimitedS.M. Hewitt (Sarnia) Ltd.Sault Customs Brokerage Ltd.SDV Logistiques/Logistics (Canada) Inc.Seamont Brokerage & Transport Ltd.Secam International Inc.Service Plus International Inc.Shelini Transportation Corp.Stockwell International Trade SolutionsTeam Cargo Logistics Inc.TCS Total Customs Services The Canadian Customs House Ltd.The Commerce Trade Show Logistics GroupThompson, Ahern & Company Ltd.TNT Express (Canada) Ltd. Traders Customs Brokerage Ltd.Transpacific Customs BrokersTri-Ad International Freight Forwarding Ltd.Trillium Customs Brokers Inc.Triumph Express Service Canada United Parcel Service Canada Ltd.Universal Logistics Inc.UPS Supply Chain SolutionsUTi Canada Inc.Vancouver Customs Brokers Ltd.Viacan Customs Brokers Inc.W.G. McKay LimitedW. Pickett & Bros. Customs Broker Inc.Welke Customs Brokers Ltd.White & White Customs BrokersWilliam L. Rutherford LimitedWilliam L. Rutherford (B.C.) LimitedWillson International LimitedWorld Wide Customs Brokers Ltd.Yusen Logistics (Canada) Inc.
And chances are, the experts are already on your team.
Canadian Society of Customs BrokersSuite320,55MurrayStreet,Ottawa,ONK1N5M3(613)562-3543www.cscb.ca
Customs Broker Members:
Membersasof:2011/4/5
12 ct&l june 2011 www.ctl.ca
in thenews
CITT-11E-PA06-access-ability - O1 1 5/5/2011 3:53:44 PM
tion to Memphis, including Atlanta, Chica-go, Los Angeles, Norfolk, Va., Wilmington, N.C., Charlotte, N.C., Charleston, S.C., Sa-vannah, Ga., Huntsville, Ala. and Jackson-ville, Fla. The company says it expects to open additional locations in the future.
The new 98-door terminal in St. Charles will employ more than 140. Old Dominion officials said the terminal will enable the company to more efficiently handle ship-ments across the dock as well as offer ser-vice to customers in the St. Louis area.
“Our increased market share in the area has made it necessary to expand our cur-rent local and line haul operations,” said Dave Bates, Old Dominion’s vice-presi-dent of the Central States region.
The service centre will provide direct service to more than 15 cities surrounding St. Louis. The company currently operates 213 service centres in the continental United States.
To meet increasing shipping demand from Asia, Old Dominion Freight Line Inc. has expanded its Pacific Promise less-than-container load (LCL) service to Taiwan’s three main ports, in addition to 10 ports in China where the service is already offered.
The Taiwanese ports of Taichung, Keelung and Kaohsiung, join the ports of Dalian, Fuzhou, Guangzhou, Hong Kong, Ningbo, Qingdao, Shanghai, Shenzhen/Yantian, Xiamen and Xingang in China, where Old Dominion already offers the Pa-cific Promise guaranteed LCL service.
Launched in 2009 and expanded in 2010, Pacific Promise provides businesses with standard guaranteed transit times and simplified rates from the 13 Chinese or Taiwanese ports to any U.S. destination. The offering also includes port-to-door tracking of all shipments - a service many providers do not offer.
Old Dominion has seen a more than a
30% increase per year in shipments from China and Taiwan. Over the next five years, industry analysts predict that ship-ments from China to the US.could increase by 28% while shipments from Taiwan are projected to increase by 16%.
“Given the tremendous growth we’ve seen from Asia, we’re always looking at expanding Pacific Promise to additional origin points,” said Greg Plemmons, vice president of OD-Global, a division of Old Dominion.’
The service targets importers in a num-ber of categories, including shippers of high-value products, time-sensitive goods and seasonal or promotional items. Pacific Promise is also geared toward companies that are shipping from a single origin to multiple destinations or those that are pay-ing air freight rates because they cannot entrust their time sensitive shipments to a traditional LCL service.
1414 ct&l june 2011
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in the eagle’s clutch
15ct&l june 2011
storycover
It was a bolt out of the blue, intended to im-prove air cargo security but causing disruption and confusion among airlines, freight forward-ers and shippers. In early March, airlines re-ceived a sudden security directive from the
US Transportation Security Agency with new guide-lines due to come into effect only days later.
Airlines found the new rules impossible to im-plement, especially at such short notice. Faced with the prospect of fines of up to US$27,000 per ship-ment if it were found in non-compliance with the new rules, Air Canada Cargo imposed an embargo on all freight to US destinations.
“There was simply no way we could comply,” recalls Mike Morey, director of operational strategy.
Forwarders and shippers had not been notified by the TSA and were left to figure out how to move their traffic to US points. “There was a lot of scram-bling and scurrying. In the end, there were no ser-vice disruptions, but that one did have us on our heels,” says Amgad Shehata, vice-president for strategy and government affairs at UPS Canada.
On top of unrealistic requirements, operators found the security directive also unclear, leaving them in the dark about what exactly they were sup-posed to do and why. “How do you train thousands of people around the world on something you don’t clearly understand?” muses Morey.
After vociferous complaints from airline organi-zations as well as individual carriers, the TSA allowed a grace period for airlines to seek clarification about the regulations and define adequate processes for implementation. Moreover, the TSA took some of the objections from the industry on board. In early May, it issued new regulations. Morey finds these a major improvement over the former requirements.
While this constitutes a significant step forward, it does not mean that the air cargo security regime has been settled for good. “There are still some un-resolved issues,” Morey remarks.
“For example, there is mail, which stands out on its own. Is it any less a threat? What do you do with it? And what about human remains? How do you screen those? And there is still no real solution for
shipper-built pallets,” he points out.Tightened screening has also raised some con-
cern about potential pilferage and theft, as the case of some TSA screeners who helped themselves to items from passenger baggage shows, warns Bill Gottlieb, president of David Kirsch Forwarders and a director of the Canadian International Freight For-warders Association.
If nothing else, this is time-consuming, as for-warder or shipper staff want to be present when valuable shipments are opened for physical inspec-tion. Gottlieb recalls a recent visit to an airline cargo terminal, where some crates holding valuable cargo had been held for four days while airline staff wait-ed for an employee from the shipper to supervise the opening. “What’s the point of shipping by air if you get such delays?” he asks.
He reckons that security requirements have caused some US-bound traffic to be shifted from airfreight to truck, which faces less hassle.
Shehata thinks that the worst in terms of secu-rity rule changes is behind the industry. “What lies ahead likely is incremental. The main steps have been taken,” he remarks.
The next fixture on the horizon is the introduc-tion of the Advance Commercial Information re-gime in October. Here the concern is less with the requirements themselves than with the level of edu-cation and awareness across the transportation in-dustry and its clientele.
“This needs ongoing education,” warns Karen Richards, customs supervisor of Challenger Motor Freight. “If the information is not at the broker in time, the freight will be offloaded at the border,” she warns, adding that this would aggravate conges-tion and delays at border crossing points.
The authorities have shown some flexibility to ease congestion. One initiative currently under dis-cussion is the creation of “FAST light” lanes, lanes normally used for passenger vehicles that could be allocated on an ad hoc basis to FAST traffic. The CBSA has some reservations on the issue, Richards notes, but at least it is ready to discuss such schemes.
Operators and shippers are frustrated with the
in the eagle’s clutchCross-border shipping struggling under the increasingly tight embrace of legislationBy Ian Putzger
16 www.ctl.ca16 ct&l june 2011
storycover
lack of tangible benefits from security programs like PIP, C-TPAT or FAST. “PIP has not had a lot of clear benefits so far. That’s why it has not been a priority for many freight operators, and some shippers as well,” says Gottlieb.
Morey is concerned that the Secure Supply Chain program launched on April 1 could suffer the same fate. “This has to translate into tangible benefits to participants. Otherwise, why would they participate? They have made a significant invest-ment and at our docks we can’t offer them something addi-tional,” he comments.
Dan Einwechter, chairman and chief executive of Challenger Motor Freight, finds that the approach from the authorities has been lopsided in favour of sanctions. Benefits from their partici-pation in security programs that truckers see at the border are too often eclipsed by penalties they face if something goes wrong; even minor infractions draw heavy-handed sanctions. “We un-derstand there needs to be security, a proper protocol, but some-times there is a disconnect if you have slight problems but the penalties are severe,” he says.
Shehata is confident that PIP and C-TPAT certification will eventually bring clear benefits to companies that have em-braced these. He is encouraged by progress on the question of mutual recognition of the two programs by the US and Cana-dian authorities.
At this point, the benefits from PIP are not adequate, but participation in it brings advantages nevertheless, he says. Freight from C-TPAT or PIP participants faces a lower frequency of in-spections behind the scenes, he points out.
While there is unanimous agreement that participants in secure freight initiatives should gain more from their invest-ment in these programs when they get to the border, the in-frastructure at the crossing points is the larger problem for some operators.
“The bigger issue is whether the infrastructure at the border is able to handle the growing volume that moves across,” says John Costanzo, president of Purolator International, the international arm of Canada’s largest express operator.
“We need more border crossing points. The second bridge at Detroit can’t be opened soon enough,” comments Einwechter. “Volumes are strong. We see pressure points developing.”
Challenger has seen firm southbound traffic across the bor-der, with rates holding up and increasing. In the opposite direc-tion, they are going up exponentially, according to Einwechter.
In order to secure capacity into Canada, some companies are prepared to pay for the outbound leg, he reports. “A lot of clients pay for roundtrips to pick up their loads. We run 500, 600 miles empty to pick up freight,” he says.
While demand has increased, capacity is tightening. “Trailer orders are up, but those are replacements, not additional capaci-ty,” he comments, adding that this picture will remain for some time. “We see capacity very tight, even in a lackluster economy.”
Buoyed by strong northbound flows, some operators are
expanding. Purolator, which had curtailed its expansion in late 2008 in response to the downturn, is back in growth mode. It recently opened branches in San Francisco, Minne-apolis and Boston, and further additions in the US are on the horizon.
“We’re now in 12 markets. We plan 20 by year-end, 30 by 2012,” says Costanzo. “We want to at least double our business out of the US over the next five years.” Currently, Purolator runs some 300 trailers and 40 flights a week between Canada and the US.
Last October, the company started an express parcel service from New York to Canada. This is going to be the launch pad for a rollout across much of the US. Costanzo says it should be pos-sible to offer a two-day service from northern US cities by truck feeding into Purolator’s Canadian network.
“There are close to 50 million small package shipments from the US to Canada in a year. FedEx and UPS have about 60% of that market, we’re approaching 10%. We should be able to cap-ture 20-30% of that market,” he declares.
LTL traffic has also benefited from a surge in northbound shipments driven largely by the strong Canadian dollar, with both Canadian businesses and consumers buying from the US. This could receive a further boost from plans at the CBSA to simplify tariffs for low-value imports into Canada.
“This was in the last budget and we’re hopeful that it will be in the next budget,” says Shehata. “This is going to accelerate inbound shipments.”
One segment that stands to benefit from such a move is mer-chandise bought by Canadians from US Web sites. Costanzo has seen significant growth in this business. “It is one of our fastest-growing segments, particularly since we’ve come out of the re-cession. I think this is going to be a tremendous growth opportu-nity,” he says.
However, Ottawa is showing signs of stepping on the brakes to slow down shopping south of the border. Concerned over the impact on Canadian retailers and sales tax revenues, the govern-ment is reportedly resisting initiatives from Washington to slash Customs duties.
Air Canada, meanwhile, sees scope for traffic around the US. Security regulations for air cargo entering or leaving the US are inducing a growing number of freight forwarders and shippers to route their cargo to look for alternative routings.
“We get a lot of flow over Canada to other countries, bypass-ing the US, that used to go via the US,” Morey observes. “We like to present ourselves as an alternative to going via the US. We’re doing well from Asia to Latin America.” CT&L
First out of the gate... and across the finish line.At Cavalier, we deliver on the promises we make. We listen to the challenges our customers are facing and respond with unique, results driven solutions. We are accessible, accommodating and accountable.Our footprint is comprised of strong relationships and personalized performance that carries through each aspect of our operation including:
• Overnight scheduled LTL delivery within a 500 mile radius of the GTA• Domestic and transborder LTL and truckload service• A long standing logistics network that covers all of North America • Heat, hazmat, expedited, tail gate and appointment delivery services• Warehousing and distribution centres for imports from the USA to all of Canada
Cavalier is a certified participant in the following:
• ACE (Automated Commercial Environment)• CSA (Customs Self Assessment)• FAST (Free And Secure Trade) • PIP (Partners In Protection)• C-TPAT (Customs Trade Partnership Against Terrorism)
905.857.6981 • 800.263.2394
Consider it Delivered!Ian Putzger is an award-winning journalist with more than 20 years experience covering transportation and logis-tics issues. He is a former writer and editor with the Hong Kong-based Asian Sources Media Group, and Airtrade, a British magazine covering the global air cargo industry.
First out of the gate... and across the finish line.At Cavalier, we deliver on the promises we make. We listen to the challenges our customers are facing and respond with unique, results driven solutions. We are accessible, accommodating and accountable.Our footprint is comprised of strong relationships and personalized performance that carries through each aspect of our operation including:
• Overnight scheduled LTL delivery within a 500 mile radius of the GTA• Domestic and transborder LTL and truckload service• A long standing logistics network that covers all of North America • Heat, hazmat, expedited, tail gate and appointment delivery services• Warehousing and distribution centres for imports from the USA to all of Canada
Cavalier is a certified participant in the following:
• ACE (Automated Commercial Environment)• CSA (Customs Self Assessment)• FAST (Free And Secure Trade) • PIP (Partners In Protection)• C-TPAT (Customs Trade Partnership Against Terrorism)
905.857.6981 • 800.263.2394
Consider it Delivered!
18 www.ctl.ca18 ct&l june 2011
storycover
no surprisesThe Canada-European Union talks on free trade agreements are not expected to change transportation and Customs practices. Is that a good thing?By Ken Mark
The continuing Canada-European Union talks to establish a free trade agreement are unlikely to disturb longstand-
ing transportation and Customs practices. Currently in their fifth round, the Comprehensive Economic and Trade Ar-rangement (CETA) negotiations are anticipated to wrap up by the end of 2011.
“We don’t expect any surprises from the final agreement,” says Chris Gillespie, Montreal-based president and CEO of Gillespie Munro.
In Gillespie’s mind, Canada-EU discussions about sea and air cargo movements are different from those related to land-based Canada-US transportation talks. That’s because they involve fewer infrastructural concerns related to road and rail carriers such as bridges, roads, tunnels, etc.
On the air cargo side, despite a fair degree of open skies and reciprocal agreements between Canada and EU mem-bers, concerns are growing over the proliferation of cargo-security procedures. “We need to ensure that the security regimes in place are as harmonious as possible,” says William Gottlieb, Montreal-based CEO of Kirsch Freight Forwarders. “There are several out there that place a different emphasis on shippers, carriers and freight forwarders.
“We hope that there can be greater reciprocity involving the EU’s Authorized Economic Operator security system and the US C-TPAT and Canada’s PIP programs, especially in moving data electronically. Traditionally, logistics is a sec-ond player in such discussions.”
However, more eyes are focusing on the EU’s electronic declaration known as an Entry Summary Declaration (ENS) implemented on Jan. 1. It is the equivalent of US Customs’ 24-hour rule. The new security measure requires up-stream, EDI-format data transfers to regulators for risk assessment. However, there is no standard regulatory framework for the declarations. It differs from one EU member to another.
That reality causes Gillespie to believe that ENS will be frustrating and fraught with problems. “We are only one [ju-risdiction] and they are 27,” he says.
On the Customs side, since 90% of merchandise trade in both directions enters duty-free, the major focus is on non-tariff issues such as rules and regulations. “My clients, espe-cially those in the food and chemical industries are concerned about the different standards, certificates and testing require-ments among EU member countries that Canadian exports must meet,” says Carol Beaul, Toronto-based president of Intelli Trade.
“Many of those issues remain uncertain,” she says. “But after the fifth round of talks ends in January, when the issues become clearer, more companies will be telling the govern-ment which ones they’re most concerned about.”
Once CETA’s terms are finalized and ratified, Beaul be-lieves that Canadian firms could come out winners in sev-eral ways. The obvious one is simpler access for Canadian exports to the EU with its 27 member countries and 490 million consumers. The other is easier entry of more EU goods into Canada.
The latter could benefit Canada in two ways. “First, many products will be cheaper because of simpler Customs regula-tions and processes,” she says. “The second is that many of those imported items are inputs into Canadian products which may make them cheaper as well.”
The double win comes from Canada’s potentially en-hanced role as a gateway to the NAFTA (North American Free Trade Agreement) marketplace. Canada’s supply chain and logistics sector would benefit from increased traffic vol-umes as European exporters may decide to set up a presence here to provide faster deliveries to US customers. Second, Canadian products containing EU-sourced parts may still qualify for NAFTA country-of-origin rules making such ex-ports more competitively priced for US and Mexican buyers.
In the negotiations, the EU’s top product priorities in-clude seeking greater access to Canadian public procurement opportunities involving provinces and municipalities as well as easier entry for their dairy products especially cheese. For Canada, it is about boosting sales of fish and beef products. For the first time, Canadian provinces and territories are di-rectly involved although the actual negotiators are from the federal government.
A lot is at stake. Currently, the EU is Canada’s second largest export market after the US. In 2009, two-way trade between Canada and the EU totalled $90 billion, split very close to 50-50. The Department of Foreign Affairs and Inter-national Trade (DFIAT) estimates that a successful treaty will boost bilateral trade by $38 billion per year.
“Any agreement that improves trade will benefit both sides,” says Gillespie. CT&L
Veteran technology expert Ken Mark has covered supply chain management since it was called distribution and has documented its legitimization as a critical business function. He holds an MBA from York University.
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UPS_CT&L_CrossBorderShipping_FP_Ad.indd 1 5/9/11 2:17 PM
20 www.ctl.ca20 ct&l june 2011
The slow disintegration of Canada’s short sea ship-ping (SSS) fleet was thrown into reverse on Sept. 23, with the announcement of the remission of the
25% Customs duties payable under the Customs Tariff on imported cargo vessels, tankers and 129-metre or longer ferry boats.
Thanks to the remission order, ship owners operating in coastal trade will save $250 million in duty over the next decade on an estimated $1 billion worth of ships they are expected to import by 2020, according to the Canada Gazette.
Within months of the duty remission, shipping compa-
nies had already announced nine new ship orders and ac-cording to Bruce Bowie, president of the Canadian Ship-owners Association, “There are options that [the purchasing ship owners have not yet exercised] that could raise this above nine new vessels.”
Canadian Steamship Lines (CSL) contracted the Chengxi Shipyard in Jiangyin, China to build two new dry-bulk vessels for Great Lakes operations. The Chengxi was scheduled to cut the first steel for the ships this spring. The first deliveries are expected in 2012. “We need to look back to the early 1980s to see the last full newbuild laker to have come online,” reports Claude Dumains, vice-pres-
Lifting the 25% import duty on ships has sparked a slew of new ship orders
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38 FACILITIES SERVICING ALL OF CANADA
VersaCold Logistics provides a wide range of services to importers/exporters, producers,manufacturers, food service operators and retailers.
With Voice Pick™ technology, EDI, Power 2™ WMS systems, national/regional and local transportation capabilities.
� All of our facilities havethe ability to network with
sites in the U.S.
Joel Smith, Chief Executive Officer of Versacold is pleased to announce the appointment of :
Brian Ware to the position ofDirector of National Marketing& Business Development
VersaCold News...
Versacold_CTL Mag_Ad_Layout 1 25/05/11 10:42 AM Page 1
22 www.ctl.ca22 ct&l june 2011
L T L
.com. .
President & COO Consolidated Fastfrate Inc.
ident of technical operations for CSL in the December issue of CSL World.
The Canadian Wheat Board (CWB) made history this February with the announcement that it is purchasing two Equinox Class bulk carriers. They will be operated and managed by Algoma Cen-tral Corporation. The two ships will cost about $65 million and will be ready for service in 2013.
Algoma reported this March 22 that it is investing about $400 million for five Equinox-class vessels, and possibly two more later on. The first of its new ships should be in service on the Great Lakes in 2013. One will be a gearless bulker and three will be self-unloaders. The fifth ship is a gearless bulker order that came with Algoma’s acquisition of the partnership interest of Upper Lakes Group in Seaway Marine Transport (SMT) this March, along with the vessels and assets owned by Upper Lakes and used by SMT, according to a March 22 press release from Algoma.
On the significance of the shipping company purchase to the SSS industry, Algoma vice-president and chief financial officer Pe-ter Winkley says, “It is an indication of our commitment to short sea shipping on the Great Lakes.”
To illustrate the penalty that was associated with the 25% duty, Algoma points out that it paid $7.6 million in duty on the AlgoCa-nada, which it put into operation in January 2009. “This payment hurt the competitiveness of marine transportation in Canada and hurt our economy by raising the transportation cost for refined petroleum products,” wrote Algoma in response to the announce-ment of the duty removal.
Bowie comments, “We’ve been keeping our old ships going beyond their normal lifetime because we could not make the busi-ness case for buying new ships [with the 25% duty in place]. The duty had a huge impact on stalling investment plans. The critical-ness of the situation was mitigated by the recession of 2009, by laying up old ships. We are still short of tonnage from time to time when unanticipated markets emerge; for example, the increased demand for grain through the Seaway to Europe when grain crops failed in Europe.”
The remission of the 25% duty does not, however, do any-thing for tug and barge companies, notes Tom Paterson, market-ing coordinator and business development with Hamilton, Ont.-based McKeil Marine. “We are still forced to pay the duty regardless of the size of the unit. We are, however, optimistic that this clause will eventually be looked at and allow us to enjoy the benefits of no duty.”
Total cargo volumes for the CSA member shippers rebound-ed 18% in 2010 over 2009 levels – from 46.6 million tonnes to 55.1 million tonnes. “We would categorize this as a steady im-provement, but it is not improving as quickly as it dropped,” Winkley comments. The 2010 performance is more than 11% below the 2008 figure of 62.2 million tonnes and well below the annual figures from 2000 and 2006, which ranged from 64.6 to 72.2 million tonnes.
Of particular note, iron ore volumes increased from 10 million tonnes in 2009 to 18 million tonnes in 2010. Salt shipments dropped three million tonnes. Coal shipments were up just under one million tonnes to hit eight million tonnes; other cargo figures twitched only slightly from 2009 to 2010.
There were some project cargo moves last year. “Project cargo is
a very small percentage of tonnage, but it is well-paying cargo,” Bowie notes. McKeil sailed its 1,200 tonne-capacity S/VM barge and two tugs up the Ottawa River and through the Carillon Locks for the first time in 30 years to deliver four pulp and paper dryers from Sorel to Thurso, Que.; Fortress Paper bought the mothballed mill from Fraser Paper and is transforming it into a 200,000-tonne/year producer of dissolving pulp (an ingredient in rayon).
CSL reported that it won a contract to move up to five loads of wind turbine components between July and October last year, from Quebec’s Port of Gros Cacouna to Burns Harbour, Ind. The company believes this may have been the largest single shipment of wind turbine pieces ever on the Great Lakes.
The Dutch Runner, a 221 TEU-capacity container vessel owned by Great Lakes Feeder Lines, delivered a load of pressure vessels, built in Trenton, Ont. to the Port of Thunder Bay’s Keef-er Terminal last October. “This is the first oil sands project cargo we have moved from Southern Ontario. There might be more of this activity in 2013,” says Tim Heney, CEO of the Thunder Bay Port Authority.
While acknowledging that the Port of Thunder Bay is primarily an outbound port, Heney describes infrastructure work that will help serve the SSS industry: “At the terminal, we have been mak-ing lay down areas – engineered gravel pads. We have created three acres and are growing the lay down areas. We will have a dedicated mobile harbour crane in place later this year. It will be wind turbine and container capable, and will be able to do clam-ming of bulk out of ships. We have not had this capacity here for several years.”
Speaking to the Canadian SSS industry, Heney notes, “What affects prospects for short sea shipping the most in the Great Lakes is the supply of versatile ships. The Canadian fleet has declined. The Dutch Runner is in a class of its own, with its cranes and RO/RO capability. If you are going to develop short sea shipping, you need equipment.”
The Canadian SSS fleet also suffers from equipment shortfalls in the Canadian Coastguard, according to Bowie. “The Canadian Coastguard used to have four ice breakers in the Great Lakes and the Saint Lawrence Seaway. Now they have only two. We often experience situations where Canadian assets do not get the service they need. We have been advised that there is no funding to ad-dress the shortage of ice breakers or to replace the ageing fleet of ice breakers.”
Two particularly troublesome regulatory issues also threaten the SSS industry, according to Bowie. One is air emissions. “Cana-da and the US jointly agreed with the International Marine Orga-nization to implement an Emission Control Area regime on the coast of North America to reduce sulphur and particulate matter emissions on the coast. The problem is that the US then unilater-ally implemented this ocean regime on the Great Lakes.” Unfortu-nately, Canadian ships pass in and out of US waters about 25 times on a single trip between Montreal and Thunder Bay, so they will be affected when the Environmental Protection Agency (EPA) rule comes into effect in 2012 and 2015.
To meet this rule, ships will have to convert to low-sulphur (0.1%) fuel. It is already 50-60% more expensive than the 1.7% sulphur-content fuel used now. “The EPA estimates that the dif-ferential will be less than 40%, but when a low-sulphur fuel rule
short sea shippingmarine
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24 www.ctl.ca24 ct&l june 2011
Running Canada to the USA...If you have LTL freight being shipped to the USA, it’s a great time to benefit from our excellent coverage, pricing and personalized service.
Our extensive terminal network, on both sides of the border is unique for a Canadian carrier. It puts us in direct control from pick-up to delivery, to over 20,000 cities and towns throughout the USA.
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Toll Free: 1.800.263.0791Email: [email protected]
was implemented in the Baltic, shippers saw an 80-100% increase in fuel costs,” Bowie says.
To boot, the exemption to this rule that the US Congress passed for steamships is not particularly useful to Canadian shipping com-panies: only seven of the 73 CSA members’ ships noted in its 2010 annual report are steamers. In any case, Bowie points out, “We don’t want this exemption because it encourages the retention of the older vessels that are the biggest emitters. This is the worst pos-sible result for the environment.”
The solution, in a line, explains Bowie is, “We need the US to agree to accept the Canadian approach to air emissions through a reciprocal arrangement, in return for Canada accepting the US ap-proach to emission reductions.” If this issue is not resolved, rising rates will force a massive migra-tion of cargo to rail and trucks.
The other regulatory problem is a stunner. According to Bowie, New York State decided it would enact a water ballast performance standard 1,000 times as strict as the standard set by the Interna-tional Marine Organization in 2004. “This New York rule would come into force in August 2013. There is no hope that any technology will attain this stan-dard. If the requirement is not changed, the Seaway will shut down. Shippers are already mak-ing arrangements to ship by other modes to bypass the Seaway. This is already having a profound effect on the Seaway. We don’t know if we will be able to oper-ate,” Bowie explains.
Bowie did not explain how this battle is being fought, but one does wonder whether New York is being flooded with calls, letters and nastygrams from every manufacturer, shipper, carri-er, port, state, province and country on the planet that depends on the Seaway.
On a brighter note, the Port of Halifax reports some new SSS action that began this June 1: “The Port of Halifax will add a new short sea shipping service that connects Atlantic Canada and New England exporters and importers to global markets via Hali-fax: American Feeder Line launched ‘The Halifax Express,’ a weekly container service between the ports of Halifax, Portland and Boston as a fixed-day coastal liner service to connect New Eng-land with global trade markets.”
According to Richie Mann, vice-president of marketing at Mel-ford Terminals, the construction of its planned deep-water termi-nal in Melford, N.S. is on track to begin this year and will be op-erational in late 2013 or early 2014. Melford has been promoting the concept of shipping containers from its future terminal up into
the Great Lakes, and down the East Coast. “As more and more super post-Panamax vessels are being built,
including 18,000-TEU capacity by Maersk, there will be more and greater opportunities to utilize Melford as a transshipment hub, loading and unloading the larger vessels at Melford, then transship-ping to US Eastern Seaboard ports which, for various reasons – for example, water depth, bridge clearance, congestion – cannot ac-commodate these huge vessels. Discussions with interested parties are ongoing,” Mann says.
A couple of years ago McKeil Marine wanted to launch a con-tainer feeder service between Hamilton and Montreal but that did
not pan out, says Paterson. “We completed 26 roundtrips and had an on-time percentage of 97% [but] we never could get a firm commitment from the con-tainer liners.”
The biggest opportunity for SSS growth is in container traf-fic, according to Bowie, but he notes three main obstacles to at-tracting container traffic to the marine mode from truck and rail. The first is the 10-month sailing season. The second is the high cost of transferring con-tainers on and off ships. The third is the government rate structure. “Trucks don’t pay for highways or snow removal, in-frastructure or tolls, marine ser-vice fees or icebreaking. It is an uneven playing field. If you see an economic advantage to [building fewer new roads] and the environmental advantage of the marine mode, the govern-ment is a key barrier to an in-crease in the marine mode. The government has to provide the right price signals and reduce
negative price signals if it wants more investment decisions to hap-pen,” Bowie explains.
On the up side, the increase in trade with the European Union is good for business, as could be the increased traffic through the Panama Canal if trade routes shift from West Coast ports to the Seaway and the Great Lakes, according to Bowie. He also notes that, “The environmental benefits of shipping continue to increase. We are getting greener and greener and hopefully industries will recognize this; for example, the way Walmart values green prac-tices in its supply chain.” CT&L
Carroll McCormick is an award-winning writer who has been covering transportation industry issues and technolo-gies for more than a decade. He is based in Quebec.
change pidc
short sea shippingmarine
“We’ve been keeping our
old ships going beyond their
normal lifetime because we
could not make the business
case for buying new ships
[with the 25% duty in place].
The duty had a huge impact
on stalling investment plans.”
Bruce Bowie,president,
Canadian Shipowners Association
Running Canada to the USA...If you have LTL freight being shipped to the USA, it’s a great time to benefit from our excellent coverage, pricing and personalized service.
Our extensive terminal network, on both sides of the border is unique for a Canadian carrier. It puts us in direct control from pick-up to delivery, to over 20,000 cities and towns throughout the USA.
Additional features include:
• Greater control with our Vitran to Vitran network • Single and team driver service • Dry van and Heated service• Participants in all border security programs
Toll Free: 1.800.263.0791Email: [email protected]
26 www.ctl.ca26 ct&l june 2011
conference reportSCL-CITA
A dollar saved in supply chain costs is one dollar straight to the bottom line.
George Mather, assistant vice-pres-ident of supply chain at Winners Merchants International, laid it out in simple terms during his presentation on management metrics at the 2011 Supply Chain Canada-CITA conference.
With supply chain costs accounting for some 25-35 % of an organization’s cost base, and with a lot of associated volatility (such as fuel, credit and capacity), there’s no need to stress the importance of cost management in the chain.
Hence the importance of good Key Perfor-mance Indicators, which focus attention in the right areas at the right time, allowing for cor-rective action to be taken on a timely basis, said Mather.
“KPI’s allow information-sharing with key stakeholders, benchmarking and goal-setting tools, and, with a sin-gle source of data, a good KPI system gives you one version of the truth,” Mather noted.
An effective measurement program is easy to use, timely, flexi-ble, scalable, and requires little or no manual intervention to create sustainability and consistency.
But before you embark on such a program, make sure you’ve got a vision that everyone is involved in and everyone believes, said Steve Loveday, an independent consultant and president of Supplyline Logistics, who presented at the conference.
“Some of the vision comes from them (stakeholders) to you. Establish a baseline, like numbers and business case, surveys and opinions. Watch out for seasonality in your baseline, because that can really skew an annual number. Success has to be considered by all the stakeholders. It’s really crucial to balance how much effort you’re putting in on the people side versus the KPI side. How many have put measures in and not talked to all of those stakeholders? Spend some time with associates, stakeholders, the CFO/CEO, customers, all of whom may feel they are important in determining the measures for success,” he added.
There are some key steps to the process of launching a measure-ment program, said Mather.
• Identify the individuals who manage costs or cost centres – These are the individuals whose actions drive costs and/or savings, and these may include finance teams.
Good metrics offer clear vision and drive performance
B y J u l i a K u z e l j e v i c h
a measure of success
• Identify the key cost drivers – Actions that cause a business to incur costs.
“You’re trying to get the end user to iden-tify what the costs are, for example on-time delivery,” said Mather.
KPI’s should quickly identify any issues with the cost drivers. But you want to limit the number of these.
“The key thing is the KPI is a measure to focus attention on, not to fix the issues. (For example, the KPI is the percentage of on-time deliveries while the cost driver is wait time).
• Data sources – The more process-orient-ed, the greater the need to document the data source for each component.
“The source needs to be automated as much as possible. Identify the backup sources for this data. Limit the responsibility for gath-ering this data to a single individual where pos-
sible,” said Mather.Design a reporting format and identify variances by colour, by
bold, or by checkmarks, for example.
• Reporting Methodology – Establish what sort of review format you want to go with, (i.e. monthly, quarterly, etc.), and how you will review (through team meetings, etc.)
• Test phase – Agree to a launch time frame with your stake-holders. Establish a sign-off process for “going live.”
• Operational KPI review – Document your action items, mak-ing sure you have a solid action item list to work on.
• Continuous improvement – Any performance measurement tool needs to be constantly evaluated for effectiveness.
Management metrics does not have to be a fully automated pro-cess, noted Mather.
“It just depends on your individual circumstance, but it is more the ideal. Setting up the metrics can vary based on their scope. You could focus in on something smaller, for example on the outbound, otherwise you may end up with too many stakeholders with defer-ring interests,” he said.
In terms of labour allocation, this is a constant challenge and you want to make sure you outline the benefits up front to all
27ct&l june 2011www.ctl.ca
conference reportSCL-CITA
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A division of
stakeholders, noted Mather.“Pay at least as much attention to what happens after; someone
in the business has to be responsible for continuing to deliver suc-cess,” added Loveday.
“Stakeholders will believe you, and buy in to what you’re doing when you engage them, your formula rings true, your data is secure, change begins, and they trust you,” he added.
Your company’s data: Maximizing its useGathering data to benchmark is not a novel concept. But according to John Weigelt, national technology officer with Microsoft Cana-da, many business challenges tend to skew the process.
Key information is frequently not available to frontline decision makers. Managers are dependent on IT to run reports.
“There is still a big gap between the useful information that can be reported and the information that is actually reported,” said Weigelt, adding that we’re in a “petabyte data era.” The pace of business is accelerating, and what determines success is having a close connection between business and IT.
“There’s a misconception than tech projects need to be major expenditures and behemoths. Technology allows you to have flex-ibility and to be a business differentiator,” he said.
“We’re all doing business digitally, and there are many technol-ogy enablers of new supply chain models: cloud computing, natural user interfaces, unified communications, pervasive performance management. But the execution gap is still pervasive, and 95% of a
typical workforce does not understand how organizational goals and objectives relate to their jobs,” said Weigelt.
Consider this: 90% of organizations fail to execute their strate-gies successfully, and 60% do not link strategies to budgets.
“The role of software has changed over the last 15 years, in terms of bringing together disparate data sources, and creating a consistent approach between business lines and sectors. The administrative side of business is often forgotten, with data often locked in dispa-rate systems, complicating workflows, sapping productivity, and introducing errors,” noted Weigelt.
ERP, he said, can harmonize and streamline toolsets to provide a unified view of the business, while cloud computing can act as a complementary system to help you reduce your costs.
“With security concerns some executives want to be able to reach out and hug (some proprietary) things at night. Cloud com-puting is important to Microsoft as a company – all packaged soft-ware is going to the cloud. My view is that 2011 is the year for de-mystifying the cloud – it’s pretty nebulous. You need to work closely with legal and compliance authorities to make sure of what’s comfortable for you,” he said.
Whatever the tool, it’s the usability that drives future behaviour, and therefore usability must factor in to your metrics.
Weigelt noted that Prius drivers are frequent dashboard watch-ers. Their constant seeking out delivery of the best miles per gallon in effect determines their driving behaviour.
“If you give people the right tools and indicate the importance of these, they are going to use them.” CT&L
28 www.ctl.ca28 ct&l june 2011
conference reportSCL-CITA
Why supply chain’s role in the C-suite is growing
B y J u l i a K u z e l j e v i c h
the new voice in the boardroom
The supply chain has matured be-yond a departmental function to an important determiner of the
company’s bottom line. So making sure supply chain issues have a voice in the boardroom is crucial.
At the 2011 Supply Chain Canada-CITA conference, Fiona Renzi-Fantin, director of logistics and planning for Gen-eral Mills Canada, and responsible for its end-to-end supply chain, spoke about giving a dif-ferent lens to building a supply chain team.
“Companies want to hire the best and brightest with formal educational qualifications. The supply chain voice has never been more capable, credible and necessary,” she said. “There’s huge opportunity for supply chain to become a lead function, not a sup-port function.”
Post secondary training in supply chain is gaining in popularity, and with it credentialed and tenured candidates.
Meanwhile, globalization, as a concept and trend, is accelerat-ing, said Renzi, “and so some typical things that used to get done in supply chain, regardless of the sector, are moving to a low-cost, experienced workforce. Energy and raw materials are going through the roof and becoming buzzwords. Production and trans-portation, just moving the product, is becoming way more expen-sive. The bottom line is shrinking,” she said.
This is especially true in the Canadian landscape: logistics in Canada is an expensive proposition given the country’s small pop-ulation and huge land mass.
“As more and more people are investing more resources in supply chain, the expectations around supply chain contributions are in-creasing in all areas: cost, quality and service. Environmental and health trends are also something we need to consider because they are not going away,” said Renzi, who has run sourcing, demand plan-ning, and now inbound and outbound logistics, first in retail and then in consumer packaged goods.
The concept of building an influen-tial supply chain profile, connecting to the critical needs of your organization, and defining your supply chain voice are behind what Renzi calls the five “I”s: influence, identity, inspiration, the ability to initiate, and the ability to innovate.
“Your identity needs to be more than where you work. It can’t just be
associated with your role, in this case your supply chain role. It needs to be linked to your
organizational deliverables. You need to become known for more than just the service piece, or the cost
per case piece, so you can get to a different identity. If you have an idea and you want to bring it to the boardroom, your reputation has to be that you are a consistent performer against those deliverables,” she said.
Fostering a spirit of continuous improvement in those areas is also necessary.
“How do you partner with your cross-functional people to show that you’re flexible, and that even if an idea is something you don’t agree with, you could build it into something that’s executable?”
In terms of inspiration, “the part we need to think of as supply chain professionals comes down to your supply chain talent. How is it developed and where is it located? Is the talent up-wardly mobile? Permitting movement and cross-functionality means you’re starting to penetrate the organization, making the supply chain process interesting enough for someone to come into it,” said Renzi.
Benchmarking, which is as easy as picking up the phone and leveraging information, is a way of initiating and then innovating.
“That’s your opportunity to bring the outside in, to see areas where you can be a little bit more innovative. Leading fact-based change sets the stage for future capabilities. Taking things that are tried, tested and true is a great example of innovating what’s al-
Palmer Marketing 905.672.6282 • 800.247.5550
Let our team help yoursProud to serve the transportation industry since 1988!
Branding Strategies • Web Development • Print & Promotions
B-ManPM Mascot
Robin Promotions and Print Production
AnthonyGraphic Artist and Account Manager
SteveGraphic Artist and Photographer
MarlonWeb Design and Flash Specialist
JerryAll Things Web and Technical
CarlosWeb and Print Designer
RudyGraphic Designer and Illustrator
SamCreative Director and Account Manager
LeeThe Boss Since 1988
29ct&l june 2011www.ctl.ca
conference reportSCL-CITA
ready there,” said Renzi.But connecting to your organization’s critical needs is not an
easy thing to do. Hence the concept of inclusion: a cross-function-al audience, with cross-functional collaboration.
“If you’re not involved in integrated business management, you’re losing the opportunity to gain alignment, and to focus across all functions,” said Renzi.
In defining your supply chain voice, there’s an opportunity to take the “I”s and to figure out where you want to be in the next five years.
“The secret to getting started is to break your complex, over-whelming tasks into small manageable ones, and then to start on the first one,” said Renzi.
“Once you have the short term stuff, your long range plan tells your entire organization, ‘These are the things you can count on from my team.’ You have to then be thinking forward, being in-clusive, bringing your team together,” she said.
A long-range plan looks at things three to five years out, consid-ers future trends, outlines deliverables and KPI’s, showing a year-over-year improvement, and fits into the organization’s big pic-ture. The plan also must include talent, structure and development, and has to include a succession plan – i.e. what are the right roles for that person in the next five years?
“While we all start out with the best of intentions, commit-
ment is paramount to success. Change is one thing, but abandon-ment of the plan is another. You have to really carve out time to nurture your idea and bring it to fruition. Can you articulate your idea, figure out how it fits in with somebody else’s deliverables?” said Renzi.
“Go from collecting the information to advising on it, and you’ll really see that you’ve become someone with a voice at the table,” she added.
Indeed, supply chain professionals have never been more ca-pable or more necessary to their organizations, said Renzi.
“They’re taking on a more credible and integrated role not only within the supply chain, but within their organization as a whole. And now is the time for supply chain professionals to raise their voices,” she said.
But be careful what you wish for, cautioned Renzi. You’ll start to get invited to a lot more meetings!
She also stressed that training does not have to come from a coach in a classroom setting.
“Knowledge transfer can come from internal sources, from mentoring, from experienced people in sales who can talk about the customers, for example, or from supply chain people who can talk about plant operations, for example. Those people are experts and many times you can learn more from them than you can in any classroom,” said Renzi. CT&L
Palmer Marketing 905.672.6282 • 800.247.5550
Let our team help yoursProud to serve the transportation industry since 1988!
Branding Strategies • Web Development • Print & Promotions
B-ManPM Mascot
Robin Promotions and Print Production
AnthonyGraphic Artist and Account Manager
SteveGraphic Artist and Photographer
MarlonWeb Design and Flash Specialist
JerryAll Things Web and Technical
CarlosWeb and Print Designer
RudyGraphic Designer and Illustrator
SamCreative Director and Account Manager
LeeThe Boss Since 1988
30 www.ctl.ca30 ct&l june 2011
Palmer� Mar�keting� hits their�
str�ide
This is a paid advertisement by Palmer Marketing and part of our research in measuring the effectiveness of the advertorial approach to print advertising. All comments and suggestions are encouraged and appreciated.
Haven’t heard of Palmer Marketing (PM)? That could change. They’ve developed the advertising material for 20 of the top 50 for hire carriers and work with over 100 transportation and transportation related companies, across Canada. They have assisted the marketing efforts of the transportation sector since 1988. That’s 23 years focused on promoting the industry.
Like many enterprises, the recession had a significant impact on the company. In PM’s case, it forced them to focus and further develop their strengths in web and branding. It meant replacing administrative positions with additional creative power. It also meant fully understanding the techniques necessary to make their customers’ websites more effective from a messaging, search engine ranking and content management perspective.
According to owner Lee Palmer, “If your web hasn’t had a significant update over the last 4 to 5 years it is likely out of date in both look and marketability. Due to competitive pressure to provide clients with real time shipment visibility, most trucking companies have focused on the back-end functionality of their web development. Based on a recent PM study, the majority of transportation websites have failed to adopt current web design trends, develop a concise and believable message and take full advantage of the many search engine optimization (SEO) techniques available to them.”
Lee Palmer along with his Creative Director Sam Cockcroft, presented at the 3rd Annual Transportation Company Workshop hosted by Dan Goodwill & Associates and Motortruck Fleet Executive. At the May 25, 2011 conference, they discussed the 4 key targets a company’s web should address, common pitfalls to avoid and some first steps to get your web marketing moving in the right direction. It was their first time presenting to the industry in this manner and their insight on the topic was very well received.
Lee Palmer’s blogs are a regular feature on TruckNews.com and PM’s profile and quality of work are constantly on the rise.
Mr. Palmer states, “Our company is much like the transportation industry we serve. Standing still is moving backwards. You can’t compromise on talent or rest on your laurels and think everything will be okay. Moving forward means taking action and throwing ‘but we’ve always done it that way’ out the window. Today our company is truly making an impact on the industry and best of all, our clients really appreciate the work we do for them. We’ve put companies small and large on a much better path with their marketing.”
As spelled out in their newly designed website (trypm.com), the PM process works for every industry. Still the Mississauga based firm shines brightest when their customers are in the transportation sector. Truckload, LTL, intermodal, warehousing, freight brokerage, customs brokers, international forwarders, regional carriers, national carriers and suppliers to the industry, all trust PM to create their marketing programs. In addition to web media, their clients’ print ads appear on a regular basis in Canadian Transportation and Logistics magazine. They pride themselves on their ability to do the best job possible for each client by tailoring each look and message to their customers’ unique offering.
The integrated marketing approach is not unique to PM but to be able to roll out a complete program across all B2B media after a single two hour discovery meeting, certainly is. They offer a turnkey solution for branding, web, print and promotions. They rolled out a major name and branding change for Trailer Wizards last fall and have launched 20 sites of significance since then, a literally who’s who in transportation (featured in the portfolio section of their new website).
Palmer Marketing has hit their stride and with their extensive industry knowledge, can deliver the desired results and cross the finish line quicker than most other agencies. To find out more about their services, geared specifically to the transport industry, contact them at 800.247.5550 or [email protected].
conference reportSCL-CITA
Shippers and rail officials debate what’s needed in the months ahead
B y L o u S m y r l i s
What’s next for the Rail Freight Service Review?
Prior to the election, Ottawa inserted itself into the nation’s rail
freight transportation land-scape in a major way by an-nouncing its support for the four key elements of the Rail Freight Service Review and committing itself to tabling a bill that would give all shippers the right to a Ser-vice Level Agreement and provide a process to estab-lish an agreement if com-mercial negotiations fail.
Ottawa also plans to establish a Com-modity Supply Chain Table to provide a forum for exporters to address issues that affect the rail freight logistics system and develop supply chain performance met-rics that would be publically available.
Transport Canada will also be working on an in-depth analysis of the grain indus-try supply chain although at this point it’s not known what the analysis will entail.
It all makes for an ambitious set of plans for the government and the specif-ics of the eventual implementation will be much anticipated by shippers and the railways alike. A facilitator is to be ap-pointed to work with railway and indus-try organizations to first develop a stream-lined commercial dispute resolution
process and then to develop a boilerplate Service Level Agreement that can form the basis of discussions between shippers and railways.
It’s still not certain if the facilitated process will produce the dispute resolu-tion process that is ultimately imbedded into the SLA.
Such details, however, have been held back because of the election and not much may surface during the summer ei-ther. But the delay is giving shippers time to articulate their ideas on what they would like to see from Ottawa.
At the recent SCL-CITA conference, Greg Cherewyk, executive director, Pulse Canada, shared his thoughts on the issue along with Ray Foot, group vice
president, Canadian Pacific Railway.
Pulse Canada is a nation-al industry association that represents over 30,000 growers of pulses or peas, lentils, beans and chickpeas from Alberta through to Ontario. It also represents more than 120 processors and exporters of pulses and special crops from Vancou-ver through to Quebec. These members range from the family run operations
with one facility to the multinational grain companies with facilities across Canada and around the world.
Canada is a major player in the pulses market. We are the world’s largest pro-ducer and exporter of peas with over 55% of world trade. We’re also the world’s largest producer and exporter of lentils with over 50% of world trade and we’re a top five exporter of beans and chickpeas moving over $300 million worth in 2010. Last year we exported over 4 million tonnes worth of pulses, accounting to more than $2 billion dol-lars. This is a multimodal business with product moving bulk in hopper cars, bagged in boxcars and intermodal vans and source loaded and port loaded in
Palmer� Mar�keting� hits their�
str�ide
This is a paid advertisement by Palmer Marketing and part of our research in measuring the effectiveness of the advertorial approach to print advertising. All comments and suggestions are encouraged and appreciated.
Haven’t heard of Palmer Marketing (PM)? That could change. They’ve developed the advertising material for 20 of the top 50 for hire carriers and work with over 100 transportation and transportation related companies, across Canada. They have assisted the marketing efforts of the transportation sector since 1988. That’s 23 years focused on promoting the industry.
Like many enterprises, the recession had a significant impact on the company. In PM’s case, it forced them to focus and further develop their strengths in web and branding. It meant replacing administrative positions with additional creative power. It also meant fully understanding the techniques necessary to make their customers’ websites more effective from a messaging, search engine ranking and content management perspective.
According to owner Lee Palmer, “If your web hasn’t had a significant update over the last 4 to 5 years it is likely out of date in both look and marketability. Due to competitive pressure to provide clients with real time shipment visibility, most trucking companies have focused on the back-end functionality of their web development. Based on a recent PM study, the majority of transportation websites have failed to adopt current web design trends, develop a concise and believable message and take full advantage of the many search engine optimization (SEO) techniques available to them.”
Lee Palmer along with his Creative Director Sam Cockcroft, presented at the 3rd Annual Transportation Company Workshop hosted by Dan Goodwill & Associates and Motortruck Fleet Executive. At the May 25, 2011 conference, they discussed the 4 key targets a company’s web should address, common pitfalls to avoid and some first steps to get your web marketing moving in the right direction. It was their first time presenting to the industry in this manner and their insight on the topic was very well received.
Lee Palmer’s blogs are a regular feature on TruckNews.com and PM’s profile and quality of work are constantly on the rise.
Mr. Palmer states, “Our company is much like the transportation industry we serve. Standing still is moving backwards. You can’t compromise on talent or rest on your laurels and think everything will be okay. Moving forward means taking action and throwing ‘but we’ve always done it that way’ out the window. Today our company is truly making an impact on the industry and best of all, our clients really appreciate the work we do for them. We’ve put companies small and large on a much better path with their marketing.”
As spelled out in their newly designed website (trypm.com), the PM process works for every industry. Still the Mississauga based firm shines brightest when their customers are in the transportation sector. Truckload, LTL, intermodal, warehousing, freight brokerage, customs brokers, international forwarders, regional carriers, national carriers and suppliers to the industry, all trust PM to create their marketing programs. In addition to web media, their clients’ print ads appear on a regular basis in Canadian Transportation and Logistics magazine. They pride themselves on their ability to do the best job possible for each client by tailoring each look and message to their customers’ unique offering.
The integrated marketing approach is not unique to PM but to be able to roll out a complete program across all B2B media after a single two hour discovery meeting, certainly is. They offer a turnkey solution for branding, web, print and promotions. They rolled out a major name and branding change for Trailer Wizards last fall and have launched 20 sites of significance since then, a literally who’s who in transportation (featured in the portfolio section of their new website).
Palmer Marketing has hit their stride and with their extensive industry knowledge, can deliver the desired results and cross the finish line quicker than most other agencies. To find out more about their services, geared specifically to the transport industry, contact them at 800.247.5550 or [email protected].
32 www.ctl.ca32 ct&l june 2011
Guess Who Found A New Job?
Getting a new job is life-affirming! Are you stuck in a job, and looking for something new? Well, you too can find a job in 201 on www.HireLogistics.ca, a new jobs website
for transportation and supply chain professionals. HireLogistics is brought to you by Canadian Transportation
& Logistics magazine. Check it out today.
Attn: Employers ~ Job Postings Are Free!Post your jobs for FREE on HireLogistics.ca. Your ad will also
appear simultaneously on three other jobs websites: ctl.ca, TransportPlanet.com, and Trucknews.com.
www.HireLogistics.ca1
conference reportSCL-CITA
marine containers and shipped to nearly 150 countries each year.
“But because we’re moving smaller lots of agri-product, we do have our chal-lenges when it comes to transportation. Although there are many different play-ers from steamship lines to truckers to transloaders, the central figure to our move is the railways and as a result, our industry took the recent Rail Freight Ser-vice Review very seriously,” explained Cherewyk.
Pulse Canada filed one of the 140 sub-missions to the Rail Freight Service Re-view Panel and met with the Panel and Secretariat on 5 separate occasions. This is what Cherewyk would like to see happen over the next few months:
Focusing on the supply chain analysis that could be undertaken as part of the Commodity Supply Chain Table and the grain industry supply chain analysis or both, Cherewyk emphasized “we don’t need another forum to discuss issues.”
“The time has come for a thorough and meaningful analysis of the entire sup-ply chain. It’s time to map the relation-ships between stakeholders, understand and document the current state of the sys-tem from each player’s perspective and their desired future state. By applying lean management principles or a hybrid of different efficiency oriented strategies, we can not only start the process of creat-ing a common understanding of desired future performance but also identify the gaps in information and put together a common roadmap for the supply chain,” he told conference attendees.
Referring to his own industry as an ex-ample, he said steamship lines have a lack of confidence in bookings and this leads to overbooking of capacity. Booking cancel-lations are a result of a number of differ-ent challenges faced across the system that ultimately result in shippers mitigat-ing risk by overbooking and resorting to last minute cancellations when they are more certain about the cargo’s arrival time, he explained. What would it take to cut the number of TEU’s cancelled per week in half? he wondered.
“What things would have to happen across the entire supply chain to result in
more bookings materializing? And it’s not simply about cancellation fees – that does nothing to address the root cause of the problem, which can extend right back to the confirmation of a customer’s or-der,” he mused.
The Rail Freight Service Review fo-cused heavily on quantifiable evidence of performance, particularly rail freight per-formance, in order to move away from anecdotal evidence and towards objective and credible information.
“Any analysis of current state, desired future state, including success criteria and targets, requires that we take perfor-mance measurement seriously,” con-curred Cherewyk, adding that reporting from all members must be detailed: “Car order fulfillment is important, but perfor-mance reporting at origin for shippers also must reflect how many cars were allocat-ed against orders and how many cars were spotted according to plan.”
Cherewyk also believes:Reporting must be frequent, capturing
performance on a weekly and monthly basis. “There’s no point in measuring and reporting at a level that is so aggregated that it loses meaning. If you look at rail car order fulfillment for the year, you’ll find that nearly 100% of orders are ulti-mately filled. On a weekly basis, howev-er, we know that during the Review, 100% of the orders were filled only 49% of the time,” he said.
Reporting must be timely, with no bu-reaucratic processes holding up the re-lease of data. “Accountability requires timely reporting and many of these mea-sures are available in near real time. Re-ceiving a report the month after a quarter has ended is unacceptable if we’re truly looking to achieve supply chain optimiza-tion,” he said.
Reporting methodology must be inde-pendently verified to ensure it will pro-duce information that accurately reflects performance. “At minimum we need the Sheila Fraser of the supply chain to ensure the numbers are honest,” Cherewyk said.
Ray Foot, group vice president, Cana-dian Pacific Railway, said regulation to give shippers the right to a service agree-ment is not necessary and that CP would
prefer commercial measures. He ex-plained that his railway’s primary method of business relationship with its shippers is through bi-lateral commercially negoti-ated confidential contracts with large and small shippers alike and these commer-cially negotiated agreements already lay out service and price terms and commit-ments the parties have negotiated
“CP has a very detailed and effective service resolution process for both one time and systemic service issues. That process works effectively on a customer by customer basis,” Foot said, although he conceded “challenges tend to arise when there are ‘unavoidable’ and ‘catastrophic’ events that impact service and freight movement across significant portions of or across the entire network.”
Foot also said he supports the plan to establish a Commodity Supply Chain Table and to complete an analysis of the grain supply chain and advised following the Asia-Pacific Gateway model, includ-ing its supply chain performance table and identification of best practices. CT&L
The four key elements to the Rail Freight Service Review Panel recommendations
1. consultation and notification of servicechanges;
2. implementation of service agreements;
3. establishment of a fair and balanced dispute resolution process; and
4. enhanced performancereporting.
Guess Who Found A New Job?
Getting a new job is life-affirming! Are you stuck in a job, and looking for something new? Well, you too can find a job in 201 on www.HireLogistics.ca, a new jobs website
for transportation and supply chain professionals. HireLogistics is brought to you by Canadian Transportation
& Logistics magazine. Check it out today.
Attn: Employers ~ Job Postings Are Free!Post your jobs for FREE on HireLogistics.ca. Your ad will also
appear simultaneously on three other jobs websites: ctl.ca, TransportPlanet.com, and Trucknews.com.
www.HireLogistics.ca1
34 www.ctl.ca34 ct&l june 2011
While other companies talk about sustainability, Grand & Toy is doing something about it. More importantly, it is relying on innovative transportation and logistics prac-
tices to drive its green business initiatives.In simple terms, the venerable office supplies firm plans to re-
structure its relationship with customers. According to Patricia Moser, Grand & Toy’s Toronto-based vice-president of supply chain, “We don’t want to be just a supplier of products. We want to become a true partner to our customers that can help them achieve their sustainability and other business goals.
“We see sustainability as a great marketing opportunity.”Such a novel approach is a part of the growing trend among re-
tailers and other firms as they try to reach out to consumers and cli-ents who are now shopping with their values, not just their wallets.
The icebreaker for Grand & Toy’s approach was its 2009 intro-duction of 48-hour delivery to replace the existing industry stan-dard of overnight deliveries. When initially introduced in British Columbia, about 50% of firms opted in. Later, when it was rolled out nationally, the percentage was larger. In fact, in 2010, 76.5 % of its customers chose the option, an increase of just more than one-third from earlier figures.
Over the same time period, as a result of the change and other internal efficiencies, Grand & Toy eliminated a total of 30 delivery trucks from its various fleets – 18 trucks from its own and 12 from
How Grand & Toy is restructuring internal supply chain operations and reconfiguring customer relationships to make the shift from goods supplier to sustainability partner
B y K e n M a r k
How Grand & Toy is restructuring internal supply chain
procurement
sustainabilitysupply chain
procurementresponsible
external, dedicated contracted fleets. At the same time, like many other progressive retailers and sup-
pliers, it is also rapidly expanding its inventory of green products and services under its sustainable/ethical sourcing program. This bur-geoning phenomenon has been dubbed “responsible procurement.”
According to Scott MacDougall, Ottawa-based president of Ter-raChoice, a division of Underwriters Laboratories (UL), the begin-nings of the sustainable products movement arose from the fringes of the economy by early environmental supporters. “It then sur-faced among very large firms such as Walmart and Home Depot,” he says. “That happened because very large firms have greater con-trol over their supply chain partners.”
He also notes that smaller players are now getting involved. Sus-tainability is focused on reducing energy usage, greenhouse gas (GHG) emissions and carbon footprints. But corporate social re-sponsibility (CSR) statements typically also include other ethical issues including human rights, labour conditions and fair trade.
“Suppliers are adopting new sustainability commitments to dif-ferentiate themselves from the competition and move away from commodity-type goods and services which are more price sensi-tive,” he says.
To make the shift from goods supplier to sustainability partner, Grand & Toy had to restructure its own internal operations as well as reconfigure its relationships with customers. On the product
35ct&l june 2011www.ctl.ca
sourcing side, it had to revise RFPs for its suppliers to find out more about their sustainability policies and practices. “We wanted to be sure that it was more than ‘vapour ware,’” says Moser. “We start our due diligence by asking for their sustainability CSR statements, looking at relevant records, reports and statistics that show the re-sults and trends in their practices.
“We pay close attention to their power and fuel usage, how they are eliminating waste and how they are working with their own suppliers to reduce GHG emissions, power usage and their carbon footprint.
“For multi-national firms, we ask, ‘Is the sustainability CSR a global statement or a Canadian policy?’ We often find that they are separate and the Canadian activity is not a priority. And where practical, we make site visits.”
In addition, Grand & Toy maintains a continuing dialogue on various projects with its US parent, OfficeMax. Sometimes it serves as a laboratory for some initiatives or it may propose others on its own.
Gaining traction with customers remains a challenge. “We need to disprove the notion that sustainability costs money,” says Moser. “Our counterargument is that it makes more business sense.”
To backup that claim, Moser’s team asks customers about their future business plans and what goals they want to achieve while meeting their business needs. In response, the team then sits down with their counterparts to discuss the next steps. Much of the re-sulting discussion is based on Grand & Toy’s past business reports – at least six months of procurement records on what the customers bought, how often they ordered, prices they paid, etc.
After developing a basic scorecard, the team offers insights into the customer’s total spend and suggests ways to reduce the number of deliveries. As well, the team shifts into full consulting mode to share ideas about introducing change management to the organiza-tion. That’s crucial because new ordering processes and delivery schedules are often highly disruptive. To ensure employee buy-in as quickly as possible, the team helps customers communicate, through lunch and learn sessions and the like, the importance of the changes to the organization and their relevance to improving em-ployees’ everyday routines.
Instead of adopting a one-size-fits-all approach, Grand & Toy tailors its solutions to meet an individual firm’s specific needs. Ex-cerpts from the McMaster University case study clearly lay out the depth and breadth of Grand & Toy’s proposals, not to mention summarizing the project’s successes.
The university stated its overall objectives as needing to:• streamline office supplies procurement, reduce cardboard
usage and deliveries to and on campus to realize monetary savings;• promote sustainable procurement practices and the purchase
of environmentally preferable office supplies to reduce its carbon footprint.
The benefits of Grand & Toy’s implementation included:• reducing delivery frequency from five per week to one:• decreasing the number of on-campus stops from three
locations to two; • lowering annual weekly on-campus deliveries from 780 stops
at three locations to 104 stops at two locations;• making the campus more pedestrian-friendly, reducing noise
and lowering GHG emissions through less truck traffic;• eliminating 20,000 cardboard boxes or 44% from landfill by
introducing reusable plastic containers and tote bags; and• Reducing McMaster-specific deliveries’ GHG emissions
by 62%.
Reusable fabric tote bags became the poster child for the project. They replaced cardboard boxes for packaging orders. Both sides worked together to develop the idea and design them. Each tote bag is cinched tight with a drawstring and then sealed with a label indi-cating the customer’s exact location on campus. Filled bags are placed in large secure, reusable containers and delivered to McMas-ter’s central receiving depot.
University personnel deliver the tote bags to identified custom-ers, who return the tote bags to the central depot through the inter-nal mail system. Grand & Toy picks them up to be reused for the following week’s orders. The two partners also collaborated on de-signing the dollies that transport the empty plastic containers used to move the tote bags.
Since incoming deliveries are labelled and pre-sorted by building and floor in the plastic reusable containers, they are now faster, easier and more efficient. Despite the tote bags’ huge success, Grand & Toy has no immediate plans to roll out the program to other customers.
But there’s more to come at McMaster. To reduce paper, post-age and associated costs while increasing ordering speed and effi-ciency, the university plans to adopt Grand & Toy’s e-invoicing so-lution. It will enable the Purchasing Resources department to view, manage and download all invoices through the grandandtoy.com portal. In addition, McMaster will also identify more sustainable product choices to further reduce costs and minimize its environ-mental impact even more.
According to TerraChoice’s MacDougall: “This evolving dy-namic between customers and supplier creates a virtuous business and sustainability circle that feeds on itself. As retailers and corpo-rate customers request more sustainable products and services from suppliers, market demand increases as more selection be-come available. That, in turn, further boosts the appetite for more sustainable products.
“For suppliers, the ROI (return on investment) comes from ad-ditional or protected market share. That results from increasing their share of customers’ wallets and moving up the value chain to sell higher-value, higher-margin green products and services.”
That’s exactly Grand & Toy’s game plan. “Our message to sales reps is that sustainability is a competitive marketing strategy,” says Patricia Moser. “We need to develop a long-term relationship with customers based on a true partnership because simply selling them more stuff is not an engine for future growth.
“We must take time to analyze their total spend and help them rationalize their suppliers list and expand our share of that budget by providing them with a wider range of products and services. We are not just about office products, but also offer many other prod-ucts and services such as facilities supplies for lunchrooms and washrooms, office interiors including furniture and technology, computer peripherals and accessories.
“We want to move toward long-term, single-sourcing arrange-ments which resonate more with the needs of senior-level procure-ment executives. To do that, we must establish trust and credibility by helping customers achieve their sustainability goals.”
MacDougall confirms that is a winning strategy. “Early adopters come out ahead as they ride the wave of ever-increasing consumer demand for green products,” he says. CT&L
Veteran technology expert Ken Mark has covered supply chain management since it was called distribution and has docu-mented its legitimization as a critical business function. He holds an MBA from York University.
18%
36 ct&l june 201136
inside the numbers
18%That’s the percentage of
Canadian manufacturers who
reported stock accumulation
in May, according to the new
RBC Canadian Purchasing
Managers Index.
GROWTH MINDED: HOW CANADIAN SUPPLY CHAINS ARE ADAPTING TO THE RECOVERYGrowth in freight volumes as well as customer demands over the next few years will place greater strain on supply chain practices that have become less flexible after being subject to cost cuts during the recession. How are shippers planning to respond? An annual survey of large shippers conducted by Dr. Alan Saipe on behalf of the Canadian Industrial Transportation Association sheds some light on that question. Centralizing transportation management is an endeavour underway by two thirds of the shippers responding to the survey. Aligning transpor-tation more closely with related departments is also a popular approach as is investing in a Transportation Management System. Efficient transport of freight across the border is a key concern for many large shippers and the survey found fairly strong penetration of the C-TPAT program but considerably less penetration of other border security programs, such as PIP, FAST and CSA. Environmental considerations are also growing in importance when shippers look for carriers to haul their freight, the survey found.
Environmental Considerations Questions (% of replies ’05-‘10) 2010 2009 2008 2007 2006 2005
Yes Yes Yes Yes Yes YesWhen selecting a transportation service provider today . . .
Do you consider any environmental factors thatreduce greenhouse gas emissions? 40% 33% 48% 26% 17% 20%
Do you consider any environmental factors thatreduce air pollutant emissions? 47% 39% 45% 29% N/A N/A
Are you aware if they use hybrid or alternative fuels? 60% 33% 38% 53% 33% 40%
Do you consider the age of the engines in the carrier’s fleet? 47% 33% 30% 32% 28% 25%
Transportation department changes & initiatives underway
Change %Yes Aligning transportation more closely with related departments 42.9%
Implementing a Transportation Management System – TMS 42.9% Implementing other information technology 41.7%
Centralizing transportation management 66.7% De-centralizing transportation management 18.2%
Adding staff 21.4% Reducing staff 15.4%
Outsourcing some transportation management activities 7.1% Insourcing some transportation management activities 15.4%
Border Programs Already in use Applied Planning to Apply Sub Total Will not Apply Undecided
Customs Trade Partnership 53.3% 0.0% 13.3% 66.7% 20.0% 13.3%Against Terrorism (C-TPAT)
Partners in Protection (PIP) 20.0% 0.0% 20.0% 40.0% 33.3% 26.7%
Free and Secure Trade 21.4% 7.1% 7.1% 35.7% 50.0% 14.3%Program (FAST)
Customs Self Assessment 7.1% 0.0% 14.3% 21.4% 35.7% 42.9%
Growth in transportation volume 2008 to 2010
2008 2009 2010
Reducing slowly 5% 16% 13%Remaining about 24% 37% 25%the same
Increasing slowly 48% 26% 38%Increasing quickly 24% 21% 25%
D A S H B O A R D
2007 2008 2009 2010 2011 Percent Change Y-O-Y
Jan 173 214 140 171 222 30%
Feb 174 217 117 182 248 36%
Mar 228 264 131 249 337 35%
Apr 212 296 142 261 300 15%
May 280 316 164 283
Jun 288 307 185 294
Jul 219 264 156 238
Aug 235 219 160 240
Sep 206 203 180 234
Oct 238 186 168 211
Nov 227 143 157 215
Dec 214 139 168 225
TransCoreCanadianSpotMarketFreightIndex2007-2011
2007 2008 2009 2010 2011 Percent 2007 2008 2009 2010 2011 Percent 2007 2008 2009 2010 2011 Percent 2007 2008 2009 2010 2011 Percent 2007 2008 2009 2010 2011 Percent 2007 2008 2009 2010 2011 Percent 2007 2008 2009 2010 2011 Percent
30% 173 214 140 171 222 173 214 140 171 222 173 214 140 171 222 173 214 140 171 222 173 214 140 171 222 173 214 140 171 222 173 214 140 171 222 173 214 140 171 222 173 214 140 171 222 173 214 140 171 222Jan 173 214 140 171 222
36% 174 217 117 182 248 174 217 117 182 248 174 217 117 182 248 174 217 117 182 248 174 217 117 182 248 174 217 117 182 248 174 217 117 182 248 174 217 117 182 248 174 217 117 182 248 174 217 117 182 248Feb 174 217 117 182 248
35% 228 264 131 249 337 228 264 131 249 337 228 264 131 249 337 228 264 131 249 337 228 264 131 249 337 228 264 131 249 337 228 264 131 249 337 228 264 131 249 337 228 264 131 249 337 228 264 131 249 337Mar 228 264 131 249 337Mar 228 264 131 249 337Mar
212 296 142 261 300 15% 212 296 142 261 300 1 212 296 142 261 300 1 212 296 142 261 300 1 212 296 142 261 300 1 212 296 142 261 300 1 212 296 142 261 300 1 212 296 142 261 300 1 212 296 142 261 300 1 212 296 142 261 300 1 212 296 142 261 300 1 212 296 142 261 300 1Apr 212 296 142 261 300 1Apr 212 296 142 261 300 1Apr
280 316 164 283 280 316 164 283 280 316 164 283 280 316 164 283 280 316 164 283 280 316 164 283 280 316 164 283 280 316 164 283 280 316 164 283 280 316 164 283 May 280 316 164 283 May 280 316 164 283 May
288 307 185 294 288 307 185 294 288 307 185 294 288 307 185 294 288 307 185 294 288 307 185 294 288 307 185 294 288 307 185 294 288 307 185 294 288 307 185 294 Jun 288 307 185 294
219 264 156 238 219 264 156 238 219 264 156 238 219 264 156 238 219 264 156 238 219 264 156 238 219 264 156 238 219 264 156 238 219 264 156 238 219 264 156 238 Jul 219 264 156 238
235 219 160 240 235 219 160 240 235 219 160 240 235 219 160 240 235 219 160 240 235 219 160 240 235 219 160 240 235 219 160 240 235 219 160 240 235 219 160 240 Aug 235 219 160 240
206 203 180 234 206 203 180 234 206 203 180 234 206 203 180 234 206 203 180 234 206 203 180 234 206 203 180 234 206 203 180 234 206 203 180 234 206 203 180 234 Sep 206 203 180 234
238 186 168 211 238 186 168 211 238 186 168 211 238 186 168 211 238 186 168 211 238 186 168 211 238 186 168 211 238 186 168 211 238 186 168 211 238 186 168 211 Oct 238 186 168 211 Oct 238 186 168 211 Oct
227 143 157 215 227 143 157 215 227 143 157 215 227 143 157 215 227 143 157 215 227 143 157 215 227 143 157 215 227 143 157 215 227 143 157 215 227 143 157 215 Nov 227 143 157 215 Nov 227 143 157 215 Nov
214 139 168 225 214 139 168 225 214 139 168 225 214 139 168 225 214 139 168 225 214 139 168 225 214 139 168 225 214 139 168 225 214 139 168 225 214 139 168 225 Dec 214 139 168 225
TransCore Canadian Spot Market Freight Index 2007-2011
2007 2008 2009 2010 2011 Percent
173 214 140 171 222
174 217 117 182 248
228 264 131 249 337
212 296 142 261 300 1
280 316 164 283
288 307 185 294
219 264 156 238
235 219 160 240
206 203 180 234
238 186 168 211
227 143 157 215
214 139 168 225
2007 2008 2009 2010 2011 Percent
173 214 140 171 222
174 217 117 182 248
228 264 131 249 337
212 296 142 261 300 1
280 316 164 283
288 307 185 294
219 264 156 238
235 219 160 240
206 203 180 234
238 186 168 211
227 143 157 215
214 139 168 225
Change Y-O-Y
2007 2008 2009 2010 2011 Percent
173 214 140 171 222
174 217 117 182 248
228 264 131 249 337
212 296 142 261 300 1
280 316 164 283
288 307 185 294
219 264 156 238
235 219 160 240
206 203 180 234
238 186 168 211
227 143 157 215
214 139 168 225
Change Y-O-Y
2007 2008 2009 2010 2011 Percent
173 214 140 171 222
174 217 117 182 248
228 264 131 249 337
212 296 142 261 300 1
280 316 164 283
288 307 185 294
219 264 156 238
235 219 160 240
206 203 180 234
238 186 168 211
227 143 157 215
214 139 168 225
Change Y-O-Y
2007 2008 2009 2010 2011 Percent
173 214 140 171 222
174 217 117 182 248
228 264 131 249 337
212 296 142 261 300 1
280 316 164 283
288 307 185 294
219 264 156 238
235 219 160 240
206 203 180 234
238 186 168 211
227 143 157 215
214 139 168 225
Change Y-O-Y
2007 2008 2009 2010 2011 Percent
173 214 140 171 222
174 217 117 182 248
228 264 131 249 337
212 296 142 261 300 1
280 316 164 283
288 307 185 294
219 264 156 238
235 219 160 240
206 203 180 234
238 186 168 211
227 143 157 215
214 139 168 225
Change Y-O-Y
2007 2008 2009 2010 2011 Percent
173 214 140 171 222
174 217 117 182 248
228 264 131 249 337
212 296 142 261 300 1
280 316 164 283
288 307 185 294
219 264 156 238
235 219 160 240
206 203 180 234
238 186 168 211
227 143 157 215
214 139 168 225
Change Y-O-Y
2007 2008 2009 2010 2011 Percent
173 214 140 171 222
174 217 117 182 248
228 264 131 249 337
212 296 142 261 300 1
280 316 164 283
288 307 185 294
219 264 156 238
235 219 160 240
206 203 180 234
238 186 168 211
227 143 157 215
214 139 168 225
Change Y-O-Y
2007 2008 2009 2010 2011 Percent
173 214 140 171 222
174 217 117 182 248
228 264 131 249 337
212 296 142 261 300 1
280 316 164 283
288 307 185 294
219 264 156 238
235 219 160 240
206 203 180 234
238 186 168 211
227 143 157 215
214 139 168 225
Change Y-O-Y
2007 2008 2009 2010 2011 Percent
173 214 140 171 222
174 217 117 182 248
228 264 131 249 337
212 296 142 261 300 1
280 316 164 283
288 307 185 294
219 264 156 238
235 219 160 240
206 203 180 234
238 186 168 211
227 143 157 215
214 139 168 225
Change Y-O-Y
2007 2008 2009 2010 2011 Percent
212 296 142 261 300 1
Change Y-O-Y
2007 2008 2009 2010 2011 Percent
212 296 142 261 300 1
TransCoreCanadianSpotMarketFreightIndex2007-2011
37ct&l june 2011www.ctl.ca
Transcore’s Canadian Spot Market Freight Index softens in AprilCanada’s sizzling spot market cooled in April after record-breaking freight availability in March.
TransCore’s Canadian Freight Index saw load volumes for April register a 15% year-over-year increase, surpassing the previ-ous record set in April 2008. However, volumes were down 12% from March.
Equipment postings were also down, reaching their lowest re-corded levels since 2005, TransCore reported. Available capacity was down nearly 20% from April 2010.
“While capacity and loads both decreased from the prior month, surprisingly the ratio of available equipment to loads re-mained at the exact same level on a month-to-month basis,” TransCore reported.
TransCore’s Canadian-based Loadlink freight matching data-base constitutes the largest Canadian network of carriers, owner operators, freight brokers and intermediaries and has been avail-able to Canadian subscribers since its inception in 1990. Over 13 million full loads, LTL (less than truckload) shipments and trucks are posted to the Loadlink network annually. As a result of this high volume, TransCore believes its Canadian Freight Index is representative of the ups and downs in spot market freight move-ment and provides a historical account of the domestic and cross border spot market freight movement.
The first five columns in Table 1 include monthly index values for years 2007 through 2011. The last column indicates the per-centage change from 2010 to 2011. For the purpose of establishing a baseline for the index, January 2002 (index value of 100) has been used.
Increased fuel surcharges offsetting reductions in base ratesThe cost of ground transportation for Canadian shippers increased slightly in March when compared to February due to increases in Fuel Surcharges assessed by carriers, results published by the Canadian General Freight Index (CGFI) indicate.
The CGFI Total Freight Cost Index rose by .4% in March when compared to February, while the Base Rate Index, which excludes the impact of fuel surcharges assessed by carriers, decreased 0.7% during the same period. Offsetting the decrease in base rates was a significant increase in average fuel surcharges which rose from 17.4% to 18.8% of base rates.
Fuel surcharges increased for the 6th consecutive month, and reached their highest point in over 2 years.
“Increasing fuel prices continue to be the major factor affecting transportation costs”, commented Doug Payne, president & COO Nulogx. “While base rates are relatively stable to declining, increas-ing fuel prices are starting to have a real impact on shipping costs.”
US truck tonnage softens in April; ATA not worried US truck tonnage fell 0.7% in April after gaining a revised 1.9% (up from the 1.7% first reported) in March, according to the latest data from the American Trucking Associations.
Non-seasonally adjusted freight was down 8% in April compared to March.
Compared to April 2010, seasonally adjusted freight volumes were up 4.8%. In March, tonnage was 6.5% better than the same month the year before, ATA reports. The small setback should not be worrisome, ATA chief economist Bob Costello said.
“The drop in April is not a concern. Since freight volumes are so volatile truck tonnage is unlikely to grow every month, even on a sea-sonally adjusted basis,” Costello said. “I expect economic activity, and with it truck freight levels to grow at a moderate pace in the coming months and quarters.”
“The industry, and the economy at large, should benefit from the recent declines in oil and diesel prices,” Costello added. “Lower fuel costs will help freight volumes and motor carrier bottom lines going forward.”
38 ct&l june 2011 www.ctl.ca
the bigger picture
The improving job numbers provide further con-firmation that an economic recovery is under-way. The drop in commodity and fuel prices is
likely a brief reprieve on the way to a further upswing in business growth. With rising demand, shippers are facing a broad array of challenges in 2011. A tighten-ing transportation equipment supply is being triggered by driver shortages, new US government regulations and a reluctance of carrier executives to add capacity. This, coupled with rising freight rates and fuel surcharges, is causing shippers to revisit their freight transporta-tion paradigms.
Informed shippers realize that there are limitations as to what they can do to offset these market driven forces. To retain their business volumes, shippers must meet the demands of their clients in terms of order sizes and transit times. Large retailers are seeking greater control over their inbound freight transporta-tion. Within these parameters, shippers are exploring opportunities to blunt the impact of some of these changes. As I reflect on my recent conversations with shippers and my review of various published reports, here are some of the strategies and tactics they are employing or investigating.
Create Pooling Programs/Convert from LTL to TruckloadPooling arrangements allow sister companies or com-petitors to consolidate small parcel or LTL shipments in specific geographic areas in order to deliver lower-cost truckload shipments. This approach, where feasi-ble, offers some unique benefits. Participants in the pooling program have access to truckload pricing since their shipments share space on a full trailerload of freight. By filling trailers faster, the freight can move faster, speeding up the supply chain. The trucker wins by having more freight to transport.
Converting freight from LTL to less-costly truckload service is part of Home Depot’s five-year supply chain transformation plan in both the US and Canada. The Atlanta-based home improvement giant has created “rapid deployment centres” (RDCs) in the US and Canada. These are flow-through facilities that enable the cross-docking of large quantities of merchandise. By leveraging the RDCs, suppliers who used to ship direct to stores using LTL service can now consolidate their shipments into truckload quantities for shipping to these facilities.
In-source Freight TransportationSome companies that have outsourced their freight transportation to a logistics company are rethinking this
strategy. If the freight management company is not adding value to the process, then there is reason to question the financial benefits in paying a mark-up to the carrier and to the freight management company. For shippers that have straight-forward carrier procure-ment and management processes, particularly those companies with their own TMS system, it may be time to look at the option of bringing these functions in-house and saving the second mark-up. By conducting a comprehensive RFP every few years and then putting in place carrier scorecards to track performance, this may be an opportunity to reduce freight costs.
Improve Planning and Perform Load LevellingCapacity shortfalls can cause shippers to select higher-paying carriers that rank lower in the routing guide or go to the spot market to cover their loads. Shippers have several methods of trying to mitigate paying high-er freight costs. For companies that can provide quality forecasts, this will enhance their opportunities of ob-taining capacity from their core carriers. Best practice involves working collaboratively with one’s major car-riers and seeking ways to match supply with demand. In those situations where the freight is moving to com-pany or third-party warehouses, the option to smooth out the peaks and valleys, through planning and com-munication, may also result in better core carrier utili-zation and better spend management.
Increase use of Intermodal TransportationOn inbound movements to its manufacturing facilities and DCs, where longer lead times can be built in, shippers are making increased use of intermodal transportation.
Network OptimizationSome shippers are reducing energy consumption and transportation costs by reducing delivery frequencies, reconfiguring the location of their “last-mile facilities,” and integrating more energy-efficient vehicles into their fleets. Higher fuel prices will force many businesses to shrink the length of haul from DC to retailer. To ac-complish this, additional and larger warehouses may be needed, which implies more stock and higher inven-tory levels and costs.
As we approach mid-year, it is clear that shippers are employing a variety of strategies and tactics to make more cost-effective use of the available carrier equip-ment supply, to utilize lower-cost modes of transport and when necessary, reconfigure their networks to ad-dress tight capacity and rising costs. CT&L
adapting to the ‘new normal’Shippers are changing their transportation paradigms to
address capacity shortages and rising freight rates
Dan Goodwill, president of Dan Goodwill and Associateshas more than 20 years
of experience in
the logistics and
transportation industries in
both Canada and the US.
He has held executive
level positions in the
industry, including
president of Yellow
Transportation’s Canada
division, president of
Clarke Logistics, general
manager of the Railfast
division of TNT, and
vice-president of sales
and marketing at TNT
Overland Express.
Goodwill is currently
a consultant to
manufacturers and
distributors, helping
them improve their
transportation processes
and save millions of
dollars in freight spend.
He can be reached at
Whether your way is the highway or the railway,Hub Group Canada is the solution. We are literallyeverywhere you turn and offer one of the most capacityrich transportation networks in North America.
With Hub Group Canada, you’ll have instant 24/7access to the services, carriers and centralizedcontrols you need to smoothly manage thetransportation needs of your business. Our highwayand intermodal specialists are standing by to respondimmediately to your next LTL, full load or specializedtransportation requirement.
Everywhere You Turn
Please contact : Barry O’Neill, Vice PresidentHub Group Canada, [email protected] www.hubgroup.com
Whether your way is the highway or the railway,Hub Group Canada is the solution. We are literallyeverywhere you turn and offer one of the most capacityrich transportation networks in North America.
With Hub Group Canada, you’ll have instant 24/7access to the services, carriers and centralizedcontrols you need to smoothly manage thetransportation needs of your business. Our highwayand intermodal specialists are standing by to respondimmediately to your next LTL, full load or specializedtransportation requirement.
Everywhere You Turn
Please contact : Barry O’Neill, Vice PresidentHub Group Canada, [email protected] www.hubgroup.com
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