MAY/JUNE 2015
PUBLISHED SINCE 1898 | WRITTEN FOR BUYERS OF TRANSPORTATION SERVICES
AWARD WINNING SUPPLIERS Canada’s best managed transportation and logistics players
CONTINGENCY PLANNING Managing risk, reaping rewards
the new
SILK ROAD REDRAWN GLOBAL TRADE ROUTES OFFER SHIPPERS A WEALTH OF OPPORTUNITY
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CONTENTS
MAY/JUNE 2015
DEPARTMENTS
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6 | Editor’s Forward Measuring the value of mentorships.
COVER STORY
The New Silk Road
8 | The View with Lou Are container lines getting serious about on-time performance?
Plans for a new continental rail system linking Asia and Europe are redrawing ancient trade routes in a modern twist.
10 | In the News St. Lawrence Seaway opens season on upbeat note; CN welcomes news of Maher Terminals expansion project at Prince Rupert. 60 | Inside the Numbers Pricing will continue to drive mode shifting for shippers.
26 Contingency Planning Mitigating risks in the supply chain to create resilience.
©Chalabala/iStock/Thinkstock
62 | The Bigger Picture Core carrier programs as protection against capacity shortfalls.
“Witnessing truth” gesture at a Buddhist temple in Sri Lanka, one of the “string of pearls” in the ocean version of the new Silk Road trade route.
FEATURES FOREIGN TRADE ZONES | 22 A look at choices for geographically designated duty- and tax-exempt way stations for imports and exports en route to their final destinations.
CONTINGENCY PLANNING | 26 Mitigating risks in the supply chain to create resilience.
PEST CONTROL AND FOOD LOGISTICS | 30 Best practices on managing critters in food facilities.
continued
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THE PORT OF PRINCE RUPERT
North America’s leading-edge gateway. At the Port of Prince Rupert, fast transit times and high delivery reliability set us apart. Planned expansion means significant opportunities for growth and further enhancement of terminal capacities. It’s time to discover how to share our advantages with your customers.
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WHAT’S ONLINE
continued
FOOD FOR THOUGHT | 34 The growth of perishables in air cargo.
ATLANTIC FREIGHTERS | 38 Kelowna Flightcraft enters the transatlantic freight market.
WOMEN IN LOGISTICS | 40 Highlights from a panel of female professionals working in the logistics industry, on recruiting and retention of women into the field.
WOMEN WITH DRIVE | 44 A look at best practices from other industries, during Trucking HR Canada’s Women with Drive Leadership Summit.
AWARD WINNING SUPPLIERS | 45 Featuring profiles of the winners of Canada’s Best Managed Companies award, and who are prominent leaders in the transportation and logistics community.
WEB TV Transportation Matters
SHIPPER SPEAK
34
What do shippers want from carriers? It’s simple: Execution. Whirlpool executive Susan Promane on the shipper-carrier relationship. From a panel at the Surface Transportation Summit.
BLOG BITS Search our blog archives at ctl.ca
Carolina Billings The genesis of an enterprise – let courtship and honeymoon commence.
Julia Kuzeljevich Chin up’ on low morale What to do when you face a situation of low morale, whether in the workplace or in your personal sphere,
sion e to Find us on Twitter at: @CanadianShipper
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@LouSmyrlis
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@JuliaKuzeljevic
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@JamesMenzies
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@FleetExecutive
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EDITOR'S FORWARD Julia Kuzeljevich
Of Metrics and Mentorships
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s Canadian Shipper was going to press, Canada’s Minister of Labour and Minister of Status of Women, the Honourable Dr. K. Kellie Leitch, announced a new initiative entitled 'It Starts with One -Be Her Champion.' This campaign challenges leaders in all fields to “make a difference in a woman’s career by becoming her champion.” The 'It Starts with One' campaign is designed to engage leaders in both the private and public sectors as champions for women by taking a pledge to participate in formal or informal mentoring efforts. According to the federal government, research suggests that 88% of entrepreneurs with mentors survive in business, compared with a 50% failure rate for those without a mentor. This issue, Canadian Shipper provides coverage of two panel discussions around women in logistics and women in trucking as well as other “non-traditional” industries looking to recruit more women into the field. During Trucking HR Canada’s Women with Drive Leadership Summit, at which I was a moderator for the panel of female executives representing other industries, Leitch announced that the Government of Canada is committing $421,720 to develop mentorship programs that will help further the careers of women in the nation’s trucking industry, and identify best practices that can better support the hiring and retention of under-represented demographic groups. While the announcement of the money and the program is surely a positive for such industries, there’s a part of me that winces at some aspects of the 'Be Her Champion' campaign. I like to think that some of the best mentorships happen by themselves, where they should and when they should, and that if there is a need for a formal program around mentoring, that it should not single out one sex over another. Perhaps that is coming from a naïve place, and from the fact that my own personal work experience has offered me many mentorship opportunities and the experience of having been unofficially championed, in several industries where women were considered to be “under-represented”. While an official advisor or supervisor, whatever the construct, may be well placed to guide you on the proper path within an organization when it comes to all practical aspects, I feel it’s the “mentorships by osmosis” that have the best success, and these don’t have to be official programs as such. In University I was part of a “formal” mentorship program that was a neutral experience overall. It was never monitored and there
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was no follow-up. As mentees we were matched with people in jobs similar to those we aspired to. The problem is, sometimes you just have nothing in common with people in the very same job. And as women, it’s important to remember, we don’t automatically all come from exactly the same place in terms of values, priorities, and paths taken to get there. This particular experience left me with the conviction that there have to be some sort of metrics around the programs that will offer something to both mentor/employer and mentee. We think of mentors as people who have a positive influence on our careers, but you can also consider those who influence us negatively to be meaningful mentors. You have to take little bits and pieces from many experiences and many individuals in your working life, including those whom you never want to emulate. When all is said and done, and as emerged from the panel discussions Canadian Shipper profiles in its Women in Logistics feature, we never want to overlook a job candidate because of sex or race, and while it remains a fact that many women are under-represented in various sectors, and there’s a lot of work to do around that, it’s about the right candidate, the motivated candidate, quite apart from the sex of the candidate. If mentorships are what motivate and encourage the “right candidates” to move forward, then I’m all for them. But they must move beyond a “feel good” gesture into something concrete, well-managed and measurable for both mentor and mentee. CS
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4188-24 MOL CSh Full pg Ad (Oper) F_8.125 x 10.875 4/23/15 10:04 AM Page 1
MOL VESSEL
ON-TIME PERFORMANCE OCT. - DEC. 2014
ASIA-U.S. WEST COAST
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ASIA-U.S. EAST COAST
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TRANSATLANTIC
64%
ASIA-EUROPE
52%
ASIA–EAST COAST SOUTH AMERICA
92%
ASIA-MEXICO/WEST COAST SOUTH AMERICA INTRA ASIA
100% 57%
TARGET: 100%
IN-TERMINAL
TRUCK TURN TIME
NORTH AMERICA JACKSONVILLE
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MOL (Canada) Inc. has offices in Toronto and Vancouver. To book cargo, visit MOLpower.com or contact MOL Customer Service at 1-800-449-7575.
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THE VIEW Lou Smyrlis, MCILT May/June 2015 Volume 118 Issue No.3
EDITOR Julia Kuzeljevich (416) 510-6880 Julia@TransportationMedia.ca
What time is it? It’s high time the container shipping lines took on-time performance seriously
C
anadian supply chain professionals tasked with managing global supply chains primarily reliant on marine transport had a welcome bit of news this spring. Or did they? Container shipping service reliability across the three core East-West trades hit a fivemonth peak in March with an aggregate on-time performance of 64%, according to Carrier Performance Insight, the online schedule reliability tool provided by Drewry Supply Chain Advisors. The latest result represents an 8.5 percentage point gain over February and is the second best average in about a year. Yet before you rejoice, take a moment to consider. Is a 64% on-time performance really something to get excited about? Has the performance bar dropped so low that one third of container shipments missing their scheduled delivery is considered a worthwhile achievement? Consider too that the 64% on time performance was an aggregate. It included carriers who performed significantly better, such as Maersk Line with an on-time performance of 81%, and container lines which performed so horribly (38% on time performance) I shudder to think the supply chain nightmares they caused the shippers unfortunate enough to have used them. I wouldn’t be surprised to see the on-time performance numbers get worse rather than better. There’s been a sharp drop in Asia-Europe freight rates and the East Coast South America trades are underperforming. Spot freight rates are also in decline. Current spot rates of $1,000 per FEU from Asia to North Europe are below break-even levels for the carriers, according to Drewry’s estimates. All this could lead marine lines towards cost savings that have a detrimental impact on service reliability. Container shipping’s continuing addiction to ever larger ships may actually contribute, at least in the short term, to make the reliability issue worse rather than better. Drewry forecasts another year of excess growth in relation to demand in 2015. This will make it harder for carriers to repeat the estimated 92% load factors across the main headhaul East-West trade lanes achieved in 2014. New orders for Ultra Large Container vessels of at least 18,000 TEU are pushing back the date when supply and demand can be expected to meet and at the individual trade route level this is now seemingly unachievable, according to Drewry. Slumping load factors could lead to the container lines enacting cost saving measures which in turn have an impact on service reliability. All of this of course is happening against a backdrop of massive concentration in a container shipping industry now controlled by four main alliances. I appreciate that container line leaders believe such mega alliances to be the answer to a sustainable future for the marine shipping industry; marine shipping is not for the faint of heart as witnessed by the financial misfortunes faced by some of the biggest marine lines over the past decade. But I agree with Chris Welsh, secretary general of the Global Shippers Forum, who argued recently that it’s high time for a “manageable but rigorous” set of monitoring KPIs that generate confidence among buyers of marine transport services that these alliances can actually deliver benefits in terms of improved services. As Welsh noted in his presentation entitled Maritime Alliances – A Customer’s Perspective: “Shipping alliances need to take responsibility for monitoring, measuring and benchmarking their performance on key trade routes to demonstrate enhanced alliance performance, and make that information transparent to regulators and their customers as evidence of their commitment to showing the pro-competition benefits of improved alliance services.” On-time performance is critical to efficient supply chains. Every other mode of commercial transport has had to focus on and improve its on-time performance as a result. It’s high time container shipping made a similar attempt to do so. CS
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EDITORIAL DIRECTOR Lou Smyrlis (416) 510-6881 Lou@TransportationMedia.ca PUBLISHER Nick Krukowski (416) 510-5108 nkrukowski@canadianshipper.com ART DIRECTOR Ellie Robinson erobinson@annexnewcom.ca CONTRIBUTING EDITORS Carroll McCormick, Leo Ryan, James Menzies, John G. Smith, Ian Putzger, Ken Mark, Carolyn Gruske MARKET PRODUCTION MANAGER Gary White (416) 510-6760 gwhite@annexnewcom.ca VIDEO PRODUCTION MANAGER Brad Ling RESEARCH MANAGER Laura Moffatt CIRCULATION MANAGER Barbara Adelt (416) 442-5600 ext. 3546 badelt@annexnewcom.ca VICE-PRESIDENT PUBLISHING Joe Glionna PRESIDENT Jim Glionna HEAD OFFICE: 80 Valleybrook Drive, Toronto, ON M3B 2S9 Canadian Shipper is written for Canadian transportation and logistics professionals who manage product flow from manufacturer to point-of-sale. Editorial is focused on reporting, analysis and interpretation of Canadian logistics trends and issues. It is published by NEWCOM BUSINESS MEDIA INC.
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IN THE NEWS
ST. LAWRENCE SEAWAY OPENS ON UPBEAT NOTE Despite the continuing challenges of navigating through heavy ice formations in parts of the waterway still not wiped out by the spring thaw, the St. Lawrence Seaway opened its 57th season April 2 on an upbeat note. Terence Bowles, president and CEO of the St. Lawrence Seaway Management Corporation (SLSMC), went as far as to express the hope of seeing a repeat of the strong results of 2014, when the Seaway handled a post-recession high of 40 million tonnes of cargo. This included 12 million tonnes of grain, the highest volume in more than a decade. Earlier this year, Seaway officials estimated it would be difficult to match the 2014 performance. But Bowles suggested that grain shipping – a key Seaway commodity – would remain strong while overall demand could be enhanced by the current more robust outlook in the U.S. economy and new signs of economic recovery in Europe, notably in Germany and France. “These are causes for optimism.” Echoing the positive note was Ken Lerner, purchasing manager for France’s Lafarge group in Eastern Canada, who affirmed: “The St. Lawrence Seaway enables Lafarge to maintain a highly efficient logistics chain.” The first vessel through the St. Lambert Lock in Montreal was the newly-built CWB Marquis, carrying a load of 29,000 tonnes of iron ore destined for the ArcelorMittal steel factory in Hamilton on Lake Ontario before proceeding to Thunder Bay, on the tip of Lake Superior, to pick up grain. Two ships ordered by the restructured Canadian Wheat Board after losing its marketing monopoly in 2012 are managed and operated by Algoma Central Corporation, biggest bulk carrier on the Great Lakes/Seaway system. According to Bowles, the investment by CWB in the two ships underlines the importance of the Seaway to Canada’s agricultural industry. “As agricultural technology boosts pro10
May/June 2015
BY LEO RYAN
The St. Lawrence Seaway Management Corporation (SLSMC) marked the opening of the Seaway’s 57th navigation season April 2 with the transit of the newlybuilt CWB Marquis through the St. Lambert Lock
duction and global demand for grain intensifies, there is a great opportunity for the Seaway to be increasingly at the center of Canadian and U.S. efforts to broaden exports,” said Bowles. Present at the opening ceremony, CWB president Ian White said that the new vessels (with the second slated to arrive from China in the coming weeks), together with its terminals in Thunder Bay and TroisRivières, allow CWB to penetrate markets in Europe, the Middle East and Africa quickly – “and at the same time get the best returns for farmers.” In an interview, White also alluded to “the potential of expanding markets in Indonesia, Japan and China for specialty grains and high quality wheat.” However, the outlook for iron ore exports, previously a major commodity for
Seaway shipping, remains lacklustre. As explained Allister Paterson, President of Canada Steamship Lines, “with the plunge in world iron ore prices, it is just not possible to compete with such low cost producers as Australia and Brazil.” The opening of the Seaway was delayed by one week due the second harsh winter in succession. Canadian and U.S. Coast Guard ice-breakers have been doing their best to clear channels. At present, persistent heavy ice cover on Lake Superior and Lake Erie is forcing many shipping lines to delay commercial entry into the waterway. Industry sources indicate that several dozen vessels in the Canadian domestic fleet of some 80 ships will not likely move from their winter parking spots on the marine highway until the end of April. CS
TR
Truck News
Leo Ryan is a veteran journalist who has reported on key transportation and trade developments in Canada for more than two decades. A former Montreal bureau chief for The Journal of Commerce, he specializes in port and shipping issues and was awarded the Medal of Merit in 1992 by the then Canadian Port and Harbour Association.
www.canadianshipper.com
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IN THE NEWS
CN welcomes news of Maher Terminals expansion project at Prince Rupert; outlines capacity strategies Maher Terminals Holding Corp. will expand the capacity of the Port of Prince Rupert’s Fairview Container Terminal to more than 1.3 million twenty-foot equivalent units (TEUs) annually, from the current annual container-handling capacity of approximately 850,000 TEUs. “This investment in terminal expansion to accommodate future growth in overseas container traffic is good news for CN’s customers and the Pacific Gateway we serve,” said CN CEO Claude Mongeau. Maher Terminals Holding Corp., the operator of the Port of Prince Rupert’s Fairview Container Terminal, announced its decision earlier this week to proceed with expansion of the 7-year-old facility, increasing its container capacity by 500,000 TEUs to accommodate growing container
volumes and further enhancing the Canadian gateway’s growing role in North American trans-Pacific trade. “Intermodal customers have been capitalizing on the advantages of Prince Rupert as part of their transpacific trade solution since Fairview’s first phase opened in 2007,” said Don Krusel, President and CEO of the Prince Rupert Port Authority. “We’re very pleased to see Maher Terminals continue delivering on the vision of fast, reliable container service — while creating new opportunities for the workers, communities, and nations who benefit from this trade gateway.” In conversation with Canadian Shipper Jean-Jacques Ruest, CN Executive VicePresident and Chief Marketing Officer, said that 90% of the expansion targets the rail business.
He also noted that as volumes increase at the Port of Prince Rupert, they will increase at some of CN’s other facilities in the US and Canada. “We want to attract more exports to match up with imports, to give customers more matchback at that terminal. We have enough infrastructure at our intermodal facility in Prince Rupert. Saskatoon is where we are working with customers to source load grain going to the West Coast, as well as pulp. We’ve expanded that yard over the course of 18 months, and we will expand it further for more throughput,” he said. CN is also working on additional fluidity through Detroit, Memphis and Chicago. When asked about the effects of West Coast port congestion on Canada’s ports, and potential long-term diversion of cargo, Keith Reardon, CN’s Vice President for incontinued
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CELEBRATING 30 YEARS OF GROWTH For 30 years, Hercules has rejuvenated the level of service available in the market on US to Canada LTL shipments. We will continue to work hard to introduce innovations that others want to imitate, and traffic staff will enjoy. Thank you to the shipping community for your tremendous support, allowing a small forwarder to develop into a national award winning motor carrier. Hercules looks forward to introducing what’s next!
herculesfreight.com
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IN THE NEWS
termodal, said that a lot of the beneficial cargo owners of the freight “are choosing to stick with us at Rupert, or at some of the other ports we handle other than Rupert. We feel very comfortable to take on existing customers’ growth and additional customers. Where we were in alignment with the numbers we could handle we’ve worked well. When the numbers were too high, it created some congestion,” he said. “We knew we would have high single digit growth in our intermodal. Because of diversions and the reduced network, we increased rail cars by 12%,” he added. “We had more capacity this January than we had in January last year- in terms of locomotive, rail cars, inland terminals, crew, etc. Since July of last year there was a lot of traffic that came to Canadian ports because of West Coast congestion, and in early July diversions were very strong,” said Ruest. Because this created an unannounced level of diversion, CN put a capacity management program in place. “All traffic to the US was put in this
program to prevent clogging at the port. We managed capacity and provided more resources,” Ruest said. Canadian traffic was not part of this capacity management program, which is managed quarterly for US customers. “If you are a Canadian stakeholder, an announcement like the expansion of the Fairview terminal at Maher means more vessels, and a wider choice of shipping lines. We are confident of more vessels, and a wider choice of shipping lines. For Canadian exporters who are looking for more empty boxes going back to Asia, the more successful we are emptying boxes from Prince Rupert to the US, the more backhaul capacity,” he said. Reardon added that in terms of terminal dwell time, in the months of January and February it was an average of 44 hours for a box at Prince Rupert. “We work very hard with Maher to have the appropriate number of rail cars on spot under a 24/7 labour arrangement to create a fluid terminal. One of the things
we did was add the Kaien long rail siding, allowing us to go to three trains in and out per day. The standard practice was 2 in and 2 out. That is a key enabler for us to keep the dwell times down,” said Reardon. The Maher Fairview terminal expansion project will provide a second deepwater berth, four additional gantry cranes, and land reclamation to further expand the container yard. On-dock rail trackage will also be expanded through densification of the current track configuration, which will be supported by a rubber-tired gantry crane operation. The terminal expansion will increase the capacity to over 1.3m TEUs annually, and is scheduled for completion in mid-2017. In seven years of operations, traffic through Prince Rupert’s Fairview Container Terminal has grown at the fastest pace of any container terminal in North America. In 2014, volume increased 15 per cent over year-earlier volumes, while Fairview continued to post excellent terminal dwell times for containers. CS
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ASIAN TRADE
the new
SILK ROAD ASIA-EUROPE DEDICATED BLOCK TRAINS COULD OFFER NEW OPTIONS FOR GLOBAL SHIPPERS BY KEN MARK
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ASIAN TRADE
C
hina’s bold plans for the New Silk Road, a transcontinental rail system linking the entire Eurasian landmass, will redraw global trade routes, as did its fabled ancestor. The 21st century version will replace caravan trails with modern railroad tracks. Parts of the Asia-to-Europe pipeline are already delivering goods. The first train to complete the world’s longest rail journey from China to Spain returned home in February after a 25,750-km journey. It carried a backhaul load of olive oil, wine and cured ham to Yiwu (a city near Shanghai). It passed through France, Germany, Poland, Belarus and Kazakhstan. The 82-container cargo train originally arrived in Madrid in mid-December laden with Christmas toys and power tools. The line is 724 km longer than the Trans-Siberian Railway. The trip took 16 days vs. 45 days or longer by sea. Travelling overland is also onetenth the cost of air cargo. Shippers and forwarders foresee dedicated block train services, i.e., ones booked by a single client, carrying everything from fresh fruit to auto parts. The project is merely the latest in China’s mad dash to expand its domestic rail network and connect it with European cities. Earlier links include the 9,826-km line between Chengdu in Sichuan Province and Lodz, Poland, which opened in 2013. Another is the 10,800-km link between nearby Chongqing to Duisburg, Germany established in 2011. The latter’s annual freight volume in 2012 of 2 million metric tons is expected to peak at 15 million metric tons. Then there is also the 10,214 km Zhengzhou-Hamburg connection that takes 18 days. Zhengzhou is strategically located at the confluence of China’s east-west, north-south national rail lines. These ribbons of steel are the 21st century equivalent of the iconic Orient Express that connected Paris and Istanbul. Only these Europe-Asia trains carry cargo, not tourists. With more in the pipeline, these projects will far exceed the exploits of 19th century U.S. and Canadian railway barons. As a result of the recent experience of its
Full Container Load (FCL) rail solution on the Chengdu-Zhengzhou-Europe route, UPS can outline real-world advantages to Canadian firms operating global supply chains. According to Nikkol Zezza, Mississauga-based manager, Public Relations & Social Media UPS Canada, Canadian companies sourcing or manufacturing goods in East Asia and exporting them directly to the European market now have lower cost options. It will also benefit Canadian companies that partially manufacture goods or inputs in Asia and then ship them to Europe for further work prior to delivery within Europe and/or export back to North America. Indirectly, the New Silk Road could also provide additional benefits to Canadian
China is extending its long logistics arm by planning, financing and ultimately building major infrastructural projects wherever they are needed including in Central and Eastern Europe. For example, China, Serbia and Hungary recently signed a memorandum of understanding to build a new 402km rail link between Belgrade and Budapest. The upgrade will speed up China’s plans to expand Piraeus, Greece’s main port, into a regional trade hub. A Chinese firm, Cosco Pacific, which operates two of the port’s three container quays, will spend US $285 million (CAD $350 million) to build a fourth quay. It will increase annual capacity to more than 6 million TEUs, up 62% from current levels.
“Indirectly, the New Silk Road could also provide additional benefits to Canadian companies after the Canada-EU Comprehensive Economic and Trade Agreement (CETA) comes into force.” companies after the Canada-EU Comprehensive Economic and Trade Agreement (CETA) comes into force. Lower Canadian duty rates may apply to EU imported products sourced in China and other parts of Asia depending on their level of EU value-added content. As well, the service may encourage Canadian companies to shift their Chinese operations further inland where production costs are lower. Since the New Silk Road is in its early days, many Canadian firms are still weighing their options. Says Sarah Kutulakos, Torontobased executive director of the Canada China Business Council, “For the most part, we are not paying attention to this in a big way. It is up to individual companies to decide whether they want to get involved. Since a lot of it is about building infrastructure, Canadian construction and engineering firms may see opportunities. Many of the business relations we have with China involve our expertise in services. Canadian firms were active in the huge Three Gorges dam project.”
Domestically, China’s “one belt, one road” strategy will establish a new framework for regional economic development within China. To finance such infrastructure projects linking its domestic markets to three continents the government recently set up a US $16.3 (CAD $20.6) billion Silk Road Fund. Among other things, China’s Go West infrastructure policy simplifies moving bonded goods within China. Now, such products made in Sichuan are shipped in sealed containers eastward down the Yangtze River to Shanghai. By sidestepping Shanghai, the world's busiest container port, shippers, carriers and others save time and money while avoiding red tape. Speaking of red tape, since Kazakhstan is part of a customs union agreement with Russia and the European Union, once block trains are cleared in a matter of hours at the Kazakhstan border there are no more inspections or delays until they reach their European destination. Besides speeding up continued
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the journey, eliminating border-crossing checkpoints also removes the nuisance of bribes and facility payments that plague international trade in this part of the world. Despite the high hopes, these projects still face numerous challenges. The most obvious is the need to offload containers and reload three times because of different
railroad gauges along the route. The trains will require special equipment. The Wall Street Journal recently cited comments from Darryl Hadaway, a senior consultant for Kazakhstan’s KTZ Express, who expects at least 50% of the containers to be reefers, even in summer.The company is about to take delivery
21 FROM A TO Z Amsterdam, Athens, Barcelona, Brussels, Copenhagen, Dublin, Edinburgh, Frankfurt, Geneva, Istanbul, Lisbon, London, Madrid, Manchester, Milan, Munich, Nice, Paris, Rome, Venice, Zurich. With service to Amsterdam starting June 4, Air Canada Cargo now has direct service to 21 cities across the UK and Europe, and widebody trucking connections to over 50 more. Find out more at aircanadacargo.com
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18
of 200 45-foot reefer containers to meet shipper demand. He says, “Even in summer temperatures get up to 40°C and winter temperatures fall to minus 50°C. By year-end, we should have about 900 reefer containers on our books.” Geography also poses engineering and construction problems because the route must wend its way across the “roof of the world”raging rivers and other desolate terrain. But the greatest challenges will likely arise from the centuries-old rivalries involving countries in the various regions sitting between China and Eastern Europe. These include South and Central Asia, various small republics in the former Soviet Union as well as the Middle Eastern hornets’ nest.While Afghanistan leaps immediately to mind as a trouble spot, India and its neighbours, Pakistan and Bangladesh, among others, must put aside their age-old political, ethnic and religious differences to work cooperatively so they all can benefit fully from the new opportunities. Although China has the money, engineering expertise and experience, not to mention the determination to carry out these plans, many recipient countries are still concerned over what strings are attached to China’s generosity. For example, the newly elected Sri Lankan government has halted work on the US $1.4 (CAD $ 1.72) billion Colombo Port City megaproject.The incoming prime minister said that the deal lacked transparency. To allay such fears, China is actively reaching out for global as well as regional partners. A top priority is setting up the new US $50 (CAD $61.53) billion international financial institution, the Asian Infrastructure Investment Bank (AIIB). So far, more than 50 countries including the United Kingdom, France, Italy and Germany have applied to join. However, several major powers-Japan, the U.S. and Canada are still making up their minds. More importantly, major international financial institutions (IFIs) such as the World Bank and the International Monetary Fund have expressed interest. One of the emerging regional players is the Central Asia Regional Economic Cooperation (CAREC). Besides China, the other members include Mongolia, Pakistan,Afghanistan and six so-called former USSR “stans” Azerbaijan, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan. Six major multilateral financial institutions have signed on. CAREC’s avowed goal is to “maincontinued
May/June 2015
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ll around the world,
the red “K” Line logo is recognized as a symbol of speedy, reliable shipping and handling, over the seas and on land. It embodies the “K” Line ideals – service, innovation, and strength. Our global network is among the most extensive in the world. And our strength – the strength of people who do whatever it takes to best serve you – is greater than ever.
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ASIAN TRADE
continued from p. 18
stream” regional cooperation in the areas of transport, trade, and energy. To date, it has designated six specific corridors in the New Silk Road, i.e., (1) Europe with East Asia, (2) the Mediterranean region with East Asia, (3) the Russian Federation with Middle East and South Asia, (4) the Russian Federation with East Asia, (5) East Asia with the Middle East and South Asia and (6) Europe with the Middle East and South Asia. Corridor 1, the rail–land bridge between China and the European Union via Kazakhstan and the Russian Federation is currently up and running. A complementary, ocean-going version of the New Silk Road, often called the “string of pearls”, will connect traditional ports such as Yangon and new ones such as Dawei and Kyaupyuin in Myanmar with others in South Asia that include Kolkata (Calcutta) in India, Dhaka and Chittagong in Bangladesh and Colombo in Sri Lanka. From there, ships can reach ports in East Af-
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rica or pass through the Suez Canal. This initiative also has firm roots in China’s history following in the wake of the Ming dynasty admiral, Zheng He, who made seven voyages to the Bay of Bengal in the 15th century. His travels to the region took place before the arrival of Portuguese, Spanish, Dutch and English explorers in the region. A recent report by China’s National Development and Reform Commission (NDRC) report stressed “infrastructure connectivity” acceleration with Pakistan, Bangladesh, India and Myanmar as part of China’s Silk Road Economic Belt and 21st Century Maritime Silk Road initiatives. It will provide alternative routes for China’s western and central manufacturing powerhouses in Wuhan, Chengdu, and Chongqing etc. to ship products more directly to European customers. As well, it creates another pipeline for moving goods and raw materials in and out of the rapidly expanding ASEAN (Association of South-
East Asian Nations) marketplace to take pressure off Singapore. Last fall, Chinese president Xi Jinping announced that such plans require building or expanding ports and industrial parks across Southeast Asia and in places including Sri Lanka, Kenya and Greece. More recently, he said that he expects China’s annual trade with countries along the Silk Road will surpass US $2.5 trillion within a decade. China’s leaders are now inviting other countries to come along for the ride as China carves out new trade routes that will reshape geography and rewrite history. CS
Ken Mark is a veteran technology expert, who 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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EMPTY PROMISES ARE JUST THAT. You’ll hear “yes” a lot in this industry. Too bad just saying yes doesn't move product. Years of stability, a robust container fleet and tight control over operations does. At Hub Group when we say “yes” to the customers we work with, we truly mean it. And that means your shelves will be full of more than just empty promises.
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FOREIGN TRADE ZONES
FIND YOUR
ZONE
BY CAROLYN GRUSKE
CONFUSING PROGRAMS OFFER REAL ADVANTAGES TO IMPORTERS AND EXPORTERS
T
hanks to a patchwork of under-promoted government programs, companies doing business in Canada may be losing out on opportunities to better manage their cash flow. Worldwide, importers and exporters have come to rely on areas known as foreign trade zones (FTZs) as geographi-
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cally designated duty- and tax-exempt way stations for imports and exports en route to their final destinations. For some businesses, FTZs are a requirement. For others, their presence signals that the host country is open and friendly to trade and commerce. The US has 292 designated FTZs. Canada has none. To be fair, Canada does have a number of programs that al-
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low qualified businesses to act as if they were located within an FTZ environment, but according to people familiar with them, the programs aren’t well known, aren’t promoted enough either in Canada or abroad, and not enough companies are taking advantage of them. “I can promise you businesses in Canada and outside of Canada aren’t familiar with them,” said Mississauga, Ont.-based Cora Di Pietro, vice-president and general manager, trade consulting Canada, for Customs broker and compliance company Livingston International. “We really don’t promote it as an FTZ program, so that’s why businesses are a bit confused. First they have to know there is a program, then they have to know what it is called before they can even do research, then they have to look at the unique qualities of each of those programs and see if the business qualifies. And a lot of businesses don’t think they qualify for some of these.” Currently, there are five programs that are grouped together as Canada’s FTZ initiative. The Duties Relief Program defers or exempts duties on imported items used in the creation of goods destined for export. Qualifying businesses must achieve at least 70% in export sales. B:8.625” Customs Bonded Warehouses (CBW) provide duty and tax relief T:8.125” for import-oriented, non-manufacturing firms.
Drawback provides refunds of prepaid CBSA duties for exported goods. Export Distribution Centre Program offers upfront GST/HST relief for imported and domestic goods destined for export. Qualifying companies must be export-oriented (90% in export sales) and can only add very limited value to the merchandise. Exports of Processing Services Program is strictly for non-resident owned businesses that re-export goods after processing. The program offers upfront relief of GST/HST on some imports. In addition there is the Duty Deferral Program, which is for businesses that operate a CBW and qualify for drawback. “Even after studying the concepts fairly in-depth, it is hard to keep them all straight,” said Mark Ferguson, a senior research associate at the McMaster Institute for Transportation & Logistics in Hamilton, Ont., who completed an comprehensive report in 2013 on Canada’s FTZ program. “There are different export thresholds for the different programs. In one, value-added can take place, in the other it can’t. And it’s complicated by the fact there are separate agencies involved, whereas it’s much more unified in the United State under the Department of Commerce.” Despite the confusing array of offerings, there are good reasons why more businesses should investigate whether one or more of the continued
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We make a big deal over the tiniest items. Old Dominion’s focus on premium service means every item arrives with one of the lowest claims ratios and one of the best on-time records in the industry. OD Domestic offers: • More than 220 service centers nationwide • Competitive transit times and pricing • Proactive shipping solutions
For more information, visit odfl.com or call 1-800-235-5569. Old Dominion Freight Line, the Old Dominion logo, OD Household Services and Helping The World Keep Promises are service marks or registered service marks of Old Dominion Freight Line, Inc. All other trademarks and service marks identified herein are the intellectual property of their respective owners. © 2015 Old Dominion Freight Line, Inc., Thomasville, N.C. All rights reserved.
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programs is a good fit for their operations. One in particular sets Canada apart from US and other international programs: there is no geographic requirement to participate. A CBW can be set up wherever a company’s manufacturing plant or distribution centre is located. And as long as businesses qualify and remain compliant for any of the programs it doesn’t matter if they are located near an international port, in a major city or in the middle of the tundra. “That means, theoretically, if your own small firm is involved in international commerce and you are importing and you have to worry about duties, then you could set up a FTZ on your kitchen table,” said Ferguson, adding the Canadian approach is different to the US one where activities are limited to certain geographical areas and facilities. “So in the sense there is wide access and there is not this threshold you have to leap over in Canada, it is surprising the usage is not significantly higher.”
“Another advantage the Canadian programs offer versus their US counterparts is the simplicity of application and administration. There is no heavy paper burden. They ask the questions businesses have: volume of imports, volume of exports, value of your goods, percentage of imports versus exports, the type of manufacturing you do. Really, I don’t think the application process is difficult.” Cora Di Pietro, vice-president and general manager, trade consulting Canada, for Customs broker and compliance company Livingston International
Another advantage the Canadian programs offer versus their US counterparts is the simplicity of application and administration, added Di Pietro.“There is no heavy paper burden,” she said, explaining the application process is very straight-forward. “They ask the questions businesses have: volume of imports, volume of exports, value of your goods, percentage of imports versus exports, the type of manufacturing you do. Really, I don’t think the application process is difficult.” In Manitoba, the process can be even simpler. Centreport, which describes itself as a 20,000 acre, tri-modal inland port and industrial development in Winnipeg, has been used as the test case for the federal government’s “single window” approach to FTZ participation. Companies interested in taking advantage of FTZ programs can request an assessment, facilitated by Centreport, that will determine which (if any) programs fit their business models. The Western Diversification Taskforce, which is a federally created regional development agency, that includes representatives from all the relevant federal agencies (including CBSA, Transport Canada, CRA, and the Department of Finance) actually undertakes the assessment, explained Diane Gray, CEO of Centreport. 24
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“When we have a client that wishes to be considered or have their business line assessed for application to one of the programs, this task force gets engaged. We offer the introduction to the task force as well as ongoing project management to ensure timely response, and then we help monitor the progress made towards approval and implementation. We are trying to streamline the process and make it as easy as possible for a company to access these programs. In turn, the federal task force is designed to be able to, through a single application, determine for that company which are the suitable programs and help that company access the programs.” According to Gray, the task force has been in place for three years and “I would say we’ve had some really good results and rapid response from our federal partners.” Since the businesses located at Centreport aren’t required to report on which programs they participate in, Gray doesn’t have any statistics about how many have enrolled in one or more, but she can say there have been three new CBWs opened.“That doesn’t sound like a huge amount, but it’s quite substantive when you consider the overall up-take across the country and the fact that most companies, even if they like the idea of having access to the FTZ [program], their business line may not require it.” For Manitoba-based businesses that don’t want to relocate to Centreport, the facility’s services are still available. Gray said they can still use the single window and be evaluated by the task force and supported in their attempts to implement an FTZ program, and no matter the location, Centreport and the task force do not charge fees for facilitating the applications. Although there is no formal Canadian FTZ area, Centreport does market itself as “being part of a foreign trade zone,” said Gray. “It is integrated in all of the marketing material we do.” One company that has benefitted from Centreport’s marketing and development is WETT Sales & Distribution Inc. The independent beer distributor was recently granted permission to operate a secured CBW inside its 90,000 sq. ft. Centreportbased facility to house all types of beverage alcohol (the company is still limited to distributing beer inside the province). “Canada Border Services and Manitoba Liquor and Lottery allowed us to establish the Customs bonded warehouse and we are very excited about it,” said WETT president Bill Gould. “It allows us to open up all sorts of new doors, and because we are part of CentrePort and in the free trade zone, we hope to take advantage of the opportunity to bring in products from outside of Canada into our bonded area and then ship both inter-provincially to other liquor distributors-and potentially down to the US-and also have the ability to bring product out of the bonded area and have it duty paid, put through clearance and into our distribution system for Manitoba and Saskatchewan.” Although Di Pietro and Gray tout the quick turnarounds associated with Canadian FTZ programs, Gould had a different experience. “It was a long process, very understandably. Liquor in Canada is the purview of provincial governments and jurisdictions. We’ve had a long, long history with the Manitoba Liquor Board, going back to 1990 when they allowed us to set up as an independent distributor and we’ve had a long working relationship with them over the years. We got them to a comfort level where we passed audits, so we were able to have their confidence to establish a bonded area. And it gives them some flexibility, and it gives the
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Saskatchewan Liquor and Gaming Autions are what they are. Our modus thority some potential to use us as a distrioperandi is to play by the rule, so we bution centre or alternative so we can beare going to do that, and continue to come an off-site warehouse.” move forward,” said Gould. WETT didn’t go through the process He added WETT will continue alone. GHY International is the company’s to investigate other FTZ programs, and to Customs broker. “There was a lot of due process possibly expand its CBW business. The company has involved. George H. Young has been great in considered adding a separate bonded area for electronics or other helping us navigate the route. We had a vision of goods if the opportunity presents itself. what we wanted to do and why, and as we got into it we didn’t realGould believes companies interested in participating in the CBW ize we were breaking ground in some ways.” or other FTZ programs should definitely pursue them, but “realize Even though WETT has its CBW established, the company is it’s going to take time. Don’t be impatient. Keep the ball moving but still figuring out how to navigate its way around FTZ programs. understand sometimes government processes don’t move as fast as “We are all learning because it’s new. There was a question of some private enterprise, but there are often good reasons for that.” terms.We didn’t fully understand the definition of them.The CBSA He isn’t the only one to encourage businesses to investigate FTZ was terrific in walking us through the definitions, understanding options. Livingston’s Di Pietro said as long as businesses keep up our confusion and setting us straight.” (The terms in question were with their compliance there are no good reasons not to participate. private versus public. WETT is a private company operating a pub“The only disadvantage is if a business goes into this and doesn’t lic warehouse.) really understand it or if their level of compliance is not as it should Another area that still requires exploration is the use of sufferbe. There aren’t any disadvantages. This is money we are leaving on ance warehouses. “Currently, we have to go through a sufferanceB:8.625”the table. It helps to improve your cash flow if you take advantage of warehouse to have [inventory] released to be delivered. That’s oneT:8.125”one of these programs. The benefits totally outweigh the burden of step we’d like to work through, but we know the rules and regula- S:7” the administrative process.” CS
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We’re on time when time is scarce. When you need something shipped immediately, Old Dominion Expedited delivers. Our focus on premium service means every shipment arrives with one of the lowest claims ratios and one of the best on-time records in the industry. OD Expedited offers: • Next-day arrival • Delivery at a guaranteed time • Weekend Promise: guaranteed Friday to Monday delivery
For more information, visit odfl.com or call 1-866-637-7333. Old Dominion Freight Line, the Old Dominion logo, OD Household Services and Helping The World Keep Promises are service marks or registered service marks of Old Dominion Freight Line, Inc. All other trademarks and service marks identified herein are the intellectual property of their respective owners. © 2015 Old Dominion Freight Line, Inc., Thomasville, N.C. All rights reserved.
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CONTINGENCY PLANNING
RISK AND RESILIENCE SUPPLY CHAIN DISRUPTION COSTS. HERE’S WHY MORE AND MORE SUPPLY CHAIN PROFESSIONALS ARE LOOKING TO MONITOR IT. BY JULIA KUZELJEVICH
R
unning a business is a volatile business. While uncertainty is always a large part of the game, supply chain disruption, one of the leading causes of business volatility, is something that more and more supply chain professionals are seeking to monitor and manage. Insurer FM Global, for example, has a Global Resilience Index, a data-driven tool and repository that ranks the business resilience of 130 countries, and is designed to help executives evaluate and manage supply chain risk. Nine key drivers of supply chain risk are grouped into three categories: economic, risk quality and supply chain factors. These combine to form the composite index. Scores are bound on a scale of 0 to 100 with 0 representing the lowest resilience and 100 being the highest resilience. Canada’s current supply chain resilience ranking, for example, is number 16, with a score of 83.3. Supply chain risk is not new, but it’s become a big topic of conversation in insurance circles, notes David Shillingford, SVP, Supply Chain Solutions at Verisk Analytics. This is a result of the fact that supply chains have evolved to be more elongated, with the element of JIT delivery. “If something goes wrong the impact is more severe,” he said. “We struggle to understand the full extent of risk.The challenge for risk managers is having the visibility into the risk. Clients are most concerned about where the risk is to them (in terms of tiers, raw source suppliers). It’s a significant undertaking to understand the links and nodes-even if you knew all that, to measure the risks at each node and develop a risk model at each is a chal26
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lenge,” Shillingford added. Understanding the full extent of the risks inherent in global or even domestic supply chains, at each level in the process, comes down to having the right models with the right scientific input. The other two components are the data about the supply chain itself, about assets and where they are going, and about the risks. “Supply chain managers are spending a massive amount of time and effort on getting a better idea of their supply chain. It’s a mammoth task. Increasingly there is better business justification for doing that, i.e. consumer demands for transparency, and different companies will be in various stages of visibility.Very few if any companies have ‘full visibility’ but there are ways to fill in the gaps. What will accelerate this is the ability to obtain data about their supply chain from outside the enterprise,” Shillingford said. It’s no good covering political risk and not crime, when gathering risk data. It’s important to cover all of the risks because they interact with each other.This can include anything from water scarcity to human rights issues-anything with a potential long term impact on supply chain. It’s important to be able to come up with numerical and quantitative scores, then bring together risks and assets through modelling. Telematics and estimation help to see where things are in the supply chain. “There’s definitely an awareness that this
is something that needs to be done, and practically it is becoming possible-increasingly companies are collecting more of the supply chain data,” Shillingford said. “From the risk data standpoint we have around 200 indices for different types of risk around the world.Where it starts to become meaningful is where we can overlay that with the client’s assets. The tool is providing guidance and results through predictive modelling-using this to quantify those risks and to predict them. We think of it as riskadjusted optimization. Being lean is different from being optimized,” he added. On the supply chain data side there are many tools supply chain managers can use to achieve visibility.The challenge they have is accessing the data. “Modelling tools that offer a complete view of global risk, such as that of Verisk Maplecroft, create probablistic scores,” said Shillingford. Resilinc, which offers a risk management and compliance platform called SupplyIntel, recently published its 2014 EventWatch supply chain disruption annual report, which summarizes and analyzes nearly 700 unique supply chain notifications and alerts generated by its EventWatch 24X7 global event monitoring and alert reporting service. The email service provides early warnings and analysis of supply chain incidents that can negatively impact revenue, market
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share, customer satisfaction, and shareholder value, by risk type, industry, geography, severity, and seasonality. The report also revealed the top five supply chain events of 2014, as driven by estimated aggregate revenue impact. The top 5 events were (1) Typhoon Halong in western Japan with a revenue impact of over (US) $10 billion, (2) Severe flooding in Long Island, New York with a revenue impact of over $4 billion, (3) Typhoon Rammasun in China and Vietnam with a revenue impact of over $1.5 billion, (4) the Taiwan gas explosions with a revenue impact of over $900 million, and (5) and the Intel hazardous chemical spill in Arizona with a revenue impact of over $900 million. “This was a good year for supply chain events as there were no severe disruptions on the scale of the 2011 Thailand Floods, the 2011 Japan Earthquake and Tsunami or
2012’s Hurricane Sandy,” said Shazaib Khan, Resilinc EventWatch program manager. “It is important to keep in mind, however, that a common misstep that organizations make is placing too much emphasis on planning for the highest impact risks and disaster scenarios. Supply chain impact research indicates that smaller, more frequent disruptions are more costly in aggregate than those precipitated by high-impact, but infrequent events.” The report also highlighted that for the second year in a row factory fires/explosions were the most common supply chain event followed by labour strikes and hurricanes/ typhoons. The top three industries for supply chain events for 2013 and 2014 were automotive, high-tech and life sciences, and in 2014, the preponderance of supply chain events emanated from North America, folB:8.625” lowed by RoW (rest of the world) and Europe. 2014 was a less “eventful” year for Asia T:8.125”
for which only 111 events were reported compared to 125 in 2013. In conversation with Canadian Shipper, Bindiya Vakil, CEO & Founder, Resilinc Corporation, said that at any given point in time there are thousands of things going wrong in the supply chain arena, across hundreds of sites and suppliers. “There are multiple interruptions during the year that don’t meet headlines. A lot of times these quality problems are not tied to large scale, catastrophic events.They could be preventive maintenance issues, shortages you have to resolve, tier one supplier effects.” If these are managed by creating a “war room situation" sometimes you are bleeding through hundreds of thousands of dollars. “We definitely see that a lot of the supply chain stakeholders, primarily from a sourcing standpoint, and with the proliferation of factories around the world, have,
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When you’re driven by details, the world is a smaller place. Old Dominion simplifies global shipping by doing more than delivering freight. Our focus on premium service means every shipment arrives with one of the lowest claims ratios and one of the best on-time records in the industry. OD Global offers: • Personalized, single point of contact for status on all shipments • Pacific Promise™: service from 24 Asian ports direct to the U.S. • Direct service to or from Canada, Mexico, Puerto Rico, Alaska and Hawaii
For more information, visit odfl.com or call 1-800-432-6335. Old Dominion Freight Line, the Old Dominion logo, OD Household Services and Helping The World Keep Promises are service marks or registered service marks of Old Dominion Freight Line, Inc. All other trademarks and service marks identified herein are the intellectual property of their respective owners. © 2015 Old Dominion Freight Line, Inc., Thomasville, N.C. All rights reserved.
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from the last 5-7 years, acknowledged that risk is a critical thing for them to manage. The other thing causing quite a lot of interest is customers that are expecting suppliers will take full ownership (of the risk) and provide customers with a better, more consistent service level,”Vakil said. Tied back to competitive pressures, risk has become a board level initiative in many companies now, where usually it had been an enterprise risk. “Now with the focus on supply chains disrupting business in a very material way we are seeing a lot of interest and pressure amongst chief supply chain operators. Some are identifying risk, and qualifying failure points on a quarterly basis," she said. Wayne Caccamo, chief marketing officer at Resilinc, noted that life cycles are so short for products so there is a long revenue based driver to optimize market opportunities, and to stay lean at the same time. “So the better you can be at business contingency planning the better off you’re going to be,” he said.
“If you are overly lean because you don’t have a robust supply chain resiliency program you can’t sustain business in the long term,” added Vakil. This year, Resilinc also created the Global Supply Chain Resiliency Council, a professional community and network for supply chain risk management practitioners, leaders, and stakeholders. Resilinc remains the technical advisor and principal sponsor with the idea that the Council will incorporate as a Not-for-Profit with a dedicated staff. “We want to bring thought leaders together, to create opportunities for these people to collaborate, and to create a platform to recognize people, organizations, and best practices within the area. These are the formative, guiding principles. We want to elevate supply chain resiliency as a discipline. Organizations can find networking, support, learn what worked and what didn’t. The key part of this is the rewards program-we talked about metrics. There’s no way for an organization that is excelling at a long term vision
to be recognized for its efforts. There’s no award platform for what’s being done. We only recognize the people who ‘saved the day’ with a war room situation. We don’t reward the people who avoided the risk. We want the council to be pro-active on risk avoidance,” said Vakil. “At the end of the day resiliency is a top down organizational initiative. The organization really has to embrace the concept, and that commitment happens at the highest level,” she added. “While you really want that top down commitment, there’s lots of dimensions where you can plan a ‘crawl, walk’ evolution of your programs,” said Caccamo. Resilinc’s recently-released white paper discusses the scoping of such programs. “They may start with an upstream focus on risk management and then extend the focus downstream, i.e. mapping their tier one suppliers. There’s a way to justify a program to get started then to incrementally implement as you start to get success,” Caccamo said. CS
Are You Getting Enough Greens? Find out by participating in the 2015 Annual Survey of the Canadian Supply Chain Professional! Watch your inbox for the Survey invitation, which will be sent out this coming June. The Annual Survey of the Canadian Supply Chain Professional is conducted in partnership with
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FOOD LOGISTICS
CRITTER CRITERIA
BY JULIA KUZELJEVICH
SID SMITH, ORKIN NATIONAL ACCOUNT QUALITY ASSURANCE MANAGER, OUTLINES BEST PRACTICES FOR PEST CONTROL IN FOOD LOGISTICS. CANADIAN SHIPPER: Can you discuss some of the requirements and regulations currently at work around pest control? (whether government regulations, industry standards and applications) SID SMITH: The
licensing requirement in Canada is one of the most important things. Each province has its own licensing system for pest control licenses. Each province in Canada has its own regulatory requirement for service technicians. These licenses are regulated through the Ministry – pesticides in Canada are regulated by the PMRA and when using these pesticides within a client’s facility LABEL is the LAW - We are all governed to make the right choices so 30
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when choosing a pesticide, even though the label is the law many clients have their own approved pesticide list and how and when it can be used within their place of business. It's normally a short list of approved PMRA pesticides they feel is best for their business. There is one third the amount of chemicals in use in Canada vs. in the US. We are constantly under scrutiny with chemicals and losing them at a rapid rate. A lot of the plants are increasingly stringent on their expectation of the pest management supplier. The auditors are a lot more stringent as are the BRC audits, which are looking more at continuous improvement and risk assessment. Being able to monitor and re-
view all data in real time and determine next steps to prevent and issue from occurring is key to a pest-free environment and a strong client, supplier partnership. CANADIAN SHIPPER: With fewer chemicals available in Canada what are some of the best practices technicians are employing around pest control in facilities? SID SMITH: Canada has 30 million people vs. 300 million in the US. When a chemical gets registered in Canada it costs a lot of money. The volume is not worth the investment so they don’t allow as many chemicals to come in. They are also looking at a lot of chemi-
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cals and their effect on the environment. Technicians have to be a lot more aware of pest issues, and education is a huge thing for us here. When choosing your pest management supplier it’s important to know what continuous education these representatives have. You want to ensure you have the best trained and most knowledgeable team behind you. Auditors will challenge the actions of the technicians so you want to be sure they are trained well to understand the pest. For example in the case of rodent control, they want the exterior stations monitored for activity and the questions asked when activity is noted -where are the pressures coming from, what are the exterior pressures beyond the station? That’s where
you need to use training and experience to SOS (seek out source).To just check an exterior station, find activity, replace feeding and move on is not enough. CANADIAN SHIPPER : In the area of food logistics what issues come to the forefront of pest management? SID SMITH: We do a lot of internal training not only for pest management but for health and safety. We do GMPs, SOPs, rodent control at warehouses, cockroach control at warehouses, and we do this on a monthly basis, keeping on top of various pest modules. I don’t think there is much that is chang-
ing-the pest issues have always been there. When you are importing from overseas there is always a risk.We try to give the shipping departments educational classes around inspecting a product before it comes into the warehouse, identifying where it’s coming in and who is bringing it in, how to isolate an infestation, how to do 3rd party audits. CANADIAN SHIPPER: What about multijurisdictional regulations-and harmonization of pest control issues within North Americaare we dealing with similar rules between Canada and its main trading partners? SID SMITH: I think food safety in North America in general is pretty high in terms continued
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continued from p. 31
of the programs being delivered. Any large food manufacturer knows the risks and liabilities involved. I just think that it is important they understand that pest control is a huge part of their business. A lot of what we do now is around handhelds, checking every trap, and establishing monitoring zones. When we go in we work with the quality assurance team. We normally work with their auditing program, i.e. HACCP, strategically setting up various kinds of equipment for exterior control, interior rodent devices, stations that are barcoded for inspections. Technicians will go in to scan the barcodes and make recommendations based on their finding for that zone. As soon as the service is finished they review it with a quality assurance person. A corrective action plan is put together between both teams on what needs to be accomplished by both parties. This is documented then implemented then closed off once completed. All of that too is in a portal-the customer can track or trend different types of pest they
have had during the year to see data gathered through the handheld system.They can look at the peak seasons they are having with this type of pest to see if they need to implement the program earlier in the year. That is key to a lot of warehouses especially when dealing with manufacturers. They can implement corrective actions in real time. CANADIAN SHIPPER: What is key to knowing what to look for? SID SMITH: Inspection!! Pests are hitchhik-
ers and when product is moving from warehouse to store or vice versa knowing what to look for is key –receivers on both ends should have a receiving checklist and training on pest signs. This includes working with your pest management team on training your staff on the key signs of an infestation so when product is received it can be stopped before reaching and cross contaminating other stored product in the facility. By doing this both sides are pro-
tecting their facility from a possible pest infestation. Clients should also have a solid pest management program in place to monitor any pest movement – in addition an in-depth electronic reporting program that involves all the right players when pest issues arise. What is the pest, what are the conducive conditions that support this pest (sanitation/structural) and what is the corrective action – This way everyone knows their role for quick effective elimination. CANADIAN SHIPPER: What are some best practices for facilities shipping and receiving product?
Most important to any warehouse shipping and receiving product is having a program customized to their facility. A full assessment of the interior and exterior should be performed by the pest management company and the quality assurance manager of the facility. All recommendations for best practices should be written, discussed then implemented. Understanding the type of 3rd party auditors is extremely important as you set your program up. Auditors have guidelines and your pest expert needs to know what these expectations are. Keeping doors closed when not in use and tightly fitted receiving bumpers are extremely important to prevent unwanted guests from gaining entry into the building. Pests like birds and other wildlife will find their way in if gaps and exposure points are visible. A routine inspection of all dock doors by the maintenance or QA should be part of the GMP’s/SOP’s.
SID SMITH:
CANADIAN SHIPPER: Can you discuss the trend of electronic reporting and managing pest issues? SID SMITH: Electronic reporting is important to help manage pest pressures throughout the year. Electronic reporting gives the client and the pest management company a broader view of trends on specific pests. These trends can give a bigger picture on when pest issues arise and where. In many cases pesticides can be avoided if both parties are working on why the pest struggle exists. Inspections stations, monitoring regularly and trending tell a story, just checking a trap and moving on is not the solution! Inspect, assess, implement, communicate and eradicate should be your goal. CS 32
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FOOD BY IAN PUTZGER
FOR THOUGHT FREIGHTERS POISE FOR GROWTH IN PERISHABLES
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he new cargo terminal that is taking shape at Hamilton’s John C. Munro International Airport (it is due to open towards the end of the second quarter) will serve to meet demand for more
capacity, but the $12 million facility also aims to open the door to new types of business. About 5,000 sq. ft. of its 77,000 sq. ft. floor space will have ambient temperature control to handle perishable cargo. Historically this type of traffic was not really on the radar at Hamilton, but the launch of freighter flights to the Maritimes as part of Cargojet’s contract flying for express carriers three years ago yielded some empty space on the planes on their return leg from the coast. Before long this was used to haul in lobster and seafood, recalls Lincoln Garraway, the airport’s director of cargo development.
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He sees various opportunities to develop this segment. Some lobster could be transferred into smaller containers and trucked to Toronto’s Pearson airport to catch domestic flights. Hamilton’s connections to Mexico and the Caribbean offer possibilities to develop fruit and vegetable traffic and other Caribbean foodstuff from those points as well as from Latin American connections beyond them, he says. As traditional air cargo commodities like automotive traffic and consumer electronics have either migrated to slower, less costly modes of transportation or shrunk considerably in size (think of laptops and tablets replacing PCs), more and more airlines and freight forwarders have set their sights on perishables. Global logistics operators like Kuehne + Nagel and Panalpina have identified it as a strategic growth segment. Thanks to their high value that can readily absorb the cost of special handling processes, pharmaceuticals rule the roost when it comes to temperature-sensitive cargo, but they are no match in volume for consumable perishables. While well below the rates generated by pharmaceuticals, this traffic yields better prices than general cargo, observes Chris Connell, president of Commodity Forwarders, a Los Angelesbased specialist in perishables logistics. Moreover, volumes are projected to continue to rise. According to a recent report from Research and Markets, the refrigerated transportation market in the U.S. will grow at an annual rate of 12.44 percent in the years to 2019. To capture some of this market, operators are investing heavily in facilities and technology. One of the key battlegrounds is end-to-end visibility of a shipment for the dual purpose of having an uninterrupted record of its transit and the ambient conditions at every step of the way and being able to take corrective action as soon as a deviation from determined conditions is detected. “We integrate refrigeration unit data with the customer’s fleet management system, says Gayatri Abbott, director of
telematics and intelligent monitoring solutions of Thermo King, a Minneapolis-based maker of transport temperature control products. The company offers a web-based temperature and asset monitoring system that utilizes GPS and cellular communications. It deploys a range of sensors, such as temperature probes and door and fuel monitoring devices in combination with real-time tracking. Every deviation in ambient conditions automatically triggers an alert. Two aspects have been behind the hunger for shipment data. For one thing, au-
thorities keep raising the bar to ensure product integrity and to document the state of a shipment throughout the supply chain. Keith Goldsmith, executive vice president and chief commercial officer of Americold, a provider of temperature-controlled warehousing and logistics solutions to the food industry, points to this as a major factor. “Testing and monitoring is at an alltime high,” he adds. The authorities’ inclination to tighten their rules is related closely to a second element, a string of high profile incidents that have raised consumer awareness of continued
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continued from p. 35
SEA CHANGE ONLINE GROCERIES C
onsumer expectations regarding fresh food have undergone a sea change, finds Michael van Roozendaal, vice president and general manager of Thermo King. “Ten years ago very few restaurants had fresh tuna steaks. Today people expect certain foods not only in one country but in large cities around the world,” he says. One reflection of this trend is the availability of high-grade sushi from Japan in Shanghai, Hong Kong or Singapore, courtesy of Japan Post. Two years ago the agency ventured into international food logistics with a special offering for highend delicacies. In partnership with Japan Airlines, which had a special cooling container developed for the service, it launched an international temperaturecontrolled parcel product to carry small shipments of perishables door-to-door to a small number of Asian metropolitan centres. Japan Airlines manages the airport-to-airport segment, while Japan Post controls the other legs of ‘Cool EMS’ shipments all the way from shipper to consignee, who usually orders the goods online through a special portal. The idea of having their food delivered to the door certainly appeals to consumers, but the challenges associated with this for the vendors remain formidable. Last summer British food retailer The Co-operative Food scrapped its online grocery service after one year of operation, as it was not profitable and cannibalized in-store sales. Considering that online sales remain a small portion of overall sales volume, the necessary investment in dark stores, in creating mobile apps and the technology platform to enable and manage online sales and delivery, not to mention to logistics costs, look daunting. Moreover, in Canada the population density outside the main urban centres is a further challenge. On the other hand, online grocery shopping is rising and projected to continue. Grocery chain Loblaw reckons it has found the answer to this conundrum: cut out the delivery portion. Last fall it launched a pilot in a small number of outlets for a click-and-collect service. Shoppers order their groceries online but pick them up themselves from the store. Instead of grappling with delivery aspects and costs, this concept leaves the retailer working out how to align inventory for online and in-store channels. Should it stock the full gamut of its product portfolio at the store or risk the ire of the consumer if the item ordered is not available?
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the potential hazards. Last summer food distributor Sysco Corporation agreed to pay US$19.4 million in penalties for having stored seafood, raw meat and mill in sheds without refrigeration. Connell reckons that outbreaks of e-coli and listeria in the past two years will push the U.S. authorities to raise the bar on storing and moving perishables. Abbott figures that making better use of data is the way forward in the direction of use-based predictive analytics. This can help increase productivity and lower operating costs, she says. Besides better shipment visibility, improved packaging is another major catalyst of change in the industry. For decades the industry has largely relied on bubble wrap with a cooling agent attached to the outside when shipping produce by air, but this is no longer enough, remarks Connell. New materials offer heightened protection against temperature spikes and other deviations from the desired shipment conditions, he says. Prompted by the needs of one pharmaceutical shipper among its clients, DuPont Protection Technologies has developed Tyvek covers to shield a shipment from temperature excursions, condensation, harmful gases and vapours as well as rain, wind and insects. The material’s surface forms a reflective barrier against solar gain, while the metallized inner surface helps maintain the temperature inside. While they were initially devised for pharmaceuticals, Tyvek covers have found increasing use for food shipments. Air Canada Cargo has been using them for its AC Fresh and AC Pharmacair services on select routes. Recently it added Rio de Janeiro and Montreal to the network where Tyvek covers are deployed. For Connell the next step goes in the direction of using new materials to develop packaging solutions that are geared to the characteristics of individual types of produce. “We need to be “commodityspecific,” he says. Commodity Forwarders is working together in this area with Ernest Packaging Solutions. At this point their cooperation concentrates mainly on identifying the characteristics of individual perishables, how they respond to changes in atmospheric pressure, loss of humidity, convection and radiation. “For example, we can use materials to control the moisture content.We can create
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a measurement system to control it,” says Larry French, supply chain consultant, R&D and cold chain logistics at the Los Angelesbased packaging specialist. The push into this brave new world faces one constraint that looms over the entire produce logistics sector. “Cost is a big factor,” says Connell. “There is a limit to what a consumer will pay.” If logistics costs push a fruit or vegetable beyond a certain limit, the consumer will likely pick something else instead, he adds. He questions some of the recent technology investments in the cool chain, such as the deployment of refrigerated dollies to keep produce shipments cool as they transit between aircraft and warehouse at the airport. In some regions, such as the Middle East, this technology may be adequate, but in North America it is hard to justify the investment, he argues. Instead, forwarders and airlines should rather invest in expertise among their staff to ensure that perishable cargo is adequately handled. On the other hand, technology can produce significant cost savings if it allows growers to move their produce at a lower cost. Many of them have experimented for years with solutions to ship their exports on ocean vessels rather than by air; if not entirely then at least part of the distance, as in the case of Chilean salmon moved by ocean vessel to California to catch flights from there. Many of these experiments have been unconvincing, but the push away from airfreight has gathered momentum. According to the Cool Chain Association, between 2000 and 2013 the share of cherries that were flown as opposed to going by ocean transportation fell from 86 percent to 48 percent, for papayas it went down from formerly 79 percent to 46 percent. In the case of tomatoes this share plummeted from 65 percent to 11 percent. The association does not think that this process has run its course. On the contrary, it warns that it may intensify. Maersk is bent on making this happen through improved technology. Last year the shipping giant struck up a partnership with Primaira, a Boston-based technology company. The objective of their alliance is the development of a high ozone air cleaning system for reefer containers which will eliminate molds, fungi and bacteria and remove ethylene. Carrier Transicold, a provider of cold
chain solutions based in Georgia, has its sights on the same goal with a container atmosphere control system that removes ethylene and controls several aspects, notably temperature, oxygen and carbon dioxide levels. This slows down ripening and doubles shelf life, according to the company. CS
Ian Putzger is an award-winning journalist with more than 20 years experience covering transportation and logistics 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.
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NEW KID ON KELOWNA FLIGHTCRAFT READIES FOR JUMP INTO CROWDED NORTH ATLANTIC MARKET
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ay 17 will mark the entrance of a new operator into the transatlantic air cargo market. It will also bring in scheduled lift on freighter aircraft, with a DC-10 cargo plane running four days a week between Toronto and Brussels. The new kid on the block is no novice to flying freighters. Kelowna Flightcraft looks back on 45 years of business. Until this spring it operated the overnight air network for Canada Post and Purolator, which has now been taken over by Cargojet. Canada Post’s new tender requirements introduced an element of surplus capacity marketing that Kelowna was not set up to do, so management realized that it had to explore new avenues if it wanted to continue flying its freighters. The subsequent examination of potential markets led to the identification of a Brussels-Toronto routing as the core sector for the new operation. The North Atlantic has been a crowded market, but Kelowna’s research indicated solid demand out of Europe to Canada, says Bryan 38
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Akerstream, director of business development. This tallies with the experiences of Cargojet with its freighter service from Germany. “We always had strong and consistent demand from Cologne,” reports Jamie Porteous, executive vice president of sales and service. Most inbound volumes from Europe are flown into Toronto, notes Akerstream. With little capacity to move freight further inland, some of this ends up being trucked to US airports to be flown to its Canadian destination, he adds. This is where Kelowna’s domestic legs come into play. It intends to run twicedaily flights with Boeing 727 freighters to the Maritimes (the airport in the region has yet to be determined), and there will also be a link to Vancouver. Freight forwarders have often complained about a lack of maindeck capacity to Europe, which has forced them to truck cargo to gateways south of the border that have freighter flights across the Atlantic. Over the years there have been attempts to
BY IAN PUTZGER
run freighters from Toronto to Europe, but lack of demand has frustrated these efforts. It does not help that there is an abundance of lift out of US airports. Rich Zablocki, vice president for the Atlantic trade lane at CEVA Logistics, has seen “some pockets of hope into Europe”, pointing first and foremost to Germany, but overall there no huge demand for maindeck lift to Europe, he says. Due to the abundance of capacity, airlines have been “super competitive” in their pricing, he adds. “It is hard to make money with freighters on the transatlantic (sector),” he concludes. The capacity glut has been exacerbated by Asian airlines that route some of their US freighters back to their home markets via Europe rather than return across the Pacific. That way they can pick up cargo from Europe to Asia, so their transatlantic leg serves to position the aircraft and is typically sold at rock bottom rates.This has increased the downward pressure on yields, says Achim Martinka, vice president for
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THE BLOCK the Americas at Lufthansa Cargo.The German airline has tried to counter this by selling its network beyond Germany, a measure that has yielded some success but has its limits, he adds. Kelowna is looking to the Maritimes to feed seafood, especially lobster, to its Brussels flights. “A lot of lobster gets trucked now,” observes Akerstream. The Maritimes have seen a procession of freighter operators launching flights to Europe and quietly abandoning the route after a while. Cargojet has been going for two years now, but with gaps during the summer. This year it intends to operate without any hiatus, says Porteous. The seafood market has been challenging, he remarks. Volumes fluctuate from day to day, affected by a variety of factors, such as adverse weather conditions.This has led to a vicious cycle, where erratic loads have forced carriers to abandon their service, which made shippers reluctant to shift their exports to new entrants, lest they find themselves without
capacity if the new operation founders. Kelowna is looking to feed some of the seafood exports from the Maritimes to Asian airlines. To some extent, this could happen over Toronto, but the airline is also planning to start a flight from Toronto to Vancouver and on to Anchorage to connect with Asian freighters. Southbound they could carry cargo from Asia. Besides the challenges in the Maritimes, Porteous has doubts about the choice of the DC-10 for a transatlantic route. The aircraft consumes more fuel than 767 or more modern freighters, concedes Akerstream, but it worked for Kelowna at the high fuel price level of a year ago, he notes. Moreover, the carrier’s DC-10s are fully paid for. “Even at belly freight rates we have a viable network,” he comments. In any case, the DC-10s will test the waters to establish if there is a viable market. Then Kelowna can make adjustments and go for another type, depending on the size of demand, he says.
For a few years Cargojet ran a B767 freighter between Warsaw and Toronto on behalf of LOT Polish Airlines, supplementing LOT’s belly lift on its passenger service on the route. The venture came to an end last year, when LOT replaced its 767 on the sector with a B787, which has more cargo capacity. This year Cargojet has flown a freighter for LOT on the Warsaw-New York sector, but there are no aspirations for a year-round operation. “We will not operate during the summer.We will resume late in the summer up to Christmas,” Porteous says. CS
Ian Putzger is an award-winning journalist with more than 20 years experience covering transportation and logistics 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.
www.canadianshipper.com
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WOMEN IN SUPPLY CHAIN
BY JULIA KUZELJEVICH
NEW TO THE TABLE
WOMEN WORKING IN SUPPLY CHAIN DISCUSS THE NEED FOR BETTER RECRUITMENT AND RETENTION
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he Cargo Logistics Conference, which took place January 28 and 29 in Vancouver, featured a panel of industry leading women who work in supply chain. Jane McIvor, Editor of the BC Shipping News, was the moderator. The panel shared thoughts and experiences on the industry, recruitment and retention strategies.
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WOMEN IN SUPPLY CHAIN
Kleo Landucci is vice president, projects and development at Ashcroft Terminal. She began her career in the financial sector, moving to the Ashcroft terminal three and a half years ago on a full time basis.
Q|
What’s the current situation with respect to the ratio of men to women in the supply chain?
CORRIE BANKS: There are not very many of us but that is changing now as many more women are coming in via customer service and procurement. The boots on the ground supply chain is nearer and dearer to my heart. There are also more women at the frontlines which will translate into more senior levels later on. You want women in your supply chain because we think differently and we bring different things to the table. Having women on the board has a huge impact on profitability. Women are an underutilized workforce-we have more available women than we actually have working. We want to attract these women with transferable skills into the sector. ANN POMPILIO: I’m coming from the pure 3PL supply chain. Many
women are coming into the supply chain industry from HR, CST, as business analysts, etc. I’ve worked on putting some of those business analysts with the supply chain team. It’s a win-win situation, with the sharing of skills across the supply chain. When we looked to build our team we looked for the best person for the job. There are not many more than 5% of women around the table. I saw that in the financial industry.There are tremendous opportunities for women to come and use their terrific brains and perspectives. I suspect that family demand is a tough balance. We certainly have women doing the loading at the terminal-we feel they are probably safer operators because they tend to be more careful. I think that the focus needs to be on good talents overall.We will hire the best person for the job and who is passionate about the industry. What I’d like to see is more passion from younger people, more of an interest in what’s going on in the companies. KLEO LANDUCCI:
Q|
What is the labour growth forecast for your sectors? What positions are opening up the most, and which are the most difficult to fill?
There has been lots of head hunting within the industry itself for management level (candidates). There is lots of opportunity for sure in truck driving. Every warehouse person I talk to says they have an ongoing, non-stop recruitment process.We’re struggling both at the frontline level and the experienced level. I encourage everyone to think about transferrable skills, like IT or accounting.
CORRIE BANKS:
Corrie Banks is president of Triskele Logistics, a company she started after working as an IT project manager within the supply chain. Banks spent 14 years at CP Railway working in many aspects of the business after starting in mechanical services.
Ann Pompilio is a CFO at 3PL Links Inc. and began her career in IT and accounting.
ANN POMPILIO: Those transferrable skills add value in terms of putting together solutions for a client. At the entry level yes, there is a big gap. At the C-level there are many women in sales and operations, and I think that’s great.There’s an awareness now. KLEO LANDUCCI: We’ll
start to see more changes now in B.C. as the federal government recognizes the need for apprenticeship funding. The key is to have women be trained at a young age and develop their passion early, starting off with a passion about what you’re doing, so you’ll be drawn back. We have employed women in traditional male roles at the site. We’ve seen women do a terrific job at what they’ve been hired for. I think the key point is this industry has a plethora of opportunities for people. Realize there is a broad, diverse, cross-section of opportunities here. It’s a huge industry full of innovation and creativity. We’d love to see more women and more talent overall.
Q|
What about challenges around family/maternity leave issues?
KLEO LANDUCCI: It’s very difficult to promote me into a leadership role if I’m newly married and about to have children. You need to have an important network. The reality is that it’s very difficult for women to take on big responsibilities. CORRIE BANKS: When you look at the way that we look at our roles as women, it is possible but we do need the support. Don’t try and do everything yourself. It is a definite challenge that we face as women. The challenge we need to try and shift is that if a woman is of childbearing age it doesn’t mean that she is not interested in furthering her career. We don’t challenge the paradigms of ‘when we come back we take on the same role as before and not a lesser role.’ From the mother perspective, it is not impossible for a mother to be in a front line supply chain role but we have to have full and equal support. In my world my husband is an equal partner and he stayed home for three months to look after nine-month old twins because I was the higher income earner. That might mean that men have to go into non-traditional roles, and that is where it gets really tough. ANN POMPILIO: I raised my children while I was pursuing a supply chain career. You’re not going to win every day so don’t try. There were some days where you wanted to say ‘this is not working.’ It’s all about the overall picture. continued
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WOMEN IN SUPPLY CHAIN
Q|
KLEO LANDUCCI: As women in male dominated industries, you need to work harder, be more educated, and smarter. Sometimes that’s what women have to do. Sometimes women can let emotions get the best of them.We need to make sure our level of professionalism and strategic experience is ahead of the others.
I’m extremely direct in my communication and there are many times that that has not been perceived as positive.The challenge that you have is looking at your strengths and being smarter. If a person is not reacting well to your being the ‘driver’, change your communication. CORRIE BANKS:
Q|
grams in supply chain. Graduating students have to have so many hours in 3PLs and it gives companies the opportunity to bring these individuals on board.
Have you ever experienced a bias?
KLEO LANDUCCI: Education needs to start at the grassroots level. In
B.C. there is a disconnect between the rural and urban centres-the wealth comes from the hinterland. I’ll be focusing on taking my kids to Prince George for them to see what goes on in the industry. Certainly the post- secondary programs are crucially important but certainly we need to start younger.
Q|
What about succession planning at more senior levels?
CORRIE BANKS: I do strongly believe we’ve created a different type Why have we done such a collectively horrible job recruiting women?
CORRIE BANKS: One
of bias: you got the job because you’re a woman. From a labour market availability perspective we are actually going backwards. There needs to be people in the jobs because they are qualified. We also need to pick the people who make us less comfortable. Diversity actually has a direct impact on the GDP of a country. Strategies have to be balanced. Specifically we need more women coming in at the entry level, and we need people at executive levels to understand the value of them being there. We need to highlight the unconscious things we do that make us comfortable and consciously make a different choice.
of the things we’ve been talking about is the image of the supply chain. I think we have an image problem. We’re not doing a good job of promoting the supply chain as an industry of choice. We are making progress on a cultural level across the board. We have to make sure the males are in the conversation. It’s a labour market conversation. We as women have to make sure that we are welcoming and inclusive ourselves. We also need to get people to understand what supply chain actually is-there is quite a lot of business process, and change management that happens in the supply chain. It’s actually a very interesting career path.
Q|
Q|
CORRIE BANKS: Ask for what you want, don’t assume it will be given to you. If you want to grow in your career, you have to put into it what you want to get out of it. I would give the same advice to a male.
Are business schools failing at the supply chain specializations, for example in operations and logistics management?
CORRIE BANKS: In
general, from an industry perspective, we need to look at flexibility as a strategy. As the owner of my own company, some of the things I employ are more flexible job arrangements. As corporations start to look at how we can attract and retain women into the industry, there’s always a risk that with flexibility someone will take advantage of what you’re offering.
ANN POMPILIO: That’s the strategy we work with, looking at the tasks at hand as well as bringing an awareness to the team, and trying to promote finances at the decision-making table.
Q|
Are you seeing more purposeful mentoring and coaching in the industry?
KLEO LANDUCCI: I see more purposeful mentoring but I think we’re missing things a little bit. I don’t think there are many programs that focus on mentoring. I have more than one mentor. I think you need both a mentor and a coach. ANN POMPILIO: There are companies that sponsor educational pro-
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What is your advice for young women coming into the workforce and would that advice differ from what you would give to a male?
ANN POMPILIO: When you look at your career aspirations you really have to follow your passion, figure out where you can add value and at the end of the day be true to yourself. Don’t be someone you’re not. Don’t forget you are a woman. KLEO LANDUCCI: I would say push yourself. While you’re “finding yourself ” you need to be professional in life. Don’t ever be late. Have confidence, and realize you have to earn it.
Q|
Any advice for female millennials?
ANN POMPILIO: I think the advice is don’t try to put them in a box.
Get them to manage to the task at hand. They really care about being heard, and they really care about the environment.
CORRIE BANKS:
They should realize that it’s not about what your company can do for you, it’s about what you can do for your company. CS
KLEO LANDUCCI:
www.canadianshipper.com
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WOMEN WITH DRIVE
THE UNTAPPED MARKET How other industries are attracting women to the workplace Transportation isn’t the only industry looking for ways to attract women. Other professions are dealing with their own dearth of workers and are also looking to women to help fill the void. That competition for the same pool of prospective employees makes it even trickier for transportation to draw women to the industry. However, there are lessons to be learned from examining the best practices of other industries and taking note of how they went about attracting women to the industry. A panel at the first Women with Drive Leadership Summit March 5 examined Best Practices from other Industries. It was moderated by Julia Kuzeljevich, editor of Canadian Shipper magazine. Her first guest was JudyLynn Archer, president and CEO of Women Building Futures, a strategic workforce development partner for the construction industry. “Underemployed women are Canada’s largest untapped labour market,” she said. “What we need to do collectively and better is to raise awareness in women about these opportunities and also the realities.” Women Building Futures helps match trained and certified women with appropriate employers in the construction industry. “It’s so important to match the right person to the right employer,” she pointed out. “A lot of employers require fly-in/fly-out. This is not going to work if you’re a single parent. It’s not our job at Women Building Futures to figure out if that’s right or fair, it is what it is, and it isn’t going to work for you. But we have companies in every city and town in Canada that need good people, so there is plenty of work in those communities, we just need to make that match.” Archer shared several success stories, including that of a woman who now earns 160% more than she did eight months ago. She said it’s incumbent on industries that haven’t traditionally targeted women to do a better job of reaching out. “Women out there just don’t wake up in the morning and think ‘I think I’ll be a boilermaker’ or ‘I’ll go drive one of those semis’,” she said. “It’s just not in their frame of reference. We need to get that out there, 44
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that these are fantastic opportunities.” Michelle Branigan, chief executive director of Electricity Human Resources Canada, said the same is true in the electrical industry. Only a quarter of the electrical industry workforce is female, and when you drill down into the trades it’s less than 5%, Branigan said, “which is absolutely woeful in this age, given how long we’ve been talking about this problem.”
JudyLynn Archer
Michelle Branigan
The organization’s research indicated women and girls need to see more female role models in the workplace. Otherwise, they have difficulty understanding the duties, roles and responsibilities those careers entail. “I personally don’t know women who drive trucks,” Branigan said. “I would never have thought of it as a career and I collected Hot Wheels as a kid, I never played with dolls. It’s very challenging for a woman to develop an interest or curiosity in a career that they simply do not know exists.” There are also misperceptions of these industries that need to be overcome. Branigan also said her organization’s research has found young males are more resistant to females in male-dominated workplaces than older male workers are. “Society still programs young males to think there’s nothing worse than being bested by a girl,” she said. “That kind of belief makes it challenging for some men to understand women can do the job as well as they can.” Branigan called on senior leadership to send a message that sexism will not be tolerated.
BY JAMES MENZIES
“They need to develop a culture where there’s no such thing as a non-traditional role for women in their company,” she said. Denise McLean, senior associate with Graybridge Malkam, a workplace diversity specialist, said the mining industry has recently enjoyed some success in attracting women. The companies that have been most successful in this regard have been those that set firm targets and objectives
Denise McLean
and where there was a strong commitment from senior management to follow through. One mining company increased the number of women who applied for positions by 30% in 18 months. Mining companies did community outreach, with one company holding orientation events specifically for Grades 1112 girls, educating them on careers available in the industry. Another company held a family appreciation day and encouraged employees to invite their wife, daughters, nieces – any family members who may benefit from a first-hand look at mining operations and the career options that exist. “They had 25-30 women sign up for more information,” McLean said.“That’s a start.” Once women have been hired, it’s just as important to ensure they have the opportunity to advance through the ranks, McLean added. “A lot of organizations are shifting their focus, so it’s not just about attracting women into the occupations, but retaining them and advancing them up the pipeline into more senior-level careers,” she said. CS
www.canadianshipper.com
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AWARD WINNING SUPPLIERS ARMOUR TRANSPORTATION SYSTEMS BISON TRANSPORT CONESTOGA COLD STORAGE MILGRAM & COMPANY LTD. OCEANEX ROBERT TRAILER WIZARDS
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ARMOUR TRANSPORTATION SYSTEMS
VALUE PROPOSITION Wes Armour on fostering good relationships, motivation, work-life balance and investments for the long term
CANADIAN SHIPPER: Over half the commodities shipped by Armour, in both LTL and Truckload markets, are in the food and beverage category. Can you discuss trends affecting food and beverage and how these have influenced or formed strategies in providing service? WES ARMOUR: Transporting
a large number of food and beverage products gives our company a very consistent and steady year-round business, which is crucial to forming our strategies. There will be holiday fluctuations and higher demand for alcohol and soft drinks during warmer weather, but for the most part these variations can be planned for ahead of time. As a carrier, it enables us to specialize in an essential commodity and opens up opportunity to service many different types of customers within this gigantic category. Food safety is extremely important throughout our organization and policies and procedures are in place for handling, storing and transporting goods. Because we hire from all of the same communities where we deliver, it’s not just a product to us, it becomes what our own people are going to be buying and consuming every day. CANADIAN SHIPPER: Armour Transportation Systems has been named an Employer of Choice by the THRSC Atlantic. This designation is given to employers “who are dedicated to responding to the needs of their employees and focusing on what really matters within the workplace.” What do you feel are the key factors of employee engagement that contribute to a stronger, more loyal workforce? WES ARMOUR: In
our experience we have been able to attract and retain good people by being fair, offering competitive wages and benefits, being flexible and fostering good relationships with our people. The foundation of our company is built on the Guiding Principles of People, Safety, Service, Sustainability and Family. We attribute our lower than average turnover rate to the connection our employees feel with our company. In particular, our low driver turnover is almost unheard of.
CANADIAN SHIPPER: With regard to the company’s goal of being the “dominant gateway between Atlantic Canada and the world”, can you discuss the importance of gateway strategies in Atlantic Canada?
We operate out of the ports of Halifax, St John’s, Montreal and Saint John. Gateway strategies are essential to our region quite simply due to our geographic location. Much like it’s important to develop partnerships with other carriers, suppliers and customers, the same can be said for gateway partnerships. Most recently, the Port of Halifax
WES ARMOUR:
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has focused on improving efficiency by decreasing dwell times and congestion. This creates a win-win outcome by enhancing the attractiveness of their business while enabling us to move goods more quickly and improve transit times for our customers. CANADIAN SHIPPER: With third generation family members now in the business, can you discuss the importance of family ties and history as Armour forms its long-term company vision? WES ARMOUR: For
our customers, I believe having family members in the business signals stability and that we are around for the long-term. For our employees, it boots morale, provides job security and creates a culture that is unique to family-run businesses. Though we may be a large organization, we try to maintain a small-company atmosphere and a lot of that can be attributed to our commitment to family values. Our family ties also enable us to make investments today for the future. With both my son and daughter working in the business, we look not only at what is best for the company today but what is the right decision for the future.
CANADIAN SHIPPER: How can companies best champion and encourage employees at the workplace? Among the programs, activities and services you offer for staff, what are some of the favourites, or the most well-received? WES ARMOUR: We’re constantly striving to create a workplace that promotes the importance of having a healthy work/life balance and that recognizes both the personal and professional accomplishments of our employees. Perhaps one of our most well-received programs is our “Shift Gears, Live Well” wellness program. For the past nine years we have offered a complete wellness program in order to support our employees and help them achieve their health-related goals. CANADIAN SHIPPER: Can you discuss developments on the company’s TruckMate application-next major steps, what results it aims to achieve, timeline for implementation, etc.? WES ARMOUR: The TruckMate project began in the spring of 2014, with an implementation date of Dec. 27th, 2015. As a supplier of LTL, Courier, Truckload, Flatdeck, Transload and Intermodal services, we are confident we have found a flexible solution to accommodate all our requirements in one offering. The new software will replace all aspects of our current system, including Dispatch, Finance, Payroll and all other back-office operational functions. Previously, we had a combination of separate systems all integrated together, some much better than others.We are confident this new software transition will provide us with the technology to manage our business into the future. CS
www.canadianshipper.com
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ATLANTIC CANADA’S AWARD WINNING CARRIER
We are proud to be recognized both nationally and regionally as a leading transportation and logistics specialist and a best managed company. Our business focus continues to be connecting the Atlantic Canadian provinces with one another and with the world around us. We have grown by maintaining excellent service, remaining flexible, staying true to our commitments and continually developing innovative solutions that help our clients. With over 4,000 pieces of equipment, 1,900 employees and 26 freight terminals our team provides award-winning service to our customers across North America. Our many divisions, extensive fleet resources and strategic partnerships give us the ability to serve a wide variety of industries. To find out more about our company please visit our website for further details.
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R
BISON TRANSPORT
IT’S ABOUT MUTUAL RESPECT Bison Transport professional driver Roger Maltman on driver training, recruitment, and relationships with shippers.
CANADIAN SHIPPER: Congratulations on once again making the list of Canada’s Best Managed Companies! Bison has made the list every year since 1994, and you were once again named one of the safest truckload carriers in North America, and one of the Best Fleets to Drive For at the recent Truckload Carriers Association’s Annual Convention. Bison’s drivers consistently receive awards in the industry and Bison is well known for the attention it pays to driver issues. Personally, you have also achieved 2.75 Million Consecutive Safe Driving miles, which is an impressive accomplishment. As a professional driver, can you discuss some of the best practices designed to keep drivers engaged in your safety programs at Bison?
It’s all about the work life balance. Bison makes sure they run you and then they get you back home because they understand that having home time is important. They also have a really great safety program and have created a real culture of safety. It’s not just talk; safety is number one in all the training and development given to drivers. Bison also has many training and development opportunities for drivers at all stages in their career whether they are fresh out of driving school or looking for a different opportunity. I had been driving long haul for years and eventually I wanted a change so I started training to become a LCV driver. This allowed me to earn more money and I was able to drive within Canada, which is what I was looking for. I am also a driver mentor and I train drivers who want to move into our LCV division. Having different opportunities to earn more or to change your route is really appealing to a driver. There’s always something going on and at Bison and if you are looking for a different opportunity, you’re more than welcome to take advantage of them.
MALTMAN:
CANADIAN SHIPPER: Bison is frequently named as a favourite carrier among several of Canada’s top shippers. From a driver’s perspective, what does it take to make the shipper-carrier relationship a long-term success, and do you feel that shipper-carrier collaboration is improving? MALTMAN: I
think there is a better understanding and focus by the shippers on a carrier’s safety and performance. I believe this has really improved since the changes to HOS and CSA in the United States. There is an increased appreciation for carriers operating in a safe and compliant manner. Collaboration leads to a balance of the needs of the shipper and the carrier and finding a win-win solution for both. It’s about mutual respect.
CANADIAN SHIPPER: Are many shippers still too focused on cost? Are there other factors such as safety that you think shippers should consider equally important?
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MALTMAN: Safety
should be an equally important consideration for shippers because when you are not safe, legal and compliant, it can be costly. Think about the costs associated when your product ends up in the ditch or if a carrier gets shut down at the scales for violations and the shipment arrives late. At Bison, every driver uses e-logs. We are 100% legal and compliant, which is part of the reason why we have a culture of safety and reinforces that our drivers are expected to return home safely every day. As an LCV driver, every load I carry matters and my day isn’t successful unless I deliver my load on time and incident free.
CANADIAN SHIPPER: On the regulatory front, what are the top issues that are going to affect carriers’ operations in the year ahead, and as a driver, how do you keep abreast of the changes and the implications of these changes on your day-to-day work? MALTMAN: There are many regulatory issues that affect drivers, car-
riers and shippers; such as the potential for mandatory e-logs. Based on my experience I feel that all carriers should use e-logs whether it is mandated or not. In terms of keeping up with changing regulations, I am fortunate to work with a carrier that ensures we are safe and compliant. Bison has a process to keep us informed of all regulatory changes. CANADIAN SHIPPER: Many Canadian carriers, if not all, struggle to recruit and retain professional drivers. What do you feel are the most important issues for today’s drivers and what can carriers do to improve them? MALTMAN: To retain drivers, it boils down to your life balance and offering different schedules or programs to suit different needs. Some drivers love long haul and others need more flexibility. Bison offers a lot of switch shifts where drivers are back home every day. Like I said, home time is important for many drivers. Bison is also very personal – they take the time to know their drivers, and make you feel like you are not just a number and that’s very important. To recruit new drivers, we have a New Driver Finishing program which makes it easier for many to enter professional driving as a career. CANADIAN SHIPPER: This magazine is read almost exclusively by Canadian shippers, so, if you could say one thing to shippers on behalf of professional drivers across Canada, what would you say? MALTMAN: I always enjoy going into places I haven’t been before, and getting to meet and talk to your people.Thank you for entrusting us with your shipments. My goal is to make sure your product arrives on time and intact. CS
www.canadianshipper.com
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RELIABILITY STARTS WITH THE DRIVER
“ My goal is to make sure your product arrives on time and intact.” Roger Maltman Professional Driver, Central Region 2.75 Million Safe Miles Driven
Bison Transport is North America’s Safest Fleet, a Best Managed Company and a Best Fleet To Drive For.
Contact Us Today! 1.800.GO.BISON marketing@bisontransport.com bisontransport.com
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CONESTOGA COLD STORAGE
PLANS FOR EXPANSION Greg Laurin, Conestoga Cold Storage president on final mile costs, visibility and cold chain technologies.
CANADIAN SHIPPER: Will the growth of e-commerce in the cold chain space see a lot of penetration in Canadian markets, and if so, how do you foresee this affecting your business? What about the more non-traditional food retailers-what effect do these players have on the cold chain landscape and are they becoming more sophisticated participants with regard to the requirements of operating in the cold chain? LAURIN: There
has been a lot of discussion in the industry about this trend and the long term implications for the cold chain. The biggest hurdle facing grocery e-commerce is the cost of delivering the final mile. It is difficult to offset the costs of delivery against a consumer who drives to his local store, picks his own order, pays for it and then delivers it when he wants it, all for free. Studies have shown that consumers like the convenience of home delivery but they are often not willing to pay for it. A potentially less expensive compromise may be for stores to offer on-line ordering and give the customers the ability to pick up their orders in a special drive through location on their way home. This would reduce shopping time as well as eliminate the expense and the hassle of scheduling home deliveries. Recently, we have had clients inquire about distributing frozen products directly to their customers through on-line channels. This type of distribution model tends to be very expensive as instead of moving pallet and truck loads, orders are made up of only one or two individual cases. The increasing popularity of home delivered organic vegetables where a standardized box of fresh produce is delivered to all customers on a weekly basis is one way to simplify the ordering process and minimize picking costs.
CANADIAN SHIPPER: Visibility is an important component of the cold chain-can you discuss your approach to managing visibility for customers? LAURIN: Our sophisticated computer and integration systems provide our customers with greater access to order status and inventory information in real time via Electronic Data Interchange (EDI) than they could likely achieve in their own storage facilities. Many of our larger customers rely on ERP solutions that tend to be less flexible and more difficult to customize than our proprietary software systems. In-house programmers allow for the flexibility to change and adapt our systems to suit our customers’ needs. Customized dashboards, data analysis, and advanced reporting are increasingly in demand as manufacturers look for efficiencies and cost savings throughout in the entire chain. We encourage the use of one pallet tag label throughout the entire distribution chain. This allows us to scan the manufacturer’s pallet bar code on our docks and send an electronic notification
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back to the manufacturer instantly. This reduces data entry errors, speeds up shipping and receiving time, and allows our customer to keep track of important date and recall information using their own unique bar code number in their own system. CANADIAN SHIPPER: Operating across multiple facilities, how do you develop a company culture that is well understood and shared? Do you observe differences in style/attitude/culture in the different regions in which you operate? What about recruitment and retention in the warehousing industry-can you discuss trends and issues here?
This is a difficult area and a real struggle for small and medium sized companies to manage. Larger companies with thousands of employees can afford to spend much more on HR and training. With five facilities in Canada, it is difficult to keep culture and service levels consistent. French language requirements in Quebec mean trainers and managers must be bilingual and makes it more of a challenge to ensure training and communication are consistent. Economic realities are also different across the country, for example, in Calgary it can be difficult to find and retain good employees when the oil sands are booming. In order to encourage teamwork we have many traditional company events such as Christmas parties, steak days, summer parties and golf tournaments and we encourage employees from across Canada to participate.
LAURIN:
CANADIAN SHIPPER: Your fully automated solution for frozen storage has received much acclamation. Can you discuss any new developments/expansions/changes you are looking at in this area? For example, at the annual Surface Transportation Summit last October you discussed technology such as Automated Guided Vehicles (AGVs) and their use in Europe, and prospects for bringing more of these into the market in North America.
We have done a lot of research on AGVs. The biggest drawback we see is their reliance on battery power to operate. Batteries do not perform well in cold storage environments, have lengthy recharge times, and eventually have to be replaced. High performance capacitors in place of batteries are a promising technology for our industry.We are currently using capacitor pallet shuttles at our Dorval facility to transfer product from the warehouse to the dock. The capacitor power units on the shuttles can be fully charged in just 12 seconds and automatically return to their charging stations when they require a recharge. This system has decreased travel time in the warehouse and has proven to be more reliable than conventional conveyors. Now that our automation project at our Dorval facility is complete, we are working on plans for an expansion at our Mississauga facility that will be operational next year. CS
LAURIN:
www.canadianshipper.com
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MILGRAM & COMPANY LTD.
DATA STRATEGIES MILGRAM & COMPANY Ltd. President and CEO Jay M. Goldman on emerging trends and the delivery of timely information pertaining to cargo.
CANADIAN SHIPPER: Congratulations on attaining the Canada’s 50 Best Managed Companies award! You are committed to providing clients with visibility and information. Can you discuss some of the trends at work in the realm of tracing and information management?
CANADIAN SHIPPER: You have a proven commitment towards technology and connectivity. What are the best practices/strategies that you employ, to seek out, develop and implement solutions for trade requirements?
GOLDMAN: Importers and exporters are dependent on their supply chains, not only for the timely delivery of their cargo, but also for the timely delivery of information pertaining to that cargo.We employ multiple methods of data collection and delivery to provide that information quickly and accurately, and work closely with our clients to integrate our data into their information management systems. In a year that has seen so many supply chain problems caused by disruptions in labour and in weather patterns around the world, the timely delivery of information is critical to our clients’ decision-making and planning processes. In that regard, the biggest trend we are seeing is the integration of our systems with our clients’ ERP systems. Integrating our systems helps our clients to plan ahead, control their costs, manage their inventories, schedule their advertising and promotions, and communicate more effectively with their customers.Their customers, in turn, benefit from the same efficiencies. Another emerging trend is the use of strategic data, which helps our clients with internal and external compliance and improved efficiencies. Some of this data helps senior management ensure that they are complying with internal guidelines regarding price points, countries of origin, approved vendors, preferential tariffs, and more. While this is not all new, it used to be reserved for select, larger importers willing to commit the time and resources. However, today we are seeing a greater adoption rate amongst all types and sizes of importer.
GOLDMAN: We strive to develop a culture of innovation at Milgram, encouraging our people to be curious and open to change. As a result, innovation and change become part of our nature, and continuous improvement becomes a way of life for us. In this manner, finding new solutions for our clients and helping them to achieve their objectives is second nature for us. We keep abreast of legislative and regulatory issues by sitting on various Boards and Committees across North America, and through our rigorous compliance processes as well. Of course we use this information to keep our clients informed, but we also use it to identify challenges they may face and develop appropriate solutions wherever possible.
CANADIAN SHIPPER: Late last fall you announced the conclusion of your acquisition of M.O.T. Intermodal Shipping Inc., a Canadian freight forwarder based in Montreal, and M.O.T. Intermodal Shipping USA, Inc., an American freight forwarder and customs broker, with the entire team staying with Milgram. How has the transition gone and what added strengths does the deal create in the European and USA markets?
The transition has been going extremely well. In fact, we are delighted and very impressed with the expertise and depth of knowledge of our newest team members. Milgram’s business has traditionally been focused on imports, and this strategic acquisition has helped us to significantly increase our export business both from the United States and from Canada. We have expanded our agency network as well, particularly throughout Europe, which of course will be even more exciting if the Canada - European Union Free Trade Agreement is ever enacted. MOT’s Montreal team made the move into our Head Office very quickly, which has created an excellent environment for collaboration and cooperation
GOLDMAN:
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CANADIAN SHIPPER: You have a direct connection with CBSA (Canada Customs) and dedicated communication links with major suppliers, partners and clients. Do you think that supply chain collaboration has improved, and what would you recommend to industry to bring supply chain stakeholders closer together on the communication side?
Supply chain collaboration has definitely improved and is being embraced by a wider group of parties. One of the challenges we all face is the fact that everyone runs their business differently and therefore has different requirements.The closer everyone can adhere to established standards, the faster new relationships can be built and running. I would recommend that businesses invest more into automating their supply chain communications and give these projects a higher priority, because there is a very good ROI. Milgram has taken the lead in this area with twenty full time computer programmers and IT personnel, giving us the ability to build and deploy both standard and non-standard systems.
GOLDMAN:
CANADIAN SHIPPER: Are there any other company developments or industry trends you’d like to highlight in the context of the Best Managed Companies award? GOLDMAN: Achieving Best Managed status for four years in a row is as much about our people as it is about our technology, acquisitions, innovations or financial results. It speaks to our corporate culture, our diversity and our inclusiveness, and to our commitment to Corporate Social Responsibility.We work hard to support, encourage, mentor and include our personnel, and we attribute our success to their hard work and commitment.We continue to focus on our corporate culture and to that end, will be rolling out a new and exciting engagement platform in the coming months. CS
www.canadianshipper.com
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CUSTOMS BROKERAGE FREIGHT FORWARDING NORTH AMERICAN TRANSPORT
Do you have a solid supply chain strategy? Visit us online or call us for a consultation to learn more about what Milgram can do for you.
1-888-MILGRAM
www.milgram.com
CUSTOMS BROKERAGE • FREIGHT FORWARDING • NORTH AMERICAN TRANSPORT
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OCEANEX
EXCITING OPPORTUNITIES Captain Sid Hynes on the intermodal outlook and Oceanex's commitment to a culture of safety.
CANADIAN SHIPPER: Congratulations on again being named to the prestigious list of Canada’s 50 Best Managed Companies. As a leading player in the east coast transportation industry, are you satisfied with the current state of infrastructure in the Maritimes, and with funding for improvements? What do you see as areas for much needed improvement? HYNES: Thank you, we are indeed very proud of this accomplishment and attribute it to our great employees who are very committed to meeting the needs of our customers. We have a tremendous team of qualified and experienced transportation specialists. Generally speaking, we do not have any significant issues or concerns with respect to infrastructure in the Maritimes.We believe that it is very important that government continue supporting infrastructure in the region, particularly with respect to the development and maintenance of road and rail activities. Our one major area of concern relates not to funding for infrastructure improvements, but with the massive and escalating federal government subsidy provided to Oceanex’s trucking and railway competitors in the form of discounted commercial ferry services. Oceanex recognizes the vital service Marine Atlantic provides to Newfoundland and the obligations of the federal government to maintain ferry services to the island on the constitutional route. Our concerns relate to the ballooning subsidies for commercial freight services which put a shortsea shipper to Newfoundland such as Oceanex at a massive and unfair competitive disadvantage compared to other integrated transportation providers. CANADIAN SHIPPER: As a key intermodal provider, can you comment on what you are seeing as trends in intermodal and what you expect to be the case over the next several quarters? HYNES: It
is our belief that 2015 will indeed be a challenging year for all intermodal providers to Newfoundland and Labrador. As Newfoundland’s economy is heavily dependent on the oil and gas industry and the challenges it is faced with given the current price of oil, we believe there will be a significant impact on the region’s economy and subsequently service providers like Oceanex. To date, Oceanex has seen that its customers’ businesses are being impacted by a general slowdown in the economy. However, we will continue to focus on market share growth throughout the year.
Oceanex has been involved in discussions with stakeholders around the CETA accord on the issue of cabotage. As the accord proceeds, can you comment on where you see things heading and what, if any, other shortsea shipping issues you may be concerned about surrounding the accord?
CANADIAN SHIPPER:
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HYNES: One of our concerns with respect to the CETA accord relates to the repositioning of empty containers within Canada on a non-revenue basis by European vessels. This was a service that had been provided by Oceanex as well as Canadian trucking companies and railways. We are concerned that this may be the start of something bigger in the long term with foreign vessels with foreign crews taking work away from Canadians by moving freight within Canada. It is important that the Canadian Transportation Agency closely monitor this aspect of the accord to ensure this does not occur. CANADIAN SHIPPER: Weather issues are always a concern on the Eastern seaboard. Following a particularly severe winter in the area, and across pretty well the whole North American continent, can you comment on some of the contingency planning and best practices Oceanex employs around such issues, or other “unplanned” events, in order to maintain service levels to clients?
First and foremost, Oceanex's priority is safe operations. To ensure we operate both safely and reliably in all weather conditions, Oceanex has a well-trained and experienced team in place.Through the provision of well-maintained and properly designed equipment, our team of transportation specialists do a great job in dealing with these challenges and ensuring that we are able to maintain schedule. We are particularly proud to say even though the winter of 2015 was very challenging to most carriers, Oceanex did not miss a scheduled trip and the longest delay experienced was 12 hours on one voyage during particularly extreme weather conditions. Our ability to maintain this high level of performance can be attributed to our employees who do a great job maintaining and operating equipment and vessels custom designed for our service requirements.
HYNES:
CANADIAN SHIPPER: You are committed to building a culture of safety at the company. Can you talk about how you measure around these metrics? HYNES: At Oceanex, we are fully committed to health and safety at all
levels within the organization.An ISO 9001:2008 certified company, we maintain an unwavering focus on continuous improvement, while managing the risks associated with our operations. A top-down approach to safety culture is demonstrated through safety policies, programs and initiatives. Progress is continually monitored throughout the year, and monthly reports reviewed to identify areas requiring improvement and appropriate actions are subsequently developed and implemented. Oceanex encourages employee engagement in health and safety matters through committees to review and assess any number of related topics including the Joint Occupational Health and Safety Committee and the Safety Recognition Committee. CS
www.canadianshipper.com
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GROUPE ROBERT
GENERATING VALUE Groupe Robert's Gilbert Duquette, Vice President, Business Development and Sales, on what clients want from their 3PL, innovation as a top priority, and the need for more harmonization across borders.
CANADIAN SHIPPER: Congratulations on being named to the prestigious list of Canada’s 50 Best Managed Companies! You serve a wide variety of sectors/industries. In which sectors are you seeing more growth? What trends are reflecting this and how are you as a company planning around this growth? GILBERT DUQUETTE: We see growth in distribution centers, value added services and logistics solutions. As a 3PL, we observe that clients want, as a supply chain partner, a company that will be able to provide them multiple services. They want a one stop show supplier to help them reduce their costs and increase their efficiency. CANADIAN SHIPPER: What are your more challenging moves? How do you collaborate to create solutions around some of the more challenging projects? GILBERT DUQUETTE: We have to focus on solutions that generate value for our customers. For specific projects, we usually create a committee with the client that meets on a regular basis and we make sure to address challenges and work together to find solutions. CANADIAN SHIPPER: Robert has always been ahead of the game in making investments and participating in testing of new technologies to improve on fuel use, driver performance, and greenhouse gas emissions. Can you discuss the reasons behind your commitment to the testing of technologies and making investments of this kind?
Our president Claude Robert really believes in innovation and stimulates the passion for innovation in all his employees, partners and in the entire industry. Innovation is always at the top of our minds. Embracing sustainability and reducing our carbon footprint are tops on our list of priorities. We want to be innovative and allow our clients to take advantage of the benefits.
GILBERT DUQUETTE:
CANADIAN SHIPPER: With regard to the extensive IT solutions you offer, what are some of the best practices and strategies you employ to stay ahead of the game when it comes to keeping up with various regulatory requirements, changing customer demands and evolving technological trends? GILBERT DUQUETTE: Recently, Groupe Robert decided to invest in new WMS and ERP systems to re-
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place our legacy systems.These implementations will allow us to be more efficient and agile. Also, we’ve implemented, over the years, a structured approach to operational excellence focusing on: Day-today performance management (KPIs), Proficiency in problemsolving techniques, Continuous flow and just-in-time concepts and Involvement of operational teams in the process (suggestions and improvement projects). CANADIAN SHIPPER: Training and employee engagement is an
important component and a priority for many companies who are the “Best Managed”. You offer an extensive array of training opportunities for your staff. What feedback do you receive on which programs are the ones they like best, or find most valuable? How else do you get employees involved, and engaged, at the company? (i.e. reward programs, metrics, etc.?) GILBERT DUQUETTE: We encourage our staff to pursue professional development opportunities. Employees who wish to do so can work hand in hand with their immediate supervisor to come up with a career plan focused on their professional goals and the means they plan to use to achieve them. Groupe Robert employees have access to a broad array of workplace training opportunities. This can include conferences, seminars and other activities held by professional associations. We also give managers the chance to attend workshops and presentations designed to fine-tune their knowledge and managerial experience.The feedback is really good and our employees feel that they can grow along with the company. CANADIAN SHIPPER: You are Canada and U.S. Customs Bonded,
which allows you to move bonded merchandise between customs warehouses. You are also expert users of the Pre-arrival Processing System (PAPS), among various other programs. As Canada and the U.S. move closer to harmonization of their customs regimes, as an expert user of the various technologies and programs, what do you feel most needs to be addressed for future efforts between the two countries? GILBERT DUQUETTE: The two countries must continue to work on solutions to facilitate the transportation of goods between the countries. We need to be more efficient and minimize the delays. Also, they need to work on multiple regulations between the two countries. There are a lot of regulations and they vary from one country to another. CS
www.canadianshipper.com
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TRAILER WIZARDS
MEASURING SUCCESS Trailer Wizards' Anne McKee, Executive Vice President, on company expansion, metrics and the key role of customers.
CANADIAN SHIPPER: Congratulations on being recognized as
a 2014 winner of Canada’s Best Managed Companies program! In 2013 Trailer Wizards celebrated more than 50 years in business. What contributes to the longevity of a company such as Trailer Wizards? ANNE MCKEE: First and foremost, we attribute our success to our customers. We don’t just measure ourselves on revenue but on what we hear from our customers and on our ability to respond. Our customers are at the heart of our approach to sales, the composition of our fleet, our commitment to safety, managing our yards, branch operations and the level of employee training. As well, we pride ourselves on our organizational structure and believe it is key to our success. Local Service…Nationwide – Our organization is structured to provide great autonomy to our regional centres as regional competitiveness is a key success factor in the trailer rental business. We can then effectively address customers’ needs based on regional requirements. CANADIAN SHIPPER: What are some of the top trends you have been observing around trailer technology and customer demand? ANNE MCKEE: The need to conserve fuel and maximize weight capacity leads innovation in the trailer business. Whether it is addons, materials, or technology, the industry is continually introducing innovative solutions. With over 20 thousand trailers that we lease, rent and maintain,Trailer Wizards continually test drives new products to see how they succeed in real life applications. It is to our benefit, and our customers’, to provide quality, durable, and cutting edge options for Canadian trailers. As environmental standards become more restrictive, new materials and technologies are how we as an industry are going to be able to meet these evolving guidelines. Testing them in real applications allows us to understand how the new technology works, how it stands up to the Canadian environment and what true benefits they offer our customers.
The acquisition of Crailin Leasing Inc. in Cornwall is a shining example of the success of our approach to integration. Ninety percent of the staff were hired on as employees and began immediate ‘Wizardization’ of operations: swift implementation of our operating and safety practices along with our systems facilitated through our extensive e-learning curriculum. Staff were happy with this structured approach as it solved many issues that existed in the previous entity. The new hires were provided with ample training, equipment and resources to perform their roles effectively within the Trailer Wizards organization. CANADIAN SHIPPER: What is the company philosophy around giving back to the community and how do you feel such programs benefit?
Giving back to the communities that we live and work in is core to who Trailer Wizards is as a company. Our philanthropic initiatives are driven by our ownership group through a formal foundation, our organization and our employees throughout the regions. We have a mix of national, regional, and personal initiatives that we support; including Food Banks Canada (and local food banks), Trucks for Change Network and many other community and environmental causes. We don’t just donate over one million dollars each year; we also donate our time and our expertise. ANNE MCKEE:
CANADIAN SHIPPER: What about initiatives such as contests for
your technicians? ANNE MCKEE: In addition to extensive training with our Wizards of Work (WOW) E-leaning program, which ensures technicians are trained consistently across the country, and Wizards Working Wisely Safety program, which enables robust safety practices, we offer the Super Wizard annual competition for technicians. This three-tier national competition builds a collaborative, effective team and celebrates technician excellence. Winners are compensated at the shop, regional and national levels.
CANADIAN SHIPPER: Trailer Wizards has acquired companies
like Bryant Trailer Services Inc. and Western Storage, adding inventory, tooling, mobile trucks, customers, dry vans and containers, among other assets. How has the process rolled out so far? ANNE MCKEE: Our strategy over the last 15 years has been aggressive acquisitions, and organic growth, allowing us to grow over 1000% to a national footprint consisting of five regions with nearly 30 locations. In assets, it means that our fleet has grown from two thousand trailers to over 20 thousand.
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CANADIAN SHIPPER: How can shippers make better customers?
As we all know, there is a consolidation of both shippers and suppliers across the country and there is a greater need for nationwide processes, systems and contacts. It is also important, both on the shipper and supplier side, that companies understand the nuances and requirements of the regional markets. Trailer Wizards is well positioned to address customer needs in this type of market. CS
ANNE MCKEE:
www.canadianshipper.com
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TRAILER
R E N TA L | L E A S I N G | S A L E S | S T O R AG E | PA R T S | S E R V I C E
Canada’s One-Stop Trailer Shop named one of
Canada’s Best Managed Companies Trailer Wizards has been delivering dependable, professional service nationwide for over 50 years and is now one of Canada’s Best Managed Companies. Put our award-winning trailer expertise to work for you. Contact us today.
1 855 EASY RLS | trailerwizards.com (1 855 327 9757)
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INSIDE THE NUMBERS Have higher rates and/or surcharges affected your use of transportation modes
GETTING REAL ON RATES
39% YES
Canadian shippers are concerned about a shortage of capacity, particularly when it comes to trucking when the eventual return to normal energy pricing kicks Western Canada's economy back into high gear. However, it’s important to remember that our research over the past decade indicates shippers will consider mode shifting
61%
if they get too uncomfortable with the direction of pricing.
NO
Percentage of current rail shipments for which trucking considered an alternative
Main reasons for diverting freight from rail to truck in past year
4%
0%
Trying to service new markets
of shippers
of shipments
More than 20%
51%
of shipments
15%
18%
38%
Responding to customer requests Increasing rail prices
0%
Decreasing truck prices
18%
8%
13%
Change in policy to faster inventory times
46%
Poor rail service or coverage
1-10%
11-20%
Main reasons for diverting freight from truck to rail in past year
4%
of shippers
Percentage of current truck shipments for which rail considered an alternative
Trying to service new markets
More than 20%
0% of shipments
Responding to customer requests
26%
9%
44%
of shipments
30%
Increasing truck prices Decreasing rail prices
0%
11-20% Change in policy to faster inventory times Poor truck service or coverage
60
18%
13%
May/June 2015
29% 17%
18% 1-10%
www.canadianshipper.com
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WE CHANGED OUR LOOK... NOT OUR SERVICE! Today, change is constant. We all evolve and adapt as required. Becoming part of the TransForce family was one of those changes. As a result, we have a fresh look and a new perspective as part of the largest transportation company in Canada. We are here for a single purpose, to serve you, our valued customers. We continue to be hands-on and highly responsive to your individual needs!
Regional. National. Transborder. Our multi-modal service offerings provide superior coverage, flexibility and consistent performance for your LTL and Truckload shipping requirements.
Vitran.com
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THE BIGGER PICTURE
DEVELOPING A CORE CARRIER PROGRAM Protecting your company against capacity shortfalls In a recent Stifel report, it was noted that the “mother” of all capacity shortages is expected to hit the United States in 2017 as a series of government regulations reduces the supply of fleet equipment by five to fifteen percent. Despite the efforts of carriers to raise pay, upgrade facilities and improve the lifestyle of drivers, annual turnover stubbornly remains at close to one hundred percent in many fleets. On the rail side, a huge upswing in the movement of energy products by this mode has had a deleterious effect on intermodal capacity and service. Wise shippers realize that trying to secure carriers on the spot market is a risky endeavor since this leaves them open to capacity shortages and rate volatility. What can your company do to protect itself if there are capacity shortfalls? Is your company ready for even tighter freight capacity? Will the integrity of your company’s supply chain be maintained in this ever-changing environment? What can your company do to protect itself if there are capacity shortfalls? Here are some suggestions. 1. Bring your top performing carriers under contract
An important first step is to view your major carriers as business partners. As such, it makes good sense to negotiate formal multi-year contracts with capacity commitments and service guarantees. As you engage in these types of discussions, find out how your business fits within the parameters of their operation. Does your freight move on their 62
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primary traffic lanes? Do they have head haul or back haul in the reverse direction? Are you a valued customer? 2. Do your Due Diligence
An equally important step is to evaluate the extent to which your top carriers can meet your range of inbound, transfers and outbound movements of freight. Some traffic lanes are easier to cover than others. One often finds that there are certain particular (remote) lanes or requirements that require specialized carriers or equipment. These lanes and services may best be served by a local carrier or freight broker. Searching out regional or local carriers may take some time and due diligence. To be safe, it may be helpful to test and interview these less known players to ensure they can perform at a high level. 3. Secure Back-up Carriers on every lane
Where are the weak spots in your supply chain? What would happen if one or more of your core carriers went out of business or stopped hauling your company’s freight? With limited capacity, carriers are allocating their scarce equipment and drivers to the highest yielding customers. Many shippers have been surprised to see their carriers come to them with substantial rate increases to improve margins or as a mechanism to de-market their
accounts. Do you have backup carriers on all of your lanes? Do you give them a percent of your freight to keep them engaged with your company? 4. Look out for Quantity and Quality
One should never forget that some carriers are better than others. The better carriers have higher quality management, have more motivated staff, employ more highly trained personnel and utilize newer model equipment and better monitoring systems. Higher quality can translate into better safety ratings, superior productivity, fewer damages and theft and happier customers. It is wise to interview all prospective carriers for your company to see if they are Smartway certified, to review their CSA or CVOR (in Canada) scores and to inspect the quality of their customer service personnel, their equipment and their information systems. If you are considering using a freight management company, it is fair to ask them about their systems and those of their core carriers. 5. Focus on Performance
Missed pick-ups, late deliveries
and damaged product all cost companies customers. Review your on-time service and billing accuracy reports. Make sure that they are at a very high level. In this extremely competitive world, superior performance allows a company to stay ahead of the competition. 6. What can your company do better?
Where does your company fit on your carriers’ scorecards? Is your company a profitable account for all of your core carriers? Are there any lanes that don’t work for a particular company and would be better handled by another carrier? What is the one thing that your company could do that would make your account more profitable for some of its carriers? Are you willing to work with those carriers to make it happen? What can your company do to rank higher on their scorecards? Do you have regular (quarterly) meetings with your core carriers to address and fix problems? Proactive companies should go through this due diligence exercise now so they protect the integrity of their companies’ operations. CS
Dan Goodwill, president of Dan Goodwill and Associates, has more than 20 years of experience in the logistics and transportation industries in both Canada and the US. Goodwill is currently a consultant to manufacturers and distributors, helping them improve their transportation processes and save millions of dollars in freight spend. He has held several executive level positions in the industry. He can be reached at dan@dantranscon.com.
www.canadianshipper.com
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Fresher solutions. That ’s Ryder. According to the 2014 FORTUNE Datastore, all ten of the top ten food and beverage companies use Ryder to streamline their supply chains, unlock efficiencies, and bring more value to the table. Discover how outsourcing with us can improve your fleet management and supply chain performance at ryder.com.
FLEET MANAGEMENT |
DEDICATED TRANSPORTATION
|
SUPPLY CHAIN SOLUTIONS
Ryder and the Ryder logo are registered trademarks of Ryder System, Inc. Copyright © 2015 Ryder System, Inc. Ever better is a trademark of Ryder System, Inc. Copyright 2014 Time Inc. FORTUNE® and the FORTUNE Database names are trademarks of Time Inc. All rights reserved. For requests for commercial publication or use of substantial portions of the FORTUNE Databases, please contact datastore@fortune.com. PT004354 031315
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