JULY/AUGUST 2017
PUBLISHED SINCE 1898 | WRITTEN FOR BUYERS OF TRANSPORTATION SERVICES
INTERMODAL Railway resurrection
HAZMAT Beneath the surface
ARCTIC AIR DELIVERING BULK CARGO TO CANADA’S FAR NORTH
2017
SHIPPER’S CHOICE
www.canadianshipper.com
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CONTENTS
JULY/AUGUST 2017
DEPARTMENTS
43
5 | Editor’s Foreword Survey says
COVER STORY
6 | In the news Marine shipping impact; An intermodal first; Inland port for Manitoba; Drone delivery
FROM RUSSIA WITH LOVE
49 | Inside the Numbers Recruitment realities
Find out how one air carrier delivered the goods to Canada’s North.
51 | Retrospective Hazmat history 53 | Coaching Corner To commute or telecommute
54 | The Bigger Picture Surface Transportation Summit
14
2017 SHIPPER’S CHOICE AWARDS Celebrating the carriers who have exceeded shippers’ expectations.
Volga-Dnepr
2017
SHIPPER’S CHOICE
With help from its IL-76 cargo plane, Volga-Dnepr was able to get vital equimpent to a minning operation in Nunavut.
FEATURES REGIONAL FOCUS | 12 Latin America
34
ITF REPORT | 34 The latest from the OCED’s annual International Transport Forum
HAZMAT | 37 Lack of awareness plagues shipping of hazardous goods
INTERMODAL | 40 The revival of a Quebec short line railway
RETAIL LOGISTICS | 45 STORE 2017 conference www.canadianshipper.com July/August 2017 3
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EDITOR'S FOREWORD John Tenpenny July/August 2017 Volume 120 Issue No.4
EDITOR John Tenpenny (416) 510-6880 john@newcom.ca RESEARCH DIRECTOR Lou Smyrlis lou@newcom.ca ART DIRECTOR Ellie Robinson ellie@newcom.ca CONTRIBUTORS Carolina M. Billings, Dan Goodwill, Carroll McCormick, Ian Putzger PRODUCTION MANAGER Kimberly Collins (416) 510-6779 kim@newcom.ca VIDEO PRODUCTION MANAGER Brad Ling CIRCULATION MANAGER Mary Garufi (416) 614-5831 mary@newcom.ca PUBLISHER Nick Krukowski (416) 510-5108 nick@newcom.ca PRESIDENT Joe Glionna CHAIRMAN & FOUNDER Jim Glionna VICE-PRESIDENT, OPERATIONS Melissa Summerfield
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.
SUBSCRIPTIONS: Contact us at: mary@newcom.ca Tel: (416) 614-5831 Fax: (416) 614-8861 Website: canadianshipper.com (click on subscription button)
SUBSCRIPTION RATES: Canada: $65.95 + applicable taxes, per year; $107.95 + applicable taxes, for two years. U.S.A.: US$107.95 per year. All other foreign: US$107.95 per year. Single copies $8 except for the annual Logistics Buyers’ Guide (Aug) $60.95 + applicable taxes, (not including HST) plus $2.00 for postage. USA: US$68..95, Foreign: US$68.95 ISSN 2292-2490 (print), ISSN 2292-2504 (Digital), (Canadian Shipper.) Indexed by Canadian Business Periodicals Index. Printed in Canada. All rights reserved. The contents of this publication may not be reproduced either in part or in full without the consent of the copyright owner.
Survey says
A
s the new editor of Canadian Shipper, I’m eager to learn what you think of this storied publication, which has been publishing for nearly 120 years. Whether you’ve been with us for just a few months—like me—or decades, I know that your continuing support depends on our continuing ability to serve your needs. We here at Canadian Shipper consider ourselves—and hope you the reader do as well—a trusted source and central to becoming a trusted source is understanding the needs of your audience. To that end, we are conducting a Reader Survey to better understand what you think of our content and even more importantly, how you think we can be better in delivering the kind of content you want. We all know what can happen when you A-S-S-U-M-E. As good a job as we think we are doing, it would simply be wrong of us to assume that there is nothing for us to improve upon. We want to close any gaps between editorial assumption and reader reality. That’s why your feedback is so important. As a small token of our appreciation for you taking the time to let us know what you think, one lucky reader will receive a $250 Canadian Tire gift card. Not only do we want to know what type of content you would like to receive, we also want to know how you would like to receive that content. Whether, you read the printed edition of the magazine or its digital twin, visit our website regularly or eagerly await our twice-weekly e-newsletter, we’d like to know. Is social media, whether it be Twitter, LinkedIn or Facebook, where you like to find the latest industry news? If so, we want to know. And it doesn’t end there! We would like to continue the conversation with you by encouraging you to send us your comments about what you like and don’t like when you read the magazine. Our goal is to feature a selection of these each issue in a “Letters To the Editor” column. As the new kid on the block, I look forward to meeting many more of you in the industry over the coming months and years and particularly look forward to hearing what you think, not just about Canadian Shipper, but your insights into this fascinating world we call transportation. CS
POSTMASTER: Please forward forms 29B and 67B to: 80 Valleybrook Drive, Toronto, Ontario, M3B 2S9 Second Class Mail Registration Number 0721.
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John Tenpenny, Editor john@newcom.ca www.canadianshipper.com July/August 2017 5
2017-06-29 6:59 AM
IN THE NEWS
Marine shipping in Canada estimated at $30 billion New report includes other measures in addition to economic impact A new report, estimates the national economic value of commercial marine shipping is at least ten times higher than traditional economic impact measurements, such as GDP. The report, The Value of Commercial Marine Shipping to Canada, released by the Council of Canadian Academies (CCA), is the first study of its kind to examine “value” as including cultural, environmental, and security dimensions in addition to economic measures. Among the report’s key findings: • The national impact of marine shipping is equal to approximately 1.8 per cent of the Canadian economy, or about $30 billion— which is roughly the equivalent of New Brunswick’s economy; • Nationally, marine shipping transports
Data Sourwwce: Statistics Canada. (2015). Statistics Canada’s Canadian International Merchandise Trade Database.
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IN THE NEWS
about 20 per cent of Canadian exports and imports by dollar value; and • By carrying more than $200 billion of goods to and from global markets annually marine shipping is essential to international trade. “Traditional economic impact studies measure the direct and spinoff impacts of the industry but do not capture the overall value of marine shipping in facilitating international trade throughout the economy,” said Dr. Mary R. Brooks, Chair of the Expert Panel and Professor Emerita at Dalhousie University. “When assessed from a broader social value perspective, the net overall value of marine shipping to Canada is positive and sizeable.” Historically, the economic impact of the Canadian commercial marine shipping industry has been measured by GDP, and in 2016 was estimated at $3 billion. However, conventional measurement of GDP fails to capture the role that marine shipping plays in enabling specialized
“This study helps contextualize how marine shipping influences everything from the choices that Canadian consumers make through to how prairie farmers get their goods to market.” Peter Ellis, Executive Director of Clear Seas Centre for Responsible Marine Shipping
production and efficient trade patterns. The Panel therefore commissioned a quantitative trade model to try to better understand what the Canadian economy would be like if the Canadian commercial marine shipping industry did not exist. “When examining the contentious issues that surround marine shipping today it is easy to overlook the aspects of our day-to-day lives that depend on it,” said Peter Ellis, Executive Director of Clear Seas Centre for Responsible Marine Shipping, based in Vancouver, B.C. “This study helps contextualize how
marine shipping influences everything from the choices that Canadian consumers make through to how prairie farmers get their goods to market,” added Ellis. “Broadly, it challenges us to consider how marine shipping is indispensable to our lives and the country’s prosperity.” Requested by Clear Seas Centre for Responsible Marine Shipping, the report is now the second report by the CCA to examine the shipping industry. The first report, published in 2016, assessed the risks associated with commercial marine shipping in Canada. CS continued
For transborder shipments, OD offers:
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IN THE NEWS
continued from p.7
An intermodal first in North America Canadian Tire and CP unveil new 60-foot intermodal container
Canadian Tire and Canadian Pacific (CP) unloaded its 60-foot container in Calgary recently, marking the maiden voyage for the intermodal trailer in Alberta. Canadian Tire said the container— seven feet larger than the standard 53foot trailer—is a North American first, and will serve as an intermodal solution to increase productivity and efficiency, as it allows the retailer and CP to transport more products—13 per cent additional freight—as well as reduce transportation costs and greenhouse gas emissions. The larger containers are currently only regulated for use in Alberta and Ontario, and the demonstration of the 60-ft.
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IN THE NEWS
container in Calgary was the kickoff for its first venture onto Alberta roads. “Things like LCVs (long-combination vehicles), the acceptance of those grows over time and I think this will be no different,” said Jonathan Wahba, vice-president of sales and marketing for CP. “This is the next evolution of 53-foot containers to 60s, and over time it will evolve.” Neil McKenna, vice-president of transportation for Canadian Tire, which has one of the largest transportation networks in the country, moving more than 100,000 different types of products to 500 stores in Canada, said the company’s supply chain infrastructure is one the most modern in Canada, capable of supporting growth and efficiently managing the increasing number of products they transport. “This new configuration will enable us to increase the volume shipped in each container, which ultimately allows us to
“This new configuration will enable us to increase the volume shipped in each container, which ultimately allows us to carry more goods per trip, resulting in an improvement in service to our stores and our customers.” Neil McKenna, vice-president of transportation for Canadian Tire
carry more goods per trip, resulting in an improvement in service to our stores and our customers,” he said. McKenna highlighted the non-ex-
tendable 60-foot chassis that was on display at CP’s Intermodal Terminal in Calgary—six of which are currently on the road—as well as the expandable chassis, which goes from the standard 53- to 60-foot length. CP had been testing the 60-foot container for several months prior to its release, including using a prototype on existing 53-foot containers in an effort to mimic the 60-foot configuration in transit. CP and Canadian Tire also collaborated to offer the first 53-foot intermodal container in 1994. “At CP, we are constantly looking for ways to do our business better, safer and more efficiently in order to serve our customers and the nation’s economy,” said Wahba. “In Canadian Tire, we have found an innovative partner that shares our passion for customer service, sustainability and safety.” CS continued
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IN THE NEWS
continued from p.9
New inland port coming to Manitoba Dry port will facilitate rail shipping across North America
Mid Canada Transload Services Ltd. is building a new, privately-owned, inland port and rail siding in southern Manitoba, next to the United StatesCanadian border. The new company says the facility will be built on a 250-acre green field site, one mile south of Letellier, Man. and seven miles from the U.S. border. It will be located alongside Manitoba’s Highway 75 from Winnipeg and have access to two Class 1 railways, the CN and BNSF, giving the site daily rail service to and from the U.S. and Mexico. Behind Mid Canada Transload and the concept is Real Tetrault, also the CEO and President of Emerson Milling Inc., an
oat milling plant. His 30-year old company is already shipping oat products by CN rail into the U.S. and Mexico, which Tetrault says, led to the idea of building an industrial park to transload other products that travel by rail but still require a truck to move the product to and from the rail site. The new location will be of particular importance to the agricultural trade as a private producer car loading site, he adds, allowing farmers to ship their products by rail to either Canadian, U.S. or Mexican destinations. The facility will also handle other commodities and manufactured products that travel in and out of Manitoba and Saskatchewan by rail.
Real Tetrault of Mid Canada Transload Services Ltd.
Manitoba’s Growth, Enterprise and Trade Minister Cliff Cullen welcomed the new investment. “Cross-border trade is vital to the growth and prosperity of Manitoba’s economy,” said Cullen. “This development is strategically positioned with direct links to international markets. Manitoba producers, processors and small and mid-size shippers will benefit from the opportunities this new inland port will provide.” CS
Drone delivery inches closer to commercialization Canadian company’s successful test flights overseen by Transport Canada
The commercialization of a drone logistics platform is closer to reality now that Drone Delivery Canada Corp. has reported becoming the first and only company of its kind in Canada to successfully achieve Beyond Visual Line of Sight (BVLOS) test flights. According to the company, with the success of these flights, which took place in Foremost, Alta. after DDC received a Special Flight Operating Certificate from Transport Canada, DDC’s BVLOS technical capability has now passed the most important landmark which enables the DDC platform to run commercially. Commercial operations are forecast to be based on a revenue model that comprises of integration fees, set up fees, and ongoing re-occurring revenue. DDC’s revenue is based on a traditional SaaS model format. “The success of these flights now allows us to expand our testing with both new and existing clients that include large corporations and government organizations in Canada and abroad,” said Tony Di Benedetto, CEO of Drone Delivery Canada. “Given Canada’s geography and some of the obvious and social opportunities in Northern Canada, we be-
lieve the best place to start commercializing this platform is in our own backyard, then internationally as we prove out our systems.” During the flights, DDC’s Mission Control Centre in Toronto, 2,500 kilometres away, successfully monitored and
record telemetry in real time for each flight. According to DDC, it is set to become the first and only drone logistics compliant operator approved by Transport Canada, which is expected to occur in the fall of 2017 followed by commercial operations in early 2018. CS
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REGIONAL FOCUS
LATIN REVIVAL WHILE LATIN AMERICA HAS EMERGED FROM RECESSION, EXPERTS POINT TO POTENTIAL INSTABILITY
In February, APM Terminals Lazaro Cardenas received its first vessel call with the arrival of the 9,600 TEU capacity Maersk Salalah.
APM Terminals
W
ith its recent expansion into Latin America, and more to come, the move by Canada’s discount king is just one signal of the recovery of a market that has seen its exports contract for four consecutive years. Four years ago, Montreal-based Dollarama struck an agreement with Central American chain Dollar City to supply it with merchandise, advise it on business matters and lend product assortment expertise, with an option to buy a majority stake in Dollar City in February 2020. In 2013, Dollar City had 15 stores in El Salvador and Guatemala. Now, the chain has 77 stores and recently opened nine stores in Colombia. Neil Linsdell of Industrial Alliance Securities believes Dollarama’s decision to buy a stake in Dollar City will hinge on its performance in Colombia. “With Dollarama’s help, the chain may be looking to expand to Peru and Ecuador and to likely increase its footprint to 6,000 to 7,000 square feet ( from 4,000 square feet per store),” Linsdell wrote in a note to clients recently. Commodity growth According to an analysis conducted by the Inter-American Development Bank (IDB) using detailed data for 25 countries in the region, Latin American and Caribbean exports returned to a path of growth
in the first quarter of 2017, with the value of goods exported increasing 17 per cent year-on-year, having contracted 2.9 per cent in 2016. The recovery was driven primarily by a rebound in commodity prices, according to the annual report Trade Trend Estimates of Latin America and the Caribbean, which argues that, in 2016, regional exports followed a trend similar to that of world trade, whereas the recovery observed in the beginning of 2017 was more intense. “The trend reversal is great news for Latin America and the Caribbean. Yet, in the current context, one should not overestimate the drivers of this export expansion, which remain unstable and still restricted to a few regional economies,” said Paolo Giordano, Principal Economist of the Integration and Trade Sector and coordinator of the report. Countries with a high share of oil and mineral products in their export supply posted the largest increases, due to the recovery in commodity markets. Meanwhile, export volumes in the entire region registered only a slight acceleration of 2.2 per cent on average, and real export growth was observed in just a few countries. South American countries exhibited the strongest recovery, with an average export growth of 23 per cent. Noteworthy in this group were the performances of Venezuela, with a 75 per cent increase, followed by Peru with 39 per cent, Ecuador with 34 per cent, Colombia with 31 per cent, and Brazil with 24 per cent. Mesoamerica (Mexico and Central America)
12 July/August 2017 www.canadianshipper.com
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REGIONAL FOCUS
and the Caribbean registered an expansion of 11 and 12 per cent, respectively. The return to an export growth path marked the end of the longest trade recession in the region’s recent history, which lasted 24 months. Despite the expansion, the value of exports remains 10 per cent below its peak registered in 2014. A World Bank report also noted that a deeper economic integration among Latin American countries will make the region more competitive in international markets and boost long-term growth, something particularly noteworthy for the region as it comes out of its recession. Better Neighbors: Toward a Renewal of Economic Integration in Latin America argues that a renewed integration strategy that takes advantage of the synergies between regional and global economic integration can contribute to growth with stability. “Regional economic integration offers a way forward to reactivate the economic growth needed for reducing poverty and boosting shared prosperity,” said Jorge Familiar, World Bank Vice President for Latin America and the Caribbean. “A more robust regional integration will make the region more competitive globally. Effective integration will require investment in infrastructure, connectivity and logistics, which will offer an additional boost in economic growth.” Mexican expansion In the sphere of container shipping, Mexico, which handles Latin America’s third largest container volume, behind only Brazil and Panama, recently added to its capabilities with the completion of the first phase of APM Terminals’ Lazaro Cardenas terminal. The initial phase occupies an area of 49 hectares, with a quay of 750 meters in length for ships and a depth of 16.5 metres, deep enough to receive some of the world’s largest ships. The terminal is connected to five rail tracks and offers gate services for land-side customers. By the final phase of the terminal buildout, which is scheduled to happen between 2027 and 2030, the terminal’s water depth will increase to 18 metres. By then, the terminal will have a quay 1.5 kilometres long in a total area of 102 hectares and a capacity of 4.1 million TEUs, operated by 15 STS cranes and 10 rail tracks, providing intermodal access. By the final phase, the total investment will be US$900 million. “In addition to servicing ships, the new terminal in Lazaro Cardenas will enable us to further contribute to the nation’s growth story and long-term competitiveness by offering efficient, safe and reliable terminal services to producers and manufacturers,” commented Jose Rueda, Managing Director for APM Terminals in Mexico. “With the capacity to receive the world’s biggest ships and provide additional connectivity inland via our terminal at Cuautitlan Izcalli, in the industrial zone of Mexico City which is surrounded by over 200 onward distribution centers, we are in a unique position to facilitate trade for the country.” CS
Expanded Panama Canal Turns One
The Expanded Panama Canal has seen more than 1,500 Neopanamax vessels transit the canal in the year since it opened. © Matthew Ragen/iStock
In its first year of operations, the Expanded Panama Canal has seen tonnage increase by 22.2 per cent in 2017, compared to last year, and increased Neopanamax traffic. More than 1,500 Neopanamax vessels have transited the Expanded Canal, according to the Panama Canal Authority. Containerships represent approximately 51.3 per cent of traffic through the Expanded Canal, followed by LPG and liquefied natural gas (LNG) carriers, which represent approximately 31.5 and 9.1 per cent, respectively. A total of 15 out of 29 liner services that use the Panama Canal now employ Neopanamax vessels to take advantage of the economies of scale offered by the Expanded Canal. The majority of these liner services connect ports in Asia and the U.S. East Coast. “These transits are a testament to the global maritime industry’s confidence in the Expanded Canal,” said Panama Canal Administrator Jorge L. Quijano. “The countless accomplishments set over the past year have surpassed even our own expectations for the project. We would like to thank everyone involved, from our customers to our highly-skilled employees, for their role in making this year such a great success.” On average, 5.9 vessels transit the Expanded Canal per day, surpassing original forecasts of two to three daily transits for the first year of operation. According to the Authority, more than 90 per cent of the global LNG fleet can now transit the waterway for the first time in history, opening a new market and allowing LNG producers in the United States to ship natural gas to Asia at competitive prices. Future infrastructure projects planned by the Authority, include plans to concession a roll-on roll-off (RoRo) terminal to serve as a centre for the redistribution of vehicles, machinery and heavy equipment and a 1,200-hectare logistics park.
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2017
SHIPPER’S CHOICE
EXCEEDING EXPECTATIONS Our 16th Annual Shipper’s Choice Awards Survey sets industry benchmarks for performance excellence and identifies the 41 carriers who surpass them
O
n time and on budget. It’s a mantra that many businesses strive to execute—perhaps none more than those companies whose job it is to move goods around the country and around the world.
Canadian carriers at the behest of shippers do their best to live up to the standard of on-time delivery at the best price and some do it better than others, according to our Annual Shipper’s Choice Awards Survey, which provides buyers of
transportation services with consistent, national and scientifically derived benchmarks of excellence for carrier performance in each mode. Across the board—almost unanimously—carriers again ranked on-time continued
Importance Of Performance Criteria On-time performance
Quality of equipment & operations
Information technology
Competitive pricing
Customer service
LTLTrucking
4.791
4.400
4.164
4.720
4.756
4.492
3.716
4.132
TL Trucking
4.864
4.541
4.187
4.726
4.671
4.483
3.960
4.209
Couriers
4.885
4.441
4.607
4.750
4.706
4.467
3.966
4.218
Air Carriers
4.857
4.533
4.616
4.637
4.682
4.583
3.994
4.245
Mode
Leadership in problem solving
Ability to provide value-added services
Sustainable transportation practices
Ocean Carriers
4.642
4.511
4.429
4.752
4.650
4.514
4.117
4.266
Rail Carriers
4.590
4.407
4.278
4.701
4.459
4.315
3.805
4.206
14 July/August 2017 www.canadianshipper.com
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BACK-TO- BACK YEARS AS YOUR LTL CARRIER OF CHOICE
FROM ALL OF US AT GX TRANSPORT, THANK YOU FOR YOUR CONTINUED SUPPORT!
DEDICATED FLEETS
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1-877-740-3940 gxts.com
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2017
SHIPPER’S CHOICE Our survey provides shippers, 3PL service providers and freight forwarders across Canada with the opportunity to set benchmarks for carrier performance on eight key performance indicators (KPIs) and to rate their top carriers against those benchmarks. Aside from identifying the best carriers across all modes through this process, survey respondents also provide clear indications of the different values Canadian buyers of transportation services place on each key performance indicator based on mode as well as a comparison of how high these standards are set for each mode. (For example, transportation buyers set their highest standard on sustainable transportation practices for ocean carriers while expecting TL carriers to live up to the highest standard for quality of equipment and operations.) The importance survey participants
performance and competitive pricing as their Nos. 1 and 2 criteria in terms of importance. (LTL motor and air carriers placed customer service slightly ahead of pricing.) As a reflection of the importance of these and the other criteria rated, shippers have again raised the benchmarks of excellence that carriers are required to surpass in order to become Shipper’s Choice Award winners. Clearly some carriers are finding the sweet spot between being lean enough to provide competitive pricing and providing excellent service. This year 41 carriers managed to surpass the Benchmark of Excellence in our 16th Annual Shipper’s Choice Awards Survey. Particularly impressive are the carriers who have scored above the benchmark of excellence for five years in a row, thus earning our special “Carrier of Choice” designation. Turn to page 32 to see which 16 companies were honoured.
continued
Shipper Satisfaction Ratings By Mode Mode
On-time performance
Quality of equipment & operations
Information technology
Competitive pricing
LTLTrucking TL Trucking
Customer service
Leadership in problem solving
Ability to provide value-added services
20.75
18.88
16.90
21.63
19.88
16.63
20.33
20.47
18.43
20.52
20.48
18.82
Sustainable transportation practices
Total satisfaction score
15.06
17.11
147.933
16.15
17.43
151.541
Couriers
21.00
18.89
19.28
19.42
18.57
16.71
14.92
16.74
145.534
Air Carriers
21.63
19.82
19.56
19.68
19.97
18.98
16.02
17.43
153.086
Ocean Carriers
19.43
18.68
17.83
19.92
19.25
17.65
15.26
16.87
144.870
Rail Carriers
18.22
18.18
17.14
19.56
17.41
15.91
13.54
16.91
136.868
Peace of mind transportation from our family to yours. LTL in Ontario and Québec. Thank You to all our customers.
800-465-6657 www.minimaxexpress.com
16 July/August 2017 www.canadianshipper.com
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TO ALL OUR LOYAL CUSTOMERS AND DEDICATED EMPLOYEES, WE SAY THANKS!
For the 6th consecutive year, Transport Guilbault has received the Shipper’s Choice Awards excellence award surveyed by the Canadian Shipper Magazine. We have surpassed the benchmark of excellence performance in the TL and LTL categories. Again, we have distinguished ourselves in the following: • Customer service; • On-time delivery;
• Quality of equipment and operations;
• Problem solving;
• Information technologies.
This consistency of excellence performance allows us to maintain the prestigious Carrier of Choice title.
Your trust fuels our success !
1.888.880.3801 www.groupeguilbault.com
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2017
SHIPPER’S CHOICE
As with past years, survey participants represent every region across Canada and buy transportation services for companies with annual sales ranging from less than $5 million up to more than $2 billion.
place on the KPIs for each mode (based on a five-point scale) is used as a weight in calculating carrier evaluations. Survey participants then rate up to three of their main carriers in each mode (again on a fivepoint scale.) The final weighted score for each carrier is derived by multiplying the carrier’s average performance score by the average importance rating for each key performance indicator for that mode. Because survey participants are first asked to rate the importance they place on each of the eight KPIs when making their carrier selections, and that data is used as a weight on their carrier evaluations, we feel that the benchmarks set are truly standards of excellence. In other words, carrier performance is judged against an ideal of what shippers expect and the areas given the most weight are the ones that matter most to buyers of transportation services. As a result, of the hundreds of carriers rated in our survey, only a very few are deemed by participants’ evaluations as providing a service so superior that it warrants a Shipper’s Choice Award. Carriers receive the Shipper’s Choice Award when their total score meets or surpasses the total benchmark of excellence for their mode. Only those carriers who exceed this benchmark have their names and scores included in the following tables. Average shipper satisfaction ratings for each KPI are shown by mode. The final column on the right shows the total benchmark of excellence set for each mode. The benchmarks for each of the eight KPIs per mode also are indicated with each modal table on the following pages. Invitations were sent to more than 6,000 of our readers who are buyers of transportation services in the manufacturing, retail and other sectors as well as to individuals responsible for managing shipments within the freight forwarding and 3PL sectors. Carriers must receive a minimum number of evaluations in order to qualify for the award. It should be noted that this year winning was made all the more difficult because we once again raised the number of evaluations necessary to qualify for the award for almost every mode. In order to boost response, carriers were giv-
en the opportunity to forward the survey to their own customer lists. Not all carriers chose to do so, however. To prevent tampering, we check for multiple cases submitted by known respondents. If there is more than one case, then only the newest one is considered. Likewise, we check for similar IP addresses. As a final check on tampering, we separate and check the evaluations submitted by participants from our own e-mail list versus the e-mail lists of carrier customers. Winners must have evaluations submitted by transportation buyers from our own e-mail list to qualify for the award. More than 2,000 buyers of transportation services participated in our survey, which makes Shipper’s Choice the largest of the several surveys we conduct annually. We thank all those of you who took the time to complete our survey. (Participants receive an advance electronic copy of the results.) More than 9,000 evaluations of carriers from all modes providing services in the Canadian market were cast. As with past years, survey participants represent every region across Canada and buy transportation services for companies with annual sales ranging from less than $5 million up to more than $2 billion. Their annual supply chain budgets range from less than $100,000 up to more than $20 million. A third of respondents spent over 70 per cent of their supply chain budgets on transportation. The Shipper’s Choice Awards Survey was undertaken once again in partnership with CITT and the Freight Management Association of Canada (FMA), two associations whose thousands of members are responsible for the purchase of transportation services. And, as in previous years, the research was conducted by an independent research firm. Winning carriers are listed alphabetically, and not by their total score. Those wanting to compare the scores among the winners should keep in mind the high probability that these carriers, although they are being compared to an industry benchmark, have been evaluated by different shippers. This survey is intended as a measure of which carriers exceed industry expectations and not a ranking of the carriers involved.
18 July/August 2017 www.canadianshipper.com
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WE WOULD LIKE TO THANK OUR CUSTOMERS FOR THEIR MANY YEARS OF SUPPORT! ONTARIO & EAST LTL & TL SERVICE INTERMODAL LTL & TL SERVICE FULL SERVICE WAREHOUSING ON, AB, BC TRANS-BORDER FREIGHT SOLUTIONS LTL & TL
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SURVEY DEMOGRAPHICS
2017
SHIPPER’S CHOICE
A deeper dive into our Shipper’s Choice Awards respondents
Industry sector distribution of respondents
Geographic distribution of respondents
37%
17%
15%
9%
23%
Manufacturing
Third-party logistics
Retail
Freight forwarding
Other
56% of respondents had an annual supply chain budget under $1 million
19%
31%
49%
Western Canada
Central Canada
Eastern Canada
Annual supply chain budget
19%
25%
12%
19%
8%
9%
9%
Less than $100,000
$100,000 $500,000
$500,000 $1M
$1M - $5M
$5M - $10M
$10M - $20M
More than $20M
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20 July/August 2017 www.canadianshipper.com
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Percentage of budget spent on transportation
Biggest annual expenditures in mode of transportation
41-60%
10%
21-40%
13%
Transport
$100,000 - $449,999
30%
Air Cargo
$10,000 - $49,999
27%
Marine
$10,000 - $49,999 & $100,000 - $449,999
18%
Rail
$100,000 - $449,999
27%
Courier
$10,000 - $49,999
31%
61-80%
18%
19%
81-100%
41% 1-20%
61% of respondents spend under 50% of their budget on transportation
Gross annual sales
34%
24%
10%
9%
6%
9%
5%
4%
5 million or less
Over 5 million to 15 million
Over 15 million to 30 million
Over 30 million to 60 million
Over 60 million to 100 million
Over 100 million to 500 million
Over 500 million to 2 billion
Over 2 billion
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On time and on top
2017
SHIPPER’S CHOICE
T
performance on that KPI better than any other mode other than TL trucking. Sixteen carriers surpassed our Benchmark of Excellence this year, down one from last year, with three new entries: Big Freight Systems, Western Canada Express and XPO Logistics. LTL winners and their scores for each of our eight KPIs are shown in the table below. The bottom row of the table shows this mode’s Benchmark of Excellence for each KPI. The total Benchmark of Excellence is indicated on the top right. The winners are shown in alphabetical order and only those scoring above the total Benchmark of Excellence are included.
here were nearly 4,000 evaluations cast by Canadian shippers for the LTL category. On-time performance is considered highly important for shippers purchasing LTL transportation, ranking just ahead of customer service and followed by competitive pricing. In fact, the customer service expectations for LTL are the highest among all the modes in the survey, but LTL carriers appear to be delivering on that score—the LTL mode receives the second highest customer service ratings of all the modes. The buyers of transportation responding to our survey were quite satisfied with the competitive pricing performance of their LTL carriers, ranking this mode’s
LTL Motor Carrier Award Winners Total No. of shippers evaluating carriers in this mode: 2,521 Total No. of carrier evaluations: 3,859 Benchmark of Excellence: 147.933
Carriers
On-time performance
Quality of equipment & operations
Information technology
Competitive pricing
Customer service
Leadership in problem solving
Ability to provide value-added services
Sustainable Transportation Practices
All Connect Logistical Services
22.06
20.31
18.07
21.55
23.23
21.32
16.91
18.49
Armour Transportation Systems
20.56
18.75
16.74
20.42
20.65
18.86
15.80
17.33
Big Freight Systems
20.96
20.21
18.04
21.24
22.67
20.05
16.32
17.60
Bourett Transportation
21.19
19.63
18.94
20.45
20.98
19.02
15.23
16.96
Cavalier Transportation Services
22.90
20.98
18.86
22.00
22.77
20.69
17.89
18.87
CCT Canada
22.36
19.99
18.10
21.76
22.41
20.45
16.18
18.25
Guilbault Transport
20.87
19.20
17.60
20.24
21.57
19.90
15.45
17.78
GX Transportation
22.89
20.75
19.08
21.93
23.43
21.77
17.42
19.35
Hercules Forwarding
22.63
20.28
18.60
21.96
22.90
20.80
16.80
18.68
Minimax Express Transportation
21.56
19.05
17.38
21.83
21.34
19.20
15.99
17.78
Polaris Transportation
21.67
20.28
18.88
21.45
21.04
19.70
15.69
18.54
Seaway Express
22.89
20.24
17.70
21.61
22.90
20.40
17.38
19.18
Spring Creek Carriers
22.23
20.22
16.89
21.36
21.86
20.17
16.50
18.28
TransPro Freight Systems
22.63
20.29
18.48
21.45
22.90
20.92
16.91
18.51
Western Canada Express
19.75
18.48
17.04
22.40
20.71
17.90
15.17
17.52
XPO Logistics
21.87
19.63
17.72
19.12
20.00
18.20
14.75
16.65
Benchmark of Excellence
20.75
18.88
16.90
20.33
20.47
18.43
15.06
17.11
22 July/August 2017 www.canadianshipper.com
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Running the table
2017
SHIPPER’S CHOICE
T
his has traditionally been the most hotly contested mode in our Shipper’s Choice Awards. You have to bring your A game to please Canadian buyers of TL services and the carriers that make the cut really deliver an excellent service offering based on the survey results. The TL category has the second-highest satisfaction score (air carriers ranked first), making it more difficult to be named to the circle of winners in this modal category than any other. The TL mode leads all other modes in satisfaction scores for six of our eight KPIs—ontime performance; quality of equipment and operations; competitive pricing; customer service; ability to provide value-added services; and sustainable transportation practices.
Nearly 1,500 shippers cast more than 2,000 carrier evaluations for the TL category. Fourteen carriers surpassed our Benchmark of Excellence this year, three more than last year. New to the list this year were Apps Transport Group, Big Freight Systems, CCT Canada, Challenger Motor Freight and Guilbault Transport. TL winners and their scores for each of our eight KPIs are shown in the table below. The bottom row of the table shows this mode’s Benchmark of Excellence for each KPI. The total Benchmark of Excellence is indicated on the top right. The winners are shown in alphabetical order and only those scoring above the total Benchmark of Excellence are included.
TL Motor Carrier Award Winners Total No. of shippers evaluating carriers in this mode: 1,470 Total No. of carrier evaluations: 2,088 Benchmark of Excellence: 151.541 On-time performance
Quality of equipment & operations
Information technology
Competitive pricing
Customer service
Leadership in problem solving
Ability to provide value-added services
Sustainable Transportation Practices
All Connect Logistical Services
22.84
20.76
18.38
22.35
22.99
21.28
18.07
18.83
Apps Transport Group
20.61
19.57
16.96
19.61
20.58
19.35
17.67
17.83
Carriers
Armour Transportation Systems
21.22
19.71
17.10
20.52
20.64
18.79
17.08
17.54
Big Freight Systems
20.79
20.30
17.35
21.50
21.25
19.15
15.95
16.66
Bourassa Transport
21.70
19.74
15.78
20.54
20.84
19.42
16.83
17.19
Cavalier Transportation Services
23.53
21.55
18.73
22.33
22.16
20.49
18.74
18.73
CCT Canada
23.40
20.76
19.14
22.73
21.80
20.28
18.29
18.44
Challenger Motor Freight
21.38
21.10
17.48
19.89
20.24
18.77
17.16
18.50
Guilbault Transport
22.15
20.38
17.37
20.01
21.32
20.12
17.04
17.96
Hercules Forwarding
23.40
21.61
19.56
22.44
22.98
21.67
18.78
19.83
MacKinnon Transport Inc.
23.02
21.19
18.54
20.79
21.80
20.32
18.15
18.04
Penner International
22.97
21.36
17.69
21.88
22.23
19.62
17.04
18.60
TransPro Freight Systems
23.22
21.19
18.24
21.65
22.22
21.10
18.27
18.79
XTL Transport
23.26
20.97
18.49
20.53
22.50
21.22
18.04
19.22
Benchmark of Excellence
21.63
19.88
16.63
20.52
20.48
18.82
16.15
17.43
24 July/August 2017 www.canadianshipper.com
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Walking the tightrope
2017
SHIPPER’S CHOICE
M
anaging competitive pricing, excellent customer service, and time constraints is an ongoing challenge for couriers and buyers of these services have high expectations, especially to meet the growing market of e-commerce sales. Keeping up with on-time performance demands requires sizeable investments in both fleet assets and information technology, which can be a real hurdle to providing the competitive pricing courier service buyers demand. Couriers ranked in the top three in satisfaction for information technology, on-time performance, and quality of equipment and operations. Still, there are couriers who prove
more than capable of managing this tightrope of expectations. Eight companies surpassed the benchmark this year, one more than in 2016, including a pair of newcomers, ATS Healthcare and MBW Courier. There were more than 1,200 shippers who provided more than 2,000 carrier evaluations for the courier category. Courier winners and their scores for each of our eight KPIs are shown in the table below. The bottom row of the table shows this mode’s Benchmark of Excellence for each KPI. The total Benchmark of Excellence is indicated on the top right. The winners are shown in alphabetical order and only those scoring above the total Benchmark of Excellence are included.
Courier Award Winner Total No. of shippers evaluating carriers in this mode: 1,231 Total No. of carrier evaluations: 2,048 Benchmark of Excellence: 145.534
Carriers
On-time performance
Quality of equipment & operations
Information technology
Competitive pricing
Customer service
Leadership in problem solving
Ability to provide value-added services
Sustainable Transportation Practices
Armour Courier Services
21.10
18.83
18.73
21.18
20.98
19.11
16.77
17.76
ATS Healthcare
21.36
20.34
19.39
19.67
19.92
18.92
16.18
18.11
Cardinal Couriers
22.46
19.03
19.15
21.96
20.35
18.43
15.86
18.03
FedEx
21.49
19.52
20.25
18.92
18.60
16.89
14.62
16.74
MBW Courier
22.84
17.64
16.33
20.40
20.76
18.82
16.01
16.39
Midland Courier
22.44
19.98
19.30
20.93
20.77
18.09
16.63
17.68
Tiger Courier
21.86
18.67
18.20
22.68
19.65
16.75
15.63
16.87
TNT Express Worldwide
21.04
18.11
19.31
21.01
19.19
16.84
15.07
15.29
Benchmark of Excellence
21.00
18.89
19.28
19.42
18.57
16.71
14.92
16.74
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26 July/August 2017 www.canadianshipper.com
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Above the clouds
2017
SHIPPER’S CHOICE
A
irfreight is a high-cost business for both the buyers and the providers of the service. And in this game on-time performance is definitely king. That’s followed by the third-highest customer service expectations of all modes. Not many can make the cut against such high demands but every year a few select air carriers do, in this case only one—Cargojet—managed the trick. Despite the emphasis on on-time performance and customer service, air carri-
ers also excelled in other areas, ranking first in satisfaction from shippers in the information technology and leadership in problem solving categories. Airfreight carrier winners and their scores for each of our eight KPIs are shown in the table below. The bottom row of the table shows this mode’s Benchmark of Excellence for each KPI. The winners are shown in alphabetical order and only those scoring above the total Benchmark of Excellence are included.
Air Carrier Award Winners Total No. of shippers evaluating carriers in this mode: 462 Total No. of carrier evaluations: 393 Benchmark of Excellence: 153.086 On-time performance
Quality of equipment & operations
Information technology
Competitive pricing
Customer service
Leadership in problem solving
Ability to provide value-added services
Sustainable Transportation Practices
Cargojet
22.77
21.16
19.96
20.89
21.55
20.81
17.48
19.05
Benchmark Excellence
21.63
19.82
19.56
19.68
19.97
18.98
16.02
17.43
Carriers
28 July/August 2017 www.canadianshipper.com
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Value-added proposition
2017
SHIPPER’S CHOICE
P
on-time performance. Those concerns showed up in shippers’ rankings of KPI importance, as ocean carriers ranked first in the categories of competitive pricing, ability to provide value-added services and sustainable transportation practices. Carriers met the challenge, as they ranked third in satisfaction ratings in the competitive pricing and ability to provide value-added services categories.
rice is repeatedly the top criteria in selecting a marine carrier in our survey. Yet the many newbuilds leave investment costs that have to be recovered. The industry’s major players have been forming alliances in an attempt to shore up freight rates as well as raise return on investment and reduce high-capital investments. Buyers of marine services however remain concerned about the impact on customer service and
Ocean Carrier Award Winners Total No. of shippers evaluating carriers in this mode: 413 Total No. of carrier evaluations: 472 Benchmark of Excellence: 144.870 On-time performance
Quality of equipment & operations
Information technology
Competitive pricing
Customer service
Leadership in problem solving
Ability to provide value-added services
Sustainable Transportation Practices
NYK
20.74
20.00
19.19
20.12
20.61
18.06
14.50
15.74
OOCL
19.45
18.75
18.31
19.11
20.08
18.16
15.34
16.50
Benchmark of Excellence
19.43
18.68
17.83
19.92
19.25
17.65
15.26
16.87
Carriers
CANADIAN SHIPPERS VOTE YES FOR CCT Our entire team at CCT is proud to be acknowledged and named the Shipper’s Choice in the LTL category for the fifth time in 2017. Thank you for allowing us to serve your expedited LTL and premium rail LTL requirements throughout Canada.
YOUR PREMIUM ROAD & RAIL SERVICE PROVIDER
CCTCANADA.COM 1.866.576.4CCT
30 July/August 2017 www.canadianshipper.com
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COURIER ӂ LTL ӂ TRUCKLOAD THE ONLY CARRIER IN CANADA VOTED AS THE SHIPPER’S CHOICE FOUR YEARS IN A ROW... IN ALL THREE MODES OF TRANSPORT.
2014
2015
2016
Armour Transportation Systems is the only carrier in Canada to achieve this recognition and we could not have done it without the outstanding support of our valued customers. Thank you for your continued commitment.
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CARRIERS OF CHOICE
2017
Consistency of performance deserves a special award
SHIPPER’S CHOICE
C
arriers are presented with this prestigious award if they have demonstrated the consistency necessary to attain the highest levels of service by surpassing the industry Benchmarks of Excellence set in the Shipper’s Choice Awards survey for a minimum of five consecutive years. This is a particularly difficult task because aside from having to maintain con-
sistent excellence in their operations, carriers have to meet a likely rising standard set by shippers from year-to-year while also responding to changing priorities. To remain part of this exclusive fraternity, carriers must requalify each year by having surpassed the Shipper’s Choice Awards Benchmark of Excellence for five consecutive years.
Congratulations to the 2017 Carriers of Choice CARR OF CH IER OIC E
All Connect Logistical Services Armour Transportation Systems Cardinal Couriers Cargojet
Cavalier Transportation Services FedEx Guilbault Transport GX Transportation
Hercules Forwarding MacKinnon Transport Midland Courier Penner International
Polaris Transportation Tiger Courier TransPro Freight Systems XTL Transport
THANK YOU We appreciate the continued support of Canada’s shipping community as we gratefully accept the Shipper’s Choice award in the LTL category for 2017. We would also like to thank our entire team for their contribution in making our LTL offering an award winning experience for our valued customers.
westerncanadaexpress.com
1.800.387.3702
32 July/August 2017 www.canadianshipper.com
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Trust the #CrossBorderPros.
1.800.409.2269 info@polaristransport.com
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INTERNATIONAL TRANSPORT FORUM
Ministers call for improved governance for transport Regulation should foster innovation, provide a framework for Open Data use and help to make mobility in cities more inclusive
T
ranspo ransport rans port r Ministers Mini t from the 57 member countries of the International Transport Forum expressed their political will to improve the governance frameworks for transport in order to help achieve objectives agreed by the international community, at the ITF’s annual summit held in Leipzig, Germany. “Transport governance should consider the ambitious goals set by the Paris Climate Agreement and the UN Sustainable Development Goals. Successful implementation of these agreements calls for significant changes to transport systems, technologies and to the overall governance of the sector”, stated the 2017 Ministerial Declaration of Governance of Transport. In their joint declaration, Ministers recognized that regulatory and fiscal frameworks may require adjustment to promote innovative mobility solutions and call for responsive regulation to foster innovation. Specifically, Ministers expressed their will to create a sound framework for open mobility data and support new approaches to collaboration between the private and public sectors to share data. They welcomed initiatives to make all non-personal transport data collected by governments openly available and encourage transport companies to make their data available in open standard formats. Ministers will also promote measures to ensure cyber security and data protection in transport. Taking note of on-going urbanization,
Michael Keenan, Canada’s Deputy Transport Minister, makes a point about the importance of better governance during the ITF plenary session.
Ministers encouraged cooperation among all levels of authority to ensure that transport systems in urban areas provide inclusive access to services and sustainable mobility solutions for their rapidly expanding populations. Specifically, they called for better coordination of transport, land use, and fiscal policies. Better governance for investment in transport infrastructure In this panel session, high-level decision makers across government and the private sector discussed major issues of strategic planning under evolving goals and how to involve the private sector in infrastructure development. Such governance arrangements play a critical role in determining user satisfaction and affordability of transport infrastructure. If decisionmakers work within a strong governance framework, infrastructure will contribute to economic productivity and individual well-being by giving access to health, education, jobs, leisure and markets. Under poor governance arrangements, communities may suffer from lost opportunities due to underinvestment, inappropriate infrastructure or costly projects that divert resources from other valuable uses. There was a common view among stakeholders that significant investment was required in transport infrastructure. There are twin imperatives: responding to climate change and encouraging economic growth under the influence of new tech-
34 July/August 2017 www.canadianshipper.com
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nology. In Canada, Deputy Transport Minister Michael Keenan noted that climate change is actually degrading transport assets by changing access to “ice roads” and shortening bridge lives. In Paris, the policy emphasis has shifted towards greater emphasis of public transport prompting a large-scale investment in metro and tram systems, particularly in suburban areas (The Grand Paris Express). Many participants stressed the on-going role for roads as a driver of growth and providing lastmile connections for all other modes. Panellists argued that any individual government’s budget was not able to finance all the spending required to meet infrastructure investment demands. Public sector collaboration and private sector involvement were seen as critical to make progress. In Norway, the national government is putting urban growth agreements in place with city governments to direct co-investments towards compact transitoriented developments. The European Investment Bank is looking for opportunities to find co-investment partners across Europe to deliver on ambitious transport investment aims in the Junker Plan. All panellists were seeking mechanisms to involve the private sector in project development and taking on real risk and equity stakes in these projects. Sharing knowledge across countries on success and risk factors was seen as a strong strategy to ensure good value for money from private involvement in infrastructure. CS Photo courtesy International Transport Forum
2017-06-29 9:04 AM
INTERNATIONAL TRANSPORT FORUM
Driverless trucks: new report points out need for a managed transition Automated road freight will save costs, reduce emissions, make roads safer, but will impact driver jobs
G
overnments must consider ways to manage the transition to driverless trucks in order to avoid potential social disruption from job losses, says a new report published by the International Transport Forum (ITF) with three partner organizations. According to the report, Managing the Transition to Driverless Road Freight Transport, self-driving trucks will help save costs, lower emissions and make roads safer. They could also address the shortage of professional drivers faced by the road transport industry, the study says. But automated trucks could reduce the demand for drivers by 50-70 per cent in the U.S. and Europe by 2030, with up to 4.4 million of the projected 6.4 million professional trucking jobs becoming redundant, according to one scenario. Even if the rise of driverless trucks dissuades newcomers from trucking, over two million drivers in the U.S. and Europe could be directly displaced, according to scenarios examined for the report. The report makes four recommendations to help manage the transition to driverless road freight. These include the establishment of a transition advisory board to advise on labour issues, along with consideration of a temporary permit system to manage the speed of adoption. It also recommends setting international standards, road rules and vehicle regulations for self-driving trucks. Pilot projects should also continue with driverless trucks to test vehicles, network technology and communications protocols. The report was prepared jointly by the European Automobile Manufacturers’ Association (ACEA), the International Transport Workers’ Federation and the International Road Transport Union (IRU), the road transport industry’s global body, in a project led by the International Transport
Automated trucks could reduce the demand for drivers by 50-70% in the U.S . and Europe by 2030.
Forum, a Paris-based intergovernmental organization linked to the OECD. “Driverless trucks could be a regular presence on many roads within the next 10 years,” said José Viegas, Secretary-General of the ITF. “Manufacturers are investing heavily into automation, and many governments are actively reviewing their regulations. Preparing now for potential negative social impact of job losses will mitigate the risks in case a rapid transition occurs.” Erik Jonnaert, Secretary General of ACEA, added, “We need international standards, legislation and processes to obtain exemptions from road rules that are appropriate for self-driving trucks. Otherwise we risk having a patchwork of rules and regulations, which could hinder manufacturers and road users from investing in automated vehicles.” “Autonomous trucks will bring many benefits to society, from cost savings and lower emissions to safer roads,” commented Christian Labrot, President, IRU. “Autonomous vehicles will also help the haul-
Photo courtesy International Transport Forum
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age sector deal with the current shortage of drivers in many parts of the world. However, we have to remember the dedicated drivers of today will need to be retrained tomorrow, and we must keep attracting professionals into road transport. We all need to work together for a smooth transition to driverless technology.” Steve Cotton, General Secretary of the International Transport Workers’ Federation, welcomed the report’s recommendation that trade unions must be part of any such process. “Automation in trucking demands a managed and just transition. We must avoid excessive hardship for truck drivers and ensure the gains from the technology are fairly shared across society. Self-driving trucks threaten to disrupt the careers and lives of millions of professional truck drivers. This report is a timely investigation into how that transition could happen. Its recommendations will help governments to ensure a just transition for affected drivers.” CS www.canadianshipper.com July/August 2017 35
2017-06-29 9:04 AM
INTERNATIONAL TRANSPORT FORUM
Governing major transport gateways and corridors Nations are competing to attract these investments but coordination is needed to ensure coherence in the long run
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ransport gateways and freight corridors are central to facilitating global trade flows. The trans-national character of these movements means that many corridors cross multiple countries. Good governance of these gateways and corridors is critical, particularly when different corridor initiatives overlap. The “Governance of Gateways and Corridors” session at ITF’s annual conference in Leipzig, Germany, provided an overview of some of today’s major transport corridor building initiatives, namely the TEN-T Network and The One Belt One Road project. It also examined some of the strategic facilitation and coordination frameworks that are important to their development in the Black Sea economic region, the Suez Canal and through the Intergovernmental Organization for International Carriage by Rail (OTIF). The panellists focused on the key lessons and challenges for the effective development of transport corridors between Europe and Asia. Europe has been at the forefront of corridor development and has a history in dealing with different regulatory playingfields across countries and according to Mathieu Grosch, TEN-T Coordinator, that success so far is due to a step-by-step approach and three ingredients: a combination of top-down and bottom-up initiatives, good dialogue between stakeholders and the establishment of common standards. This idea was shared by François Davenne from OTIF, which has a long experience in bringing countries together through the development of European rail network standards. He estimates that seamless traffic for rail-freight (e.g. border crossing by complete trains) remains a major challenge beyond the EU border. Building inter-operability requires the establishment of international rules at the contractual and technical levels rather than a multitude of bilateral agreements.
Mathieu Grosch of TEN-T speaks at the ITF's session on the governance of gateways and corridors.
Michael Christides from the Black Sea Economic Cooperation (BSEC) highlighted the difficulty of agreeing on common principles dealing with a number of countries with very different connectivity levels and administrative standards at the crossroads between Europe and Asia. Harmonization and the reduction of red-tape have progressed significantly through joint efforts but there is still a lot of work to do. Davenne also stressed that for effective cooperation and seamless transport we have to think beyond infrastructure development. Establishing the software connectivity to support the existing network is also key and requires identifying what information should be shared, how, between whom and how to make it secure. This will contribute to cooperation and the building of trust, without which cross-border cooperation suffers. There are many bottlenecks to overcome; for instance, out of the 13 days that it takes to move parcels from Europe to Asia by rail, one is lost at the Polish border according to OTIF. Such
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key interfaces need to be pinpointed and addressed to ensure smoother connectivity. The Suez Canal Authority is working on reducing time lost by cargo going through the Canal in this way and transit time is now only 11 hours. Plugging China’s very ambitious Belt and Road Initiative smoothly into corridor development in Europe was at the centre of the discussion. The project has already had a major impact on transport network and economic development in Asia, Africa and Europe. It will greatly enhance the position of the Black Sea Region as a node in transport between Europe and Asia and also encompasses the Suez Canal, contributing to its position as the major gateway between Europe and Asia. Nagy Amin, from the Suez Canal Authority, noted that 99 per cent of container trade between Europe and Asia uses the canal, adding that the newly expanded canal and future port and economic development projects guarantee its future as a strategic logistics hub. CS Photo courtesy International Transport Forum
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HAZARDOUS MATERIALS
A DECLINE IN DAMAGES CAUSED BY HAZARDOUS CARGO IS LITTLE CAUSE FOR CHEER, AS LACK OF AWARENESS KEEPS HIDDEN DANGERS PERILOUSLY CLOSE TO THE SURFACE
By Ian Putzger
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irst the good news: shipping got safer last year, with vessel losses down 16 per cent from 2015 to 85 ships lost, the lowest number in the past decade. The statistics from insurance provider Allianz Global also show a four per cent decline in casualties from 2015. Regrettably the drop in losses and casualties does not imply an improvement in safety when it comes to dangerous goods. According to Peregrine Storrs-Fox, director of risk management at cargo insurance specialist TT Club, about five to 10 per cent of all cargo carried on ocean vessels is hazardous, but continued
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HAZARDOUS MATERIALS
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between one-third and one-half of all incidents of reported cargo damage have a cause that involves dangerous goods. He notes that this year has not produced dramatic calamities at ports caused by hazardous materials, such as the explosions at the port of Tianjin in 2015 that killed 173 people and injured hundreds more, but a number of fires have been reported this year from ports that have been attributed to such cargo. He calls each of them a near miss that had the potential to spark a major incident. “Sadly, we have seen the same trend as in the last three decades,” he says, pointing out that nearly two-thirds of cargo damages involved issues with the preparation process—from documentation to packaging. “Not much has changed, which is galling, given the availability of information that is out there.” All too often hazardous shipments are not identified as such by the shippers, be it out of ignorance or with intent. “Dangerous goods that are concealed are a big problem in the industry,” says Robert Monette, general manager of Dangerous Goods Packing Service. He recalls cases where motorcycles that were to be shipped had dangerous substances stuffed in the saddlebags. Most operators agree that the majority of the problems that have arisen from dangerous goods sprang from the fact that shipments had not been declared properly and packed without observing the proper guidelines. Barb Johnston, manager of operational
programs for Air Canada Cargo, confirms that most of the problems stem from the shippers’ side. “Our forwarders are professionals, for the most part they have this knowledge and are respectful of the requirements. It is at the shipper level that there needs to be better understanding of the risks that surround certain commodities, and what needs to be done, such as proper packaging and declarations, to ensure safety is maintained,” she remarks. The rapid growth of e-commerce has drastically augmented this problem. “Ecommerce is a very big concern,” says Barbara Foster, senior regulatory consultant at ICC Compliance Center, which runs the air cargo training program for CIFFA, the Canadian forwarders association. “Amazon at least is a corporate entity, with eBay you have a lot of private individuals. Most of them have no idea what a dangerous goods regulation is.” Much attention has focused on lithium-ion batteries, especially after the formal investigation into the fatal crash of a UPS freighter in 2010 established that the aircraft crashed shortly after take-off because of a fire caused by lithium batteries. This led to a subsequent ban of lithiumion batteries on passenger aircraft. Monette notes that this ban has created serious challenges. “If you try to ship lithium batteries to the Bahamas, you need to truck them to Miami. There you can catch a cargo plane that flies to the Bahamas three times a week,” he says. Dangerous Good Packing Service was
involved in the recall of the Samsung Galaxy 7 last year. The company handled over 20,000 boxes, all of which had to be repackaged. It consolidated that traffic in Toronto and shipped it by ocean. “It took us two months,” recalls Monette. The ban on lithium-ion batteries on passenger aircraft notwithstanding, Foster finds that the industry has not really got a handle on how to control this issue. “This is probably going to be the biggest topic for the foreseeable future,” she reflects. While much e-commerce moves in express networks, forwarders bundle such traffic and send it to international destinations in consolidations, which are broken down and fed into last-mile delivery networks on the other end. TT Club has seen a limited number of incidents with hazardous materials in consolidations, which were mostly related to e-commerce, reports Storrs-Fox. Air mail has been another cause for concern there. “All other items sent via the post are a concern primarily because the shippers may simply not be aware of the risks of certain commodities during transport, and there is no mechanism for the carrier to know what is being flown,” comments Johnston. She adds that Transport Canada may introduce enhanced security regulations surrounding postal traffic in the near future, a drive that Air Canada Cargo would support. Storrs-Fox notes that screening technology has made significant strides forward and is getting closer to capabilities that not only show the contents of a container but also how they are packed. “This is not going to be there tomorrow, but within the next decade,” he adds. In the meantime, much hinges on the frontline staff of airlines, express companies and forwarders. Purolator Courier does not accept hazardous materials from walk-in clients, but it does move dangerous goods in nine different categories. The company has over 400 dangerous goods specialists across its network, but its front-end employees who deal with customers play a crucial role. “Any employee who touches a package requires dangerous goods awareness training,” says Brian Cassidy, director of environment, health and safety. The training courses that ICC runs for CIFFA’s air cargo dangerous goods pro-
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HAZARDOUS MATERIALS
“If you try to ship lithium batteries to the Bahamas, you need to truck them to Miami. There you can catch ha cargo plane that flies to the Bahamas three times a week.” Robert Monette, general manager of Dangerous Goods Packing Service
gram are designed primarily for forwarders, but shippers are also welcome. The standard course consists of an introduction module that lasts one day, followed by the two-day core course. For those who require it, there is also an added one-day course on radioactive materials. Forster sees some changes on the horizon there. Transport Canada and the International Civil Aviation Organisation are working on new rules that will move to competence-based training. This means that employees must be familiar not only of the legal requirements but also of their own company’s system. “Simply going to a
course is not going to be enough,” she says. Monette reckons that training will remain an ongoing concern, not only because regulations get updated, but also because of staff turnover. “Young people come in and only stay two years before they move on, so you constantly train new people,” he says. For its part, TT Club has joined forces with global liner and shipper organizations to push cargo integrity, with the code of practice for packing cargo transport units at the core. In the near-term Storrs-Fox does not anticipate any financial pressure from the insurance industry for greater compli-
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through aance raised premiums. rai An influx of o capital into the with cost insurance sector, coupled co pressures on shippers that prompts them to try and reduce their spend on insurance, means that premiums are unlikely to rise dramatically, he points out. For the foreseeable future, the emphasis will remain on raising awareness of the issues with shippers and promoting training. 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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INTERMODAL
STARTING FROM SCRATCH Central Maine & Quebec Railway is successfully rebuilding shipper confidence in a neglected short line
BY CARROLL MCCORMICK
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hree years after the Fortress Investment Group bought the bankrupt Montreal Maine & Atlantic (MMA) railway in May 2014, major capital investments and a lot of outreach to shippers and communities have gone a long way to restoring confidence in the short line railway’s ability to deliver. Purchased 10 months after a freight train carrying crude oil rolled into the Quebec town of Lac Megantic, exploded and destroyed the downtown, Fortress renamed the railway Central Maine & Quebec Railway (CMQ), and immediately began investing in its future. While regaining the trust of the towns-
people of Lac Magantic was certainly going to be a critical task, it was the neglected track infrastructure that had made the 481-mile long line—237 miles of which is in Quebec, a few miles in Vermont, and the rest in Maine—less and less attractive as a shipping option. “Our predecessor had been issued a multitude of Transport Canada notices and orders and a lot of [them] surrounded the condition of the track,” says Ryan Ratledge, who became the President and Chief Executive Officer of CMQ in 2017. “What we bought was pretty much a 10 miles-per-hour railway. We focused our effort on improving the infrastructure to make a 25 miles-per-hour railway.”
Elaborating on the decision to strive for 25 mph, Ratledge says, “It allowed our team to design and provide a very reliable and consistent service, and develop an operating plan to serve customers who, say, needed three, five or even seven days a week service. It also allowed us to develop a more consistent service with our interchange customers.” In the first three capital seasons, CMQ invested nearly US$30 million in track and infrastructure—about 10 times the CAPEX of MMA. The expenditures included 170,000 feet of rail, 70,300 ties installed, 48,000 tons of ballast dumped, 210 miles of surfacing, brush cut along 350 miles of track and the rehabilitation of 23 cross-
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INTERMODAL
Riviere-du-Loup Edmundston
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CP/NS
AUGUSTA Wiscasset Newcastle
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ings. CMQ has also purchased 11 more locomotives and leased others. “When CMQ began operations in 2014, there were approximately 230 miles of mainline track restricted to 10 miles-perhour,” says Gaynor Ryan, CMQ’s Chief Administration Officer. “This equated to 16 hours of delay over the CMQ system. Our track investment has eliminated almost all of these slow orders.” Leading the infrastructure improvement charge at CMQ was Ron Marshall, Director of Engineering. “Had we not had Ron on our team, we would not be talking about all the good things CMQ has done,” says Ratledge. “Ron worked closely with Transport Canada and was able to resolve those infrastructure-related issues.” The main Quebec hub is in Farnham, about 65 kilometres east of Montreal. Short spurs run north, west, south, and southeast, but the main line runs due east through towns like Brigham, Magog, Sherbrooke and Lac Megantic. In Maine, the line continues eastward to Brownville Junction, then splits, with one spur going northeast to Millinock-
Yarmouth
Central Maine & Quebec Railway
CN
CMQ haulage via NBSR/MNR Canadian National Railway
CP
Canadian Pacific Railway
CSX MNR
CSX Corporation Maine Northern Railway
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New Brunswick Southern Ry. Co. Ltd. New England Central Railroad
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Norfolk Southern
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Pan Am Southern (Operated by Springfield Terminal) Providence & Worcester
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et, where it connects to the Maine Northern Railway and another spur heading south, past Bangor through to Searsport on the Atlantic coast. Brownville Junction also connects to the New Brunswick Southern Railway (NBSR), which runs to Saint John. CMQ serves approximately 25 customers along the line, and bridges traffic carrying cargo for other customers along the NBSR. “We serve a pretty diverse mix of industries,” explains Ratledge, citing pulp and paper, chemicals, and energy as examples as well as several propane terminals. “We bring in loads and our customers distribute them. And we compete against other railways for the traffic we bridge.” As CMQ’s first two years of CAPEX spending illustrates, the company was serious about building up the business. Rebuilding the destroyed track in Lac Megantic would restore service to customers cut off from the line, including one customer who had to mount a massive shipping workaround that involved switching from 50 to 60 railcar loads to over 100 additional truck trips per week.
Trains began operating again through Lac Megantic on June 18, 2014. This resumption of service accounts for the quarterly increase in carloads from 3,000 to 7,000 in the past two-and-a-half years. However, some shippers had cooled on MMA due to the system delays, plus there were considerable safety and trust issues associated with the Lac Megantic incident, that demanded CMQ’s attention. CMQ management got on their horses and began reaching out to its customers, and to townspeople. But as with any sullied reputation in need of repair, it was not easy going, according to Ratledge. “There were customers it was difficult to even get a meeting with for several months or even more than a year. They wanted to see if we would carry through with our safety initiatives. Every time we go visit a customer we spend some time talking about what we are doing to improve safety.” The company offered its employees more safety training, and informed customers about it. It also began to clear the slow orders and increase the speed of the continued www.canadianshipper.com July/August 2017 41
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INTERMODAL
continued from page 41
system to a practical average of 25 mph. Because the faster trains go, the more quickly the track deteriorates, CMQ chose 25 mph as the sweet spot between not too slow for business and not so fast that the trains would chew up the track improvements. Ratledge adds that CMQ has also made some capital investments that allow the railway to handle 286,000-pound railcar shipments. Previously, it was 263,000 pounds. “Not all short line railways are capable of doing this,” he says. “Very specifically with us, we strengthened a couple of bridges.” How did shippers respond? “There are customers we’ve met with who say, ‘if you can work with your connecting carriers and can meet these transit times, you will win our business,’” says Ratledge. “This has happened with several customers. It is all about relationships and doing things in a safe, consistent manner, and doing what you say you are going to do. We could tell
“It is all about relationships and doing things in a safe, consistent manner, and doing what you say you are going to do.” Ryan Ratledge, President and Chief Executive Officer, CMQ
them what we were going to do, but we had to demonstrate that several times to build up the trust. It would be impossible to build up interconnecting business without the trust of the other carriers.” Along with the ongoing process of improving transit times, CMQ has been increasing the frequency of service, according to Ratledge. “We looked at crew utilization and put them up against customers’ needs.
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We put together a game plan that provided more frequent customer service. For example, two freight trains a week between Brownsville Junction and Farnham. As the track improved we went to three days a week, to five and six days a week.” Through 2020 CMQ has a capital plan with yearly expenditures averaging US$4 million. “We are looking for continuous improvement, and knowing that, we will have to continue to invest and maintain,” says Ratledge. He says the expenditures will be for the nuts and bolts: ballast, surfacing, ties, drainage control, among other things. Safety will continue to be a top priority. “CMQ is a very important transportation option for the shippers in Maine, Quebec and Vermont and we are focused on helping our customers and communities by providing a safe and economic transportation option for all inbound and outbound material or products,” says Ryan. And from the sound of it, CMQ has no intention of easing up on its goal of strengthening the trust between the company and the shippers it serves, or ever saying, ‘this is good enough.’ Ratledge explains: “You’ve got to realize that we are far from perfect. We still strive to find ways to improve what we are doing, opportunities for growth. By no stretch of the imagination do I or our team think that we’ve built the better mousetrap. We strive to get better every day. “When you do what you say you are going to do with your shippers and interchange customers, it allows them to better plan their business.” CS Carroll McCormick is an award-winning writer who has been covering transportation
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industry issues and technologies for more than a decade. He is based in Quebec.
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AIR CARGO CASE STUDY
From Russia With L ve Volga-Dnepr’s quick-thinking will help Canadian iron ore mining project increase its 2017 production
n 2016, Baffinland Iron Mines achieved 3.2 metric tonnes of production and transportation of iron ore from its Mary River mine on Baffin Island in Nunavut to the port site 100 kilometres away. Much of the equipment already on the island arrived by sealift during the summer, but with ice having shut down shipping lanes, no further deliveries would be possible until late July or early August of 2017. Recognizing the need to increase the size of its truck and trailer fleet, Baffinland turned to VolgaDnepr and its specialty in transporting oversized cargo to come up with an innovative solution to help them increase its iron ore production quota in 2017. In turn, Volga-Dnepr chose one of its Ilyushin IL-76TD-90VD freighters for the job because of their ability to operate to Arctic runways. The company is well-acquainted with cold weather northern remote operations. It delivers over 60,000 tons of outsized and heavy loads to some of the most remote and inhospitable airfields in the world each year. The Russian heavy cargo jets dominate this specialized market, since there are no
similar western-built, rear loading jet cargo aircraft in commercial service. Built in 2007, the IL-76 chosen, is one of a handful equipped with modern efficient and powerful Aviadvigatel PS90A-76 engines, hence its designation. The aircraft is also equipped with a partial glass cockpit, ordered specifically for Volga-Dnepr. The aircraft cargo bay is fitted with a complex set of gear hoists and electric hoists. This allows autonomous operation from all kinds of airfields. Volga-Dnepr is one of numerous commercial operators of the type, currently using five IL-76s, and also operates a fleet of 12 much larger Antonov An-124 super heavy transports. Tretan Inc. handled the logistics of the operation and coordinated the vehicles being moved. The ore haulers were taken to Orangeville, Ont., from factories in United States (trucks from Portland, Ore., and trailers from Iowa) to be dismantled and allow for the air shipping. In addition to increasing its fleet capac-
ity, Baffinland needed the extra equipment because the extreme winter weather conditions and harsh ground environment were causing its existing equipment to need regular maintenance, thus reducing its availability. However, the trucks were too tall to fit inside the IL-76TD-90VD cargo cabin so Volga-Dnepr’s engineers set about finding a fix, working closely with the Baffinland team. With weather conditions of up to -50 degrees on site, plus the need for the new equipment to enter service quickly, it was essential to minimize the level of dismantling of the trucks in order to eliminate a lengthy re-assembly process on arrival. Volga-Dnepr decided to put smaller tires on the tractor units for transportation, reducing their height sufficiently to fit inside the IL-76TD-90VD. VolgaDnepr’s team also worked with Ilyushin Design Bureau to address the issue of the short 6,500 feet runway at Mary River Aerodrome and found a solution to use the least amount of fuel in order to safeguard the limited fuel supplies available continued www.canadianshipper.com July/August 2017 43
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AIR CARGO CASE STUDY
continued from page 43
In order to eliminate the need for lengthy re-assembly of tractor trailer units upon arrival in Nunavut, the teams from Volga-Dnepr and Baffinland decided to put smaller tires on the the trucks and trailers for transportation, reducing their height sufficiently in order to fit inside the IL-76TD-90VD cargo plane.
on the island. Using the aircraft’s extension ramp equipment and onboard cranes also ensured the program was self-sufficient in terms of loading and unloading. With all of the planning completed, including gaining the necessary approvals from Transport Canada, Volga-Dnepr commenced a four-week program of 20 flights at the start of April. This included positioning extra crew in Canada to ensure the timeliness of the flight operations for the four-hour rotation from North Bay’s Jack Garland Airport to Mary River and back again. “Weather systems can come in very quickly in Mary Island so you have to be prepared. Having extra crew availability
meant we were able to meet our delivery schedule even though we had two days of blizzards and white-out conditions during the flying program,” said Clair Gunn, an account manager with Volga-Dnepr, who worked on the project with the airline’s specialists in the UK and Russia “We are proud to have delivered a solution that will make a significant contribution to Baffinland achieving their iron ore production quota this year.” The short timeframe had Baffinland Iron Mines’ Chief Procurement Officer, Sandeep Kumar worried, but the solutions and service provided by VolgaDnepr’s team impressed him. “When we started the search for a so-
lution, we were apprehensive of finding a workable and reliable solution in the short timeframe that we had ahead of us,” he said. “To the Volga-Dnepr team’s credit, they provided us with commercial, technical and project management expertise through the process to come up with a detailed and reliable plan. “The communication between VolgaDnepr and Baffinland representatives as well as the third parties involved, was smooth and effective, including the lead taken on the permitting process. [VolgaDnepr] understood the ground situation and worked accordingly. This gives us confidence of using such heavy airlift solutions should the need arise again.” CS
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RETAIL
NAVIGATING THE LAST MILE (L to R) Gary Newbury, Shauna McMillan, Rod Hart and Stephen O'Keefe discuss the last mile of delivery at the Retail Council of Canada's STORE 2017 conference in Toronto.
STORE 2017 conference panel discuss how to manage the all-important and always changing last mile of delivery
Photo Ryan Francoz
F
or shippers looking to aid their retail customers in executing the last mile of delivery it’s all about collaboration. That was according to a panel of industry experts who gathered at the Retail Council of Canada’s STORE 2017 conference in Toronto in May for a session entitled, “The OMNI Experience X Factor: How to Manage the Last Mile.” With the last mile being the biggest challenge facing retailers who want to offer a fantastic omnichannel experience to their customers, what fulfillment strategy is efficient, cost effective, and provides the best possible customer experience? This question has caused many sleepless nights for retailers, but at the same time constantly evolving consumer demand has forged tremendous ingenuity and innovation, said the panelists. In this session, leaders in last mile execution discussed what works, and what doesn’t when it comes to completing the last step in the customer journey. The panel, hosted by Stephen O’Keefe, Retail Adviser to the Retail Council of Canada, featured Rod Hart, Vice President, Parcels, Canada Post, Gary Newbury, a consultant and 30-year veteran of supply chain logistics and Shauna McMillan, Director of Marketing, Domestic Intermodal Group, CN. According to Hart, the last mile of delivery is still working itself out. “There’s no
silver bullet,” he told the audience. “More choice is what customers want.” McMillan added that the last mile is not always the same. “It’s not one-stop shopping anymore,” she said, citing the fact that some stores are becoming mini fulfillment centres. “There’s no one solution-fits-all either.” For Newbury, what can disrupt the last mile delivery is small pick orders in large-scale warehouse distribution centres. They are also expensive to fulfill. “It’s not just about transport,” added Newbury, who is currently working with Gordon Food Service, advising them on their Canadian last mile strategies. “There is a lot of complexity within the last mile.” In a survey last year from McKinsey & Company on how consumers are changing last-mile delivery, nearly 25 per cent of consumers are willing to pay significant premiums for the privilege of same-day or instant delivery. The survey indicated that this share is likely to increase, given that younger consumers are more inclined (just over 30 per cent) to choose same-day and instant delivery over regular delivery. But despite the large share of consumers willing to pay extra for same-day delivery, only two per cent of survey respondents said they would pay sufficiently more to make instant delivery viable (assuming the consumer would have to bear the additional cost of this extremely fast service). The report stated that same-day and instant de-
livery will likely reach a combined share of 20 to 25 per cent of the market by 2025, and they are likely to grow significantly further, especially if the service is extended to cover rural areas to some extent. Making all product delivery available in all ways to customers is important, said Hart. “It’s about understanding what customers are willing to pay for. You have to drive costs out the network because you can’t not be in e-commerce. Addressing the elephant in the room, Hart added that, “It’s not too late to catch up to Amazon. First investments were made on the front end for online purchases. Now investments are being made in how inventory is distributed.” McMillan concurred. “Don’t think Amazon has the secret sauce,” she said. “They’re still figuring it out. They’re viewed more as a technology company then as supply chain.” In wrapping up the session, each panelist was asked where retailers should look in their search for last mile solutions. The answer in a word, was shippers. “Leverage your partners for best practices,” said Hart. “Your network is bigger than you think it is,” added McMillan. “Have those conversations.” “Keep asking questions until you get the answers,” concluded Newbury. CS — John Tenpenny www.canadianshipper.com July/August 2017 45
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RETAIL
How to Handle the Truth KPMG survey charts the rise of online shopping and e-commerce
T Willy Kruh, KPMG’s Global Chair, Consumer Markets, discusses The Truth About Online Consumers report at the Retail Council of Canada’s STORE 2017 conference in Toronto.
he rise of online shopping by consumers and the growth of e-commerce retailers, whether they have brick and mortar locations or not, will continue to challenge companies’ supply chain logistics and how and where they ship their products. In a keynote presentation at the Retail Council of Canada’s STORE 2017 conference, Willy Kruh, Global Chair, Consumer Markets for KPMG, discussed the results of their recent report, The Truth About Online Consumers, which was based on a survey of 18,430 consumers from more
than 50 countries, including Canada. Enabled by technology, the continued year-over-year growth in online shopping has been fueled by a new generation of consumers who want greater convenience, value and options. For consumer businesses, this trend poses both challenges and significant opportunities. Competition is no longer limited to local shops during business hours. Consumers today are shopping all the time and everywhere; and in a truly global online marketplace, products can easily be purchased from retailers and manufacturers located
Photo Ryan Francoz
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46 July/August 2017 www.canadianshipper.com
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RETAIL
anywhere in the world—or from those with no physical retail locations at all. According to the report, “Advances in technology, logistics, payments and trust— coupled with increasing internet and mobile access and consumer demand for convenience—have created a US$1.9 trillion global online shopping arena, where millions of consumers no longer ‘go’ shopping, but literally ‘are’ shopping—at every moment and everywhere.” From a supply chain and logistics perspective, what this does is dramatically increase the complexity and the granularity at which companies need to be able manage, says Andrew Dooner, Partner, Strategy & Operations at KPMG. “In the traditional way of shipping— managing bulk shipments to and from a distribution centre to a store—your need for traceability and the ability to handle small packages is minimal,” he says. “But as you start to get into that last mile to the consumer, the ability to drive traceability
to which products are where as well as have the right economic structure to manage small package shipments. He added that in a world where online shopping continues to grow reverse logistic issues become increasingly challenging because one of the things that unlocks consumer decision-making and consumer purchases online, especially in something like apparel, is having a sizeable return policy. “This is a big challenge that a lot of our clients are wrestling with.” Anticipating where goods need to be is going to be key moving forward, says Jérome Thirion, Partner, Service Line Leader for Supply Chain at KPMG. “The latest technologies in data analytics on the demand and supply planning side will allow pure e-commerce players to start moving their stock closer to where it is going to be sold,” he says. He adds that e-commerce is a dynamic environment as opposed to the traditional push-and-pull strategy of moving goods
from a distribution centre to retail outlets. “We work with e-commerce retailers who attack costs by moving to semi-automated or fully automated distribution.” Thirion cites as an example a company doing $300 million in revenue. “We’re talking about a $50 million investment over a five-year period.” Dooner sees the landscape changing when it comes to manufacturers and retailers shipping strategies for e-commerce. “Traditionally, companies tended to own as much of the value chain as they could, now you’ll see more third-party logistics agreements. “How you think about the economics of distribution will also change. Is it a fixed or a variable cost?” Because shipping in Canada is expensive compared to the U.S., Thirion says reducing costs is the goal and one way to do that is through the power of what he refers to as “CO” as in, “co-distribution, co-location and co-warehousing.” CS — John Tenpenny
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www.ciffa.com/PFF www.canadianshipper.com July/August 2017 47
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SURFACE TRANSPORTATION SUMMIT
R U O Y K R A M R A D N E CAL oining j n o n a l Please p ountry’s top the c AND N O I T A T OR TRANSP EXECUTIVES G of SHIPPIN for a day N AND O I T A C U ED KING NETWOR
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R
E B O T C O
#sts17
2017
11 2017-06-29 8:05 AM
INSIDE THE NUMBERS WITH LOU SMYRLIS, MCILT
RECRUITMENT REALITIES Freight volumes may be far from peak levels, but Canada’s for-hire motor carriers still cite recruitment of drivers to deliver that freight as their top challenge, according to Newcom Business Media Research. Managing maintenance expenses was cited as the second biggest challenge but some owner/operators are starting to employ different electronic devices on their trucks.
Biggest challenge in managing business New technology in trucks Training and retaining staff Regulatory compliance
Customer satisfaction
5% 5%
Customer satisfaction
13% 0%
20%
Recruitment of drivers Managing maintenance expenses
28% 26% of respondents
Primary vocations Dry van LTL
Dry van TL
Types of electronic devices on trucks
10%
Reefer
Onboard connectivity from truck OEM
33%
Onboard connectivity from aftermarket provider
53%
GPS/vehicle location unit
59%
Tire pressure monitoring system
19%
Automatic tire inflation
14%
Electronic onboard recorder
27%
Fleet management system
7%
Safety devices (in-cab video cameras, etc.)
17%
Cargo/load monitoring equipment
17%
20% Refuse
15% 9% Construction
Flatbed
15%
Energy & Mining
2% 5% 2% 10%
Logging Tanker
Responsible for maintenance of own vehicles
Lease some or all of vehicles
86%
38%
YES
YES
Main reasons for not using electronic monitoring equipment
Not reliable
10%
62% NO
14%
16%
Too costly
74%
Too complicated
NO ©Ryzhi/iStock
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RETROSPECTIVE
Dangerous Goods Canadian Transportation & Distribution Management’s April 1981 issue featured a story on the newly established Transportation of Dangerous Goods Act (Bill C-18), which came into force on November 1, 1980. The Act established a mechanism by which the transportation of dangerous good by all modes could be enforced under a single legislative authority and introduced new indictable offences as well as more severe penalties. The Act also provided the government rights to enter property, seize records, inspect products and seize and dispose of them in the name of public safety. Updated in 1992, the Act was also amended last year to include a ban on lithium-ion battery cargo shipments on passenger aircraft. According to this month’s Canadian Shipper feature, all too often hazardous shipments are not identified as such by the shippers. Most operators agree that the majority of the problems that have arisen from dangerous goods sprang from the fact that shipments had not been declared properly and packed without observing the proper guidelines. The challenge of ensuring compliance with these complex and changing regulations is made even more difficult due to responsibility shifts within many organizations, with the role of hazmat compliance now often involving a number of divisions, including IT, supply chain, compliance warehouse, shipping, EHS (environmental, health and safety) and more. The path to safety and compliance requires a commitment to developing the necessary infrastructure, establishing the right processes and having the right personnel to carry it out. The result is not just enhancing your company’s brand
by being a good corporate citizen. It can give your business a competitive edge and boost your bottom line by helping to reduce costs, mitigate risk and virtually eliminate penalties and fines due to violations and rejected shipments. CS
www.canadianshipper.com July/August 2017 51
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SURFACE TRANSPORTATION SUMMIT
OCTOBER 11, 2017 International Centre 6900 Airport Road, Mississauga, ON
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The Donald Trump Effect and The Economy in 2018: What trends will impact your business? Fast Forward – an inside look at the Future of Transportation Shipper-Carrier Roundtable Effective Strategies to Improve the Profitability of your Trucking Business Bridging the Generational Gap
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Table Topics: Shipper Carrier Collaboration Best Practices in Cross-Border Freight Transportation Best Practices in Recruiting, Developing and Training Top Talent for your Business Preparing for Changes to NAFTA and Border Policies How to successfully Navigate a Rail Claim with the Canadian Transportation Agency
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COACHING CORNER
To commute or to telecommute. Employers often assume incorrectly that they can change an employee’s job as they see fit. Just as often, employees wrongly assume that their jobs cannot be changed without their consent. Q: I was recently notified that I need to go back to working from our office instead of being allowed to work remotely. If I go back to work my cost of commuting, gas, day care, will go up. Should they take that into consideration and have some kind of allowance or adjustment to my pay to take that into the new conditions of employment? Can they just change my terms of employment?
A: Any fundamental change to an employment contract requires careful consideration by the employer. A fundamental change results where the terms of employment are changed in any significant way. Examples of fundamental changes include, amongst others, a reduction of hours and salary, geographical relocation, or a significant change in the roles and responsibilities of the employee. The amount of notice required is the same as what would be required in the event of a dismissal without cause. Unless the existing contract says otherwise, it will be reasonable notice. Once an employee has been notified of the future change, they are, of course, free to seek other employment, as they would be at any time. However, if they remain in the employ of the company, the company will be entitled to impose the changes once the notice period has passed. You mentioned “going back.” Was the change to work remotely something that was negotiated or offered? Is this a new company-wide policy? Do you need to relocate as a result of it? These are questions that will determine whether there is room for negotiation or if an allowance is
By Carolina Billings, CPCC, CHRL, MA-IS
a reasonable expectation. Even then there are no guarantees. According to a recent article on www. payscale.com detailing the right way to pay remote employees, some have argued that since remote employees work independently, they should accept that they might be offered less pay and benefits than their in-house counterparts. After all, they do get
tor of real estate and workplace said despite predictions of “epic policy failure, employee engagement is up, product launches have increased significantly, and agile teams are thriving.” After several decades of allowing employees to perform their jobs remotely, IBM recently announced it was changing course to foster more in-person collaboration. Ac-
“Improved productivity means less human sweat, not more.” — Henry Ford the “perk of working from the convenience of their home office.” The reality is that most employees that work remotely often work longer hours than those commuting and interacting with others in person. In 2013 Yahoo took away the work from home privileges from approximately 12,000 employees in the United States. There were many critics’ contention that “people are more productive when they’re alone,” to which Marissa Mayer, the company’s CEO, commented in a Fast Company article, “but they’re more collaborative and innovative when they’re together.” Eight months later, Yahoo insisted it was the right decision. Two months later, at an industry conference, CEO Marissa Mayer acknowledged her critics’ contention that “people are more productive when they’re alone,” but then stressed “they’re more collaborative and innovative when they’re together.” Eight months later, Yahoo insisted Mayer was right, in a paper called The Power of Presence: Being Present In a Virtual World. In the report, published at the CoreNet Global Summit in Las Vegas, where several thousand real estate execs gathered to debate the future of the office, Julie Ford-Tempesta, Yahoo’s senior direc-
©id-work/iStock
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cording to www.businessinsider.com, some 2,600 people in IBM’s marketing department, plus an unknown number of employees in IT, procurement, and Watsonrelated departments, learned in early February they would soon be required to work—or “co-locate” in one of six U.S. cities. The question then becomes, how productive or collaborative will the employees be if they are not happy with the changes? and is it worth leadership’s pursuit of a gain in benefits to the company if doing so risks lowering employee morale? Especially if employees are high-performing within their current relationship? My suggestion is to bring your concerns to the table. CS Carolina M. Billings is Partner & CEO of a business consulting group and has 15+ years' experience in the fields of Business Development, Human Resources and Finance. She champions leadership initiatives as well as empowering and coaching/ mentoring others to lead. For more information please visit www.thehiveconsulting.ca or email Carolina@thevillagehive.ca
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THE BIGGER PICTURE
2017 STS will focus on Canada’s rapidly changing business environment Donald Trump. Robotics. Omni-Channel Fulfillment. The New NAFTA. Freight Marketplaces. Autonomous Vehicles. The Internet of Things. Andrew Scheer. Brexit. Climate Change. Last-Mile Delivery. Legalized Marijuana. E-commerce. Emmanuel Macron. The Amazon Effect. Drones. Digital Freight Management. Uber. Clean Energy. This is just a partial list of the major forces shaping the world of freight transportation in 2017. This year’s Surface Transportation Summit (www.surfacetransportationsummit. com) will focus on the strategies and tactics that shippers and carriers can employ to address these forces. The event will take place at the International Centre in Toronto on October 11. This joint venture between Newcom Business Media and Dan Goodwill & Associates with support from the Freight Management Association of Canada and the Canadian Trucking Alliance, will feature an agenda spread over several tracks. The first track, entitled, “The Donald Trump Effect and The Economy in 2018: What trends will impact your business?” will feature economic insights from Carlos Gomes, Senior Economist with Scotiabank, and developments in the U.S. and Canadian transportation industries from analysts John Larkin of Stifel Financial and Walter Spracklin of RBC Capital Markets. The second track, “Fast Forward—An Inside Look at the Future of Transportation,” will examine the rapidly evolv-
ing technological forces that are shaping the transportation industry. These new technologies may have the same impact as personal computers, smart phones and the Internet have had over the past quarter century. The panel, consisting of Paul Kudla of Volvo Canada, Marco Beghetto, from the Ontario Trucking Association, Justin Baillie of Rose Rocket, and Ryan Ernst of Deloitte, will engage in a discussion on how these new technologies will gain acceptance. How can shippers and carriers collaborate in this rapidly changing environment? Rob Penner of Bison Transport, Rob Nichols of CP Rail, Justin Yang of HanH Transportation Management, Eric Warren of Hercules, Tony Kermally of Freightcom, Anna Petrova of Ferrero, and Hugh MacDonald of Wajax, will engage in a lively exchange on how to work together more effectively in the new environment. After lunch, there will be two sets of three parallel tracks and summit attendees will have the option of selecting the tracks of most interest to them. One session, that is a direct response to a survey of last year’s Summit attendees, will address effective strategies to improve the profitability of a trucking company. Two industry experts will share their ideas and techniques.
By Dan Goodwill
Running in parallel will be a track on bridging the generational gap. It is now common for trucking companies to have a range of family members leading their organizations. Isabelle Hétu from Trucking HR Canada will share her research on this topic. Joining her, from Armour Transportation Systems, will be Wes and Victoria Armour, as well as members of another prominent Canadian trucking family. The third track will allow attendees to participate in small group roundtable discussions. The topics will include Shipper-Carrier Collaboration, Best Practices in Cross-Border Freight Transportation, Best Practices in Recruiting, Developing and Training Top Talent for your Business, Preparing for Changes to NAFTA and Border Policies and How to Successfully Navigate a Rail Claim with the Canadian Transportation Agency. These sessions, which require pre-registration, will be led by a skilled moderator and subject matter expert. The second set of three parallel sessions will include the topics such as “Best Practices in Developing a Driver Recruitment and Retention Strategy,” featuring Angela Splinter of Trucking HR Canada and Tim Hindes of Stay Metrics. “Major Issues in Transpor-
tation Across Canada,” will feature industry leaders, Bob Ballantyne of the Freight Management Association, Steve Laskowski of the Canadian Trucking Alliance and Gérald Gauthier of the Rail Carriers Association of Canada. The third parallel session will see Kevin Huntsman of Mastio & Company, provide the results of a recent research study entitled, The Canadian LTL Customer Value and Loyalty Report. The final track of the day will feature keynote speaker, David Segal, an entrepreneur and retail thought leader. Segal, who is best known for bringing radical innovation to a 5,000-year-old product category with the launch of DAVIDsTEA, the company he co-founded in 2008, will discuss “How to Build a Successful Business and Brand.” Clearly, this is the biggest and most ambitious Summit to date. In addition to the great educational content, there will be ample time to network with other attendees, including the FMA’s second annual cocktail reception, immediately following the Summit. The early bird registration fee is still in effect. To keep posted on the latest developments, follow the Summit on Twitter using #sts17 and join the Surface Transportation Summit group on LinkedIn. CS
Dan Goodwill, president of Dan Goodwill and Associates, has more than 30 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.
54 July/August 2017 www.canadianshipper.com
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