CTL OCT 2013

3PL Omnichannel growth creates opportunities

OCTOBER 2013

RAIL Safety issues top the agenda for regulators, industry

Published Since 1898

Are you on a level playing field?

See what the results from our 14th annual Survey of the Canadian Supply Chain Professional indicate about your salary

“There’s always going to be risk. The issue is how to manage it.”

People who know Distribution, know BDO.

The Consumer Business Practice at BDO The logistics business has never been simple. And with recent emphasis on supply chain sustainability, higher safety standards, and an evolving regulatory climate, it’s getting more complex. BDO’s dedicated professionals provide an exceptional array of partner-led services to help you keep up with key issues and maximize profitability, even in challenging times.

Assurance | Accounting | Tax | Advisory www.bdo.ca/consumer-business BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.

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Published Since 1898

Features Features

VOLUME 111

22 CANADA’S TRADE CROSSROADS 18. .. .. .COURIERS

VOLUME 116

The infrastructure The logistics growth of online retail for Canada’s Pacific Gateway isand expanding to bridge “omnichannel” is a the key massive engine of the United States andexpansion the burgeoning economies of Asia. driver for courier and change.

Published Since 1898 ISSUE NO. 9 SEPTEMBER 2008

ISSUE NO. 9

OCTOBER 2013 www.ctl.ca

cover

GROUNDED!

28 . . . LOGISTICS HIGH 24. . . 3PL

How school boards across the country are working with Our 3PL update looks at the groups like the Canadian Supply Chain Sector Council to latest industry stats and provide career-oriented training at the high school level. opportunities for the sector.

32 . . . ALL CHECKED OUT

COVER

Salary Survey

Balancing a secure supply chain and a happy workforce is more than a question of trust in today’s global arena.

Departments

4 THE VIEW WITH LOU Towards a better way on fuel surcharges; Kuzeljevich promoted to associate editor

Departments

WHAT’S ON ctl.ca 47 VIEWPOINT CIFFA 65capacity years oftemporary advocacy,or education and outreach; Are cutscelebrates in airfreight a CITToframps Reposition 2013; a look at industry risk and sign thingsupto for come? supply chain finance in our online Features.

68 IN INTHE THENEWS NEWS Lufthansa orphaned route after Air Canada Rail safetypicks top ofupthe agendafreighter for regulators, industry; backs out; Oceanex capacity to St. John’s; rail and truck OIA Global acquiresincreases Bellville International. tonnage drop over summer months; CN to upgrade intermodal 26 DASHBOARD facility in Prince George; and more.

This month’s freight update looks at Canadian Index, freight rail tonnage 12 THEcosts, LEADING EDGE and manufacturing’s expansion.

Why companies with global supply chains require a 28 INSIDE THE NUMBERS global Enterprise Planning platform.your skills?

Heading back to Resource the classroom?

Upgrading

Here’s what supply chain professionals have to say on the topic.

38 THE BIGGER PICTURE 30 THE BIGGER PICTURE Strategies and tactics for reshaping Does America’s your freight transportation North supply chain. strategy align with your business strategy? A look at why this matters.

After a period of positive growth, the US airlines’ situation has turned desperate. The weak economy and the high price of

Our 14th annual Salary Survey of the Canadian

aviation fuel are setting the stage for cutbacks rather than

Supply Chain Professional looks at the trends and

expansion. There’s really no gentle way to describe what’s

factors driving remuneration in the supply happening to plans for increasing air freight capacity:

chain

they’re . . . . the . . . .country . . . . . . .. �������������������������� . . . . . . . . . . . . page10 16 sector,grounded. and across

Are you prepared for your next round of carrier negotiations?

You need to be up on the latest transportation buying trends and benchmarks.

You need our annual Transportation Buying Trends Survey.

• Anticipated shipment volumes by industry • Rate increase averages by mode • Surcharge increases by mode • Capacity concerns by mode.

All this key information and more can be yours, FREE of charge. Fill out our survey and you will receive the full results, free of charge. . . and you'll be entered into a special prize draw.

Look for our e-mail survey.

www.ctl.ca

CONDUCTED IN PARTNERSHIP WITH CITA AND CITT CT&L SEPTEMBER 2008

3

ct&l october 2013

3

­

the view with Lou Volume 116 Issue No. 9 October 2013 EDITORIAL DIRECTOR

Is there a better way forward on fuel surcharges?

Join my panel discussion at CITT’s Reposition 2013 this November

I

’ve been researching and writing about fuel prices and their impact on transportation costs since fuel prices initially started to spike back in the late 90s. I’ve listened to countless economists, and worked my way through far too many reports and government investigations.

As a result of all that I’ve come to realize – despite what some fuel experts will tell you – the only truly predictable thing about fuel pricing is its volatility and unpredictability. And the resulting impact on transportation buyers and providers who don’t take measures to protect themselves can be substantial. Fuel surcharges have become a staple of the transportation industry but I’m hearing, and our research validates, a lot of grumbling from both shippers Lou Smyrlis, MCILT and carriers about them.

Carriers complain about the added administrative burden that comes with surcharges and about shippers who refuse to accept the higher surcharge levels when prices hit a peak.

Shippers show a fair bit of distrust of the surcharge formula mechanisms and how they are applied. For example, a Shipper Pulse Survey conducted by the Canadian Industrial Transportation Association in partnership with our magazine back in 2012 found that only 69% of shippers agreed with the statement “Fuel surcharges are necessary as long as fuel costs continue to be highly volatile.” I’m sure that raises concerns among carriers of all modes who rely on surcharges to keep their fuel costs in check.

Of even greater concern should be the fact that only 46% of shippers believed that carriers were generally applying fuel surcharges correctly while 61% believed “fuel surcharges are a way for carriers to squeeze additional revenues for their customers and improve their profits.”

It makes me wonder, do we understand fuel surcharge formulas as well as we should?

Is there a better way forward? To find out, I’m leading a panel discussion on the issue at the upcoming CITT Reposition National Conference in Toronto, November 3-5. (The fuel surcharge session is on the 4th.)

4 4

ct&l october 2013

I’ve got a great bunch of industry experts on the panel: Ginnie Venslovaitis, CITT, director, transportation operations, Hudson’s Bay Company Jeff Bryan, president and CEO, Jeff Bryan Transport Ltd., and chairman, Ontario Trucking Association Mark Lerner, assistant vice president, domestic intermodal, CN Richard Patenaude, director, client integration and development, Wheels Group Roger McKnight, senior petroleum analyst, En-Pro International We are going to look at where diesel pricing is headed; explain how surcharges should work from both the carrier and shipper points of view; and debate what is the best way forward.

It’s going to be an engaging and informative session and I hope to see you there. And while you’re considering this session, take a moment to look at all the other sessions planned for Reposition 2013. I think this is the most information (and fun) packed conference CITT has ever put together. All the information is available at www.citt.ca.

Julia Kuzeljevich promoted to associate editor It’s my pleasure to announce the promotion of our features editor Julia Kuzeljevich to associate editor. Julia has been with the magazine since 2000 and over that time has become known for her award-winning writing skills and dedication to well-researched and indepth features on industry issues. In her new role, Julia will be assuming most of the day-to-day responsibilities of the magazine so I that I can concentrate more on strategic initiatives and creating new products. Julia will be placing her considerable talents towards ensuring the magazine you read meets your high standards. You will be seeing more of Julia at industry events and I hope you will take the time to congratulate her on her promotion and share your insights on CT&L supply chain management.

Lou Smyrlis (416) 510-6881 Lou@TransportationMedia.ca ASSOCIATE EDITOR

Julia Kuzeljevich (416) 510-6880 Julia@TransportationMedia.ca PUBLISHER

Nick Krukowski (416) 510-5108 nick@ctl.ca ART DIRECTOR

Mary Peligra mpeligra@bizinfogroup.ca CONTRIBUTING EDITORS

Carroll McCormick, Leo Ryan, James Menzies, John G. Smith, Ian Putzger, Ken Mark MARKET PRODUCTION MANAGER

Gary White (416) 510-6760 gwhite@bizinfogroup.ca

VIDEO PRODUCTION MANAGER

Brad Ling

RESEARCH MANAGER

Laura Moffatt

CIRCULATION MANAGER

Barbara Adelt (416) 442-5600 Ext. 3546 badelt@bizinfogroup.ca EXECUTIVE PUBLISHER

Tim Dimopoulos

VICE-PRESIDENT PUBLISHING

Alex Papanou PRESIDENT

Bruce Creighton HEAD OFFICE: ­ 80 Valleybrook Drive, Toronto, ON M3B 2S9 ­ ­ CANADIAN TRANSPORTATION & LOGISTICS 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 ­ BIG Magazines LP, a division of Glacier ­ BIG Holdings Company Ltd. ­ SUBSCRIPTIONS: Contact us at: mmarasigan@bizinfogroup.ca­ Tel: 416 442 5600 ext. 3548. Fax: 416 510 6875. ­ Website: ctl.ca (click on sub­scription button) SUBSCRIPTION RATES: Canada: $64.95 + applicable taxes, per year; $105.95 + applicable taxes, for two years. U.S.A.: US$105.95 per year. All other foreign: US$105.95 per year.

Single copies $8 except for the annual Logistics Buyers’ Guide (Aug) $59.95 + applicable taxes, (not including HST) plus $2.00 for postage. USA: US$107.95, Foreign: US$107.95 ISSN 1187-4295 (print), ISSN 1923-368X (Digital), (Can­adian Trans­port­ation & Logistics.) Indexed by Canadian Bus­iness Period­icals Index. Printed in Can­ada. All rights re­served. The contents of thisSmyrlis, publication may not be reproduced either in ­ Lou part or in full without the consent of the copyright owner.

MCILT

POSTMASTER: Please forward forms 29B and 67B to: ­ 80 Valleybrook Drive, Toronto, Ontario, M3B 2S9 ­ Second Class Mail Registration Number 0721.

PUBLICATIONS MAIL AGREEMENT 40069240 We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage

MEMBER CANADIAN BUSINESS PRESS CANADIAN CIRCULATIONS AUDIT BOARD

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Capacity as a competitive advantage.

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ONLINE

What’s on

CTL.ca?

Web TV: Transportation Matters • FUEL FOR THOUGHT: Is there a better way forward on fuel surcharges? Find out at CITT’s Reposition 2013.

• GLOBAL CHALLENGES, LOCAL SOLUTIONS: Reposition 2013 will also offer a wealth of information to help you deal with global supply chain challenges.

• CHICKEN OR EGG?: Does infrastructure spending boost the economy?

Educate and Advocate:

Features

Canadian International Freight Forwarders Association celebrates 65 years, and speaks with CT&L about its mandate to educate and advocate, keeping freight forwarders at the top of their game.

• A Risky Business: Going global with your supply chain?

Protect against the risk of currency erosion

Blog bits

• Bridging the physical and the financial: using supply chain finance could release cash “stuck” in the chain • Yard Management – an inside look at how NSSL delivers a cost effective solution to a long neglected link in their supply chains

Search our blog archives at ctl.ca

Carolina Billings: What makes a leader?

Dan Goodwill: The Next Big Retail Battleground – Same Day Delivery

Lou Smyrlis: Transportation costs are creating a no-win scenario for Canadian e-commerce www.ctl.ca

Find us on Tw i t t e r a t : @ @ @ @

CTLMag LouSmyrlis JuliaKuzeljevic JamesMenzies

ct&l october 2013

7

in thenews

Transport Canada, rail industry, could increase measures to reinforce rail safety

Strong federal railway safety regulations remain in place to ensure the safety and protection of the public, despite some reports to the contrary in the months following the July Lac-Mégantic, Québec rail disaster, said Transport Canada.

In a statement released at press time, Transport Canada stated that rail companies are inspected regularly as part of the agency’s risk-based inspection program. But if regulations are not followed, the department will not hesitate to take action, said the statement.

Transport Canada does not advise railway operators in advance of inspections for equipment and operations, but railway operators must be advised of inspections of tracks.

“This is done so that rail operators do not move trains on the segment of tracks being inspected, which would endanger the inspectors. During the inspection, the track being inspected will be impassable to train traffic. Operators are informed ahead of time so that they can reschedule trains if necessary, to avoid network congestion and blocked crossings,” said the agency.

Following the Lac-Mégantic train explosion, on July 23 Transport Canada issued its emergency Section 33 Directive under the Railway Safety Act, aimed at enhancing the effectiveness of train securement procedures and safety across the Canadian rail industry.

The directive required ensuring all the directional controls, commonly known as reversers, be removed from any unattended locomotives, preventing them from moving 8

ct&l october 2013

forward or backward on a main track or sidings; that companies’ special instructions on hand brakes be applied to any locomotive attached to one or more cars left unattended for more than one hour on a main track or sidings; and that in addition to complying with their company’s special instructions on hand brakes the automatic brake be set in full service position and the independent brake be fully applied for any locomotive attached to one or more cars that are left unattended for one hour or less on a main track or sidings.

CN’s Claude Mongeau, President and Chief Executive Officer, said the railway would adjust its safety practices to comply with the directive.

“The government’s new safety rules will help to reduce the risk of unintended train movements that can lead to catastrophic accidents such as the one in Lac-Mégantic, Québec,” Mongeau said in a statement.

“Notwithstanding that accidents can always happen, the movement of hazardous material by rail is handled with a very high level of safety. The fact is that 99.99 per cent of dangerous goods moving by rail arrive at their destination without a release caused by an accident,” he added.

Canadian Pacific spokesperson Ed Greenberg, commenting on the directive, said “Canadian Pacific welcomed Transport Canada’s Directive, and as a result of the recent steps we took to strengthen our railway’s operating procedures we are in full compliance of what was announced by the federal agency. CP is prepared to work with Transport Canada in looking at any future steps that will make the industry safer.”

In May, the government said amendments to the force Railway Safety Act would also be coming into force to encourage railway companies to create and maintain a culture of safety. The amendments would also penalize rule breakers by enabling the government of Canada to require railway companies to submit environmental management plans; crack down on rule breakers with tough new monetary penalties and increased judicial penalties; create whistleblower protection for employees who raise safety concerns; require each railway to have an executive legally responsible for safety; and emphasize the central importance of safety management systems.

Railways in Canada and the United States are already subject to extensive safety regulation. Rules and standards are prescribed for railway operations, track safety, freight cars, locomotives, work/rest provisions, and medical requirements. In addition, the Transportation of Dangerous Goods Directorate is responsible for overseeing the Transportation of Dangerous Goods Act, which provides rules and standards under TDG regulations.

The strict enforcement of regulations and safety practices come at a time when the rail industry in Canada has increased its crude oil moves, in response to customer demand.

“CN is moving crude oil (heavy crude, light crude and pure bitumen) from areas in Western Canada to various markets in Canada and the United States.

“Shipping heavy product by rail without diluent is competitive with pipeline economics and provides market flexibility and scaleability, now and in the future. A key reason why the rail market exists for crude oil is because of the netbacks that are available to crude producers and marketers. For crudes, rail helps producers access markets that are not pipeline-connected and provides them with waterborne (Brent) netback, representing better financial returns,” said Mark Hallman, Director, Communications and Public Affairs, with Canadian National Railway Company.

In 2012, CN moved more than 30,000 carloads of crude oil to various North American markets, and believes it has the scope to double this business in 2013, said Hallman.

Rail complements pipeline in the movement of crude oil. Both modes are safe and the risk of accidental releases of product is extremely low for both modes of transport, with no appreciable difference considering both spill frequency and size, he said.

Hallman told CT&L that CN’s main track safety record in 2012 was very strong, “reflecting long-standing and thorough safety training and relentless efforts to improve and to continue reduction in accidents,” including working closely with partner companies and communities on information sessions, training and support on understanding the movement of hazardous materials and what is required in the event of transportation accidents. www.ctl.ca

At the release of its second-quarter results, CP Executive Vice-President and Chief Marketing Officer, Jane O’Hagan said, “Our crude by rail model continues to expand with growth momentum built on the expansion of our loading network, diversification of the destination network for optionality and on the commitments of our customers to capital. In terms of our outlook, crude by rail remains a complementary and important supply-chain option for producers, refiners and transloaders looking to benefit from the flexibility of moving any type of crude to any North American market. Frac sands shipments from new mines will continue to ramp up and other industrial products will trend with GDP. I expect another quarter of double-digit growth for industrial products in Q3,” O’Hagan added.

When CP released its second-quarter results, CP CEO Hunter Harrison said, “We are working diligently and cooperatively with other rails, with the regulators to see what additional regulations, if any, need to be considered, potentially put in place. We have made some steps individually on our own. And I don’t want to go into that really from a technical standpoint any further because I don’t want to put myself in the position of preempting the regulators. But I did think it was appropriate that we spent that time reflecting on what has happened in that community,” he said.

Bob Ballantyne, president of the Canadian Industrial Transportation Association, told CT&L the government’s Railway Safety Act became a roadmap for Transport Canada investigators to gauge how well the railways are doing.

“I sit on the Transport Canada advisory panel on rail safety. Despite the Lac-Mégantic accident which was horrible by any standard, you have to look and see whether any regulations really need to be changed as a result of that. It’s important they be investigated properly against knee jerk reactions that may not make sense. It’s always a good thing for the railways to reiterate with their staff from time to time the regulations and that they are being handled in an appropriate manner,” he said.

Ballantyne also said that dangerous goods regulations currently in place “have generally been quite effective.”

“I suspect that one of the things that may www.ctl.ca

happen is that CN and CP will be in contact with all their short line partners on rail safety,” he added.

“If new rules or regulations emerge from this tragic accident, our members will comply with them in both practice and spirit.

The railway industry believes this accident was an extremely atypical event,” said Michael Bourque, President and CEO, Railway Association of Canada.

RAC also recently expressed support for recommendations made by the Transportation Safety Board of Canada (TSB) regarding the installation of in-cab video cameras and voice recorders in all mainline controlling locomotives in Canada.

“Our railway members are anxious to install these devices in locomotives. We have been on record for some time now with Transport Canada and the TSB, having informed both organizations that we wish to use video and audio as part of our safety management systems to prevent accidents,” said Bourque.

Under current legislation, it would be illegal for railway companies to use recordings as part of a safety management system to prevent accidents, something Bourque said must change.

Dave Saucier, Manager, Regulatory & Government Affairs, with the Canadian Association of Chemical Distributors, said his association has been working with government in developing best practices on security.

“Industry and government are working very closely together on security regulations that would have played a role in preventing what happened. We’ve already created a security plan appended to our responsible distribution practice. We weren’t waiting for an incident to occur before we did this-this was an unfortunate incident that occurred,” he said of the Lac-Mégantic tragedy.

OIA Global acquires Bellville International Ltd.; deal excludes Canadian business

OIA Global, worldwide provider of transportation, supply chain management and packaging solutions announced that it has purchased majority control of Bellville International Ltd., a global provider of freight forwarding and logistics services headquartered in London, UK. Bellville International is the holding company for Bellville Ro-

dair International in Europe, USA, China and Brazil. Financial terms of the transaction were not disclosed, said a release.

Jeff Cullen, CEO, North America, for Bellville Rodair International told CT&L that the Canadian business was not part of the recent transaction.

“We’re still in a very cooperative environment with the Bellville Rodair group in terms of using their network. From our standpoint we’re super happy for our former business partners but remain financially independently owned here in Canada,” said Cullen.

“This acquisition is very strategic for our company. We’ve searched extensively for the right partner in Europe, and are delighted with the outcome,” said Charlie Hornecker, CEO of OIA Global. “This acquisition expands our global network by 22 company-owned offices, serving 14 additional countries, which positions OIA to better serve our growing international client base, particularly in Europe where Bellville has a strong presence,” he added.

“As part of the growing OIA Global family, our clients will also benefit greatly from the acquisition,” said Terry Walpole, Chairman of the Bellville Rodair Group.

“OIA’s well-established global network and suite of transportation, warehousing, distribution and global packaging solutions, combined with our particular expertise in energy, automotive and fashion logistics, is a win/win for both OIA and Bellville clients alike,” he added.

“Bellville has built its business by delivering reliability, high-touch customer service and trust, resulting in strong working relationships with our clients,” said David Ower, Managing Director of the Group, “OIA’s similar commitment to overall professionalism and client service was a major part of what attracted us most to OIA,” he added.

“As we all know, it’s the people who matter most and we are happy to report that Bellville’s senior management team will become part of OIA’s executive team. We welcome all Bellville employees to OIA,” Hornecker added.

For more industry news, sign up to receive our e-newsletter at www.ctl.ca.

ct&l october 2013

9

salary survey

Are you on a level playing field?

See what the results from our 14th annual Survey of the Canadian Supply Chain Professional indicate about your salary

By Lou Smyrlis

10

ct&l october 2013

www.ctl.ca

salary survey FROM THE SPONSOR

R

yder is a leading Fortune 500 global provider of transportation and supply chain management solutions with almost 80 years of experience. Ryder’s product offerings range from full-service leasing, commercial rental and programmed maintenance of vehicles to integrated services such as dedicated contract carriage and carrier management. Additionally, Ryder offers comprehensive supply chain solutions, consulting, lead logistics management services, warehousing solutions and e-business solutions that support customers’ entire supply chains, from inbound raw materials and parts through distribution and delivery of finished goods.

Ryder is dedicated to developing customized comprehensive business models that focus on high-end solutions and supply chain management with well-defined value propositions.

As the leading and largest association in Canada for supply chain management professionals, the Supply Chain Management Association (SCMA) is the national voice for advancing and promoting the profession. SCMA sets the standard of excellence for professional skills, knowledge and integrity and was the first supply chain association in the world to require that all members adhere to a Code of Ethics.

With nearly 8000 members working across the private and public sectors, SCMA is the principal source of supply chain training, education and professional development in the country. Through its 10 Pro-

Base Salary Increases

Survey Average

vincial and Territorial Institutes, SCMA grants the Supply Chain Management Professional (SCMP) designation, the highest achievement in the field and the mark of strategic supply chain leadership.

SCMA was formed in 2013 through the amalgamation of the Purchasing Management Association of Canada and Supply Chain and Logistics Association of Canada. With a combined history of more than 140 years, today the association embraces all aspects of strategic supply chain management, including: purchasing/procurement, strategic sourcing, contract management, materials/inventory management, and logistics and transportation.

CT&L Readers

Increased 66% 60% Remained the same

30%

Size of Increase

Survey Average

35%

CT&L Readers

2.0% or less

29%

34%

2.1% to 4.0%

41%

43%

4.1% to 6.0%

12%

9%

6.1% to 10.0%

8%

4%

10.1% or greater

9%

7%

www.ctl.ca

or supply chain professionals looking to improve their pay packages, gains in the post recession years are proving rather slow and uncertain – more so than for several other sectors in the Canadian economy.

That’s the unfortunate reality revealed by our annual Survey of the Canadian Supply Chain Professional. For the second year in a row, the survey was conducted in partnership with our sister publications MM&D and Purchasing B2B, as well as the Supply Chain Management Association, offering one comprehensive national survey which included responses from more than 2,200 supply chain professionals across Canada.

An important feature added this year is our breaking out of all survey results to show the overall survey average and the results specific to CT&L readers.

Our readers have a strong transportation management focus (as opposed to warehousing or purchasing) and we felt it would be more accurate to isolate their results.

The uncertainty about supply chain salary gains is revealed right off the bat by the number of survey

F

ct&l october 2013

11

salary survey

Base Salary Ranges

Total respondents

CT&L Readers

Less than $40,000

3%

3%

$40,000 to $49,999

8%

9%

$50,000 to $59,999

12%

15%

$60,000 to $69,999

16%

11%

$70,000 to $79,999

14%

10%

$80,000 to $99,999

22%

19%

$100,000 to $119,999

11%

13%

$120,000 and higher

11%

14%

respondents who received an increase in 2013. First, a bit of perspective. Last year’s survey showed that 71% of respondents received an increase and 70% were expecting one in 2013. Although far from what supply chain professionals had become used to over the past decade when more than three quarters could count on an annual increase, it was a marked improvement over dismal 2009 when only 39% received an increase. We were optimistic that we were finally back on the right track.

Too optimistic, it appears.

Overall only 66% of survey respondents received an increase in 2013. When we isolate CT&L readers, it’s even more disappointing to reveal that only 60% received an increase. After three years of gains in this area, 2013 was a step backwards.

Last year we were also encouraged that almost three quarters (72%) of supply chain professionals who did get an increase to their base salaries received a hike above 2%. And 31% were actually enjoying base salary increases above 4%. There were setbacks in this area as well in 2013. Overall only 70% of survey respondents received an increase above 2% and only 29% above 4%. If we isolate CT&L readers the results are considerably more grim with only 63% getting increases above 2% and just 20%

Mean Salary by Supply Chain Function

Total respondents

CT&L Readers

Mean Salary by Position

$87,908

$91,611

Total respondents

Supply chain management $108,969

$120,263

SURVEY AVERAGE

$87,908

$91,611

Purchasing/procurement

$78,685

$73,919

Clerical/administration

$57,997

$71,988

Strategic sourcing

$99,364

$82,000

Consultant

$106,601

$99,169

Logistics

$80,449

$91,248

Engineering/professional

$87,815

$127,280

Warehousing

$74,511

$57,836

Executive

$139,747

$135,105

Transportation

$80,955

$91,350

Managerial

$98,656

$97,264

Inventory/Material Control $78,342

$58,550

Operations/Tactical

$68,859

$82,592

Information Technology

$83,056

$107,500

Analyst

$72,134

$84,269

Marketing and Sales

$97,785

$69,944

Strategic

$82,344

$99,331

Consultant

$107,695

$99,000

Supervisor

$83,025

$80,725

SURVEY AVERAGE

12

ct&l october 2013

CT&L Readers

www.ctl.ca

salary survey

seeing their pay rise above 4%.

The disappointing salary increase results shown by our survey are mirrored by a study conducted by consulting company CPCS which examined compensation in transportation and logistics over the 2007-2012 period and compared it to other industries. Transportation and logistics compensation grew by 10% over that period, surpassed by sectors such as pipeline (26% increase); utilities (18%); and construction (14%).

CT&L readers didn’t do well in 2013 but they are still doing better in comparison to the remaining survey respondents. The mean base salary for 2013 was $81,722 with 46% of CT&L readers now pulling in base salaries above $80,000 and 27% reporting six-figure base salaries. The survey also tracks bonuses and incentives and found that 58% of respondents received such in 2013. When bonuses and incentives are added to the base salary, the mean gross salary for our readers was $91,611 for 2013 compared to $87,908 for the survey overall.

Looking at mean compensation levels by supply chain function, our readers deemed to be involved in supply chain management are by far the best paid, enjoying a mean salary of $120,263. Those with information technology functions are the next best paid with a mean compensation of $107,500. Those

www.ctl.ca

Mean Salary by Company Size

Total respondents SURVEY AVERAGE

CT&L Readers

$87,908

$91,611

Less than 50

$72,626.00

$72,691.00

50 - 249

$81,388.00

$94,894.00

250 - 499

$82,159.00

$90,729.00

500 - 999

$89,201.00

$78,801.00

1,000 - 4,999

$94,845.00

$103,201.00

5,000 or more

$99,413.00

$111,107.00

ct&l october 2013

13

salary survey

Mean Salary by Education

Total respondents

CT&L Readers

SURVEY AVERAGE

$87,908

$91,611

Trade/technical diploma

$86,573

$89,382

College diploma/CEGEP

$80,197

$75,609

Some university

$87,115

$78,789

University Bachelor’s degree $89,600

$106,549

MBA

$111,596

$115,885

Other Masters

$104,973

$100,300

PhD

$94,400

$81,000

University degree/ MBA/ Masters/PHD

$93,688

$107,037

with transportation functions had the third highest total compensation level at $91,350.

When examining salary levels by position within the organization, what’s more informative than simply paying attention to the actual figures is paying attention to the gaps from one level to another. For example, our readers in operational or tactical roles earned a total compensation of $82,592 in 2013.

Those in managerial roles enjoy a mean total compensation of $97,264, almost $15,000 more. But, as noted many times before, it’s those individuals working for companies sophisticated enough to consider supply chain as an executive-level function who enjoy the greatest spread in salary levels. The mean total compensation for a CT&L reader who is an executive level supply chain professional is $135,105. Understanding your company’s perspective when it comes to the value of supply chain management is critical.

Our survey also records differences in pay levels attributed to a variety of factors such as the sector you work in, the region of the country in which you are based and the size of company for which you work.

Company size makes a similar, albeit not quite as dramatic difference. Traditionally our research has found significant differences between large and small companies. Large companies were hard hit by the recession, and those differences started to subside, but large companies have also rebounded faster during the recovery. It will be interesting to see if those pay gaps start to

Mean Salary by Years of Experience

Total respondents

CT&L Readers

SURVEY AVERAGE

$87,908

$91,611

less than 2

$56,748

$65,383

2-5 years

$64,575

$60,501

5-10 years

$73,303

$64,689

10-15 years

$81,111

$76,110

15-20 years

$89,166

$89,823

20-25 years

$99,548

$120,362

25-30 years

$106,960

$114,250

30-35 years

$108,489

$100,364

more than 35 years

$101,908

$104,752

14

ct&l october 2013

Mean Salary by Industry Sector

Total respondents CT&L Readers SURVEY AVERAGE $87,908

$91,611

Oil and gas extraction

$110,451

$78,136

Manufacturing

$80,884

$86,206

Transportation and warehousing $86,273

$95,201

Public administration

$80,225

$103,400

Other organizations

$86,464

$93,808

Natural Resources

$105,979

$87,189

Services

$84,777

$93,044

Trade/Wholesale

$82,222

$94,514

www.ctl.ca

salary survey

widen again. CT&L readers working for companies with fewer than 50 people had a mean total compensation of $72,691, almost $20,000 below the survey average for CT&L readers.

Those working for companies with 5,000 or more employees posted the largest total compensation at $111,107.00. That’s an almost $40,000 difference!

The survey also examined total compensation packages in different sectors. Total compensation in the public administration sector was highest, coming in at $103,400.

Geographic location and its influence on pay is reflective of both long term trends (depressed pay levels in the Maritimes) and new trends (fast growing industry sectors). Looking at the mean total compensation for CT&L readers, only those working in Ontario, British Columbia and Saskatchewan came in above the average.

The survey also looked at the impact of personal factors such as years of experience and education. Our readers are in their top earning potential in the 20-25 year range of their career.

Those in that bracket earned a mean total compensation of $120,362 in 2013, which is well above the survey average and almost double that of our readers with two years or less of industry experience.

Education is a worthwhile investment. Those with a university degree earn above $106,000 on average but those with an MBA are pulling in more than $115,000.

Mean Salary by Province

Total respondents CT&L Readers SURVEY AVERAGE $87,908

$91,611

Newfoundland & Labrador

$78,783

$70,333

Prince Edward Island

$56,357

$51,000

Nova Scotia

$82,505

$85,420

New Brunswick

$63,654

$66,633

Quebec

$80,493

$70,828

Ontario

$85,254

$95,220

Manitoba

$72,849

$76,952

Saskatchewan

$90,188

$103,743

Alberta

$103,049

$87,026

British Columbia

$85,831

$111,746

Yukon/Northwest Territories/ Nunavut

$117,403

$97,000

Want some insight?

Learn from the pros what the numbers mean Join us for the free Annual Survey of the Canadian Supply Chain Professional webinar on November 21st and find out why salaries are going up and what you need to do to see yours climb too.

This one-hour live webinar will include presentations of the results by Michael Power, editor, PurchasingB2B; Carolyn Gruske, editor, MM&D; Lou Smrylis, editor, CT&L; and SCMA president and CEO, Cheryl Paradowski, along with commentary from HR professionals and recruiters.

Register at www.scmanational.ca/annualsurvey Thursday, November 21, 2013 - 12pm ET Canada’s magazine for procurement and supply chain management professionals

www.ctl.ca

ct&l october 2013 Addressing issues affecting Canada’s public procurement professionals

15

salary survey

Respondent Profile & Methodology Geographic Distribution Size of Company Yukon/ Atlantic N.W.T/ Canada Nunavut 5%

1%

B.C.

12%

Quebec

10%

Highest level of education

Alberta

21%

Ontario

39%

Manitoba/ Saskatchewan

10%

Less than 50 10% 50-249 19% 250-499 14% 500-999 12% 1,000-4,999 27% 5000 or more 17%

High school or less 7% Trade/technical diploma 5% College diploma/CEGEP 23% Some university 22% University degree 34% MBA 6% Other Masters/PhD 4%

he majority (40%) of the 2,177 supply chain professionals included in our sample defined themselves as being in the managerial ranks of their organizations and 8% said they were in the executive ranks. More than a quarter (26%) described themselves as being in operational/tactical positions.

The vast majority of respondents (85%) were over 35 years of age. The majority (69%) had at least a college degree. More than a third (39%) of respondents were women.

Respondents performed a variety of functions ranging from supply chain management (66%) and purchasing/procurement (78%) to transportation (46%) and warehousing (34%). The majority of respondents who are CT&L subscribers had transportation and supply chain responsibilities. Their survey response totals are shown separately in our charts as a comparison to the overall survey numbers.

The survey enjoyed wide geographic reach across

T

16

ct&l october 2013

Canada. While 39% of respondents came from Ontario, another 43% were from Western Canada and 15% from Quebec and the Maritimes.

The respondents also represented a mix of small, medium and large enterprises with 44% working for large companies employing more than 1,000 while 10% worked for small organizations employing fewer than 50.

E-mail invitations were sent to supply chain professionals across Canada from e-mail lists provided by CT&L and our sister publications MM&D and Purchasing B2B as well as the Supply Chain Management Association. The survey was handled once again by the research firm of G. Bramm Research Inc. After filtering out unqualified respondents and incomplete surveys, we compiled data from a record 2,177 respondents. This represents a margin of error of plus or minus 2.1 percentage points, 19 times out of 20.

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The lure of

online shopping Couriers continue to benefit from growth in e-commerce

By Ian Putzger

R

esults for the second quarter for United Parcel Service reflect the challenging environment for express companies who are seeing their corporate clients struggle with sluggish demand, shifting as much of their traffic as possible to lower-yielding economy services. The company’s freight forwarding and international business failed to reach targets, driving declines in net and operating profits.

On the other hand, the firm’s domestic package business clocked up 1.9 percent growth, thanks to residential shipments from e-commerce customers. Online shopping has become a

18

ct&l october 2013

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massive factor in the logistics arena. In some cases it even outstrips delivery,” agrees Nicolas Dorget, vice president of customer solubusiness-to-business (B2B) traffic. According to M-R-U, a parcel tions at UPS Canada. and letter logistics research and consulting firm based in HamAccording to Manner-Romberg, one fundamental difference burg, Germany, business-to-consumer (B2C) traffic accounted for is that B2C has turned into a buyer’s market for the logistics 48 percent of German package volume last year, whereas B2B providers, so their delivery solutions have to be in tune with shipments amounted to 39 percent of the total. Consumer-to- consumers’ preferences. business shipments – largely returns of online purchases – acThis begins with consumers’ access routes to e-tailers to place counted for another 7 percent of the total pie. In Germany e- orders and pick delivery options. As retailers have adopted an commerce revenues climbed 27.2 percent last year to reach 27.6 omni-channel strategy, making their offerings available through billion euros. any device or channel, the corresponding logistics tools also have “Parcel providers will continue to benefit from ongoing to be available over multiple platforms, remarks Mansour. Egrowth in e-commerce,” remarks M-R-U founder and principal tailers’ efforts to enable consumers to shop online through mulHorst Manner-Romberg. On tiple devices – from personal the basis of growth rates seen computers to cell phones, from 2009 to 2011, the volnotebooks and tablets – are ume of parcels would double the reason why Purolator ‘s by 2020, he adds.

‘E-Ship web services’ have In Canada the picture looks been so important for the similarly promising for parcel company, he adds. companies. According to a In April FedEx unveiled its CBC report published in June ‘Delivery Manager’, which althis year, the volume of goods lows US-based customers to sold online last year was double choose from a range of options the amount recorded in 2007, to schedule locations, dates notes Ramsey Mansour, vice and times of delivery over its president of marketing of Puwebsite. FedEx Delivery Manrolator Inc. ager is available through mul“From a market perspectiple digital platforms, includtive, we see e-commerce in ing a free mobile app, and Canada growing and still a lot customers can request alerts of opportunity for growth,” he via email, SMS text or phone, says. Purolator measures the providing advance notificavolume that goes through its tions about packages being web services tools, which indishipped to their homes. cates rapid growth in online Purolator’s web services are activity for its customers. designed to be integrated with A recent M-R-U study customer’s e-tail platforms to shows garments and fashion work with multiple access accessories as the leading driver channels. The available soluIn Canada the picture looks of B2C parcel traffic with 18 tions have to be consumer-fosimilarly promising for parcel companies. percent of the total volume. cused, and they have to be This segment was followed by end-to-end, Mansour says. entertainment electronics (11 “We do not want ownerpercent), books (10 percent), computers and accessories, hobby ship of the process, we do not want to be part of the transaction, and leisure goods, and household goods (all 6 percent). and we do not want to communicate with our customers’ customLately there has been a marked increase in B2C traffic involv- ers. We give all the data to our clients for their customer service,” ing gourmet food, some in the international arena. However, M- remarks Dorget.

R-U questions in how far parcel delivery companies will be able to Such considerations place transportation issues higher on the benefit from this trend, given special handling requirements for totem pole at e-tailers than they would be with a brick-and-morperishable goods that are difficult or impossible to match by a sec- tar retail infrastructure. “Supply chain and logistics become more tor that is focused on standardized processes. part of the strategic discussion when you develop e-commerce As it is, parcel companies have to shift some of their goal posts solutions. Logistics and supply chain issues are more elevated in to deal with B2C traffic. “Parcel providers have to change their stature at these shippers,” observes Mansour. approach. This requires a different last mile concept, and also difHe adds that for many customers in this segment demand ferent payment concepts,” reflects Manner-Romberg. planning has moved to a new level of complexity.

“We needed to shift some processes and find novel ways of Arguably the biggest shift, and the greatest complexity, lies in 20

ct&l october 2013

www.ctl.ca

Coming in 2014!

Shipper canadian

Formerly ‘Canadian Transportation & Logistics’

In 2014, Canadian Transportation & Logistics is adopting a new title - Canadian Shipper.

The new title is more reflective of our editorial scope and mandate: a business journal written for Canadian Supply Chain professionals, in the context of their transportation needs and responsibilities.

The new title also lends itself more easily to the wide array of media platforms through which we are now able to serve you - not just our print magazine, but our eNewsletter Canadian Shipper News - and online portal as well - CanadianShipper.com.

Canadian Shipper will continue to publish the award-winning features and articles that you’ve come to expect from Canadian Transportation & Logistics - just with a fresh new look! Watch for us in 2014!

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courier /express

the need for multiple delivery options.

Manner-Romberg reels off a list of delivery concepts - from parcel retail outlets and automated kiosks to dropping off parcels at gas stations or even (in Britain) at pubs.

“Many of these will co-exist,” he predicts.

“There is no silver bullet.”

What he calls the ‘flexibilization of de-

22

ct&l october 2013

livery’ is forcing logistics players operating in this space to offer a range of options to choose from. The trick is to pick a suitable selection from a host of options to cover a broad range of customer requirements. Offering 15-20 different solutions would be overwhelming for everybody, notes Dorget.

“Usually you offer a spectrum depend-

ing on what type of e-tailer you are dealing with and narrow it down to two or three options. You need a standard option with a defined day of delivery. You also have to give an express option. This can drive a sale or drive a sale away,” he says.

“Sustainability is increasingly important to consumers, so it is useful to have an option that offsets the carbon footprint of the shipment,” he adds.

The low density of residential deliveries has made final mile economics challenging and will continue to spawn alliances with postal outfits and regional or local operators. “In rural areas with low densities we occasionally leverage our shipping agent network and the capabilities of our group of companies (i.e. Canada Post),” says Mansour.

Another key battleground – both for etailers and for logistics providers working with them – is the returns segment. Dorget describes it as “still the most feared and neglected part” of online selling. “Many etailers fear they may go broke if they offer a comprehensive return option,” he says.

E-tailers neglect this aspect at their peril. Dorget mentions a recent study in Germany according to which 50 percent of online consumers have used return service at some point. A well managed returns process can actually boost customer loyalty. Customers with a positive returns experience are likely to give the e-tailer a positive referral, he adds.

“A lot of our focus is on creating tools for returns, for example our e-returns portal, which offers solutions for customers to enhance the returns process,” remarks Mansour. The key is to offer a variety of choices, from consumers using the company website to return shipping labels accompanying the original shipment.

While it is important to give consumers options to choose from, the range does not have to be as broad as the delivery options, says Manner-Romberg. “For delivery flexibility is key, for returns you need to be close to the consumer. He does not want to lug his parcel across town on his way to work,” he comments.

In his opinion, DHL recently made a smart move in Germany in a deal with newsagents running kiosks in residential neighbourhoods and business areas. They have been equipped with scanners to accept parcels for returns. The consumer can hand over his return shipment near his www.ctl.ca

courier /express

home or workplace, and the kiosk owner stands to gain some additional business from these visits, he says.

M-R-U’s recent study dispenses with the myth that returns take a high toll on e-tailers and their transportation providers. Only a few commodities have high rates of return, notably garments and shoes, it shows. For most commodities, such as consumer electronics, returns are the exception rather than the rule, M-RU’s analysts found.

Purolator has worked with Sony Canada on a returns platform to develop a repair service solution for the electronics firm. Historically Sony was using 110 repair locations across the country, and the process usually took between one week and a month to run its course, with no possibility for customers to check the status of the repair. In consultation with the logistics firm, Sony built a proprietary repair service portal and integrated it with its own ERP system as well as with Purolator’s E-Ship web services. Customers now can drop off the item requiring repair at a location of either company or order a shipment box online from Purolator, and they can track the status of the repair.

In six months Purolator moved over 20,000 shipments for Sony’s repair service.

The electronics firm managed to cut its repair costs, partly by consolidating the work in one location. Sony’s proprietary system to track customer satisfaction showed an improvement from previously 30 percent approval to 60 percent.

In June Purolator made a move to boost its footprint in the B2C space with the introduction of ‘PuroPost’, a guaranteed service of B2C shipments from the US to residential locations in Canada within 2-8 days.

Selling from Canada to an international clientele still offers a lot of untapped potential destinations, according to Dorget. While especially emerging markets with emerging middle classes offer much potential, among SME vendors in Canada there is “a lot of fear and uncertainty about tapping into international markets”, he comments.

How lucrative is the journey for parcel and courier companies, though? Consumers usually pay full rates, but the lack of density of residential deliveries undermines yields. “Even with a doubling of volumes you will never achieve a density compara-

ble to B2B, which means that transportation providers have to look for other solutions,” remarks Manner-Romberg.

He adds that he sees only limited room for gains in efficiency without significant investment or creative, innovative solutions. This puts the large express companies with deep pockets at a clear advanCT&L tage, he reckons.

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 Kongbased Asian Sources Media Group, and Airtrade, a British magazine covering the global air cargo industry.

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23

2013-06-20 12:23 PM

3PL report

3PLs continue growth curve Flexibility, performance metrics key to success

By Julia Kuzeljevich

A

n overview of the 3PL industry shows the industry continues to grow in the intermodal and LTL modes, with thirdparty logistics providers among the industry leaders in customer satisfaction in terms of fill rates, said a report separating 3PL performance by core services offered.

The Transportation Intermediaries Association’s 3PL Market Report draws on data from three categories of members based on revenue, and represented nearly 1.3 million shipments and just under $2.3 billion in total revenue for the first quarter of 2013.

“3PLs continued to grow, expand, and change their businesses,” said TIA President & CEO Robert Voltmann.

“The percent of 3PLs offering intermodal and LTL continues to increase each quarter and 100% of all 3PLs report activity in TL.” Voltmann said.

According to the report some 98% of all revenue was derived from over-the-road truckload (TL), rail intermodal (IM) and Lessthan-Truckload (LTL).

While shipment volume increased consistently within the three modes, profit declined 70 and 90 basis points respectively for TL and intermodal, while LTL outpaced all modes by increasing 140 24

ct&l october 2013

basis points. The decline of basis points for TL and intermodal margin percent is a result of transportation cost increasing greater than invoice amounts in the quarter.

LTL basis points increased as a result of invoice amounts growing faster than transportation cost, noted TIA. Gross Profit Margin decreased 60 basis points to 13.6%, increasing in intermodal and LTL and decreasing in TL, which had the steepest decline of 4 %.

In a comparison of first quarter 2013 vs. the same quarter in 2012, the report found that total shipments increased 3.2%, and TL led the way with 3.1% growth.

Total revenue invoiced increased 3%, with 2.4 % for TL, 6.5 % for LTL and 4 % for intermodal, said the report.

Intermodal experienced an increase in shipments and invoice amount per load, but a decrease in profit margin by 90 basis points, the report said.

Looking at the Canadian market alone, the oil and gas sector is still strong, though there are some volume constraints on flatbed trucking which is driving up rates in those modes.

“In terms of domestic intraprovincial LTL we’re seeing pretty www.ctl.ca

3PL report

weak markets. Volumes are not up and are in fact trending downwards. There is some pickup activity cross border in LTL,” said Guy Toksoy, Ryder System Inc.’s VP of Supply Chain Solutions for Canada.

He said there is a general sense of the Canadian economy treading water.

“It’s been pretty stagnant over the last year or so,” he said Along with oil and gas, the growth of omnichannel retail has a large role to play in 3PL growth, with varying effects.

Different retailers will have different notions of what constitutes omnichannel, noted Toksoy.

“If you’re talking about retailers trying to reach their customers through traditional brick and mortar and also through catalogue sales-two things matter to the consumer: product availability and choice. We’re seeing retailers experimenting with different creative ideas. Amazon is coming into the Canadian marketplace and continues to grow its footprint,” he said.

“To a certain extent yes, moving from a traditional brick and mortar into an e-fulfillment environment takes on different phases during the development of that marketing strategy.

In phase one companies try to perform e-fulfilment activity out of existing warehouses that may not be set up for consumer orders.

In that initial phase we’re not seeing very many opportunities. As they progress in terms of setting up more fulfillment channels on an individual order basis there are more opportunities in an e-fulfilment warehouse setup or when product is coming in from Asia and can be transloaded bypassing the DC, said Toksoy”, citing a Ryder service offered in Vancouver.

3PLS get involved as retailers look for more creativity in reaching their customers via various channels, he said.

3PLs have also become “industry leaders in customer satisfaction” for on-time delivery and order fill rates, said the Tompkins Supply Chain Consortium.

Its report, Distribution Customer Satisfaction Core Benchmarks, is based on a survey of respondents across eight industries, including apparel and footwear, electronics, food and beverage, and pharmaceutical, among others, and showed that metrics continue to improve as companies invest in people, process, and technology.

“We are seeing a large increase in the number of companies using the perfect order metric compared to previous years’ data,” said Bruce Tompkins, Executive Director of the Consortium and author of the report.

On-time delivery is on the upswing, with those leading the way capable of greater than 98.5% compared to a historical average of 94.2%. On-time delivery ranges from 94.2% to 97.6% for 3PLs, and they performed at 97.6 % for order fill rate.

With the growth in e-commerce and omnichannel retailing emerge more growth opportunities for 3PLs. The new world of omnichannel is “recasting” traditional delivery models for retailers, said Tom Singer, a Principal with Tompkins International..

Delivery options in retail orders have expanded, with store pickup, third party services, pick up and drop off (PUDO) services, and delivery lockers joining homes as final mile destinations, said Singer, who authored the report on Final Delivery: A Technology Perspective on Omnichannel Retailing.

3PLs can play a role in offering better visibility that is essential to both fulfillment execution and customer satisfaction, enabling a single view of data from initial customer interaction through post delivery.

As customer expectations continue to increase, 3PL systems related to final delivery must support rapid fulfillment and expedited delivery processes. Fulfillment centers must contend with tighter cut-off windows and more carrier services when same-day and next-day services are offered. Order cycle time will take on increased importance.

A final delivery solution should be approached as a truly mission critical application, especially as retail channel boundaries blur, noted Singer, and will increase the need for close collaboration between the retailers and third party partners.

“The bottom line is 3PLs do provide lower risk, more entry options for retailers that may not have a sense of customer demand and 3PLs can offer more flexible models when that side of their business is more unknown,” said Toksoy.

“I would say in terms of the general trends we’re seeing in Canada a stagnant economy-in general the economy is treading water.

In terms of overall trucking there is a looming driver shortage. In certain pockets we are certainly seeing that-there are extreme upward wage pressures and these are going to continue to be chalCT&L lenges for shippers and 3PLs,” he said.

Features editor Julia Kuzeljevich has been writing about transportation issues for more than a decade. Her meticulously researched articles have garnered several transportation and Canadian Business Press writing awards.

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ct&l october 2013 CT&L_Ad_3.375x4.875.indd 1

25

2013-10-02 10:27 AM

dash board

TransCore Canadian Spot Market Freight Index 2008-2013

2008 2009 2010 2011 2012 2013 % %

Change Change

Y-O-Y M-O-M

TransCore’s Canadian Freight Index subdued in August

TransCore Link Logistics reported little change in its Canadian Freight Index for the August spot market. The month-overmonth and year-over-year load volumes for August were down marginally by two percent. Load volumes in August were also at the same levels as April of this year.

Cross-border postings accounted for 68% of total volumes for August. Loads originating in the United States destined for provinces within Canada decreased by 11% year-over-year. Crossborder loads originating in Canada destined to the United States increased by 6% compared to the same period last year.

The top five states of origin for loads destined to Canada were: Ohio, Pennsylvania, Illinois, Indiana and Michigan. The top five states of destination for loads originating in Canada were: New York, California, Pennsylvania, Texas and Florida.

Intra-Canada load volumes decreased by 1% year-over-year and represented 26% of the total volumes for August.

Equipment postings calmed in August after hitting a ten-year high last month. Month-over-month equipment postings were down by 3%, and were 7% above posting levels for the same period last year. August’s equipment-to-load ratio decreased to 2.57 from 2.62 in July.

Information within the freight index includes all domestic, cross-border and interstate data submitted by Loadlink’s Canadian-based customers.

TransCore’s Loadlink freight matching database constitutes the largest Canadian network of carriers, owner/operators, freight brokers and intermediaries. More than 13 million full loads, LTL shipments and trucks are posted to the Loadlink network annually. As a result of this high volume, TransCore believes the Index is representative of the ups and downs in spot market freight movement.

The first six columns include monthly index values for years 2008 through 2013. The seventh column indicates the percentage change from 2012 to 2013. The last column indicates the percentage change from the previous month to the current month. For the purpose of establishing a baseline for the index, January 2002 (index value of 100) has been used.

Freight costs flatten out, CGFI indicates

Results published by the Canadian General Freight Index (CGFI) indicate that the 4 month moving average Total Cost of ground transportation for Canadian shippers decreased by 0.85% in July when compared with June results.

The Base Rate Index, which excludes the impact of Accessorial Charges assessed by carriers, remained unchanged when compared to June 2013.

Average Fuel Surcharges assessed by carriers remained flat 26

ct&l october 2013

Jan

214 140 171 222 220 228 4% 25%

Feb

217 117 182 248 222 198 -11%

Mar

264 131 249 337 276 245 -11% 24%

-13%

Apr 296 142 261 300 266 229 -14%

-7%

May 316 164 283 307 301 252 -16%

10%

Jun

307 185 294 315 295 234 -21%

-7%

Jul

264 156 238 245 233 234 0%

Aug 219 160 240 270 235 229 -2% Sep

203

180

234

263

200

Oct

186

168

211

251

215

0% -2%

Nov 143 157 215 252 215 Dec 139 168 225 217 182 TransCore Canadian Spot Market Freight Index 2008-2013

also. Fuel was 19.25 % of Base Rates in July versus 19.26 % in June.

“Total Cost of Freight is down 3.4% from a year ago.” said Doug Payne, president & COO, Nulogx. “Base Freight costs are 1.9 % below last year.”

The CGFI is sponsored by Nulogx, a transportation management solutions provider, and is used by shippers and carriers to benchmark performance, develop business plans, and secure competitive agreements. It was developed with the assistance of Dr. Alan Saipe. The most recent results are available at the CGFI Web site: www.cgfi.ca.

Rail freight drops in July despite rising volumes from US

The Canadian railway industry carried 27.0 million tonnes of freight in July, a 1.8% decrease from the same month last year, according to the monthly report from Statistics Canada. The drop occurred despite a rise in traffic from the United States.

Within Canada, combined loadings of non-intermodal freight (i.e., cargo moved via box cars or loaded in bulk) and intermodal freight (i.e., cargo moved via containers and trailers on flat cars) decreased 2.5% to 23.3 million tonnes.

Non-intermodal loadings fell 3.2% to 20.7 million tonnes as a number of key commodities saw decreased activity in July. These included iron ores and concentrates (down 293,000 tonnes), canola (down 192,000 tonnes), gasoline and aviation turbine fuel (down 114,000 tonnes), and coal (down 107,000 tonnes). Overall, 29 out of 64 commodities carried

by Canadian railways declined during the month.

Despite the drop in loadings, a number of commodities saw strong growth in July. These included fuel oils and crude petroleum (up 164,000 tonnes), other chemical products and preparations (up 156,000 tonnes) and lumber (up 97,000 tonnes). www.ctl.ca

Intermodal loadings rose 4.1% to 2.6 million tonnes. The gain was the result of increased containerized cargo shipments and trailers loaded onto flat cars.

From a geographic perspective, the Western and Eastern railway divisions in Canada saw mixed results in July. The Western Division, which accounted for 60.5% of the domestic loadings, saw its freight rise 0.5% to 14.1 million tonnes. By contrast, the Eastern Division, which accounted for the remainder of the loadings, saw its freight decline 6.7% to 9.2 million tonnes. For statistical purposes, cargo loadings from Thunder Bay, Ontario, to the Pacific Coast are classified to the Western Division while loadings from Armstrong, Ontario, to the Atlantic Coast are classified to the Eastern Division.

Rail freight traffic received from the United States rose 2.9% to reach 3.7 million tonnes. The increase marks the highest amount of received traffic for the month of July and occurred on the strength of intermodal loadings, particularly containerized cargo shipments.

Canadian manufacturing enjoying best expansion in 15 months

Canada’s manufacturing expansion accelerated to a 15-month high in September, according to the RBC Canadian Manufacturing Purchasing Managers’ Index.

The seasonally adjusted RBC PMI – a composite indicator de-

signed to provide a single-figure snapshot of the health of the manufacturing sector – rose to 54.2 in September, up from 52.1 in August. This indicated further improvement in manufacturing business conditions, with the rate of growth above the series average and the fastest since June 2012.

The RBC PMI found that both output and new order growth accelerated in September. In particular, the latest rise in total new work intakes was strong and the fastest since June 2012. This partly reflected the greatest increase in new export orders for two-anda-half years. Meanwhile, the rate of job creation also quickened to a 15-month high, as firms hired additional staff to handle increased business activity.

“The global economy is gaining traction, and, with that, we are seeing increasing demand for Canadian exports – particularly from the manufacturing sector, which has contributed to the PMI reaching a 15-month high in September,” said Craig Wright, senior vice-president and chief economist, RBC. “While challenges in the sector remain, this rebound is encouraging. An anticipated strengthening in global economic growth, particularly in the U.S. which is Canada’s largest trading partner, bodes well for manufacturing activity late this year and early next.”

The monthly survey is conducted in association with Markit, a global financial information services company, and the Supply Chain Management Association (SCMA).

Want some insight?

Learn from the pros what the numbers mean Join us for the free Annual Survey of the Canadian Supply Chain Professional webinar on November 21st and find out why salaries are going up and what you need to do to see yours climb too.

This one-hour live webinar will include presentations of the results by Michael Power, editor, PurchasingB2B; Carolyn Gruske, editor, MM&D; Lou Smrylis, editor, CT&L; and SCMA president and CEO, Cheryl Paradowski, along with commentary from HR professionals and recruiters.

Register at www.scmanational.ca/annualsurvey Thursday, November 21, 2013 - 12pm ET Canada’s magazine for procurement and supply chain management professionals

www.ctl.ca

Addressing issues affecting Canada’s public procurement professionals

ct&l october 2013

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inside the numbers

Top skills required to do job

Believe need further education/ professional development to progress in career

People skills

30%

Strategic leadership skills

14%

Decision making skills

12%

Negotiation skills

9%

Analysis skills

9%

Type of education believe is required for career advancement

NO 32%

Professional designation

YES 68%

34%

MBA 27% Industry specific training

34%

Bachelor’s degree

16%

College business courses

8%

Other 6% Plan to register for further education next 12 months

NO 49%

How stay up-to-date with industry developments Professional associations

76%

Trade magazines (print)

61%

Social networking

53%

Conferences/tradeshows 51%

YES 51%

Trade magazine e-newsletters/bulletins

41%

Trade magazine web sites

41%

Vendor marketing events

25%

Other 5%

School is cool

What supply chain professionals have to say about heading back to the classroom Of course school is cool if it can help you make more – and in some cases, a lot more – money. Our annual Survey of the Canadian Supply Chain Professional found that CT&L readers with a bachelor’s degree earn $106,549 on average (see also our salary survey cover story). Step up to an MBA and the average total income $115,885. More than two thirds of our survey respondents believe further education/professional development is key to progressing further in their career and 51% have plans to register for further education within the next 12 months. Most favor attaining a professional designation or other industry specific training to advance their careers. In between hitting the textbooks the majority stay up to date on industry developments through their associations and reading trade magazines (glad to hear it!).

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ct&l october 2013

www.ctl.ca

the bigger picture

a critical question Is your freight transportation strategy in alignment with your business strategy?

O Dan Goodwill, president of Dan Goodwill and Associates has more than 20 years of experience in the logistics and transportation industries in both Canada and the US. He has held executive level positions in the industry, including president of Yellow Transportation’s Canada division, president of Clarke Logistics, general manager of the Railfast division of TNT, and vice-president of sales and marketing at TNT Overland Express.

Goodwill is currently a consultant to manufacturers and distributors, helping them improve their transportation processes and save millions of dollars in freight spend.

He can be reached at dan@dantranscon.com.

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ct&l october 2013

ne of the most enjoyable aspects of our work as consultants is that my colleagues and I have an opportunity to visit companies in a variety of industries. We typically are engaged to help businesses that have issues with freight management. While some of our clients may be best-in-class when it comes to manufacturing or retail, they are often not as skilled in managing freight transportation.

We often notice that their freight strategies are not aligned with their business strategies. In fact, the strategies often inhibit these companies from achieving the bottom line results they are so desperately seeking. Here are some of the things that we commonly observe: Many companies focus on the outbound movement of their freight to their DCs, retail stores or customers. They let their vendors control all or some of the deliveries of raw materials or finished products to their main manufacturing or distribution facility. This can produce several negative financial impacts.

For many vendors, freight is a profit centre.

They mark up their freight costs and include the inflated cost in the landed cost. By not having control of inbound freight movements, this restricts the leverage a company can have with its carriers when it comes time to negotiate freight rates. It also limits the opportunity to perform consolidations to further reduce freight costs.

We also observe that a number of companies are not providing their clients with the level of service they require. This can occur for several reasons. The carrier may be picking up or delivering the shipper’s products at the wrong time, with their transportation network not aligned to the needs of some customers.

Some companies do not have the technology in place to effectively manage their freight transportation. As customer orders come in, shipment requests are placed on their vendors. We will observe multiple shipments coming from the same vendor, going to the same distribution facility, on the same day. The technology is not there to provide the visibility to identify these situations as they are occurring so these shipments can be consolidated into one large courier or LTL shipment.

Inadequate metrics and KPIs are often associ-

ated with weak information systems. While companies will have good financial and operations metrics to manage their business, they will have only rudimentary (e.g. freight cost as a percent of sales) KPIs to manage their freight spend.

Sadly, the auditing of carrier freight invoices is still done in a haphazard way in some companies.

Carriers will make billing errors from time to time. These errors can have lasting impacts on a company’s bottom line if they are not detected and corrected.

While many companies jumped on the “freight bid bandwagon” during the Great Recession, we frequently hear about transportation managers who are not skilled in conducting these exercises.

This is an area where we often receive complaints from carriers. Transport companies take a dim view of allocating time and resources to a poorly constructed bid that doesn’t contain sufficient data, correct product weights and dimensions, seasonality factors and other key freight related issues. This can lead to a “garbage in/garbage out” scenario. Some carriers simply don’t bother responding to a poorly constructed bid that is designed to “lay the hammer” on their incumbent carriers. Shippers are often not well served when they tender their freight to poorly performing “bottom feeders.”

While freights costs can represent 2 to 5% of a company’s revenues, freight is a “necessary evil” and doesn’t receive the attention or the respect it deserves, from an organizational perspective. We so often find the manager responsible for transportation wearing multiple hats. While companies will go out and hire top notch sales and engineering professionals, they will “force fit” unqualified individuals into the role of Transportation Manager. Without the knowledge, skills and resources, the company gets what it deserves – poor performance.

For an item that can be so important to a company’s bottom line, it is puzzling to see so many organizations not give transportation its due attention. On the other hand, for companies that do put a priority on the management of freight transportation and adopt best-in-class freight management strategies, this can be a differentiator to increase margins, market share and profitability. CT&L www.ctl.ca

TF

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No other Canadian carrier has the resources we do on both sides of the border. We enlist the people, technology and processes to speed things up, not slow them down.

We take a proactive approach to enhancing the efficiency of your supply chain on both a day to day basis and when you need action now. Who are you reaching out to?

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E : ltl.cda.sales@vitran.com