NOVEMBER/DECEMBER 2016
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SUPPLY CHAIN EXECUTIVE OF THE YEAR
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Making the connection
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CONTENTS
NOVEMBER/DECEMBER 2016
DEPARTMENTS
12
7 | Editor’s Forward The trials and tribulations of business travel.
COVER STORY
9 | In the News FMA celebrates 100 years, report from the Association of Canadian Ports Authorities.
OUTLOOK 2017
Motor carriers, rail, marine, integrators and air cargo carriers weigh in on the challenges ahead for them in the New Year on rates, regulation, capacity, economic trends, infrastructure spending and human resource issues.
42 | Inside the Numbers with Lou Smyrlis Will the U.S. election threaten free trade and cross-border truck traffic? 43 | Retrospective Transportation managementthe produce or perish model. 45 | Coaching Corner A look at stereotypes around workplace bullying. 46 | The Bigger Picture
31 SUPPLY CHAIN AWARD Supply Chain Executive of the Year: meet the 2016 award winner, Jamie DeKelver.
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Risk management through supplier selection and evaluation in the wake of the Hankin Shipping demise.
What steps should shippers take in the wake of challenges ahead?
FEATURES INLAND PORTS | 18 Western Canada’s inland port stakeholders on collaboration, marketing, and pulling for growth.
18
REGULATORY UPDATE | 23 From air cargo, to containers, to e-Manifest, the latter half of 2016 gets heavy handed on regulation for various transport modes.
LOGISTICS PROFILE | 39 The logistics of wood fibre through a typical day at Tafisa Canada. www.canadianshipper.com November/December 2016 3
There comes a time in every traffic manager’s life when they want to start seeing other carriers. That’s us — nice to meet you! Learn more at youtube.com/user/herculesfreight
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WHAT’S ONLINE
BLOG BITS Search our blog archives at ctl.ca
Dan Goodwill In this Period of Declining Freight Rates, Shippers need to be Smart, not Greedy The static economy and low energy prices would appear to be creating a “perfect storm” for shippers seeking to meet their greatest challenge.
WEB TV Transportation Matters
GREEN SCREEN Aviation could become first industry to reach global emissions pact.
Find us on Twitter at: @CanadianShipper | @LouSmyrlis @JuliaKuzeljevic | @JamesMenzies @FleetExecutive
NOW OPEN!
Shippers, Watch Out for Unprofessional Freight Bid Service Providers The subject of online freight bids and internet freight auctions came up a few times at the Surface Transportation Summit that took place in Toronto on October 13. The carriers that raised this topic spoke of the high volume and poor quality of bids that have been hitting the transportation industry this year. One carrier was so fed up with the internet auctions in which they were participating that they made a decision to opt out of them.
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EDITOR'S FORWARD Julia Kuzeljevich November/December 2016 Volume 119 Issue No.6
EDITOR Julia Kuzeljevich (416) 510-6880 julia@newcom.ca RESEARCH DIRECTOR Lou Smyrlis lou@newcom.ca ART DIRECTOR Ellie Robinson ellie@newcom.ca CONTRIBUTING EDITORS Carroll McCormick, Leo Ryan, James Menzies, John G. Smith, Ian Putzger, Ken Mark. MARKET 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.
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A funny thing happened on the way to Winnipeg
T
he life of a trade journalist is not all glitz and glamour, especially when it comes to business travel. We attend as many industry conferences as budgets and timelines allow-the aim is to be in the room when conversations happen, to represent the publication, and to network of course. While these events are valuable from an editorial perspective, the travel aspect can take its toll. I asked some high mileage work colleagues (one with 50+ flights a year!) what best advice they could offer on making trips seamless. The top tip revolved, of course, around baggage. Preferably not checking it, when you can stand the carry-on stowage wars and resulting injuries. On my last trip, I switched from my favourite mockery-inviting bag, a brightly checkered rolling knapsack which holds just about everything, to something slightly roomier but pretty useless. My fear was the knapsack had a spine that just didn’t fit under an airline seat, and I’d be wringing my hands wondering what was happening to it if I could not stow it right above my head, as has happened on the last few flights. Unfortunately the result was that I was basically holding up the line searching through the unfamiliar bag for my identification. My most recent flight, to Winnipeg to attend the Inland Ports conference, was turbulent all the way. There was wind on the runway as we landed. I nearly held on to the person next to me for dear life because that aircraft didn’t feel like it was slowing down. I had PTSD that lasted the length of my two day trip, during which I had to moderate a panel. It was only slightly worse than a midwinter trip I took from Ottawa to Toronto during a snowstorm, that lasted three hours as we circled in a holding pattern, waiting for Toronto Air Traffic Control to decide we could land (thanks to the airline for handing out free booze). There are good and bad things about business travel when you are by yourself: it’s a break from routine and people-watching at the airport can offer a pleasant diversion from sitting in traffic on your daily commute. But when you arrive in a strange city, at an odd hour, far from your family, sometimes there’s that feeling of blah that is only exacerbated by plugged ears (see nightmare flight), the lack of good shopping and the prospect of eating alone in the company of your i-Phone. Sometimes the most mortifying of things can happen when you’re jet lagged and trying to rush through security. I once somehow got half a roll of (clean) toilet paper wound around the back of my coat. I didn’t discover it until I was in the middle of the security lineup, where other passengers had to help me disentangle myself from it. Most recent embarrassment saw an enthusiastic CATSA security agent dump my entire Ziploc toiletry bag out in front of a long security line, convinced I had hidden an extra rogue container of liquids or gels. I can only hope he is enjoying the vulgar shade of lip gloss I sacrificed for the sake of security. CS . LETTER TO THE EDITOR Hi Ms. Kuzeljevich, As a subscriber to Canadian Shipper permit me to congratulate you on the overall quality, content and relevance of the magazine. I look forward to receiving it and enjoy reading many of the thought provoking articles. Carroll McCormick’s “A change in menu” and yours on “Defeating Disruptors” are good examples. I wish that you would include a regular feature on the problems and economic issues facing virtually all the participants in the evolving supply chain. In the meantime keep up the good work. Thank you. Best regards, D.M. Kendall www.canadianshipper.com November/December 2016 7
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IN THE NEWS
FMA CELEBRATES 100 YEARS Freight Management Association of Canada celebrated its 100th Anniversary on October 13th with a reception at the International Centre in Mississauga following the Surface Transportation Summit hosted by Newcom Business Media. Shippers, carriers and other industry stakeholders came out to help celebrate this significant milestone. Nick Krukowski, Publisher, Canadian Shipper Magazine, toasted the FMA’s 100 years by saying “We are here to celebrate FMA’s 100th anniversary, which is an incredible milestone. Being in supply chain media, we’ve had the pleasure of working with Bob and his team on many projects over the years. And I can say that, in addition to solidly representing the interests of shippers during this time, they have
done so with a class and professionalism that would do credit to any organization. Please join me in raising a glass to the FMA’s first 100 years, and in wishing them every success in the years to come.” The celebration included FMA members, delegates from the Surface Transportation Summit and government representatives including Kate Young, Parliamentary Secretary to the Minister of Transport. Ms. Young acknowledged FMA on behalf of the Honourable Marc Garneau, Minister of Transport: “My sincere congratulations to the Freight Management Association of Canada on this remarkable milestone. I commend the
FMA’s efforts to promote an integrated approach to transportation and look forward to continuing our collaboration for many years to come.” FMA thanked its many members for giving voice to freight transportation issues over the years and gave a special thank you to its partners: Canadian National Railway, Chamber of Marine Commerce, Quality Transportation Services, Canadian Tire, Port of Hamilton, Port of Halifax, Port of Vancouver and Bunge for supporting the Centennial Celebration Reception. The FMA team said it is proud of this achievement and is looking forward to the next 100 years. CS
Canadian ports conference reviews wide spectrum of challenges Staged at Ontario’s Lake Superior Port of Thunder Bay on Sept. 7-9, the 58th annual conference of the Association of Canadian Port Authorities (ACPA) covered a broad range of subjects from the challenges of reducing costs to maritime innovation and new channels of communication in a digital world. Sea the Superior Way was the overall theme – a catchphrase reflecting Thunder Bay’s key role as a Great Lakes gateway to eastern and foreign markets for Western Canada. In an unexpected departure from the formal business agenda, sparks flew over high pilotage costs on the Great Lakes that can run in the tens of thousands of dollars for carriers entering the North American waterway through the St. Lawrence Seaway. Rising up during a question period, Angus Armstrong, harbormaster and director of Security at the Port of Toronto, bluntly stated that in light of the significant advances in recent years of navigational equipment “pilotage today is a 19th century technology” that is undermining the competitiveness of the waterway in the industrial heartland of North America. In response, Capt. Mike Burgess, vicepresident, Great Lakes region, of the Canadian Marine Pilots Association, took issue with such views and underlined the
importance of maintaining the traditional expertise role of pilots for protecting marine safety and the environment. “Pilotage is reviewed and examined on a continuous basis by Transport Canada and the industry,” Capt. Burgess said, adding that the Great Lakes Pilotage Authority reviews regulations and takes input from stakeholders. “To make the system competitive, one has to work on costs, not just at one entity but the collective costs,” said Jim Athanasiou, Vice-President Engineering and Technology of Canada’s St. Lawrence Seaway Management Corporation. He recalled that the Seaway has been leveraging technology such as its internationally-acclaimed hands-free mooring system through the network of locks. Blair McKeil, chairman and CEO of McKeil Marine, a Canadian tug and barge enterprise which recently added two bulk carriers to its fleet, stressed that “from a domestic fleet perspective, pilotage is doubling costs in compulsory zones.” While he affirmed that “a lot of good things are happening on the Great Lakes,” pilotage costs were among “the dams in the system that hinder our efficiencies and increase our costs, inhibiting our competitiveness in the world-wide markets.”
By Leo Ryan
McKeil also suggested that if driverless cars can become a new phenomenon on congested highways, the day may not be far off for autonomous vessels on the Great Lakes. He said that “this would help to solve our crewing issues, bring about meaningful cost reductions and efficiencies to make the system better.” Debbie Murray, ACPA’s director of policy and regulatory affairs, said that “innovation is helping to reduce human error. Technology is driving innovation in the transport sector.” In this connection, Jason Chesko, senior manager, global market development at Methanex Corporation, referred in particular to the growing trend towards “leaner and cleaner fuel” as shown by more and more ships being built powered by alternative and cost-competitive methanol fuel. “Methanol reduces emissions of sulphur oxides by 99%.” The Canadian Transportation Agency’s chair and CEO, Scott Streiner, said that “new trade deals will reinforce trends in global shipping” before outlining its current Regulatory Modernization program and other changes in the ways it delivers services. The latter include not widely known mediation services free of charge, an example being mediation between a port and a railway company on an outstanding issue. CS
www.canadianshipper.com November/December 2016 9
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OUTLOOK IN THE NEWS 2017
Thrive or Survive? Carriers discuss tips for succeeding in challenging time BY JAMES MENZIES
A
sluggish economy, excess capacity and downward pressure on trucking rates have made 2016 a difficult year for trucking providers, which made the panel discussion on Thriving in Challenging Economic Times at this year's Surface Transportation Summit a particularly timely topic. But first, a requested amendment to the title, courtesy panelist Jonathan Wahba, chief operating office of Kriska Transportation Group: “It’s more like surviving,” he quipped. Wahba said Kriska is managing through the downturn by focusing on two “buckets”: tactical and strategic. The tactical efforts refer to day-to-day initiatives, such as reducing costs, since carriers today have little leverage with shippers to increase rates. Wahba said labor, fuel and equipment comprise a trucking company’s three biggest costs. Kriska is focusing on reducing its fuel and equipment expenditures, to the extent possible. “On fuel, we believe we can have an advantage over some of our competitors if we have the most fuel efficient trucks on the highway,” Wahba said. “We work with the OEMs on how we spec’ them and reward drivers for the right behaviors. We try to get a lot of excitement within the fleet around not wasting money on fuel.” As far as strategic, long-term initiatives go, the focus has been on keeping borrowing costs as low as possible when making acquisitions or buying new equipment. “We want to make sure all our debt is appropriately priced,” Wahba said. Equipment spec’ing gets a lot of attention at Bison Transport as well, according to Grant Naslund, director, eastern operations. “On the road, cost reductions start with spec’ing the right equipment,” he said,
adding that building a network of trusted vendors also reduces costs when breakdowns occur. In the office, Naslund said, cost cutting efforts are focused around automation of tasks such as data entry. The current combination of abundant capacity and slow freight growth have made rate increases tough to come by. But Wahba said there are still some forward-thinking shippers looking to build partnerships with carriers to ensure they have capacity available when the pendulum swings. “We certainly see a dichotomy of our customers,” he said. “The majority are in a buy for today, use the market to drive lower costs mode and the minority have a longer-term view. Conversations with those customers are quite different.” With Class 8 truck sales in sharp decline and the impending arrival of regulations that could reduce trucking’s productivity and chase non-compliant fleets from the industry, Wahba said excess capacity in the market won’t last long. “The number of trucks being ordered by the industry is below replacement levels,” he said. “We know in the future we will get back to a scenario where the market is tight.” Wahba said the shippers with a longer-term view are more likely to be serviced when capacity tightens. Another area where shippers and carriers can work together is driving waste out of the system, Wahba added. He cited the Safe Haven parking project Kriska developed with Unilever as an example. Unilever set aside a number of parking spots so drivers could sleep at their facility rather than choose between stopping early and parking at a truck stop far from the delivery location or traveling on and parking illegally or unsafely closer to the distribution center.
“Little items around drivers’ time is what we really focus on,” he said. This becomes even more important when using electronic logging devices (ELDs) to manage driver hours-of-service, added Naslund, something all fleets operating in the U.S. will have to do by the end of next year and even domestic carriers within Canada sometime thereafter. “They are absolutely coming,” Naslund said of ELDs. “We use them in a positive fashion. Being able to see where time is wasted in a driver’s cycle is something we’ve been able to capitalize on.” Bison has an analytics team that examines unproductive driver time, empty miles, profitability of various lanes and dwell time and feeds weekly reports to operations. Naslund said Bison’s drivers accepted ELDs and few operational changes were required when they were implemented. Bison is, however, making changes to how it delivers freight with an eye towards improving its drivers’ worklife balance and retention. While the slow-growing economy and sluggish freight volumes have provided carriers some short-term relief from the shortage of qualified drivers, the issue still remains one of the industry’s top concerns and arose frequently during the Summit. Rolly Uloth, president of The Rosedale Group, said the shortage of qualified drivers is the single biggest issue affecting his business. “To get a guy in for an interview is an act of God,” he quipped. Uloth expressed frustration that the government hasn’t done more to make truck driving a skilled trade, with bursaries available and an apprenticeship-type program. He suggested under such a system a 19-year-old could join a trucking company, start out as a shunt truck driver and work his or her way up by graduating to straight trucks, city tractors and eventually linehaul. “We can’t make those rules, we can only ask our government to make it happen,” he said. “In my opinion, this is the toughest thing that is going to hit us over the next five years.” He also acknowledged wages have to increase. continued
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OUTLOOK 2017
continued from p. 11
“If you pay 40 cents a mile at 50 mph, that’s $20 an hour. He can go to Tim Hortons and get that. The wages have to go up substantially to attract people. They’re professionals,” Uloth said. Asked whether there are too few drivers, or too many trucks on the road, Michelle Arseneau, managing partner of GX Transport said either could be true today, but in the future it will be a lack of drivers. “Drivers are exiting the industry and young people are not coming into the industry, so we’re not getting any new blood,” she said. “Nobody wants their kid to grow up and be a truck driver. For city
and daytime drivers, it’s easier – it’s the longhaul drivers (that are hard to attract). The way technology is now, they are being told when they can stop for a pee break, when they can do this and do that. It’s very unattractive and the compensation isn’t there.” Trevor Kurtz, general manager of Brian Kurtz Trucking, agreed it’s tough to attract young people to the profession. “Work-life balance doesn’t fit with this industry,” he said. “That’s the challenge with millennials. We work with our older guys even if they want to go down to three-day weeks.”
What's on Track A port closure, regulatory changes and the possibility of a short line fund are part of a year of change. BY CARROLL MCCORMICK
C
losed, not closed, sold, for sale, in negotiations with buyer, grain shipping season cancelled, accusations, threats, fear … a swirl of articles and press releases challenge anyone outside boardrooms to understand exactly what is going on with the Port of Churchill and the Hudson Bay Railway Company (HBR), owned by the American company OmniTRAX. Thanks to some loose writing, one could easily be forgiven for thinking that OmniTRAX closed the whole Port this July and cancelled grain shipments on its 1,000-kilometre long HBR between The Pas and Churchill. The statement is approximately one-half correct. OmniTRAX, while tight-lipped, confirmed some bare facts to Canadian Shipper this October 19: the Port is still open, but no grain is being shipped through it. The HBR is still open, but OnmiTRAX is not moving any grain over it (elsewhere it has been written that OmniTRAX has cut
rail shipments by half, but that could simply be the arithmetic of subtracting out grain shipments). As for the state of reputed sale negotiations, Chief Arlen Dumas, of the Mathias Colomb Cree Nation, was reported in September to have confirmed that a consortium of businesses and First Nations will take over the Port of Churchill and the Hudson Bay Railway. OmniTRAX confirmed to Canadian Shipper only that the sale of both was still being negotiated. According to Churchill mayor Michael Spence, the port received 186,000 tonnes of grain in 2015, compared to an annual average over previous years of 550,000 tonnes. OmniTRAX lists a wide variety of products that it moves over the HBR for shippers such as pulp, oil and mining companies, plus supplying communities along the route and Churchill itself. OmniTRAX did not say when this rail and port crisis would be sorted out. If one dared to rank railway news by
12 November/December 2016 www.canadianshipper.com
Kurtz doesn’t think compensation is the issue. “They do make decent money,” he said. “All our improvements in efficiency have gone to the drivers.” Ken Rosenau, director of operations with Rosenau Transport, said the issue is equally challenging in western Canada. “Two to three years ago in Alberta if you had a heartbeat and a Class 1, we would hire you,” he said, adding drivers would start out in the yard and be trained before graduating to on-highway. “We have a 100% employer RRSP program and that’s not a big attraction.” CS
level of excitement, perhaps the recommendations from the statutory Review of the Canada Transportation Act (CTA), made public in January 2016, would slide in right after the OmniTRAX saga-inprogress. On the rail freight side were 40 recommendations. They include recognizing shippers and their collective needs, in the context of the optimal performance of the freight rail system, dealing with certain liability and insurance issues; e.g., for the moving of crude oil, and increasing the Capital Cost Allowance (CCA) for certain railway assets, such as rolling stock. About increasing the CCA, Bob Ballantyne, president, Freight Management Association, says “I think that this is in the interest of shippers. What it means is that, in allowing railways and private car owners to increase their CCA, in theory, it allows them to update their fleets more rapidly and keep them more current.” Also in the Review was a recommendation to phase out the Maximum Revenue Entitlement in seven years. It both guarantees a fair rate of return for railways and controls unjustified increases in rail rates for moving grain. Frowning on this and some of the other recommendations, Dan Mazier, president, Keystone Agricultural Producers (KAP) comments, “More work needs to be done to address the lack of competition in grain transportation. The report doesn’t address this at all.” On the plus side, KAP notes, among other positives about the Review, “… the report has met requests for protection for producers wanting to ship their own grain, and funding and support for groups ©Artem_Egorov/iStock
OUTLOOK 2017
wanting to purchase short lines no longer used by CN and CP. We had hoped it would go further and recommend short line operators be allowed more opportunities to haul grain on branch lines owned by the major railways, but this is a good start to encouraging the development of short line railways that can better serve producers’ needs.” Other Review recommendations include a tax credit program for non-Class 1 railways (SLRR), allowing SLRRs to apply directly for federal infrastructure program funds directly, without a government sponsor, and creating a federal-provincial SLRR program to support infrastructure investments. Talk of such a program came up at this year’s Canada Rail Summit, and the Railway Association of Canada (RAC), recommended creating a funding program in a February 9, 2016 submission titled Pre-budget 2016 Consultations. RAC wrote that the Government of Canada should create, “…a capital funding program of $300 M over 7 years starting effective in 2016 and ending in 2022 which would be aimed at helping shortlines invest in their infrastructure.” Asked for a progress report, and whether the government had acted on the recommendation, RAC communications specialist Alex Paterson said, “There hasn’t been anything yet, but we are meeting with officials more.” This June the federal government extended the Fair Rail for Grain Farmers Act (Bill C-30) to August 2017. Put in place in 2014 and originally set to expire this August 1, it includes the right for the federal government to set volume requirements on the grain the railways must carry, and keeps the limit on interswitching at 160 kilometres, instead of the usual 30 km. Interswitching is where one railway can move grain of the other railway’s customer, on its track. “This gives shippers with only one choice of railway fair and reasonable access to the rail system at a regulated rate,” KAP notes. Next year will see, well, not see any more DOT-111 tank cars built prior to the CPC-1232 standard. They must be retired from crude oil service or retrofitted by November 1, 2016. The mainline railways, CN and CP, have been spending heavily this year on things like track improvements and rolling stock: CP budgeted $1.1 billion and
CN $2.9 billion. Unfortunately for CN, its hope, expressed last year, that construction on its planned $250-million Milton Logistics Hub would begin this year and be operational toward the end of 2017, has fetched up on opposition from the town of Milton and Halton Region. Milton Mayor Gord Krantz wrote in an October 17, 2016 Public Notice that, “Town of Milton and Halton Region have serious concerns that the selected location in Milton is not appropriate …” CN did not reply to a request for comment. Liliana Busnello, communications and marketing advisor, Town of Milton, said of the planned 2017 opening date, “I think next year may be a little bit soon, because it is going through the Canadian Environmental Assessment Agency review.” In a show of what money and attention can do for a SLRR, the Central Main and Quebec Railway (CMQR) has invested nearly US$30 million in track and infrastructure since it took over the U.S. and
Quebec portions of the Montreal, Maine and Atlantic Railway, which packed it in after a runway train exploded and destroyed downtown Lac Megantic in 2013. CMQR has purchased new locomotives, installed 170,000 feet of rail and 70,300 ties, dumped 48,000 tons of ballast and rehabilitated 23 crossings, among other things. The improvements have eliminated most of the 10 mph slow orders over 230 miles of track. CMQR has budgeted an average US$4 million a year on capital improvements through 2020. CMQR resumed running trains through Lac Megantic on June 18, 2014. As for talk of rerouting the track around town, Gaynor Ryan, chief administration officer, CMQR, says, “The preliminary feasibility study on creating tracks to bypass the town were released in May of this year. The study’s second phase, which will feature preliminary design, environmental impacts and the preferred corridor is scheduled to be released next spring.” CS
Strong Momentum Integrators on the same page about e-commerce growth BY IAN PUTZGER
I
n the rearview mirror 2016 may come down as the year that the surface paths of FedEx and UPS diverged. Having moved more or less in lockstep in their annual price hikes, the two large U.S. integrators announced different rates of increase for 2017, with different minimum charges and different timeframes for calculating fuel surcharges. Tim Sailor, principal of Navigo Consulting Group, reads the FedEx announcements as further indications that the company is looking to push oversize and non-conveyable freight out of its sys-
tem (having earlier raised additional handling fees for such traffic and reduced the size limit from 60 to 48 inches). The large integrators are very much on the same page when it comes to ecommerce, which continues to grow by leaps and bounds. Greg Hewitt, CEO of DHL Express USA, notes that traditional B2B e-commerce has grown broadly in line with the overall market, whereas the B2C sector is soaring. According to one recent projection, global B2C volume is expected to reach €2 trillion (CAD $2.89 trillion) a year by 2020, with continued
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OUTLOOK 2017
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an annual growth rate of 15-20 percent. International flows of this traffic have shown strong momentum, as consumers increasingly look beyond their domestic markets, operators report. Christoph Atz, president of UPS Canada, remarks that the low loonie also helps boost opportunities for Canadian firms to sell outside their home market. UPS and DHL have targeted SME shippers in Canada. The former has expanded its network of ‘Access Points’ across the country to nearly 1,000 locations and will invest over $100 million in its further expansion in Canada next year, Atz says. According to him, over 24,000 SME customers have enrolled in the company’s small business program. DHL introduced a web portal that enables e-tailers to integrate on-line orders directly into its network. It also launched an international service that comes with a defined maximum weight and a simple flat rate based on a variety of envelope and box sizes. According to DHL, this “provides practical, flexible solutions and is intended to support the growth of our SME customers”. FedEx has tackled the international ecommerce market with ‘CrossBorder’, a subsidiary of FedEx Trade Networks, which offers e-commerce technology solutions for e-tailers to navigate common international selling issues like regulatory compliance and multi-currency pricing. While e-commerce promises the industry strong growth, it also brings challenges, points out Atz, citing rising expectations for convenience, delivery channels and choices. Speed is another issue. Sailor comments that the former alternative of ‘fast or cheap’ for delivery options has morphed into an expectation of ‘fast and cheap’ service. One logistics provider that has concentrated on omni-channel solutions notes that expectations about delivery times keep rising. “Three years ago customers expected delivery in three days, last year it was two days, now they are looking at one day,” he says. Over longer distances consumers’ growing impatience has boosted air cargo solutions. This has been underscored by Amazon’s moves to build dedicated air networks in North America and Europe, each using fleets of as many as 20 midsized freighter aircraft. FedEx and other
parcel carriers have dismissed suggestions that this heralds the emergence of a competitor for them, but it does mean a chunk of traffic that is beyond their reach. A more immediate challenge for parcel carriers is the final mile of B2C traffic. At DHL residential deliveries now account for 40-60 percent of the company’s volume, Hewitt reports. He admits that such deliveries remain challenging, and DHL has mounted a number of initiatives to avoid having to re-schedule trips. In Europe operators are increasingly moving towards using drop-off stations for B2C deliveries, observes Sailor. The proliferation of ‘Access Points’ and the ongoing investment in this drive indicates that UPS is also embracing this con-
cept, often in conjunction with its on-line delivery management tool that lets customers schedule a delivery or determine a drop-off point. “Missing deliveries at home is a thing of the past if our network is utilized,” comments Atz. Operators are also keeping a watchful eye on the moves of postal agencies. While these are often conduits for final mile delivery, some are also competing aggressively for a larger bite at the e-commerce cake. Canada Post is one of several postal outfits that have developed clickand-collect mechanisms built around collection of shipments from local branches, which can be integrated into ecommerce sites. CS
Brighter skies ahead Airlines partner to improve network reach BY IAN PUTZGER
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he skies have brightened for air cargo. After a dismal start into 2016, continuing the toxic mix of overcapacity with sluggish demand that had characterized the previous year, business picked up in the second half. “Things have really improved over the summer,” remarks Lise-Marie Turpin, vice-president of cargo at Air Canada. Gary Vince, head of airfreight, Canada at DHL Global Forwarding, confirms that a sluggish start gave way to a general recovery. According to airline and forwarder executives, this trend looks set to continue through a strong fourth quarter into 2017. There is still ample capacity in the market, though, especially across the At-
14 November/December 2016 www.canadianshipper.com
lantic, so airlines are still struggling to turn around the long downward slide of their yield. “Yield is still a challenge,” acknowledges Turpin. This has not stopped Air Canada from investing in cargo. The carrier has started planning the expansion of its Toronto hub to keep up with the growth of its network, the addition of freighter capacity and the development of new services. Air Canada is in the process of adding a slew of new routes to its network, including cargo gateways like Taipei, Mumbai and Nagoya. 2016 also brought the return of freighter operations, which are flown by Cargojet for Air Canada to Mexico City, Bogota and Lima. In October the pair was working on plans to mount a joint trans©olaser/iStock
OUTLOOK IN THE NEWS 2017
atlantic freighter operation to an undisclosed European destination. Increasingly airlines are looking to work together to boost their network reach, improve utilization and control costs. Lufthansa has formed joint ventures in cargo with two Asian and one American carrier, which in turn has joined hands with an Asian operator. In all of these the joint marketing of capacity is a core element. Turpin sees much appeal in this approach, but says that Air Canada has “other fish to fry right now”. What with limited resources available, she has no intention of going down this avenue for the time being. “You have to have the right structure in place to bring this to fruition,” she says. The launch of the Air Canada-Cargojet flights has been a boon to Hamilton Airport, the base of Cargojet’s freighter operations. The Latin American connections and the link to Air Canada gives the airport the
ability to tap into the carrier’s network, says Lincoln Garraway, Hamilton’s director of cargo development. His ambition is to draw in international freighter operators. Buoyed by the new Latin connection and the growth in express cargo, Hamilton has clocked up a seven percent increase in billable weight this year, and Garraway is looking forward to another strong year ahead. Hamilton’s cargo centre that was built a short while ago features a cool storage facility, which could play a role in handling perishables brought in from Latin America. Perishables, notably fresh food, have been a strong growth segment for the air cargo industry, and a growing number of operators - both airlines and forwarders - have been targeting it with special solutions. DHL Global Forwarding has not really chased this type of traffic so far, but management is eyeing some sectors. Vince is
upbeat on beef and other meat exports across the Pacific. Fish and seafood has also done well and will likely continue at this momentum, he remarks. The pharmaceuticals and healthcare sector has been another strong market and a major target for DHL Global Forwarding as well as a growing number of other logistics providers and airlines. The higher margins in this business are particularly appealing in light of the depressed yields on general cargo. However, volumes are relatively modest, so this sector is not going to be a panacea for the woes of air cargo, one airline executive cautions. The rapid surge in e-commerce volumes, especially the B2C segment, augurs well for air cargo, given expectations for shorter transit times. This has been fuelled further by the fact that Amazon sees a need to build up dedicated freighter networks for its traffic. continued
We make a big deal over the tiniest items. Old Dominion’s focus on premium service means every item arrives with one of the lowest claims ratios and one of the best on-time records in the industry. OD Domestic offers: • More than 220 service centers nationwide • Competitive transit times and pricing • Proactive shipping solutions
For more information, visit odfl.com or call 1-800-235-5569. Old Dominion Freight Line, the Old Dominion logo, OD Household Services and Helping The World Keep Promises are service marks or registered service marks of Old Dominion Freight Line, Inc. All other trademarks and service marks identified herein are the intellectual property of their respective owners. © 2016 Old Dominion Freight Line, Inc., Thomasville, N.C. All rights reserved.
OUTLOOK 2017
continued from p.15
While some forwarders have targeted e-commerce flows - often by moving such traffic in consolidations to international markets and feeding the individual shipments into various distribution networks - the airlines have been more or
less passive recipients of this rising tide of traffic. While they are happy to carry consolidations for postal agencies, forwarders or integrated express carriers, some airlines are looking to develop a more active approach to e-commerce.
Marine Carriers Escalating turmoil from over-capacity on the high seas BY LEO RYAN
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he outlook for marine carriers engaged in global container shipping has clearly deteriorated in recent months, with falling freight rates caused by the combination of overcapacity and a slowdown in world trade. Most profoundly affected are the Asia-Europe and transpacific operators, although tensions are also surfacing in the lower key, mature North Atlantic trade. The most critical issue remains overcapacity. This is what analysts unanimously emphasize when citing an estimated industry collective loss of US$10 billion in 2016 stemming from a huge reduction in revenues. According to Drewry shipping consultancy, shippers could face fewer choices and higher freight rates in the long run as the container shipping sector shrinks ever more due to an increase in merger and acquisitions and carrier failures. Turmoil has continued to wrack the industry since last summer’s filing for bankruptcy protection of the seventh largest carrier, Korea’s Hanjin Shipping, which resulted in more than 500,000 containers (carrying goods reportedly worth US$14 billion) stuck on arrested and marooned ships at sea. On Canada’s West Coast, two vessels, the Hanjin Vienna and the Hanjin Scarlet, were still detained at anchor at the time of writing. For shippers notably importing retail goods from Asia, there was at
least some relief when the cargo of the Hanjin Scarlet was off-loaded at the Port of Prince Rupert on Sept. 7 after terminal operator DP World and CN struck a deal to move stranded containers. In addition to Hanjin’s demise (precipitated by a Seoul government decision to stop keeping ailing companies afloat with cheap state loans), other brands that have recently effectively disappeared include China Shipping Container Lines. Singapore-based APL and United Arab Shipping Company have become subbrands within larger entities following transactions with CMA-CGM and HapagLloyd. The top five carriers now control about 55% of the world box fleet compared with 36% in 2005. Bob Ballantyne, president of the Freight Management Association of Canada (FMA), feels that the new generation of containerships of 20,000 TEUs may not be in the best interests of shippers. “These megaships reduce slot costs but not the overall logistics costs due to delays at terminals and inland congestion issues. Generally speaking, there is a significant imbalance with the other parts of the supply chain – namely terminals, trucking and rail.” Denmark’s Maersk Line, the top world container carrier, which launched the era of 20,000-TEU mega-ships, this fall adopted a new strategy of no longer ordering new vessels in a flooded market but to grow through
16 November/December 2016 www.canadianshipper.com
“Carriers are considering what to do,” says Turpin, adding that Air Canada has ambitions in this area that she is not ready to reveal at this point. “That segment is growing by leaps and bounds,” she comments.. CS
new acquisitions. The new Maersk Group strategy also involves restructuring the powerful conglomerate into two divisions energy and transportation. Referring to the Hanjin collapse, freight forwarding veteran Chris Gillespie, president of Gillespie-Munro Inc., told Canadian Shipper: “The negative cost impact on the forwarding industry has been drastic. We have been very involved in trying to clean up the mess. There is simply not enough volume to accommodate supply. Freight rates are under enormous pressure to continue to fall or certainly not to increase.” “It will not be the last of these failures,” Gillespie said, adding that “things have reached the point where certain carriers are too big to be saved.” Assessing carrier financial risks Ruth Snowden, executive director of the Canadian International Freight Forwarders Association, concurs that “another Hanjin incident cannot be discounted. All the carriers are bleeding money.” Snowden noted that “more and more, we have to review the financial health of the marine sector. We really cannot afford as an industry to have other (major) carriers go into receivership.” She also underlined the crucial importance of stability in rates and services. “In the past few months, there has been unprecedented volatility.” Snowden suggested that if freight rates go up in the near future within the context of reduction of capacity, “this might be preferable to continued volatility.” Inland operators faring comparatively better For Canadian and foreign-flag marine carriers trading on the Great Lakes/St. Lawrence waterway, times remain challenging – but not all is doom and gloom. Strong movements of North American grain and renewed iron ore export activity have spearheaded an upswing in shipping on the St. Lawrence Seaway. From the wa-
OUTLOOK IN THE NEWS 2017
terway’s opening on March 21 to the end of September, shipments of Canadian and U.S. grain hit 5.8 million tonnes, in line with the volumes experienced in 2015. Overall, some 21.2 million tonnes of cargo transited the Seaway’s locks, representing a moderate decline of 5.32% from a year earlier. Despite the recent uptick, however, Seaway cargo for all of 2016 is not expected to match the 2015 total of 36.3 million tonnes, which already represented a sharp drop from nearly 40 million tonnes in 2014. The rise in global iron ore prices over recent months is what has sparked a revival of iron ore exports via the Seaway, although iron ore traffic for the period to end September still showed volume down 13% at 3.7 million tonnes. Big gainer was liquid bulk, up nearly 35% at 2.5 million tonnes, while general cargo was slightly lower at 1.73 million tonnes. Among Canadian marine service pro-
viders, McKeil Marine, a 60-year-old privately-owned tug and barge enterprise based in Hamilton, is in an expansion mode, thanks to strong growth in revenues and in such niche areas as aluminum shipping and project cargo. Heading into the final months of the 2016 season, virtually the whole fleets of the leading Canadian-flag shipowners, CSL and Algoma Central Corporation, were operating to meet rising demand, notably in grain and iron ore, after running at well below capacity in the spring and summer. “A pleasant surprise has been the Minnesota ore heading for Far East markets,” said Dennis McPhee, vice-president sales and domestic dry-bulk for Algoma Central Corporation, which operates the largest Canadian-flag fleet of dry-bulk ships and product tankers. Commenting on transatlantic trade between Europe and the Great Lakes/Seaway
system was Dennis Pfeffer, Liner Manager of Fednav’s FALLine. Fednav is the biggest ocean-going user of the Seaway. “This season started off on a positive note as cargo bookings were in good shape,” he began. “In fact, the beginning of 2016 saw cargo bookings increase 15% over the same period last year. The Seaway had not experienced severe ice cover as it did in 2015, and March 23 saw the official opening of the Seaway. As the season progressed, imports of steel slowed slightly, particularly in flat products.” Pfeffer indicated that “construction projects are strong, especially in Canada, as witnessed by the amount of steel beams lifted to date. The automobile industry continues to expand, which translates into coil demand.” Concluding, Pfeffer stated: “Overall, we expect to see a decrease of total steel and general cargo lifted in 2016 versus 2015.” CS
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For more information, visit odfl.com or call 1-866-637-7333. Old Dominion Freight Line, the Old Dominion logo, OD Household Services and Helping The World Keep Promises are service marks or registered service marks of Old Dominion Freight Line, Inc. All other trademarks and service marks identified herein are the intellectual property of their respective owners. © 2016 Old Dominion Freight Line, Inc., Thomasville, N.C. All rights reserved.
INLAND PORTS
SWEET CANADA’S WESTERN INLAND PORTS ON MAKING THE CONNECTIONS THAT DRIVE TRADE
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BY JULIA KUZELJEVICH
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ow does Western Canada’s vast network of inland ports work collaboratively to benefit trade and transportation stakeholders in the region? Canadian Shipper was a media sponsor of the Van Horne Institute’s Inland Ports conference, September 20-21 in Winnipeg where Editor Julia Kuzeljevich moderated a panel discussion on inland port strategies. Inland ports, in the following definition, aim to “provide quality industrial land connected to multi-modal transportation and an ease of doing business to help companies efficiently manage their supply chains and connect them to markets around the world.” A key theme that emerged from the event was that inland ports must be able to survive on their own economics. Don Streuber, Executive Chairman and CEO at Bison Transport Inc. and a keynote speaker at the event, talked about inland ports as being integral to Western Canada. “Their economics have to be based on a reality. And there are sweet spots for each inland port,” he said, if they acknowledge that they can’t do everything. Diane Gray is President and CEO of CentrePort, which at 20,000 acres in size is North America’s largest inland port development. Gray said that the organization has been learning from other developments, particularly those in the U.S. “What we have been developing now for the past six years is what we describe as not only an integrated logistics and transportation platform, but also one that
is bringing together planning principles tied with land use. We’re doing some pretty neat things here that are helping to contribute towards the development of what we describe as a complete community. The vision has gone beyond just a logistics hub into one that takes into account the planning principles of live, work, play and learn. And that is because of lessons we’ve learned from other developments around what it takes to successfully support other economic developments into our capital region,” Gray said. CentrePort Canada Inc.’s legislative mandate is to facilitate long-term development and operation of the inland port and promote the multimodal inland port by marketing it domestically and internationally. A new 600-acre residential community is also in the planning stages, and Gray noted that Winnipeg is the only major Canadian city on the prairies served by three continental class 1 railways: CN, CP, and BNSF. In terms of strategies for CentrePort, Gray said, “It’s very important to know that you can’t be all things to all people. We have, in consultation with a number of experts in the field, an analysis about where all the sweet spots in economic development attraction lie for us. The key sectors are in agri-business and food processing; composites and advanced manufacturing; biomedical and e-commerce; and regional distribution. Winnipeg is the staging area for almost all air cargo shipments in North America. In addition, we are seeing a resurgence of breakbulk activity into Western
18 November/December 2016 www.canadianshipper.com
Canada. And that is because distribution activity is not only dependent on where the end consumer is for those products, but also where the products are coming from. So if those products are coming out of the southeastern United States, through the mid-continent trade and transportation corridor, Winnipeg becomes that natural (staging area) for Western Canada. So it’s very important to look at the transportation and logistics needs of every company that you’re working with to help them understand why does that make sense for them or perhaps why it wouldn’t”. Live, work, play, learn According to Gray, one of the things regularly heard from companies considering CentrePort for investment is ‘where will my skilled workers come from’? “When they’re asking that question, there are two components to it: one is the proximity of the workforce to the place of employment. The second part of that question relates to the knowledge and skill base. We’ve been planning ahead for an on-site residential community as well as a post-secondary campusthe first shared campus of its kind,” she said. Representing Saskatchewan, Global Transportation Hub CEO Bryan Richards highlighted the importance of partnerships – exploring the ways the GTH brings together partners to expand trade for the province and for existing tenants. “I usually title this presentation a thousand miles from tidewater, what do I do?” he said. ©iStock
INLAND PORTS
Trade is essential to the province of Saskatchewan, he stressed, and the Global Transportation Hub is a “groundbreaking” opportunity for shippers-“75 percent of what we produce in Saskatchewan has to go for export. The infrastructure requirement to do that is critical.” Geographically strategically located to the west of Regina, the 1871-acre footprint of GTH unites the railroad and transportation opportunities and aims to provide shippers with a planned bulk service rail line. “We are a financially self-sustaining statutory appropriation agency of the Crown. We get no support from government. All the infrastructure we build has to be created by our own ability to generate that sale. We serve as the owner, developer and regulator of the inland port. That gives us the opportunity to be wholly autonomous through our legislation. We are responsible for all aspects of the foot-
print from community planning to enforcement,” Richards said. “Being autonomous and self-governing is a bit of a unique model in Canada if not North America. We are a single point of contact and the only FTZ in Saskatchewan offering access to the duty and tax relief program which is exciting. You can’t combat transportation costs-you have to focus on your best opportunity for conversion, and for us it’s agri-food.” The real agri-food potential is in China and India, he noted. “The Asia-Pacific gateways have been critical. E-commerce evolvement is happening very quickly-we have to adaptthat’s going to change that maturity level. Norm Richard, co-chair of Port Alberta, and Director, Air Service Development, at Edmonton International Airport, noted that Port Alberta has achieved Foreign Trade Zone (FTZ) status over the
last year. This offers benefits to businesses through the application of the Duty Deferral Program which helps to alleviate cash-flow constraints that result from the imposition of import duties. Richard said that pipelines are an important differentiator for the market and that the region has a strong foundation for air cargo-it is serviced by major carriers that offer cargo service such as Air Canada Cargo, Canadian North, DHL Express, FedEx, Icelandair Cargo, WestJet, Air France/KLM service from Amsterdam Airport Schiphol, as well as the recently launched Air China Cargo Service between Shanghai Pudong International Airport (the world’s third largest cargo hub). Growth is not just about oil and gas-freighters out of China are creating lots of opportunity and the region has been able to repatriate some cargoes from the U.S., he noted. Calgary Regional Authority, as an ‘incontinued
When you’re driven by details, the world is a smaller place. Old Dominion simplifies global shipping by doing more than delivering freight. Our focus on premium service means every shipment arrives with one of the lowest claims ratios and one of the best on-time records in the industry. OD Global offers: • Personalized, single point of contact for status on all shipments • Nationwide Container Drayage from most major rails and ports • Direct service to or from Canada, Mexico, Puerto Rico, Alaska and Hawaii
For more information, visit odfl.com or call 1-800-432-6335. Old Dominion Freight Line, the Old Dominion logo, OD Household Services and Helping The World Keep Promises are service marks or registered service marks of Old Dominion Freight Line, Inc. All other trademarks and service marks identified herein are the intellectual property of their respective owners. © 2016 Old Dominion Freight Line, Inc., Thomasville, N.C. All rights reserved. www.canadianshipper.com November/December 2016 19
INLAND PORTS
continued from p.19
land port’ is a loosely based association of various stakeholders. Bob Miller, Regional Economic Prosperity Lead with the CRA, said there is an established “Calgary Region Foreign Trade Zone”, tied to the Calgary Region as a whole, and well established partnerships with key research and educational organizations like The Van Horne Institute, Mount Royal University, University of Calgary and SAIT Polytechnic. The Inland Ports conference is “a conversation for Western Canada in particular that has been waiting to happen for a long, long time.” The two major West Coast ports of Vancouver and Prince Rupert bring a lot of containers into the Calgary region. “Where we find ourselves is that in 2013 about 800,000 TEU containers were unloaded in one of our two inland ports. As growth in Vancouver and Prince Rupert for containers rises, that will only lead to the possibility of more container, warehousing, and inbound activity in the Calgary region. Over the last 15 years, there are about 50 major distribution centres in the region that have been taking advantage of this growth, especially in the retail space,” Miller said. With no set boundaries, the Calgary Regional Authority has been evolving related to oil and gas and retail distribution over the last 15-20 years. “We haven’t actually used the name ‘inland port’ in the past. It was only a couple of years ago the name became more formalized. But we are actually spread out over three or four jurisdictions. The City of Calgary, in the middle of the Calgary region, is surrounded by a number of smaller municipalities,” he said. These are looking for the opportunity to work in collaboration, to find common ground on provincial economic development strategies. “We ask ourselves bigger questions now about where are we in some of the larger systems. How do we take advantage of the network? What does this mean in terms of some of the opportunities, partners we could collaborate with? What about the efficient movement of goods to also support manufacturing? We’re also active members of NASCO, looking at trade efficiency, from Mexico through the States. Part of our competitive advantage
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in the region is actually our collaborative advantage, because we like to work with everybody, and we have to figure out how to work through relationships,” Miller said. Ashcroft Terminal is a privately owned company, family-run since 2001. Located 300 km northeast of Vancouver, it boasts 320 acres of industrial zoned land and owns an adjacent parcel of agriculturally zoned land. Kleo Landucci, Vice President, Corporate Development at Ashcroft, said the terminal has 32,000 feet of rail today-“less than 10% than our geographic footprint, so we have a lot of room to grow. We have 18 customers-every single one a multinational, triple A rated company. We service every sector of the natural resource industry,” she said. “To get specific, every single piece of cargo that comes down into the lower mainland of Vancouver, comes down on CN starting at Basque. Everything going eastbound that goes up out of Port Metro Vancouver marine terminals goes up on CP. So effectively this creates a rail pipeline, without which we wouldn’t be able to meet the trade projections we’re anticipating over the near and long term. There are three legs of our business stool: the bulk business, transloading anything from railcar to truck, and truck to railcar. We do that today for forestry, agriculture and mining. That’s a very steady, predictable, excellent piece of business. Second is our fleet management-this encompasses railcar storage, and storage supply solutions. When we look at inland ports we’re very much involved in not just facilitating import and export of products but in looking at North America as a network and the deeper hubs to facilitate trade in North America,” Landucci said. The third stream of the business is the container business-the vision was to stuff containers in Ashcroft. “We’re very involved in trying to have more collaborative discussions around how we’re going to facilitate the straight projections. Unfortunately we haven’t had such luck with our province but we’re hoping to change that,” she said. In terms of hurdles and strategies for inland ports, Gray said “because the CentrePort project is so big, with so many different levels of interest, we’ve developed some tools to help not only work togeth-
er but to share information: an advisory committee of stakeholders, the railroads, the airport, all levels of government, business interests. We also have a working group with the provincial government dealing with a number of site planning issues.” “Without the railroads we have nothing so that’s been critical. It’s had its challenges-they are large organizations with a lot of change, a lot of turnover. We are having discussions that are true and transparent about what it takes to get to the next level of conversation. We are not going to get very far if we don’t collaborate further,” Landucci said. “If I were looking back 15 years ago, I would say that people generally have an attitude that we’re all competing with each other. It has taken a long time but my sense is that the prevailing spirit is that people get it: there are certain things you need to work together on, at the scale of a region, to influence bigger audiencesthe province, the feds, bigger industry, whoever it is, to get past that into what’s common ground for all of us to try and pursue together,” said Miller. Collaboration with West Coast sea ports is high on the agenda, with good reason. “Container traffic is growing and port congestion, industrial land shortage, creates opportunities for inland ports,” said Peter Xotta, VP, Planning and Operations with the Port of Vancouver. The inland port, he stressed, must enhance customer service, satisfy railway interests and shipping line requirements, as well as complement existing logistics infrastructure already in place. “Market forces support a long-term alignment of interests between sea ports and inland ports,” Xotta said. “Canada brags about being a trading nation but what we trade in are commodities, that don’t necessarily cluster in our urban environments. We will run up against a certain level of attractability, and there is a need for ‘matchback’ in containers,” said Don Krusel, President and CEO of Prince Rupert Port Authority. “For Prince Rupert it’s all about inland ports. We couldn’t exist without the connections, without working with the inland nodes, to help find the exports that will move as backhaul,” he said. CS
www.canadianshipper.com November/December 2016 21
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REGULATORY UPDATE
Stakeholders across transportation’s various modes have eyes on a series of regulatory changes ahead that are expected to impact the supply chain. Here is some of what’s ahead. BY JULIA KUZELJEVICH
AIR CARGO Transport Canada has mandated that 100% of air cargo will have to be physically screened by one of TC’s approved methods by October 17. The agency will continue to process all applications received beyond October 17 with an approval process that can take up to six months. Businesses shipping goods by air will be affected, as well as businesses that intend to screen cargo or want to handle cargo that has already been screened (i.e. trucking companies, warehouse operators, logistics companies). The regulation is meant to align with trading partners and international associations. But the anticipated volume increase to meet the 100% screening requirement is expected to bottleneck and delay airline warehouses. Capital expense and equipment procurement lead times may pose problems for companies in adapting fast enough. Airline facilities may not be able to scale screening capacity and equipment due to space constraints. Industry estimates 5%-20% of shippers will become “known consignors” with the ability to deliver directly to airlines with certified agents. “The whole air cargo security regime is changing-the participants in the secure supply chain, the nomenclature, etc.” said Ruth Snowden, executive director of the Canadian International Freight Forwarders Association. Today only about 18-20% of cargo is actually screened. Shippers can become known consignors, can secure cargo
when they pack it, and it can then travel through a secure supply chain and not be screened. Transport Canada aims to see more air cargo shippers become “known consignors”, but as there is still a lack of known consignors yet in place, a great deal, perhaps even 80% of cargo, will have to be screened by a 3rd party screening agent, or by the airline which may not have room in its facility. The air cargo industry has already been badly hit by falling rates/kilos, and now has to worry over delays with cargo screening. Organizations have to apply to Transport Canada to become known consignors, then have to train. “Some of the big shippers are saying we already have security up the wazoo (big pharma) and we don’t want to reveal that to Transport Canada. It’s possible we could be seeing demons where they don’t exist-there could be a significant number of shippers stepping up to the plate. But I think a lot of smaller shippers will just say let’s screen that cargo. There is a security fee for maintaining the program. And in addition to that fee, Canadian shippers will face the fee of screening, likely to be 15-20 cents a kilo. Canadian exporters should be prepared for the additional cost this will drive. They still have to maintain their current security network/ structure,” Snowden said. Snowden said Transport Canada attended CIFFA’s ATM panel and that they are aware of industry’s concerns. In late September, Air Canada Cargo announced it has been working to ensure it is fully prepared to ensure the transition to this new program is smooth. “We’ve encouraged our customers and partners to apply in time continued
©kiddy0265/iStock
www.canadianshipper.com November/December 2016 23
REGULATORY UPDATE
continued from page 23
to the new program. We’re also investing. We will increase the number of onsite screening agents at our key Canadian stations to accommodate additional volume of screenings and invest in additional equipment,” the airline said. ACI Air Cargo Inc., an air cargo handling company based in Pearson International Airport, has launched a number of air cargo screening centers in the first phase of a plan to open at most major Canadian airports across the country by 2018. Following the Transport Canada announcement on cargo screening, “We identified a need by the international freight forwarder community to have an option for screening cargo and avoiding possible bottlenecks at airline facilities. For more than four decades our role has been a supplier of air cargo handling and transportation services to airlines and freight forwarders and this latest major investment is a natural evolution in our goal to supply the best possible services to the air cargo industry’, said Rob Thorndyke, President. The service, branded ACI SAFE, will operate as a Regulated Agent authorized by Transport Canada and utilize all approved
“We are dependent on each other, so we wanted to be that relief valve and keep the cargo moving as their business is our business.” Mark Dunning, Vice-President Operations and Sales for Atlantis Transportation Services Inc. and ACI Air Cargo Inc.
methods of screening in accordance with the program and open in Toronto, Montreal, Vancouver and Hamilton next month. ACI’s affiliate, Atlantis Transportation Services Inc., has applied to Transport Canada to become a Certified Agent authorized to transport secured air cargo within the supply chain. Said Mark Dunning, Vice-President Operations and Sales for Atlantis Transportation Services Inc. and ACI Air Cargo Inc.: “The screening centre, which we’ve called SAFE, and stands for Secure Air Freight Experts, was designed specifically for the Transport Canada initiative. It has five dedicated doors, its own office and personnel, two machines and over 20,000 square feet of warehouse space to process all the cargo coming in and out. Prep-
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24 November/December 2016 www.canadianshipper.com
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REGULATORY UPDATE
aration for SAFE started in early May, with multiple management meetings required to bring the program to fruition, which involved the sourcing, availability and pricing of both the X ray machines and ETD machines, as well as securing the facility in Vancouver. The four facilities, Toronto (YYZ), Hamilton (YHM), Montreal (YUL) and Vancouver (YVR), were all being prepped and equipped simultaneuosly for SAFE and will be fully operational before the implementation of the Transport Canada initiative.” Next year, Dunning said Calgary and either Halifax or Moncton will come on line, with the goal of having screening centres coast to coast. Three service tiers are being offered to the forwarder market: » One is receiving the cargo, screening it, and tendering it back to them. » The second is to receive, screen, and deliver it secured to the airline. » The third is to receive, screen, build and deliver secure to the airline. “Each one is obviously priced differently as it involves different levels of manpower to facilitate. Our drivers are all currently ACR trained and qualified , but we have reassigned them, as well as the trucks they drive, to the Regulated Agent side to ensure there is no interruption of service, due to the delay with the Certified Agent program,” Dunning said.
“We’re actually trying to assist Transport Canada with the success of this program by acting as the ‘relief valve’ because of the anticipated bottleneck and delays at the airline facilities. That was another reason for us moving forward with this, as we’re already very familiar and known to the forwarding and airline communities, through various aspects of our trucking, warehouse and airline handling services that we currently provide to them. We are dependent on each other, so we wanted to be that relief valve and keep the cargo moving as their business is our business. With the current state of this market, they cannot afford a twelve hour delay at a facility due to screening backlogs and delays, as the cargo would probably miss its flight, and if it’s a destination where there are only two or maybe three flights a week, and you miss one, the ramifications for the forwarder and end user are quite significant,” he said. “The two new machines are live and ready to go in Toronto and we will commence testing, as well as the famialiarizing of the screeners with the specific processes, the first week of October by running cargo through them and ironing out any wrinkles. There is a third machine at the Toronto facility also, but this is used primarily for the airlines we handle at ACI Air Cargo Inc., although it can also be used in conjuntion with the SAFE program if demand requires it,” Dunning said. continued
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REGULATORY UPDATE
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CBSA and Container Examinations CIFFA (the Canadian International Freight Forwarders Association) is calling for more accountability from the Canadian Border Services Agency on the issue of
container examinations at ports. Executive director Ruth Snowden told Canadian Shipper that at Port of Vancouver delays from vessel discharge to containers being called for examination have been as long as six weeks and more. The rate of examinations at Port of Vancouver
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“The CBSA shrugs its collective shoulders and claims that it has no culpability in continuing to identify containers for examinations knowing full well that the terminals and CEFs are not able to handle the requests.” Ruth Snowden, Executive director, Canadian International Freight Forwarders Association
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fees and additional equipment demurrage fees, so why do they care? The CBSA shrugs its collective shoulders and claims that it has no culpability in continuing to identify containers for examinations knowing full well that the terminals and CEFs are not able to handle the requests,” Snowden wrote in a blog to members. In an interview with Canadian Shipper, Snowden said that CIFFA has written urging the CBSA to take action to resolve the delays and expense incurred by Canadian importers at all ports and most especially at the Port of Vancouver. The letter calls for immediate steps to be taken to ameliorate the situation at Vancouver, and urges the CBSA to address both the pricing model and the regulatory framework surrounding container examinations across the country. It also suggests several immediate actions that would drive accountability and transparency in
REGULATORY UPDATE
the examinations procedures. CIFFA’s suggested actions to CBSA include changing the costing model, and holding the terminal operator responsible to its service level agreement. “Container examination facilities should also be held to their service level agreement where they put the container through the facility within 48 hours. The importer should not pay the cost of these delays,” Snowden said. From the freight forwarder’s perspective, if the importer gets a bill for $7000 on something worth only $3000, the importer abandons the container, and the freight forwarder who is managing the container is stuck with a container full of goods. The freight forwarder has a commercial relationship with the steamship line and has to pay the steamship line otherwise the steamship line won’t release the next container.
“The other significant change for the entire community is how are they going to release the cargo to a trucker/ freight forwarder/importer without paper?” Ruth Snowden, Executive director, Canadian International Freight Forwarders Association
E-Manifest CIFFA is also advocating on behalf of its freight forwarding membership ahead of November 7 and the coming into force of the freight forwarder component part of the mandatory e-housebill. “I think the message for eHBL/eManifest and the coming into force date of November 7, 2016 is the question ‘Will the industry be ready? It’s been a very complicated process-there are 12 outstanding issues with CBSA, both on the policy side and the e-commerce side. CBSA has been very responsive. Members have been very good. The problems deal more with FROB cargo, in transit cargoes, cargoes originating in the U.S. or discharging in the U.S. and being railed or trucked to Canada. We are trying to find work-arounds with CBSA,” said CIFFA’s Snowden. The other significant change for the entire community is how are they going to release the cargo to a trucker/freight forwarder/importer without paper? Snowden said. “The freight forwarder will not be presenting paper. We’re saying we’ll send the e-housebill, not both that AND paper, so the terminals better be prepared to give us that cargo based on the deconsolidation notice,” she said. (Advance Commercial Information (ACI)/eManifest Notices contains many important Notices - which we’ll need in order to implement the eHBL part of the
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REGULATORY UPDATE
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eManifest transformation. Probably the single most important new Notice is what the CBSA calls the ‘Deconsolidation Notice’. It is this notice that railroads, terminals, airlines and other carrier (primary) warehouses must implement to allow the transfer of customs control from the primary Cargo Control Number (9000 CCN or airline MAWB) to the 8000 CCN(s) within the consolidation in order to avoid any clumsy, paper-based alternatives which may be available.) The second key aspect of the ‘Deconsolidation Notice’ is that it gives the ability for these primary terminals to allow in-bond movement of FCL/AWB cargo to a sufferance warehouse for de-consolidation and customs clearance purposes - without paper re-manifesting. The ‘Deconsolidation Notice’ is a critical component of eHBL.) The amount of time it will take to get deconsolidation notices into terminals was expected to be an issue ahead of the implementation date. “The freight forwarder will be ready for the most part, but there is grave concern that the terminal operators, warehouses, airlines will not have the D4 Notices implemented. In particular, the Deconsolidation Notice is critical. Without it there will be thousands ‘more’/ additional paper documents provided to the terminals/airlines to move the cargo. The CBSA won’t have the resources to stamp additional paper, the terminals to handle the additional paper and it will be a nightmare,” Snowden said.
As they implement eHBL, freight forwarders will make carrier selection and routing decisions based on the capabilities of a carrier’s terminal, an airline’s ground handling, a trucking company’s warehouse to allow cargo to move under the 8000 eHBL by means of the EDI Deconsolidation Notice. "We must all work together to make this implementation run smoothly – and we must work quickly to get the Deconsolidation Notices in place at every warehouse as soon as possible," CIFFA stressed.
Rail This summer the Transportation Safety Board (TSB) released proceedings from its Transportation Safety Summit and urged government officials to take action on Locomotive Video and Voice Recorders (LVVR). CP is a supporter of the technology, using LVVR in 15 of its locomotives in the U.S. “I attended the summit and was heartened to see so many thoughtful people from government and industry in one place to discuss something we are passionate about at CP – safety,” said CP’s President and Chief Operating Officer Keith Creel. “LVVR was again discussed at length as an important, proactive means to improve safety and I urge Minister Garneau and his staff to heed the advice of experts and move forward with this meaningful change.” In addition to attending the Safety Summit, Creel met with
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28 November/December 2016 www.canadianshipper.com
REGULATORY UPDATE
“This is the number one safety improvement opportunity available. After each human-caused derailment I ask myself, ‘would LVVR have prevented this?’ In the name of safety, it’s time to move forward on this.” Keith Creel, President and Chief Operating Officer, CP
Canada’s Transport Minister Marc Garneau in early June. Currently, on-board recordings are privileged and can only be used for post-occurrence investigations by the TSB. Therefore, legislative change is required in order for railways to be able to use this technology to prevent accidents and increase safety. Creel believes the cameras – even without audio – would ensure crews were following operating rules and not texting, sleeping or engaging in other prohibited activities. “This is the number one safety improvement opportunity available,” Creel said. “After each human caused derailment I ask myself, ‘would LVVR have prevented this?’ In the name of safety, it’s time to move forward on this.”
CTA Review Process The Freight Management Association of Canada, representing shippers across the country, said the Minister has put out a paper, an agenda for the future of Canadian transportation, following the CTA review, and what will happen as a result of that over next year will be an interest to both shippers and carriers-looking at the requirements and needs in Canadian transportation by all modes. If growth forecasts really are achieved, will there be capacity problems in some parts of the supply chain? The federal government has extended Bill C-30 on regulated interswitching to August 1, 2017. “I get the impression that communication between the railways and the grain industry has been a little better since the last grain crisis,” Ballantyne said. The statistics this year point to railways’ at a 90% level of meeting demand for railcars. FMA has drafted a submission for the Transport Canada request for input on the “The Future of Canadian Transportation”. “It will be interesting to see how the government proceeds following the receipt of the stakeholder input,” Ballantyne commented. FMA celebrates its 100th anniversary this year and hosted a reception at the Surface Transportation Summit October 14 in Toronto to highlight this event. CS
www.canadianshipper.com November/December 2016 29
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SUPPLY CHAIN AWARD
Meet Jamie DeKelver, VP, Logistics with NSC Minerals Ltd., the 2016 Supply Chain Executive of the Year BY JULIA KUZELJEVICH
A
year spent covering a maternity leave brought Jamie DeKelver to the daily world of supply chain. And she has never looked back. Now DeKelver is Vice-President of Logistics with NSC Minerals Ltd., and Canadian Shipper is pleased to feature her as the winner of the 2016 Supply Chain Executive of the Year, an annual award given by the Freight Management Association of Canada. As DeKelver describes it: “I landed in logistics by accident. I started at NSC in 1999 and was taking classes and initially working towards a career in accounting. In 2002 I took a temporary position in Sales and Distribution at NSC Minerals to fill a maternity leave. I remember at that time making my boss promise me that I could have my old job back when the term was finished. Turns out I loved the new position and was given an opportunity to stay in the role!” DeKelver continued taking accounting courses in the evenings (juggling a full-time demanding position, a family, and school work was very challenging at times, she notes) at SIAST (now Sask PolyTech) until completing the accounting program. DeKelver enrolled in CITT, earning her CCLP designation in 2013. “I think my accounting background really gave me a solid foundation that I needed to excel in sales and distribution. I think that it’s not always just about ‘cheap freight’. It’s about how those costs relate to the whole part of the business,” she says. DeKelver’s experience echoes that of many other women in the field of logistics. “What I found is logistics is not something you think about-you get there by accident. But what I liked most about it was dealing with customers-I really enjoyed that. And the problem-solving, solutionbuilding aspect of it. I like to think I am a good advocate for bringing in more women. It’s an important part of the role to make people think about it as an option,” DeKelver says. DeKelver advanced to her current position of Vice President of Logistics in 2014. It was a new position for the company. The Sales and Logistics department has grown (initially there were two positions) to seven positions today. As the Sales and Logistics department grew, so did recognition at the C-level of the role logistics plays within the company. CEO Neil Cameron played a major role in this. “He is such a strong supporter and recognizes the importance of the supply chain within our company,” DeKelver says. Cameron came to NSC Minerals as VP of Operations in 2010 and worked very closely with DeKelver in her capacity as Manager of Sales and Distribution. “I was promoted to C.O.O. in 2013 and Jamie reported to me. In May of 2014 I was promoted to President and CEO and subsequently promoted Jaime to her current continued www.canadianshipper.com
November/December 2016 31
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SUPPLY CHAIN AWARD
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“We have a great team in place at NSC and we all work together towards the common goal of providing quality products and exceptional customer service. Everyone contributes to get the work done.” Jamie DeKelver, VP, Logistics with NSC Minerals Ltd.
position of VP of Logistics in June of 2014,” he says. Cameron notes NSC Minerals is in the salt business with the majority of product going towards road de-icing in the winter months. "We are responsible for delivering material to over 700 customer locations throughout Canada, Northwestern and Midwest United States. As you can imagine when the snow hits everyone wants their salt now! Jaime is a master at managing the logistics requirements during these intense, high stress periods. At times, we will have to go out and find alternate transportation providers and at higher costs to get salt to the customers and Jaime manages this very well. We sell safety! If our salt does not get to the customer our roads, sidewalks and parking lots are not safe for the public to pass over," Cameron says. Prior to 2008 NSC moved its entire product by truck. “Jaime was instrumental in getting NSC Minerals to build large storage locations and start moving our products by rail. This has improved our preparation for the winter months by having our
product closer to our customers. We now move product into the Midwest United States and our volumes continue to grow. Over the past year Jaime took on the project of introducing new logistics tracking software and has worked with the developer to come up with a product that works extremely well for rail, trucking, storage locations and the live/online reporting of inventory moving between our plants, storage locations and customers,” he adds. “Jamie brought calm and deliberateness to NSC and to her interactions with clients. She is efficient in getting responses, quick actions for inquiries, and confidence in her word, thereby elevating the stature of her company. She manages high expectations from clients on pricing, quality and delivery, all the while balancing this with the practical side of logistics, subcontractors and Mother Nature’s wrath while transporting their product over long distances. She was able to ensure that the mark was hit more often than not. This endeared her to all who have worked with her,” says customer Fred Desjarlais, Vice President, Volker Stevin Canada. continued
www.canadianshipper.com November/December 2016 33
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“Jaime is focused on ensuring our entire supply chain is functioning smoothly and efficiently. She is an advocate for our company, our customers and our transportation providers simultaneously, always striving to maintain the best possible balance within awarded contracts so that each party’s interests are looked after to the fullest.” Kelly Wallace, Manager, Customer Service and Logistics, NSC Minerals, Ltd.
NSC has a virtually unlimited raw product supply with product coming from the potash industry. While the company ships mostly within Western Canada and the Mid-Western U.S., it also ships as far as Alaska, Nova Scotia, and Colorado. “Our challenges always have been and always will be the transportation aspect. Our production facilities are located right on the
two potash mines so we don’t have very far to go for sourcing our product. The prime salt season is relatively short – November through February. However, we start filling salt sheds in June and depending on the winter our season can extend into late April or early May. We work very hard in the pre-season to ensure that all of our storage facilities and customer sheds are as full as we can get them prior to the first snowfall-60% of our shipments are by truck, the remaining 40% is by rail,” DeKelver says. If there is a missed sale, they don’t get it back, she adds. “If the customer is low on salt they will start to ‘ration’ it. They can’t wait a day or two until the salt gets there, the public doesn’t stop driving.” Other segments of the business are animal feed salt and industrial salt. Both rely very much on just-in-time delivery, so transportation planning is critical here as well. “I believe that the relationships we have with our transportation providers and customers are the key to our success. We are all working towards the same goals; having strong relationships in place make it easier to deal with the challenges and issues when they inevitably happen,” DeKelver adds. The storage is used to lower freight costs –the company rails to storage and then trucks out from there. “We will fill our storage sites during the summer months which allows us to take advantage of certain trucking backhauls in some instances and helps keeps our railcar fleet moving to avoid railcar continued
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storage costs. My role in this is to work with customers and transportation providers to manage our freight and storage costs, and inventory levels, to make adjustments when needed,” DeKelver says. Service levels are an ongoing issue with the railways. “We spend a lot of time working with our partners at the railways getting them to understand our requirements. Communication is key- we need to ensure that we communicate our requirements to them and in return they need to communicate their plans with us. We provide our shipping forecasts as far in advance as possible, and do what we can at our loading sites to assist the railways – for example we will block the cars as much as we can so that the railway has little to no switching to do,” she adds. “Moving our product farther means our railcars are moving farther and taking longer trips. The biggest concern is the size of our fleet – we need enough cars to service our customers in the winter, yet we can’t have too many cars since we have to store them somewhere in the off-season. We never really know what kind of winter we will have, so there is a fair amount of guesswork that goes into the planning that we do in the off-season. We also work with our carriers to make sure they are in compliance as well and that they are not being held up at the border. Inevitably that will come through in our rate,” DeKelver says. DeKelver was involved in taking on the project of introducing new logistics tracking software across the facilities-by far the biggest project she ever tackled.
“Jaime’s humble disposition, tethered to her persistence and hard work, has taken NSC to a new level of excellence. Thank you Jaime for all you do for us as a client, and for our industry. From all of us at Volker Stevin, we offer you sincere congratulations on receiving the Supply Chain Executive of the Year award!” Fred Desjarlais, Vice President, Volker Stevin Canada
The company had an old DOS based system that was last updated in 1999. It was no longer being supported and there was a desperate need for a new system. “We started the process of looking for a new system in 2014 and in 2015 we selected a cloud based provider. We wanted a system that would handle everything – both truck and rail shipments, customer contracts, orders, inventory, production, freight payables, and invoicing. We took their product and did a lot of customization. The project kicked off in April 2015 to be fully implemented by the end of October 2016. The biggest challenge was implementing the system across so many areas of our company – sales, shipping, operations, accounting; and helping our employees accept the changes. Everyone had to change their processes and they all had different requirements that they needed to get out of the new system. We had so many spreadsheets! This new system automated most of what we were doing manually before,” DeKelver notes.
SUPPLY CHAIN AWARD
“Jamie‘s communication style is frank but factual. She does her homework and then challenges you with common sense questions and suggestions, and make sure, no one is going to pull the wool over her eyes. If you are going to address an issue with Jamie, you had better be prepared.” Rod Corbett, Vice President, Paul’s Hauling
The change from how things used to be done (very manual labour-intensive data entry and analysis of data after-the-fact) to having live real-time data allowed NSC Minerals to make the switch from making reactive to proactive decisions. “Perhaps Jaime’s biggest contribution to ensuring NSC Minerals Ltd. remains at the forefront of our industry is her involvement in our recent software overhaul. For the last two years, much of Jaime’s professional life has revolved around securing and implementing a webbased supply chain management solution for NSC Minerals Ltd., which would house and integrate our production, inventory, contract and shipping functions. A system that would allow for collaboration with all of our supply chain partners on the same platform. As there didn’t seem to be a ‘one size fits all’ solution for the bulk product supplier, Jaime has worked tirelessly with our chosen provider to tweak and tailor their offering to fit our needs, essentially building NSC Minerals Ltd. a custom system that enables us to manage our processes with the utmost efficiency. With this upgrade, she and our Management team have ensured we are in the best possible position to actively compete in today’s landscape,” says Kelly Wallace, Manager, Customer Service and Logistics, NSC Minerals, Ltd. “It makes a big difference when we are in such a time-sensitive business. I have a few more IT projects that I want to complete in the next 12 months, and am really looking forward to moving on to those after our implementation is complete,” says DeKelver. A self-starter, DeKelver hopes to complete the Toastmasters’ Competent Communicator program within the next year. “It has helped with my role in industry, on the CITT council, and to become more comfortable speaking in front of groups,” she says. Despite a challenging supply chain role, work-life balance is also very important to DeKelver. “My husband and I both work very hard and sometimes that means long hours. I also travel for work a fair amount. We have two boys who are 19 and 11. It is very important to all of us that we make time for family. We try to be busy during the week and then keep weekends just for family time. Our family loves lake time at the cabin, and we enjoy travelling to new and favourite destinations.” CS Editor Julia Kuzeljevich has been writing about transportation issues for 17 years. Her articles have garnered several transportation and Canadian Business Press writing awards. www.canadianshipper.com November/December 2016 37
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LOGISTICS PROFILE: WOOD FIBRE
TRUCKS & TRAINS A NIMBLE SUPPLY CHAIN HANDLES THE INS AND OUTS OF TAFISA CANADA By Carroll McCormick
I
nbound, a conga line of trucks feeds over a million tonnes of wood fibre to North America’s largest particleboard manufacturing plant in Lac Mégantic, Quebec. Outbound, trucks, containers and railcars carry finished product to points west in Canada, and into the United States. Tafisa Canada is located about 250 kilometres east of Montreal – strategically close to wood fibre supplies and a stone’s throw from the short line railway owned by Central Maine & Quebec Railway (CMQR), which moves product west to the CN and CP rail systems. Every week between 700 and 1,000 truckloads of wood fibre arrive at the plant. Six huge dumpers tilt entire rigs to empty their loads into giant hoppers, a process that takes only 12 minutes per rig. Around 35 trucking companies bring in the wood fibre, and the job of Sylvain Martel, wood supply manager at Tafisa, includes constantly optimizing the in-
bound supply of 1.4 million green short tons of wood fibre – about 1.3 million dry metric tonnes - a year. Managing the trucking companies so deliveries match the plant’s fibre requirements, and keep a buffer of five to 10 days'-worth of wood fibre on hand, requires a light touch. “Regarding wood fibre, you have to be very humble. The one you hire today you might not hire tomorrow. You can’t just squeeze them. Today I need a supplier at 20 to 30 loads a week, and next week we may have to cut a supplier because of fluctuation in production. You need to treat them the proper way,” Martel says. After all, there is a lot of competition for wood fibre in Quebec, Martel adds. “We buy 17 different types of wood. With one type of wood you are competing for animal bedding. For another, you are competing with cardboard, for another pulp and paper.”
Another part of Martel’s job is making his end of the supply chain as efficient as possible. “We work with the transportation companies to maximize the size of loads and have better freight costs. They work with ultralight equipment (all aluminum) and great big possum bellies.” Unlike with some types of freight transportation, wood fibre suppliers are not fond of B-trains. “B-trains are not very popular. Carriers will not replace them when they come to the end of their life cycles. There are maintenance issues, like brakes. The gain is not enough to compensate for using 53-footers,” Martel says. One success story that Martel shares is that of bringing in waste wood on backhaul, like ground-up pallets, that might otherwise end up in urban landfill sites. “We export finished product to big cities and bring recycled wood back to the mill with the same trucks. Recycled wood has been ramping up since 2005. Now it is continued
©i P_Wei/narvikk/Stock
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LOGISTICS PROFILE: WOOD FIBRE
continued from page 39
150-250 loads a week. When we have an opportunity for ground wood, we have a [ freight] saving. There is also a saving for the recycled wood. Carriers like it because they don’t have to look for their own backhauls,” Martel says. Christine Couture, Tafisa’s supply chain manager, shares Martel’s involvement with backhauls of wood fibre, but otherwise she takes care of the transport of finished product and raw materials. There is all the work she does to manage the delivery of the ingredients other than wood fibre that go into making particleboard, and the supply of, for example, spare parts. Couture’s job, put one way, is to get the best global cost. “This morning I met with a supplier of a chemical product. We discussed price, quality, delivery schedule, service, how the supplier works with us. [My team] makes sure the plant doesn’t stop for lack of spare parts or chemicals. There are challenges because we are a big plant. There are a lot of things we need to buy. I concern myself with production planning, getting deliveries on time, production emergencies and efficient operations on the shop floor.” Tafisa sends off 240-270 truckloads of finished product a week; trucks are generally used for trips of 1,000 kilometres or less. Canadian trucks carry about 36 tonnes; U.S. trucks about 22 tonnes. “They are mainly 53-foot trailers, with some 48foot trailers. To the U.S. it is mainly 48foot, two-axle trucks. We also use B-trains for outbound,” Couture says. One of her tasks is to find trucks at the best cost, maximize the loads, and work with companies that can take more vol-
©i Axe_Olga/Stock
ume and load better. Couture offers another exam example of how to wring more effi efficiency out of the supply chain. “We try and eliminate as many intermediaries as possible, such as brokers. It reduces costs and speeds the supply chain. Communications ar are much faster. You are talking with w one person instead of having tw two or three involved.” For trips o over 1,000 kilometres, every week Tafisa loads lo between 50 and 55 railcars at its 100-metre long indoor rail plat-
“We try and eliminate as many intermediaries as possible, such as brokers. It reduces costs and speeds the supply chain. Communications are much faster. You are talking with one person instead of having two or three involved.” Christine Couture, supply chain manager Tafisa Canada
form, each railcar carrying 82-83 tonnes. Until the railcar explosion in downtown Lac Mégantic in July 2013, the short line railway that served the company was Montreal, Maine & Atlantic Railway. It declared bankruptcy, and CMQR, formed in 2014, purchased its assets. CMQR is a subsidiary of Fortress Transportation and Infrastructure Investors. Couture is very happy with the new railway owners. “We’ve seen a huge difference when the new people came on board. They are much more responsive. We are working together to make a winwin partnership. For example, if we need an extra service, normally they will be able to help out, send a crew here
if something needs to be repaired.” That explosion devastated the town. It also wrecked Tafisa’s access to the short line railway, and Tafisa had to scramble to patch together a workaround. Couture contacted the 10-or-so trucking companies that handle outbound loads, and hired one new carrier, to add 130 truckload departures a week from the plant’s four truck loading docks. Putting the plan into place took about two and a half weeks, and Tafisa intensified the loading schedule to 24/7 to cope with the added truck volume. Work was reorganized so that the loading could be done entirely by Tafisa’s employees. The trucks took their loads to reload centres for transfer onto railcars. “About five months after the accident the connection was rebuilt. We gradually ramped up the number of cars shipped off the platform between December, 2013 and June, 2014,” Couture recalls. Tafisa had experienced issues with railcar reliability, but in 2014 it began leasing railcars, with loads going out and empties coming right back to Tafisa. “Supply is not an issue anymore,” Couture says. Although the company does little intermodal shipping, it is an option Couture carries in her back pocket if speed is critical. “We do have intermodal truck/rail. We do load some containers. They are brought to Montreal and put on trains for long hauls. They are then unloaded and the containers hauled to the customers. We started doing that four or five years ago. It is not a huge volume, but it is another alternative to help our customers. “From here to Winnipeg normally takes two to three weeks. Using intermodal it takes two to three days. It is a little more expensive, but for high-value products delivered over long distances, it is worth it.” CS
Carroll McCormick is an award-winning writer who has been covering transportation industry issues and technologies for more than a decade. He is based in Quebec.
www.canadianshipper.com November/December 2016 41
INSIDE THE NUMBERS WITH LOU SMYRLIS, MCILT
BORDER BOUND
Top commodities shipped between Canada and the U.S.
SHIPPING ACROSS BORDERS A BIG BUSINESS UNDER THREAT With the U.S.-Canada Free Trade Agreement being called into question during the U.S. election, it’s important to understand the importance of the FTA to the Canadian economy and in particular to trucking. The value of truck traffic
AUTOMOTIVE PRODUCTS
between Canada and the U.S. is worth more than $370 billion, according to government data gathered by Canada Cartage for an infographic, part of which is reproduced here. Two-way border crossings by trucks total almost 11 million.
$37 1 BILLION The value of trucking traffic between Canada and the U.S. in 2014
$179 BILLION
IN EXPORTS FROM CANADA TO THE U.S.
MACHINERY & ELECTRICAL
$192 BILLION
IN EXPORTS FROM THE U.S. TO CANADA
10.7 MILLION TWO-WAY BORDER CROSSINGS
by trucks carrying goods to and from Canada and the United States in 2014.
MISC. PRODUCTS
66%+ OF CASES WERE RELATED TO CANADIAN REGISTERED TRUCKS.
42 November/December 2016 www.canadianshipper.com
AGRICULTURE PRODUCTS
©iStock
Print is Not Dead... In Fact
BORN: Germany, 1439 DIED: Circa 2000 ... or Did It?
It’s Growing
Consider The Following... • 2015 reversed a decade of decline, with a projected 0.2% YOY growth. (FIPP Trends Report)
‘‘
Print is not hanging on by its fingernails, IT’S GROWING. FIPP World Magazine Trends 2014-2015 Report
• Printed UK magazine advertising delivered the highest ROI of all media channels, 11% higher than TV and 22% higher than online. (PPA Magonomics)
• In the US alone, 234 new titles made their debut, up 21% from 2013. (Guide to New Magazines, USA) • FOLIO Magazine’s annual survey of US city and regional magazines said 2015 featured more new launches than any year since 2009.
Publications Serving Niche Markets (like B2B) Provide Unique Content Readers Cannot Get Anywhere Else.* * Skip Zimbalist, chairman and CEO of Active Interest Media (AIM), which publishes titles like Backpacker, Black Belt, Arts & Crafts Homes, Better Nutrition, Ski Magazine, Vegetarian Times, Power & Motor Yacht, and Yoga Journal, told FOLIO’s recent Growth Summit that AIM is investing in circulation marketing including direct mail. “We have not found declining yields in mail over the last 10-15 years,” he said.
In Case You Weren’t Convinced Before, You Can Confidently Say:
is Far From Dead. It’s Alive!
COACHING CORNER
Workplace BuLLieS Harassment of women in the workplace seems to be a hot topic in the media right now. This is a great opportunity to discuss the treatment of women in the context of doing their job or being exposed to environments that make them feel vulnerable and objectified in the workplace. The following scenario may seem a bit unbelievable to you. It is hard to believe that after everything we now know about Workplace Mental Health and Safety, bullying and harassment in the workplace is still occurring today - especially to younger workers. The problem is we tend to stereotype the offence and the offender. Q/There is a woman in our office who is a director of sales who is really, really pretty. She is very successful not just because of her looks, she is also really smart. The problem is she goes around telling other women how they should dress and what shoes they should wear. She is always making personal comments about my appearance and to other women. I work very hard and graduated with honours from college and am doing night courses to get my university degree which she always criticizes. She actually has told me that I should stop taking courses and go to the gym instead, that I am hiding behind school. I was told this is bullying. Is it true?
A/ There are so many things that jump out at me from your message. 1) Is wearing make-up and a specific dress code necessary for you to perform your job? Was this disclosed to you as part of your recruitment process? There are times when an employer can make specific requirements in the process of hiring that normally otherwise would be classified as discriminatory. This is called Bonafide Employment Requirement or BFOR. BFOR requirements are made in good faith and with the genuine belief that without these requirements there would be undue harm to the employer/employee. There must also be reasonable proof that the em©Alex_Epha/iStock
By Carolina Billings, CPCC, CHRL, MA-IS
ployee would not be able to perform the duties of their job if these requirements were not abided by. A BFOR must pass a very rigid test for it to be valid. 2) The Director of Sales representing leadership within an organization has a fiduciary duty and is personally liable alongside the organization for his/her actions. As an officer of the company, given that she is a director and part of Management/Leadership, she has a duty to protect the employees not only in her charge but within the organization. 3) From the organizational standpoint, aside from the obvious potential liability brought about by this director’s behavior, these actions are causing a disruption of the work process by now having an employee depressed and thinking of leaving. The fact that this employee graduated with good marks and is continuing to improve her skills would make it an asset to an organization, one worth cultivating and developing. Harassment and bullying in the workplace is against the law in Ontario. We always seem to think that harassment is of a sexual nature and that it is exclusively done by men. I have to admit I have seen my share of workplace harassment and bullying in my career and it is not only men but women who also at times behave in a manner which under employment standards in Ontario would qualify as harassment and/ or bullying. That being said, it is important to recognize that to constitute bullying and harassment under the law, the offence must be recognized as a pattern of behavior. That means it is not a one-off situation, unless of course the incident is of a grave nature. My recommendation to you would be to speak to your manager if you are not a direct report of the person that is making you feel uncomfortable at your workplace and affecting the performance of your duties. They will be compelled to follow
proper procedure - according to your company’s policy - which they are required to have by the Ontario Health & Safety Act. Be sure to record the fact that you have brought it up and do not be afraid to follow up should the behavior continue. Here is the definition of bullying as explained by CCOHS - Canadian Center for Occupational Health and Safety: “What is workplace bullying? Bullying is usually seen as acts or verbal comments that could ‘mentally’ hurt or isolate a person in the workplace. Sometimes, bullying can involve negative physical contact as well. Bullying usually involves repeated incidents or a pattern of behavior that is intended to intimidate, offend, degrade or humiliate a particular person or group of people. It has also been described as the assertion of power through aggression And most importantly, they provide examples of what constitutes bullying and harassment in the workplace. Examples include: • Spreading malicious rumors, gossip, or innuendo that is not true. • Excluding or isolating someone socially. • Intimidating a person. • Making jokes that are ‘obviously offensive’ by spoken word or e-mail. • Intruding on a person’s privacy by pestering, spying or stalking. • Criticizing a person persistently or constantly. • Belittling a person’s opinions. CS Carolina M. Billings is CFO-CHRO of a business conglomerate 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.nlilabel.com or email info@thecoachingcorner.ca
www.canadianshipper.com November/December 2016 45
THE BIGGER PICTURE
Righting the ship The demise of Hanjin Shipping has dominated the supply chain media since the ocean carrier declared bankruptcy in August of this year. The magnitude of this event is illustrated by the fact that Hanjin was the seventh-largest container shipping line, operating almost 100 container vessels worldwide. As a result, almost 60% of its fleet was impacted, reportedly stranding close to half a million TEUs carrying goods valued at nearly $14 billion. The importers and exporters waiting for these cargoes represent a “who’s who” of international retailers and consumer goods manufactures and distributors. These organizations face potentially significant delays in receiving peak-season inventories in time for the holiday season, not to mention additional costs in expediting shipments once they are finally released. Many ports refused to allow Hanjin vessels to dock and unload, fearing they would not be paid. (Large) shippers tend to get noticed most when an event of this magnitude occurs, but they weren’t the only companies affected by Hanjin’s collapse. The effects are still rippling through the supply chain, affecting charterers, freight forwarders, railways, trucking and drayage companies, container lessors, chassis operators and bunker fuel suppliers, all wondering if they will recoup monies paid to Hanjin for services that may or may not be fulfilled, or be paid for additional services to expedite cargoes once they are released. Given
By Laurie Turnbull, CCLP, P.MM
that some sources have estimated Hanjin’s losses may exceed $4 billion this year that fear is well-founded. The bigger picture in this scenario is one of risk management, specifically supplier selection and evaluation. At what point do shippers come to the conclusion that a carrier might not be too big to fail? Hanjin experienced financial difficulties off and
ic ocean trade routes as other carriers pick up the slack. That’s actually a good thing for the remaining ocean carriers as I for one have often felt there was too much capacity in this mode. True, the evidence may be anecdotal and hard to verify given the increase in shipping alliances, building of mega-container vessels and accelerated ship-scrapping practices. But the end result,
“The bigger picture in this scenario is one of risk management, specifically supplier selection and evaluation. At what point do shippers come to the conclusion that a carrier might not be too big to fail?” on since 2009. Including a review of supplier financials in supplier selection and evaluation practices has been touted in supply chain circles for at least a decade. Is no one listening? Or is this just another example of a shortsighted practice that many shippers are willing to gamble as part of a low-cost supply strategy? Certainly Hanjin was rumored to be making all the right moves in its bid to secure freight and stay afloat (no pun intended), reducing spot rates, delaying payments to suppliers and extending credit terms to customers. One can only assume that many shippers either didn’t notice these practices, or didn’t care. Regardless, many will now pay a price that may exceed those savings as a result of delayed, or lost, inventories, and soaring double-digit increases in the Asia-Europe and Transpacif-
46 November/December 2016 www.canadianshipper.com
painful as it will be for some, is better utilization of cargo capacity in an industry that is struggling financially. Perhaps a more relevant question for Canadian shippers is “who will be next?” The trucking industry may well be a prime example of another mode facing potential difficulty in light of the current economic climate. In its 2015 annual report on transportation, Transport Canada identified “65,921 businesses whose primary activity was trucking transportation”, concentrated in Ontario, Alberta, Québec and British Columbia, an increase of approximately 5% over 2014. In the U.S. by
comparison, the most recent industry numbers published by the Department of Transportation in 2011 (according to the American Trucking Associations), recorded over 408,000 for-hire carriers, 168,000 interstate motor carriers and more than 662,000 private carriers. And although the value of truck traffic between Canada and the U.S. increased 10.5% in 2015 (including imports and exports), the number of twoway truck movements between Canada and our largest trading partner last year was relatively flat. Not surprising given that the total value of cross-border freight between the NAFTA partners has declined for two years in a row. The number of current trucking company bankruptcies in Canada is difficult to identify with any consistency, although Transport Canada reported an insolvency rate of 5.2% compared to all industries for the period 2001 – 2011. On the other hand, early industry reports in the U.S. this year reflected increasing numbers of trucking company bankruptcies in the face of falling rates, soft demand and excess capacity, and that sounds all too familiar. Whether you call it due diligence or risk management, it would seem prudent to re-evaluate carrier relationships, giving appropriate weight to financial stability. CS
Laurie Turnbull, CCLP, P.MM is a supply chain consultant with Cole International, a Canadian logistics company providing Customs brokerage, warehousing and worldwide transportation services. He can be contacted at laurie.turnbull@coleintl.com ©Alexandr Dubovitskiy/GLYPHstock/iStock
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