OFF TRACK PIPELINE PROTESTS SHUT DOWN RAIL CORRIDORS - Inside Logistics
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MARCH 2020 PUBLISHED SINCE 1898 | WRITTEN FOR BUYERS OF TRANSPORTATION SERVICES OFF TRACK PIPELINE PROTESTS SHUT DOWN RAIL CORRIDORS EASTERN PROMISE Shifting trade patterns spark massive eastern port investments REVERSING COURSE Soaring returns leave integrators scrambling to cope AGREEMENT 40063170 www.canadianshipper.com SPONSORED: SUPPLY CHAIN LEADERSHIP ROUNDTABLE
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CONTENTS MARCH 2020 DEPARTMENTS 5 | Editor’s Foreword A path forward 6 COVER STORY 6 | In the news Railway blockades interrupt supply chains; SUPPLY STATS; Industry Q&A: Cross-Border Institute; Air OFF Canada Cargo and DDC join forces 41 | Inside the Numbers TRACK Pipeline protests shut The price of uncertainty down rail corridors 43 | Coaching Corner Everyone is in sales 46 | The Bigger Picture Shipper strategies 31 Photo: THE CANADIAN PRESS/Lars Hagberg EAST COAST GATEWAYS Shifting trade patterns spark massive eastern port investments A First Nations protester stands in front of a transport in Tyendinaga Mohawk Territory near Belleville, Ontario, on Tuesday Feb. 11, 2020, in support of Wet’suwet’en’s blockade of a natural gas pipeline in northern B.C. FEATURES 21 CHEMICAL LOGISTICS | 12 Safety is critical to the shipment of dangerous and non-dangerous substances 12 CRUDE-BY-RAIL | 16 Technology offers safer ways of shipping oilsands bitumen SPONSORED Supply Chain REVERSE LOGISTICS | 18 Leadership Roundtable E-commerce is pushing returns to record levels www.canadianshipper.comMarch 20203
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EDITOR'S FOREWORD John Tenpenny March 2020 Volume 123 Issue No. 2 EDITOR John Tenpenny (416) 510-6880 john@newcom.ca EDITORIAL DIRECTOR John G. Smith (416) 614-5812 johng@newcom.ca MANAGING DIRECTOR, No easy TRUCKING AND SUPPLY CHAIN GROUP Lou Smyrlis answers lou@newcom.ca T ART DIRECTOR Anita Balgobin he rule of law versus the right to protest. Those are the two sides of the coin that is the stalemate over blockades that have stalled Canada’s railway system and CONTRIBUTORS Carolina M. Billings, Mark Cardwell, the enforcement of court orders aimed at ending the protests. Dan Goodwill, Lars Hagberg, It began when the RCMP enforced an injunction that prevented interference with Carroll McCormick, Tom Peters, Ian Putzger construction of the natural gas pipeline in northern B.C. Soon after, protestors—in- PRODUCTION MANAGER cluding Indigenous people and their supporters—began to set up railway blockades Jwad Khan (416) 510-6779 beginning near Belleville, Ont. and New Hazelton, B.C. They supported the jwad@newcom.ca Wet’suwet’en hereditary chiefs, who oppose the $6.6 billion Coastal GasLink pipeline. SALES MANAGER Railways in the country’s most populous area soon became gridlocked. Shortly af- Anthony Buttino (514) 292-2297 ter the blockades appeared, Canadian National Railway announced it would be forced anthonyb@newcom.ca to shut down “significant parts” of its network. Trains hauling everything from chem- CIRCULATION MANAGER icals to wood products and food were soon sitting idle. More than 400 trains were Mary Garufi (416) 614-5831 mary@newcom.ca cancelled before the shutdown commenced. Rightfully, many Canadians and the shippers among them have called for an end PRESIDENT Joe Glionna to the disruptions. But the issues at the root of the protests go much deeper than the route of one pipeline. Long-term solutions will need to look beyond a single blockade. CHAIRMAN & FOUNDER Jim Glionna A heavy hand in removing the blockades would only serve to inflame tensions, lead to further protests, and further disrupt the supply chain that is vital to the state of the national economy. But there’s no denying the stalemate that exists. Both sides of the debate need to be encouraged to participate in meaningful dialogue that goes beyond a single pipeline 5353 Dundas Street West, Suite 400, or single Indigenous group. Toronto, ON M9B 6H9 Rather than siding with one group or the other, we are better served by encourag- Canadian Shipper is written for Canadian transportation and logistics professionals who manage product flow ing governments and protestors alike to deescalate the situation and extricate Cana- from manufacturer to point-of-sale. Editorial is focused on da’s supply chain and economic well-being from the equation. Everyone will need to reporting, analysis and interpretation of Canadian logistics trends and issues. It is published by NEWCOM MEDIA INC. find some common ground or the disruptions will continue, pop up, repeat. SUBSCRIPTIONS: No, we can’t leave the blockades to continue, but neither can we afford to ignore Contact us at: mary@newcom.ca the concerns that brought them here in the first place. Tel: (416) 614-5831 In the words of Buffalo Springfield, “Nobody’s right if everybody’s wrong.” CS 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) WANT MORE? 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 John Tenpenny, www.canadianshipper.com publication may not be reproduced either in part or in full without the consent of the copyright owner. Editor john@newcom.ca POSTMASTER: Please forward forms 29B and 67B to: 5353 Dundas Street West, Suite 400, Toronto, ON M9B 6H9 Second Class Mail Registration Number 0721. @CanadianShipper @ CORRECTION PUBLICATIONS MAIL AGREEMENT 40063170 The article “Loaded for Bear” which appeared in our January 2020 issue mistakenly referenced a survey that was attributed to TransCore Link Logistics. As well, David Schrader was quoted and identified as Canadian-Shipper being an employee of the company, which he is not. Canadian Shipper regrets the errors. © iStock www.canadianshipper.com March 2020 5
IN THE NEWS Off Track Pipeline protests shut down rail corridors By John Tenpenny Transporting goods via rail has never been an easy proposition, what with Ca- nadian winters and a dearth of competi- tion, and the events of February 6 made doing so that much harder for the rail- ways and by extension shippers who rely on them to conduct business. Having al- ready endured an eight-day shutdown of Canadian National Railway’s system due to a strike by 3,200 workers, a wide array of Canadian industries woke up to a double- dose of bad news that effectively closed large parts of the nation’s railway network and left those sections still in operation constrained by a government order man- dating slower speeds for many trains. The days ahead would make clear to all interested parties that there were to be no easy answers and no quick fixes for the is- sues facing both the railways, its custom- ers and the effects on average Canadians. The day began with news that protes- tors, including Indigenous people and their supporters, had set up railway blockades beginning near Belleville, Ont. and New Hazelton, B.C. in support of the Wet’suwet’en hereditary chiefs, who op- People arrive at the train track blockade in Tyendinaga Mohawk Territory near Belleville, Ontario, on Feb. 11, pose the $6.6 billion Coastal GasLink 2020, in support of Wet’suwet’en’s blockade of a natural gas pipeline in northern B.C. pipeline in northern B.C. Weeks earlier the RCMP began enforcing an injunction Within a week of the blockades being ing their products, the disruptions that prevented interference with con- set up, Canadian National Railway an- across Canada’s freight rail supply chain struction of the natural gas pipeline. nounced that it was forced “to shut have been devasting. The New Hazelton blockade that down significant parts” of its network “Given that 80 per cent of our mem- halted train traffic to and from the Port because of the blockades. bers’ operations are served by only one of Prince Rupert ended a week later, “It’s not just passenger trains that are railway, any disruption to service will though other temporary disruptions oc- impacted by these blockades, it’s all Ca- have a major impact on everyday opera- curred in Winnipeg and also at CN’s nadian supply chains,” said JJ Ruest, CEO tions,” Derek Nighbor, CEO of the Forest MacMillan yard north of Toronto South of Montreal-based CN. “We are currently Products Association of Canada, told of Montreal. Canadian Pacific Railway parking trains across or network, but due Canadian Shipper. saw one of its lines blocked by members to limited available space for such, CN “We’re already hearing reports from of the Kahnawake Mohawk community, will have no choice but to temporarily some members who say they aren’t able but CP largely escaped the disruption discontinue service in key corridors un- to guarantee delivery dates to custom- faced by its larger rival. less the blockades come to an end.” ers, which creates an issue in terms of Hours after the blockades were erect- CN also temporarily laid off about retaining business. The bigger issue here ed, the federal government announced 450 workers in Montreal, Halifax, Monc- is the overall reputation of Canada as be- that it had ordered lower speed limits for ton and Charny, Que. According to a ing a reliable trading partner and being all trains carrying large amounts of dan- spokesperson, Canada’s largest freight open for business. That’s the overarching gerous goods after a pair of derailments carrier had cancelled 400 trains since black cloud in all this.” in Saskatchewan involving Canadian the blockades began. Bob Ballantyne, head of the Freight Pacific freight trains carrying crude oil. For shippers who rely on rail for mov- Management Association of Canada, 6 March 2020 www.canadianshipper.com Photo: THE CANADIAN PRESS/Lars Hagberg
IN THE NEWS cording to the Association of Canadian Port Authorities. “This continued disruption to Cana- da’s supply chain is having a significant impact on our economy,” noted associa- tion president Wendy Zatylny. “In addition to its effect on the econo- my and on people, this service disruption has the potential for long-lasting reputa- tional damage to Canada’s ports and our transportation system as a reliable and efficient means of moving cargo.” Atlantic Container Line (ACL), which typically berths two ships a week an- nounced it was now docking in New York and Baltimore instead to run cargo inland on American railroads. In Halifax, officials say they’re running out of space to stack shipping containers, but the bigger concern is that vessels may begin to avoid the port altogether. “The longer this drags on, the more this hurts our reputation as an efficient and reliable gateway port,” said Halifax Port Authority spokesman Lane Farguson. Within a week of blockades being set up, Canadian National Railway announced that it was forced “to shut “We are working closely with CN Rail down significant parts” of its network because of the blockades. and terminal operators to minimize the impact on port operations, but it’s too which represents large companies in a tin Trudeau, calling on him to “work ur- early to say what it will be. range of sectors—including Canadian gently” with First Nations and police to “Without rail, import cargo destined Tire, The Bay, food processors and min- bring the blockade to a peaceful end. for inland markets cannot move from the ers—said the rail-freight situation is “The damage inflicted on the Cana- terminals and eventually, yard storage having a “serious effect” on companies’ dian economy and on the welfare of all space will be used up. When the Port of ability to stock their shelves, reach mar- our citizens mounts with each hour that Halifax is no longer able to accept import kets and keep production going. He said these illegal disruptions are allowed to cargo destined for inland markets, carri- the injunctions against the protesters continue,” the coalition said, which rep- ers may stop calling and this will impact should be enforced. resents automotive, mining and numer- the majority of local cargo bound for in- “The laws of the land have to be up- ous other industries. ternational import and export markets. held. The native people have rights, and While the members said they share Simply put, if the ships aren’t calling, car- peaceful protest is something that the government’s commitment to rec- go isn’t moving, and vice-versa.” should be allowed. But the blockage of onciliation with Indigenous groups, the Farguson added that a partial or private property, the blockages of the blockades “inflict serious damage on complete port shutdown would be rail system and some of the port facili- the economy, leaving countless middle- devastating to the reputation of the ties are really having a serious impact on class jobs at risk, many of them in in- port as an efficient and reliable inter- individual citizens as well as compa- dustries that must get their goods to national gateway. nies,” said Ballantyne. and from market by rail.” In Montreal, some 4,000 containers He indicated that members have told “In addition to disrupting domestic sit immobilized on the docks. FMA of a number of containers stuck in and global supply chains, the blockades “We are obviously concerned about various parts of the rail system. “One of undermine Canada’s reputation as a de- this situation, which has significant im- our grocery retail members said some of pendable partner in international pacts on the economy and the trans- their containers that are stuck on the trade,” they said in the letter. port logistics chain serving the port,” railway have got commodities that have a Canadian ports have also felt the ef- spokeswoman Melanie Nadeau said in limited lifespan and that could go bad.” fects of the blockades, with reports that an email. A coalition of 39 industry associations some ships were being turned away and On the West Coast, at least 66 ship- also wrote a letter to Prime Minister Jus- cargo re-routed to ports in the U.S., ac- ping vessels are stalled according to continued Photo: CN Rail www.canadianshipper.com March 2020 7
IN THE NEWS 21 companies SUPPLY So far, 21 companies that either ship goods STATS internationally or carry those goods have signed the Arctic Shipping Corporate Pledge. That means signatories that produce consumer goods—including Nike, Puma, Columbia and Ralph Lauren—will ensure their products aren’t shipped along routes that go through Arctic waters. Shippers, which include global giants such as Kuehne + Nagel and Hapag-Lloyd, won’t send their own vessels along those lanes or arrange for others to ply them. 15.4MT of 1.2 million TEUs grain The Prince Rupert Port Authority (PRPA) Canada’s two largest announced another record year in volume, railways moved a record with a total of 29.9 million tonnes of cargo 15.4 million tonnes (MT) moved through the Port of Prince Rupert in of grain in the final 2019—12% more than the 26.7 million tonnes three months of 2019. handled the previous year and the highest Canadian Pacific set a total volume to date for the port. DP World’s new quarterly record by moving 7.9MT of grain and grain products. Fairview Container Terminal handled over 1.2 Canadian National says it moved 7.5MT over the last three months. million TEUs, an increase of 17% over 2018. For the 2019 calendar year, which includes two crop years, CP moved a record 27MT of grain, while CN moved 26.6MT. Lift 91 kgs without strain Delta Air Lines is partnering with Sarcos Robotics to explore new employee $55 million equity technology, which includes a mobile and investment dexterous exoskeleton—Guardian XO— designed to boost employees’ physical Ontario logistics and transportation company capabilities and bolster their safety. This Hightlight Motor Group received a $55 million robotic suit, designed for employees to capital investment from Crédit Mutuel Equity, wear, does the heavy lifting. By bearing the North American private equity arm of Crédit the weight of the suit and the payload, the Mutuel Alliance Fédérale, a major banking exoskeleton may enable an employee to lift group in France. Crédit Mutuel Equity will up to 91 kilograms repeatedly for up to eight become a minority shareholder of the company. hours at a time without strain or fatigue. 125,000 kgs of vehicle weight The B.C. provincial government announced that permits for its Project Cargo Corridor are now available. The permits pre-approve travel for commercial trucks between two major Lower Mainland ports (Fraser Surrey Docks and Lynnterm East Gate) and the Alberta border via Highway 16. The trucks are no longer required to complete the traditional extraordinary-load approval process. Commercial vehicles with a gross combined weight up to 125,000 kilograms, with eight to 13-axle superloads are eligible to apply. 8 March 2020 www.canadianshipper.com
continued from p. 7 IN THE NEWS Robert Lewis-Manning, president of the Chamber of Shipping, who says at one point there were 48 vessels an- chored in Vancouver and 18 in Prince A timeline on rail disruptions Rupert waiting to get into those ports by anti pipeline protesters to either unload or pick up goods. He says Canadians will eventually Dec. 31, 2019 — The B.C. Supreme Court grants Coastal GasLink an injunction notice consequences from the backlog. calling for the removal of any obstructions including cabins and gates on any “It will hit in the pocket book, it will roads, bridges or work sites the company has been authorized to use. hit in necessary supplies for key indus- Jan. 1, 2020 — The Wet’suwet’en First Nation serves Coastal GasLink with an tries and it will take a long time to re- eviction notice, telling the company workers are “currently trespassing” on their cover,” he said. unceded territory. “Those line-ups are only going to in- Jan. 30 — The hereditary chiefs of the Wet’suwet’en agree to seven days of crease, of course ships are continuing meetings with the province. to arrive,” he added. “Eventually there will be no space and they’ll be waiting Feb. 5 — The talks that were intended to de-escalate the dispute fail after just two days. off the coast of Canada, which is a situ- Feb. 6 — Protesters in Belleville, Ont., start holding up railway traffic. ation we’d like to avoid. Feb. 7 — Via Rail halts service along one of its busiest routes because of the “Canadian businesses rely on a pre- Belleville blockade. All travel between Toronto, Ottawa and Montreal is cancelled. dictable, efficient and productive supply Canadian National Railway obtains a court injunction to end a demonstration chain to move products globally. This by members of the Tyendinaga Mohawk Territory near Belleville. Protesters also action is harming the reputation of Ca- begin disruptions at ports in Vancouver and Delta, B.C. nadian ports and the Canadian supply chain. Even a resumption of service at Feb. 8 — Protesters in Toronto disrupt Canadian Pacific Railway traffic moving through the downtown. this stage will take weeks to resolve and impacts the markets that Canadian Feb. 9 — Kahnawake Mohawk community members south of Montreal erect a shippers serve.” blockade on a CP rail line. The high value of cargo and the Feb. 10 — Demonstrators in the Montreal area disrupt commuter train service on costs of delaying ships mean container the Exo Candiac line. A shuttle bus service is in effect for affected rail stations. ship schedules are of particular impor- Feb. 11 — CN stops transport between Prince George, B.C., and Prince Rupert, tance, says Barry Prentice, a professor B.C., because of a blockade near Hazelton, B.C. The company says it has halted of supply chain management at the more than 150 freight trains since blockades started on Feb. 6. University of Manitoba. “Transportation is a service. It can’t Feb. 12 — The Manitoba government says it may seek a court injunction to end a be stockpiled. Some blocks of time are blockade on a rail line west of Winnipeg, but CN obtains its own court order. more valuable than others. Meeting con- Feb. 13 — CN shuts down its operations in Eastern Canada. The railway says blockades tainer ship schedules is particularly im- have ended in Manitoba and may come down soon in British Columbia, but the orders portant because of the high value of the of a court in Ontario have yet to be enforced and continue to be ignored. cargo and the costs of delaying a ship. Feb. 14 — A rail blockade that halted train traffic to and from the Port of Prince Any time lost when the trains are not Rupert is lifted as First Nations leaders agree to meet with federal and provincial moving is lost forever. Even when the politicians. A date for that sit-down is to be arranged. CN spokesman Jonathan blockades are finally removed, the pain Abecassis says the blockade was removed overnight. of this event will take a long time to go Feb. 15 — Indigenous Services Minister Marc Miller says “modest progress” was away. Delayed shipments will have to be made in talks with the Mohawk First Nation over the rail blockade. But Miller feathered-in with newly arriving traffic. declined to say what progress was made after nine hours of meetings on It might seem simple. It’s anything but.” Tyendinaga Mohawk territory near Belleville, Ont., saying he would deliver that A return to full operating capacity will message to Prime Minister Justin Trudeau directly. take longer than most people realize, he Feb. 19 — A group called Cuzzins for Wet’suwet’en set up a blockade on a adds—months, not weeks. “The start-up Canadian National Railway line on the western edge of Edmonton of operations of any complicated net- work, including railways, has to be fi- Feb. 24 — Ontario Provincial Police move to enforce injunction aimed at clearing nessed with the utmost skill. Yards, crews Belleville-area rail blockade. and trains need to be synchronized Source: The Canadian Press across the whole Canadian network to avoid bottlenecks and congestion.” CS www.canadianshipper.comMarch 20209
INDUSTRY Q&A Tech key to cross-border supply chain integration Dr. William Anderson, director, Cross-Border Institute The Cross-Border Institute (CBI) at the How can technology help University of Windsor is dedicated to improve cross-border travel? research, education and public out- There needs to be a push with technol- reach related to the movement of peo- ogy to get to the next level because ple, goods and services across the Can- most of the trucks crossing the border ada-U.S. border. It takes a are the same trucks crossing with the multi-disciplinary perspective, incor- same goods day after day, meaning porating engineering, economics, the the risk associated with those trucks social sciences, management and law. are low, though not zero. The question is how do you use technology to mini- What impact did NAFTA nego- mize the small amount risks associat- tiations have on cross-border ed with those trucks? Currently there traffic? is a pilot project at the Ambassador The essence of Canada-U.S. trade is the Bridge with an unstaffed lane, which integration of supply chains across the means that the truck driver interacts border. It wasn’t just NAFTA. Over the with technology like facial recogni- past five years there have been a number tion rather than a human officer. The of things that have created uncertainty ideal thing in the long run would be a around cross-border supply chains, in- “green lane” where certain trucks can cluding whether there was going to be a “I don’t think there is roll through without stopping at all. new bridge, as well as around things like We are headed towards a techno- the tariffs on steel and aluminum. The anyplace in the world where logical transformation already. If you main impact from those uncertainties is you have such complex can harness the technology then that it has had a dampening effect on in- you’re going to have a different border, vestment. In particular, if you wanted to supply chains integrated where being in a queue is the excep- make investments in production facili- across an international tion rather than the rule. ties where a substantial amount of your This has to do with communicating market is going to be in the United States border as you do between in a wireless fashion, ensuring that all or you’re going to be plugged-in to a sup- Canada and the U.S.” of the information about a truck that ply chain that crosses the border, there might have any bearing on risk or was some uncertainty if that was going Dr. William Anderson, director, compliance is received in advance in to work. The USMCA agreement is a posi- Cross-Border Institute time for the border agency to make a tive thing for most Ontario industries. decision before they get to the border. One would hope to see over the next few years an uptick in investment and capital rithm and then identify those situa- How do our border crossings expenditures, which have been slow in tions under which you would expect compare to others? the overall North American economy, to have to big border delays. I don’t think there is anyplace in the but particularly in southern Ontario. Presently, you can find out the wait world where you have such complex time at the border using a website, but supply chains integrated across an in- What is CBI currently working what we’d like to do is predict a couple ternational border as you do between on in the area of cross-border of hours in advance, so that if you’re Canada and the United States. By in- traffic? moving in a supply chain across the ternational standards the Canada- We are looking into methods of artifi- border that you would be able to pre- U.S. border is one of the best, most-ef- cial intelligence (AI) that might be dict whether there is going to be a de- ficient ones in the world. able to give trucks a heads-up to know lay and then act accordingly, either When I travel and I talk about how when to expect a long delay at the bor- changing the route or notifying others we have this problem because some- der. The idea is to gather a lot of infor- in the supply chain that there is going times it takes 45 minutes for trucks to mation, including data on weather to be a delay. get across the border people will laugh and traffic congestion, and put it We are hoping to commercialize it because in their local experience it through a machine-learning algo- down the road. sometimes takes days. CS 10 March 2020 www.canadianshipper.com Photo: Cross-Border Institute/University of Windsor
IN THE NEWS Sky’s the Limit With Air Canada behind them, Drone Delivery Canada is proving its concept works By John Tenpenny When he made his first visit to the of- fices of Drone Delivery Canada (DDC) in the summer of 2017, Tim Strauss ad- mits he was skeptical. The vice president cargo at Air Can- ada described himself as agnostic when it come to vehicles. “What can it carry and what can it do within the regulated environment? What I’d seen up to that point with drones was lots of cool equipment, but not an intersection with the regula- tors,” he explained during an interview with Canadian Shipper. What saw turned him from a skeptic into a fan of the company. “[DDC] were building their equip- ment in tandem with Transport Cana- da and Nav Canada so that it was ready to launch inside controlled airspace, which was and is the right approach to take, but something I had not seen that Drone Delivery Canada’s ‘Sparrow’ drones, which can carry loads of up to 4.5kgs, operate between anyplace else.” customer sites, remotely monitored by the drone operator’s commercial operations centre. That was a launching pad for the signing of a sales agency agreement des- ignates AC Cargo as the exclusive sales ry loads of up to 4.5kgs, to operate be- expect these will be the first of many to channel for DDC’s first 150,000 lanes. tween the manufacturer’s sites, re- come globally.” Last fall, DDC signed up a pair of cli- motely monitored by the drone According to Strauss, interest has ents in the Greater Toronto Area that operator’s commercial operations cen- been steady. Many visits by interested will showcase its operations on the sites tre. The customer pays DDC a monthly parties have been followed by second to promote the drone delivery concept. fee for each drone route. visits with senior management person- The drone operator has completed “There are revenues involved, but at nel and top management in a third the proof of concept activities required this point we’re less interested in mak- round, he reported. by Transport Canada. As a final step ing money with this. A lot of potential He sees several areas of promise for before giving it free rein, the regulator customers want to see it,” remarked DDC’s operations, from closed–loop has agreed to the suburban operations Strauss, who is also a member of DDC’s type supply chain service like the Vision to see how it intersects with other advisory board. and DSV agreements, to distribution ac- modes of traffic in the region. The second commercial agreement tivities and the carriage of supplies and While not the unfettered start of was with DSV Air & Sea Inc. Canada, the medications to remote communities. commercial operations for DDC yet, Canadian arm of the global transport Recently, DDC signed a $2.5 million Strass expects that activities will ramp and logistics company DSV Panalpina contract to deliver parcels within the up quickly once these operations are up A/S, to deploy drones at its new head of- Moose Cree First Nation communities and running. fice and warehouse in Milton, Ontario. in Northern Ontario. The first agreement was with Vision “We are pleased to roll out our first The project is the first stage in the Profile Extrusions Limited to deploy a paid commercial projects using our “remote communities” market segment drone delivery platform for the use of proven Sparrow drone, patented FLYTE DDC aims to grow over the next few Vision between its properties in system, and newly built commercial years. The company aims to utilize its Vaughan, Ontario. operations centre,” said Michael Zahra, Sparrow drones for the transport of The contract with Vision calls for president and CEO of DDC. “We have a goods including letters, general parcels, DDC’s ‘Sparrow’ drones, which can car- robust funnel of opportunities and we and medical supplies. CS Photo: Drone Delivery Canada www.canadianshipper.com March 2020 11
CHEMICAL LOGISTICS SPECIAL DELIVERY Safety is critical to the transportation of dangerous and non-dangerous substances MARK CARDWELL A s president and CEO of the “Getting our goods to market is pose the $6.6-billion Coastal Gaslink Chemical Industry Associa- challenging,” Masterson told Canadi- route that would move natural gas from tion of Canada (CIAC)—a an Shipper in a recent phone interview northeastern British Columbia to the Pa- group that represents the from the CIAC’s offices in Ottawa. cific Ocean. majority of companies that transform “Shipping is a major cost and concern The Canadian Chamber of Com- raw materials like oil, natural gas, for our members.” merce called for an “immediate end” minerals and biomass into substances In addition to transportation bottle- to the blockades, saying the coun- and materials used to make more necks that arise from a myriad of eco- try’s supply chains “are being severe- than 70,000 everyday products—Bob nomic, infrastructure and regulatory ly damaged by the continuing inter- Masterson knows how crucial the safe issues and problems, Masterson says ruptions.” and timely delivery of those goods is to the service environment in Canada is In addition to its own rail network, the health and well being of the also vulnerable to disruptions from ex- CN warned the blockades would also $60-billion industry. treme weather events or labour strife soon affect business at the ports of But he also knows how demanding like the recent CN workers’ strike. Halifax, Montreal and Prince Rupert. the handling, storage and movement Then there are unexpected interrup- “The impact is also being felt be- of hazardous and non-hazardous tions like the blockade in February of yond Canada’s borders and is harming products and substances requiring much of the 30,000-km-long CN Rail net- the country’s reputation as a stable special care can be in a country as big work by protesters in support of the and viable supply chain partner,” CN and diverse as Canada. Wet’suwet’en hereditary chiefs, who op- said in a recent statement. 12 March 2020 www.canadianshipper.com Photo: AltaGas
CHEMICAL LOGISTICS A CN train makes the first delivery of propane feedstock—from Alberta—to BC’s Ridley Island Propane Export Terminal (RIPET) for export to Asia. Chemicals also account for roughly pand existing operations in Canada. 13 per cent of all Canadian rail network Most, however, are captive rail traffic and an equally large percentage shippers with no viable shipping alter- of the revenues of both CN and CP. natives due to factors ranging from Seventy per cent of that freight rail access to a single rail carrier to the volume—notably plastic resins, which distance, volume and type of product are used to make everything from food being shipped. and drug packaging to carpets, wall- “Access to a safe, reliable and com- paper and car parts, and sodium chlo- petitively priced rail service is critical rate, which is used to bleach wood to the success of the Canadian chem- pulp in the pulp and paper industry— istry industry,” said Masterson. is exported to the United States. He applauded recent initiatives In return, Canada imports smaller, like the 2018 Transportation Modern- higher-priced volumes of sulphuric acids ization Act, which brought in new and powerful chemicals for the mining, data requirements to improve trans- electronics and refrigerant industries. parency and help shippers better monitor Canada’s freight rail network. Chemical relations The new legislation also introduced Not surprisingly, the cross-border measures like long haul inter-switch- movement of these products require ing (from a 30-km to a 100-km radius) manufacturers, carriers, and third- to help captive rail shippers and party logistics (3PL) providers to be granted Transport Canada the power aware of and adhere to a complex web and ability to launch investigations of ever-changing federal and state reg- into issues related to rail service. ulations aimed at preventing safety According to Masterson, the hazards such as combustion, contami- changes have helped to improve the nation, and spoilage. industry’s mostly positive albeit some- “A very complete alignment be- times contentious relations with CN tween Canadian and American regu- and CP. lations is critical,” said Masterson. “We all share concern for public In addition to maintaining regula- safety and work closely together in our tory harmonization, Masterson said commitment to it,” he said. there is an urgent need for public poli- cies and investments that will improve Safe distribution Canada’s supply chain networks—by One example of this was the recent de- rail, road and ship—and support cision by the CIAC-backed Transpor- growing demand and capacity for tation Community Awareness and Masterson echoed that concern. chemical production. Emergency Response initiative to re- “Investors do pay attention to these is- Masterson pointed to three new vive the Safety Train with $220,000 in sues when making decisions on wheth- private projects worth a total of $13 funding from TC. er or not to invest here,” he said. billion—including a plastic resin plant Starting this summer, the convert- Rail isn’t the only delivery method in Sarnia and two facilities in Alberta, ed tank car will travel to communities for Canada’s chemical industry. But it which has massive reserves of lighter across Canada that have chemicals is by far the most important. chemical-making feed stock like natu- moving though them and serve as a According to Masterson, 80 per ral gas and ethane—that he says will mobile classroom to help train emer- cent of the corrosives, acids, plastic help put Canada on the Top 10 list of gency responders. pellets and other products made by world chemical producers. For health and safety expert Jim chemical companies in Canada—mak- He said more projects that will double Bird, chemical manufacturers and dis- ing it the country’s third-largest man- those investments are in the works. “Plas- tributors are like two peas in a pod ufacturing sector—are shipped by rail. tics industries have grown 8.5 per cent an- when it comes to the chemical supply Based mainly in Alberta, Ontario nually over the past 50 years,” said Master- chain in Canada. and Quebec, the chemical industry is son. “That’s twice the rate of international “Distributors play a key role in the also the second or third largest volume GDP and continues to grow.” chemical industry because manufac- supplier by rail in Canada with more Rail service, he added, is a key fac- turers, due to their size and policies, than $60 million of product moving tor in decisions by CIAC members on can’t react as fast as to the needs of end daily and $23 billion annually. whether to locate a new facility or ex- users,” said Bird, a regional director www.canadianshipper.com March 2020 13
CHEMICAL LOGISTICS The TRANSCAER Safety Train is a railway tank car that was converted into a classroom on wheels in 1990 to train emergency responders. It was the first training car of its kind in Canada—a concept that has since been adopted by other organizations across North America and around the world. with Responsible Distribution Canada textiles and insecticides)—Bird said the Though oil and gas are outside the (RDC), a non-profit trade association relationship between distributors and scope of chemical distribution—even for the distribution sector of the Cana- transporters is extremely close. “They though oil and gas companies are the dian chemical industry. both work with low profit margins and principal end users of substances like Before joining RDC five years ago, face the same issues,” he said. methanol, glycol and corrosion inhibi- he spent 37 years with Univar Solu- According to Bird, one of the big- tors—Bird said the chemical distribu- tions, a global chemical and fine ingre- gest issues facing both the chemical tion network is both targeted by and dients distributor, and the leading dis- and transportation industries is the involved in the flammable liquid train- tributor in Canada. He notably created lack of truck drivers. “The shortage is ing programs for fire departments that the transportation safety program for even worse for the transport of danger- have sprung up across Canada since the company, which had a fleet of over ous goods because you need trained the 2013 rail disaster in Lac-Mégantic 300 rail cars when he retired. drivers willing to expect added risk that killed 47 people and destroyed “Whether it’s rolling stock or road with no extra premium,” he said. much of the Quebec town’s downtown transportation, distributors carry a In addition to knowing their com- core from the fires and explosion of big share of the load in chemical trans- pany’s protocol in the event of an inci- multiple derailed tanker cars. portation in Canada and account for a dent and what to do on scene, Bird said “The worst incidents usually in- majority of shipments,” said Bird. drivers need to learn through certified volve oil and gas, and usually rail and Due to the special care needed to training courses everything from the pipelines,” he said. “There are many make, handle, store and deliver the hazardous nature of the substances in more incidents on the road, but they products and substances that account the tankers they haul and the pumping tend to be more contained because of for the biggest volume of chemicals pro- rates for those products to the compat- the smaller amount of product in- duced and transported by distributors ibility of transfer hoses and how to pro- volved and minor in nature, like a in Canada—including caustic soda (a tect themselves and others in the event truck skidding off the road.” corrosive commodity substance used in of an accident or incident. He added that other major road-re- the pulp and paper industry and in the “Some of these flammable liquids in lated incidents usually occur as a re- oil sands), methanol (various uses), xly- bulk tanker loads and trucks on the sult of operator error at distributors’ ene (a common hydrocarbon solvent) road represent explosion and fire haz- sites, such as massive over spills of rail and chlorine gas (a deadly disinfectant ards,” said Bird. “Some of them also tankers involving groundwater pollut- used to treat drinking and swimming have exposure health issues like can- ants like xylene, which can require pool water and to make hundreds of cer, burns and poisoning. Methanol, costly, long-term cleanup work. consumer products, including paints, for example, is highly toxic.” “Fortunately, there are lots of proto- 14 March 2020 www.canadianshipper.com Photo: Railway Association of Canada
CHEMICAL LOGISTICS cols in place and contained material other safety issues that arise. “The vast majority of industry oper- volumes,” said Bird. “Trucks have had satellite tracking ators are highly trained professionals,” for 30 years,” said McGuigan. “The big said Kimmerly. But he said the drivers’ Going digital difference now is that our optimized shortage, together with a pay-per-mile Improved digital technology—both on systems can proactively capture, har- industry approach that is being torpe- board vehicles and through service ness, update and transmit information doed by long border delays and more providers—is also helping to improve automatically to provide customers lengthy inspection requirements, is the safety and efficiency of the chemi- with real-time visibility and informa- leading many fleets to cut costs and cal supply chain in Canada and the U.S. tion on their assets.” manage risks by setting up drivers as “There is a technical renaissance go- For his part, Doug Kimmerly, who independent contractors who are sup- ing on in our industry,” said Frank Mc- owns a small brokerage company in posedly eligible for deductions enjoyed Guigan, CEO of Dallas-based Trans- Toronto called DSN that focuses exclu- by corporations—a tax-saving scheme place, a North American leader in sively on hiring trucks to transport that may soon be challenged by the transportation management services chemicals and hazardous materials— Canada Revenue Agency. CS and logistics technology. everything from acids to lubricants— According to McGuigan, artificial between the U.S. and Canada for intelligence is helping to enhance the chemical distributors and manufac- Mark Cardwell is an digital tools and platforms his compa- turers, sees the rise of the controver- independent journalist ny has on the marketplace by provid- sial employment model known as and writer based in Quebec ing the ability to not only predict and ‘Driver Inc.’ as a growing safety issue City. He is a better understand shippers’ needs but in the trucking industry as a whole and correspondent for publica- to provide real-time information and the chemical transportation industry tions in various fields, including transporta- assistance to help manage spills and in particular. tion, business, agriculture, medicine and law. www.canadianshipper.com March 2020 15
CRUDE–BY–RAIL Calgary-based Melius Energy recently transported BitCrude bitumen via intermodal rail from Edmonton to Prince Rupert in custom 20-foot containers. THE BETTER WAY New technologies offer safer ways of moving oilsands bitumen O ngoing pipeline project de- from Edmonton to Prince Rupert, B.C. Melius says the product meets reg- lays and growth in crude-by- in custom 20-foot shipping containers ulatory requirements of the recently rail capacity from Western via intermodal rail. From there, the passed federal oil tanker ban in north- Canada, along with recent containers travelled by ship to interna- ern B.C. and can be exported from derailments that have put the spotlight tional markets. Prince Rupert. on the environmental consequences of “Now that we have tested the inter- “We have now proven that we can shipping crude, are leading some oil- modal transportation method for ex- ship bitumen to international markets sands producers to look at alternative porting bitumen, Melius Energy is fo- safely and efficiently,” stated Broder. methods of shipping bitumen. cused on scaling the BitCrude Melius is establishing relationships Oilsands bitumen is a thick, sticky transportation solution,” said Melius with refineries in Asia and is working oil which must be diluted with about Energy’s president, Nicole Zhang. “Es- to provide a long-term, stable supply. half as much light petroleum to flow in tablishing a transportation solution Those refineries plan to turn the Al- a pipeline, but diluent isn’t needed for for Canadian energy that delivers tre- berta bitumen into products such as rail transport because the product can mendous value for local producers asphalt and low-sulphur diesel. be heated for loading and unloading. while satisfying the demand for our Recently, a pair of Canadian com- energy internationally is our priority.” Pellet-ized panies, have demonstrated new tech- The BitCrude process developed by CN Rail is also working on a safe way nologies that offer to ship bitumen, Cal Broder, founder and chair of BFH to transport bitumen, with its patent- they say, safely and efficiently, by con- Corp., uses an electrically powered di- ed CanaPux, a solid pellet about the tainer or rail. luent recovery unit to remove lighter size of a bar of soap composed of heavy petrochemicals, thus producing a crude blended with a polymer inside Custom containers product that’s non-flammable for and as an outside wrap. The pellets are Calgary-based Melius Energy success- transportation purposes, floats in both turned back into a liquid, separating fully transported 130 barrels of bitu- fresh and saltwater in custom contain- the polymer for reuse. Like BitCrude, men last fall using the BitCrude process ers and is non-toxic to marine life. CanaPux is non-volatile, dust-free and 16 March 2020 www.canadianshipper.com Photo: Melius Energy
CRUDE–BY–RAIL is easily retrieved in the event of a de- ern Alberta that will include a polymer railment or if the pellets wind up in CN Rail’s patented recycling facility and biomass energy CanaPux isa solid the water. pellet about the plant that will process forest and con- Currently in the works is a pilot size of a bar of struction and demolition waste. It project, which will see CN and Wap- soap composed plans to supply pellets for non-com- of heavy crude ahki Energy, a company owned by the bustible uses in China and to off-tak- blended with a Heart Lake First Nation in Alberta, polymer inside ers in South Korea. each will invest $16.7 million. and as an James Cairns, vice-president of pe- Under its Advantage Heavy Oil De- outside wrap. troleum and chemicals at CN told The velopment Ltd. company, CN plans to Canadian Press that CN has signed a build a facility capable of producing memorandum of understanding with 100,000 pellets a day. It will include a an unnamed Asian customer who is recovery unit and rail facility where interested in importing the pucks to pellets will be loaded into hopper cars his country and separating the oil and capable of moving an equivalent 650 polymer for processing and sale. barrels of oil. That compares to a tank- Cairns said the pucks can help gen- er, costing ten-times more to lease, at erate industry profits by allowing Al- 500 barrels. Savings for producers are berta bitumen and other heavy crude a estimated at about $15 per barrel. The less environmentally risky way to ac- company is targeting Chinese refiners. cess new markets. Wapahki Energy is looking at a “It’s not going to replace pipelines, 10,000 pellet per day facility in North- not even close,” Cairns said. CS OVER 2,200 LABEL PRODUCTS PRODUC TS IIN N STOCK ORDER BY 6 PM FOR SAME DAY SHIPPING 1-800-295-5510 COMPLETE CATALOG Photo: CN www.canadianshipper.com March 2020 17
REVERSE LOGISTICS As e-commerce helps push returns to record volumes, shippers and their partners look for ways to slow the tide BY IAN PUTZGER he battle with returns is getting million returns on January 2. Steve Vi- panies may send products to workers longer. On January 7 home deliv- tale, director of communications of on a project somewhere and then ship ery specialist ParcelHero de- UPS Canada, says that returns have back the unused products,” adding clared that peak returns were ballooned at an annual clip of around that B2B e-commerce now mirrors the continuing into the second week of 2020. 10 per cent over the last four years and B2C sector in many ways. Courier firms had braced them- are going to continue to rise. In B2C returns are simply part of selves for an avalanche of return parcel While this has been widely expect- the course—an indispensable part, for flows, with estimates of US$90-95 bil- ed in the B2C arena, he notes that re- that matter. According to one study, 67 lion worth or goods flowing back. UPS turns in the B2B sector are also grow- per cent of online shoppers check the was expecting to handle in excess of ing at a rapid rate, albeit from a merchant’s returns section before one million return shipments a day relatively small base. completing their purchase. Another through December into January, an- “It’s becoming more a B2B play as survey found that the returns experi- ticipating to hit a peak volume of 1.9 well,” says Vitale. “For example, com- ence impacts the likelihood of a repeat 18 March 2020 www.canadianshipper.com Photo: UPS
REVERSE LOGISTICS According to one study, 67 per cent of online shoppers check the merchant’s returns As they mean extra cost for the consumer to download and print a la- section before completing their purchase. merchant, returns come across as the bel. SEKO unveiled a new returns ser- bane of their existence, an image un- vice last spring which utilizes a portal derscored by return rates north of the (in the colors of the merchant) that 30 per cent mark. Horst Manner-Rom- consumers access to initiate the re- berg, principal of mail and parcel lo- turns process. gistics consulting firm M-R-U, cau- “The portal helps. It improves visi- tions that this picture is misleading. bility. Customers see right away what’s Garments may be showing return returned and why, which can help rates above 30 per cent in the e-com- them reduce their returns ratio,” re- merce segment, but this is due to the marks Bourke. “You shouldn’t ship out fact that consumers order the same labels any more.” item in different sizes and/or colors, Some shippers still employ archaic shifting changing rooms to their systems to deal with returns, while oth- homes. Sectors like office equipment ers have embraced hyper-modern meth- or furniture have much lower return ods, notes Manner-Romberg. Emerging rates, he points out. software providers have spotted an op- “Returns is a channel-specific issue, portunity and unleashed a number of so- not e-commerce-specific,” he stresses. lutions for merchants to manage returns. According to him, the image of the He is not too impressed with most e-tailer being a martyr to the cost of of these. “There’s a lot of money looking returns is also misleading. “Merchants for investment opportunities,” he re- have managed to build an image that marks. Optoro, a technology company they are the battered ones, but they which helps retailers and brands man- save more on what they would have to age, process and dispose returned and pay retail outlets,” he says. “They have excess inventory, raised over US$244 a fat enough margin in e-commerce.” million in several funding rounds. At least these solutions are not getting Free shipping in the way of the logistics aspects. They Consumers are not inclined to pay for re- can usually be integrated through APIs or turns. In one survey 42 per cent named plug-ins, says Vitale. “These tools are not free returns as the strongest factor con- as cumbersome any more to implement.” tributing to a positive returns experience. Bourke sees benefits in the emer- Still, it is possible to charge for re- gence of tech companies that have so- turns in some cases, says Brian Bourke, lutions for e-commerce chief growth officer of SEKO Logistics. “Nobody can do it all alone. We’re “You don’t have to offer free returns, more into developing ecosystems with you have to offer easy returns. You can companies like EasyShip,” he remarks. monetize returns. It depends on the “Most retailers and brands have not value,” he comments. figured out returns management. They For most online merchants the easi- rely on someone to take care of it,” he est approach has been to include as says. “The need for outsourced solu- return label with the outgoing ship- tions is only going to increase.” purchase from a merchant for 73 per ment. This makes it easy for the con- Datoo agrees. “A lot of people want cent of shoppers. sumer to send an item back, and the to outsource the whole process,” he “Years back returns was the ugly shipment can be traced from the mo- observes. step-child, now it’s a mechanism to in- ment it is picked up, which also helps crease sales,” comments Vitale. expedite the refund process, another Disposable goods “If merchants don’t offer don’t offer critical interface between merchant This opens up opportunities for logistics a simple returns policy, they’ll lose and consumer. providers that extend well beyond the business,” remarks Mo Datoo, director “Tracking is extremely important, flows of return goods. To begin with, of strategy & planning of eShipper. also to steer the work process,” re- merchandise coming back has to be in- Amazon has blazed a trail, making the marks Manner-Romberg. spected to determine what will happen process simple and smooth, and oth- However, Bourke sees labels on the with it—can the item be repackaged and ers have no choice but to follow suit, way out, being increasingly replaced put back up for sale straight away, or he adds. with online platforms that allow the does it need treatment or repairs? www.canadianshipper.com March 2020 19
REVERSE LOGISTICS UPS and TerraCycle developed a system—called Loop—which eliminates the reliance on single-use packaging for consumer goods. “Most of the time they don’t come in Chances that items do not go back shipments. The second reason is re- and inspect the goods. We send them to the seller rise exponentially if the turns,” he remarks. photos and ask what they want us to consumer is located in another coun- As a cost item they have to swallow, do,” says Datoo. try. For returns of merchandise bought merchants are eager to keep the cost of Imtiaz Kermali, eShipper’s vice-presi- from Chinese suppliers the tenor is returns as low as possible, so the pressure dent of sales & marketing, adds that one “forget it,” notes Manner-Romberg. is on their logistics providers. Returns client let some returns pile up in eShipper’s “International is much more diffi- programs are rarely contracted sepa- warehouse and then came in to train staff cult. A lot is disposed of, or the merchant rately, though. They are usually part of a how to assess and handle the products. tells the consumer: ‘You got the wrong package built around fulfillment. “We In some cases, SEKO actually per- color? Keep it! We’ll send you a new one’. rarely do just returns for clients. We offer forms minor repairs of returned items, Only high value goods are returned,” end-to-end bundled solutions where re- but this is not the norm. says Dean Maciuba, director consulting turns are part of it,” says Bourke. “We have embroidery machines in services at Logistics Trends & Insights. “The only time returns are separate some of our facilities, but this is no our For returns from U.S. consumers eS- is when a business needs a bit more forte. We allow people to enter our fa- hipper often looks to move the goods as help, for example if they look for a con- cility for refurbishment. There are close as possible to the border to bring solidation point for returns. It depends companies that specialize in refur- them into Canada in consolidations. on a bunch of things,” notes Vitale. bishment,” says Bourke. For the intra-U.S. leg, often the U.S. Often the cost of the merchandise Postal Service is the preferred option. Sustainable practices does not justify sending it back for a SEKO uses postal agencies in many Consolidation of returns is a major lever second sale. A large number of re- countries. “We leverage global postal for cost containment. It has the addi- turned online purchases are disposed solutions,” says Bourke. “It usually tional benefit of reducing the environ- of through a variety of channels, such takes the least effort and the postal mental impact, a theme that is rising in as liquidation platforms, discount out- company comes every day.” prominence, Vitale says. In the U.S. UPS lets or charities, while some merchan- Another key element of cost con- leverages Coyote Logistics, a tech-based dise is simply destroyed. tainment is the use of access points. truckload brokerage to maximize con- “Amazon doesn’t want a lot of goods These are overwhelmingly used for re- solidation that it bought a few years back. You can keep them or destroy turns, says Maciuba. “Their biggest back. It has also partnered with Optoro them,” says Manner-Romberg. purpose is to manage undeliverable to help retailers determine whether to continued 20 March 2020 www.canadianshipper.com Photo: UPS
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