WE ALL PLAY FOR CANADA - NEIL MCKENNA LOOKS TO GROW - Canadian ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
NOVEMBER 2019 PUBLISHED SINCE 1898 | WRITT WRITTEN TEN FOR BUYERS S OF OF TRANSPORTATION SERVICES WE ALL PLAY FOR CANADA NEIL MCKENNA LOOKS TO GROW CANAD N TIRE'S INTERNATIONAL FOOTPRINT OUTLOOK 2020 The state of Canada’s supply chain RESEARCH Transportation Buying Trends AGREEMENT 40063170 www.canadianshipper.com
FROM ALL ACROSS THE WORLD, WE DELIVER TO QUITO. With Air Canada Cargo, the entire world is within reach. Our extensive network of over 450 destinations across six continents offers endless possibilities for your shipping needs — and it keeps growing! Introducing service to Quito, starting December. Visit aircanadacargo.com today.
CONTENTS NOVEMBER 2019 DEPARTMENTS 5 | Editor’s Foreword Carbon costs 10 6 | In the news Industry Q&A: Wendy Zatylny; FedEx cuts ties with Amazon in the U.S., but not in Canada; SUPPLY STATS; New supply chain lab opens in Alberta 35 | Coaching Corner Office hero COVER STORY 38 | The Bigger Picture Making a choice EXECUTIVE OF THE YEAR Neil McKenna 30 Photo: Peter Power During his nearly 25 years with Canadian Tire Corporation, Neil McKenna, FMA’s Supply Chain Executive of the Year, has helped to create one of the best-in-class transportation supply chain operations in North America. FEATURES 2020 OUTLOOK | 15 The future of the transportation supply chain 15 IMO 2020 | 24 Canada’s marine transportation industry readies for new fuel regulations RAIL INFRASTRUCTURE | 27 TRANSPORTATION RTATION Class 1 railroads continue to grow their capital spending programs BUYING TRENDS RENDS Find out what transportation sportation will cost you in 2020 20 www.canadianshipper.comNovember 20193
EDITOR'S FOREWORD John Tenpenny November 2019 Volume 122 Issue No. 6 EDITOR John Tenpenny (416) 510-6880 john@newcom.ca EDITORIAL DIRECTOR John G. Smith (416) 614-5812 johng@newcom.ca MANAGING DIRECTOR, TRUCKING AND SUPPLY CHAIN GROUP Lou Smyrlis lou@newcom.ca ART DIRECTOR Anita Balgobin Making plans CONTRIBUTORS Carolina M. Billings, Mark Cardwell, U Dan Goodwill, Carroll McCormick, nder new International Maritime Organization (IMO) regulations set to take James Menzies, Peter Power, effect January 1, 2020, the container shipping industry will have to reduce Ian Putzger, Leo Ryan greenhouse gas (GHG) emissions by at least half compared with 2008 levels by PRODUCTION MANAGER 2050. Shippers have and will be impacted and should—if they haven’t already— make Jwad Khan (416) 510-6779 jwad@newcom.ca plans accordingly. The industry is under the same pressures as other sectors of the transportation SALES MANAGER Anthony Buttino (514) 292-2297 industry to decarbonize. Under the IMO strategy released last year, the United Na- anthonyb@newcom.ca tions agency aims to finalize short-term measures by 2023 and medium-term mea- CIRCULATION MANAGER sures to reduce carbon dioxide emissions by potentially 40 per cent by 2030. Encour- Mary Garufi (416) 614-5831 agingly, and thanks mainly to slower sailing speeds, the global merchant fleet is 60 mary@newcom.ca per cent larger than it was in 2008 but emits 18 per cent less carbon. PRESIDENT While IMO 2020 will help significantly reduce air pollution, these new standards Joe Glionna may have an initial negative impact across the industry: most notably the additional CHAIRMAN & FOUNDER cost to the entire container freight industry, which is estimated to be $10 to $12 bil- Jim Glionna lion each year. Carriers won’t simply eat these extra costs; they will be passed down to shippers and, ultimately, to consumers. Some of these costs have already started to filter through as shipping lines start using low-sulfur fuels and installing scrubbers. 5353 Dundas Street West, Suite 400, The impact is also not limited to cost, as capacity will temporarily be reduced as Toronto, ON M9B 6H9 vessels are out of commission while scrubbers are installed. Some capacity will even Canadian Shipper is written for Canadian transportation be permanently eliminated due to the additional space scrubbers and LNG tanks will and logistics professionals who manage product flow from manufacturer to point-of-sale. Editorial is focused on occupy on ships, as well as older vessels being phased out rather than converted to reporting, analysis and interpretation of Canadian logistics new types of fuel. trends and issues. It is published by NEWCOM MEDIA INC. Although the regulation doesn’t come into effect until the first of the year, ship- SUBSCRIPTIONS: Contact us at: mary@newcom.ca pers must prepare now to mitigate the effects on their businesses. Shippers should Tel: (416) 614-5831 have conversations with their carriers to understand what fuel pricing and capacity Fax: (416) 614-8861 will look like, and plan ahead: booking capacity earlier than usual will be critical to Website: canadianshipper.com (click on subscription button) mitigating the potential disruptions. CS 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 WANT MORE? 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 www.canadianshipper.com without the consent of the copyright owner. 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 @ PUBLICATIONS MAIL AGREEMENT 40063170 John Tenpenny, Canadian-Shipper Editor john@newcom.ca © iStock www.canadianshipper.com November 2019 5
INDUSTRY Q&A The evolving nature of Canadian parts Wendy Zatylny, president, Association of Canadian Port Authorities What is the ACPA’s reaction to would be to see the modernization of recent infrastructure funding the ports, but specifically the mod- announced for some of its ernization of the Canada Marine Act member ports? and supporting regulatory and policy We were really happy with the monies underpinnings, including processes that were allocated to the NTCF [Na- to amend our letters patent, the abili- tional Trade Corridors Fund] and ty to increase borrowing limits, as were even happier that the Minister of well as allow the port authorities to Finance advanced the second and become at least become equity inves- third rounds of proposals. In fact, tors in their own projects within their they advanced the second round of own port. Right now, we are con- funding that wasn’t supposed to take strained in how we can invest in proj- place for another couple of years; to ects within the port. But, now as port this January and turned it into a roll- authorities develop into managing ing call for proposals. logistics parks and intermodal facili- That spoke to the recognition of ties, we want to be able to branch out government of the pent up demand for into those functions. Currently we are funding for infrastructure projects restrained from doing that with the across all of the port authorities and in Canada Marine Act. fact all the players within the trans- portation supply chain. “Where once we were What else is on the ACPA’s What will be important now is to radar? simply a place where ships ensure the funding agreements con- The next frontier of port efficiency is tinue to get signed expeditiously and arrived and cargo was data management. There are a number that the funds begin to flow because of initiatives globally that are explor- loaded and unloaded, we it’s one thing to have the announce- ing things like blockchain-supported ment, but you need to have to have the have become so much applications, such as the Maersk-IBM actual agreement signed, which is the more than that now.” TradeLens platform. What we’d like to next step and that the ports can put see is two things. One, recognizing the this money to use. Wendy Zatylny, president, importance of data and the sharing of The rules governing matching con- Association of Canadian Port data, that Transport Canada’s Data tributions say that only the expenses Initiative be fully supported for a good Authorities that began after the agreement was 10 years and that supply chain part- signed are eligible. So we’re hoping that ners be encouraged to ensure as much Transport Canada will have another transparency and data sharing as pos- look at that because we’ve had to work and most importantly, we have be- sible so that we can work together to to keep these projects on the boil. That’s come data managers and logistics ex- eliminate the speed bumps in the sup- the important next step. perts. That really is the heart of what a ply chain. The second element is that port authority is right now. It’s ex- we called on the government to devel- What would the ACPA like see pressed in terms of cargo and people, op a working group with the port au- come out of the Ports but we are logistics experts. thorities and related partners to start Modernization Review? The problem is the Canadian Ma- exploring and developing a Canadian What we tried to do in our submission rine Act dates back to 1998 and the leg- standard for the utilization of data and was to capture the evolving nature of islation is inconsistent with what port data exchange with a view to improv- port authorities. Where once we were authorities have now become and what ing efficiency. We have a lot of individ- simply a place where ships arrived and they need to do to continue to be able ual initiatives, but we need to stan- cargo was loaded and unloaded, we to grow and compete in a very competi- dardize those because that would have become so much more than that tive and dynamic global sector. allow Canada, its ports and transpor- now. We are facilitators of trade, we Out of the results of the ports mod- tation sector to help guide and shape help develop businesses and markets, ernization review, a top line desire global standards. CS 6 November 2019 www.canadianshipper.com Photo: ACPA/Michelle Valberg
IN THE NEWS Breaking up is hard to do FedEx cuts Amazon ties in U.S., but not in Canada By John Tenpenny By terminating its U.S. business relation- ship with Amazon, FedEx admitted what many in the industry have known for awhile now: that Amazon is competing with established shipping companies. The announcement about ending the contract for deliveries through the FedEx ground network came two months after an earlier decision to drop Amazon from a domestic air shipping service. FedEx says that Amazon represented less than 1.3 per cent of its total revenue in 2018, or less than US$850 million, of which 80 per cent was moved by air. While the moves caught some by sur- prise, there were warning signs. A month earlier, FedEx warned in a gov- ernment filing that Amazon’s fledgling de- livery business could lower prices, hurt its revenue and “negatively impact our finan- cial condition and results of operations.” Previously, in a regulatory filing of its own in February, Amazon altered the de- scription of its business to say that competi- tors included transportation companies. While FedEx opted not to renew its ground and domestic air shipping contracts with Amazon in the U.S., Dean Maciuba, a former FedEx execu- nothing has changed north of the border. tive who now works as a consultant at Lo- gistics Trends and Insights, said FedEx had good reasons to cut ties with Amazon. Rather than dropping shipping part- partner with shippers such as UPS, Puro- “They could not afford any longer to ners, Amazon is adding them in Canada. lator and Canada Post. directly support a competitor,” he said. The company recently announced a Over the years, UPS has made more Amazon has been growing its own new strategic partnership with Canadian money shipping Amazon packages than fleet of air and ground transportation in air freight line Cargojet. The deal offers FedEx has, says Maciuba. the U.S., giving it more control of how its Amazon up to a 14.9 per cent minority “Their scale is bigger,” he said. “Histori- packages are delivered, while reducing its stake in Cargojet, contingent on Amazon cally, they’ve always been able to offer reliance on FedEx, UPS and the U.S. Postal providing a specific amount of business. lower rates on the express and ground Service (USPS). The Seattle-based com- “We view the agreement positively as side than FedEx for very large customers pany has leased jets, built package-sorting it de-risks that growth profile and re- and profit more from them.” hubs at airports, and launched a program moves what little chance there was that Estimates suggest that Amazon ac- to let its contractor drivers start their own Amazon might get creative on how it counts for 5-8 per cent of UPS’ annual rev- businesses delivering packages in vans moves overnight volume in Canada,” enue in the U.S., and while Maciuba hasn’t stamped with the Amazon logo. wrote Canaccord Genuity analyst Doug seen an agreement between the two, “I Despite these actions, the Amazon- Taylor in a note to investors. don’t think UPS would put themselves at FedEx business relationship north of the Access to air shipping modes is vital to risk without some guaranteed revenue.” border remains unchanged. “E-com- provide the fast delivery times required by UPS also adds value on both sides of merce is an exciting growth opportunity Amazon Prime. Amazon launched that the border by way of its retail outlets, in the Canadian market, and Amazon service in Canada in 2013, and member- which support Amazon’s return activities. continues to be a valued FedEx customer ships doubled between 2017 and 2018. “[UPS Stores] do returns very well. Cus- in Canada,” says FedEx Express Canada Canada’s large geographic footprint tomers walk in, they scan the original pack- spokesman James Anderson. also ensures that Amazon will continue to age, they get a receipt and walk out.” CS Photo: Amazon/FedEx Express Canada www.canadianshipper.com November 2019 7
IN THE NEWS 750,000 SUPPLY trucks STATS Daimler Trucks North America has produced its 750,000th truck—a Freightliner Cascadia for UPS—at its production facility in Cleveland, N.C. Freightliner acquired the plant in 1989, to assemble medium- duty models. Today the facility also produces the Western Star 4700, 4900 and 5700XE, and right-hand-drive Freightliner Coronados and Columbias for Australia and New Zealand. 23,000-TEU 100,000 vans containership Amazon, which ships more than 10 billion TThe CMA CGM Group announced items a year on fuel-guzzling planes and trucks, the launching of the world’s largest said it has ordered 100,000 electric vans from containership (23,000 TEU) —CMA Rivian, the largest order ever of electric delivery CGM Jacques Saade—powered by vehicles, that will start delivering packages to liquefied natural gas (LNG). In 2017, shoppers’ doorsteps in 2021. It also plans to company chair and CEO Rodolphe have 100% of its energy use come from solar Saadé, announced the decision panels and other renewable energy by 2030. to order a series of nine 23,000-TEU containerships. According to the That’s up from 40% today. company, LNG helps to reduce: emissions of sulphur oxides and fine particles by 99%; nitrogen oxides emissions by up to 85% and carbon dioxide emissions by around 20%. $1 billion investment C.H. Robinson C.H. Robinson 50th anniversary president and CEO Bob Biesterfeld (right) announced In celebration of its 50th anniversary, DHL the that the 3PL has committed opened its Americas Innovation Center in to investing $1 billion in Chicago, a state-of-the-art 28,000 square technology over the next five foot facility that provides a collaborative years, doubling its previous space for DHL to work with its customers, its $1 billion investment in technology over the last 10 years. With more technology partners, and academics as well than 1,000 data scientists, engineers and developers, the company is as tap the innovative power of its employees. continuing to invest in global talent in this critical area. 62% of Canadians Key insights from the 2019 UPS Pulse of the Online Shopper survey indicate Canadian online consumers show a low appetite for paying for shipping. Sixty-two per cent of Canadians will consider cheaper, yet slower shipping and 96 per cent consider it important to have visibility of various shipping option prices. Abandoned carts are often due to a lack of transparency and almost half of Canadians abandoned an online purchase because the cost of delivery was higher than expected. 8 November 2019 www.canadianshipper.com
IN THE NEWS In the lab CN supports supply chain analytics at Mount Royal University A new $500,000 analytics lab at Calgary’s form opens the potential for further ana- Mount Royal University lets students seek lytics programming. We’re thankful to CN out and analyze live and historical busi- for its support of this lab.” ness data crucial to navigating Canada’s The lab includes 15 Refinitiv Eikon li- new economy. cences to support 12 student terminals, The industry-leading technology in one for an instructor in the lab and two the CN Supply Chain Analytics Lab pro- available for professors to use for curricu- vides students with dedicated space to lum and research requirements. It can ac- work on the Refinitiv Eikon Data Platform commodate up to 36 students, with In the CN Supply Chain Analytics Lab, Bissett that accesses the inner-workings of com- groups of three using one terminal each. School of Business students work alongside Brian panies around the world in real time. Data CN says the lab reflects the importance of Fleming, PhD, left, associate professor in supply from this platform shows students how supply chain management to the trans- chain management. ethics, the environment and other factors portation industry that helps drive the combine with price to influence decision- Canadian economy, and provided the lytics Lab at Mount Royal University,” says making and the supply chain. $500,000 donation for its development. Lonny Kubas, assistant vice-president of “The analytics lab will provide a vital “Supply chain innovation is part of our supply chain at CN. “Knowing firsthand the learning environment,” says Elizabeth Ev- DNA at CN and we are very proud to en- important role that analytics plays in sup- ans, dean of the Faculty of Business and gage the next generation of leaders through ply chain management, it is really an hon- Communication Studies. “The Eikon plat- our support of the CN Supply Chain Ana- our to be a part of this project.” CS W St i ar nte O t rC R, ou Ta ke rse What’s the T s he N ew most rewarding career decision you’ll ever make? Earning the CCLP® designation is easily the single best thing you can do to boost your career prospects. It can set you up for better pay, more advancement opportunities, and a range of management pathways and options across the sector. Plus, you’ll develop and demonstrate cross-functional capabilities that can deliver better business resultsɆ and more personal job protection. Depending on your background, your CCLP designation might be within closer reach than you WKLQN&OLFNRUFDOOWR¿QGRXWLI\RXTXDOLI\IRUDIDVWWUDFN citt.ca/cclp2020 • 416.363.5696 Your best choice for complete career-long OHDUQLQJ FHUWLÀFDWLRQ in supply chain logistics ®CCLP &,77&HUWLÀHG/RJLVWLFV3URIHVVLRQDO LVDUHJLVWHUHGWUDGH HPDUNRI&,77 Photo: Mount Royal University www.canadianshipper.com November 2019 9
SUPPLY CHAIN AWARD WE ALL PLAY FOR Neil McKenna's leadership helped establish Canadian Tire’s supply chain in Canada and now his sights are set on an international footprint BY JOHN TENPENNY During his nearly 25 years with Canadian Tire Corporation, Neil McKenna has helped create one of the best-in-class transportation supply chain operations in North America. 10 November 2019 www.canadianshipper.com Photo: Peter Power
SUPPLY CHAIN AWARD “A role or title doesn't entitle you to be a leader. Only your actions I n the eyes of Neil McKenna, failure is a rite of passage for every leader. will define if you are an effective leader or not.” People make mistakes. But only by being accountable for them and —Neil McKenna, Vice-President, learning from them can leadership be Transportation Projects at Canadian Tire Corporation formed, says the vice president of transportation projects at Canadian Tire Corporation (CTC) and the 2019 recipient of the Freight Management port as CTC looks for new global mar- flexibility in how and when they want Association of Canada’s Supply Chain kets for its products. to shop. This has altered the function of Executive of the Year award. To grasp the scope of Canadian Tire’s supply chains, that now, in addition to His leadership style is revealed in transportation supply chain, you must shipping large volumes of products to the latitude he gives those who report understand that the company is more stores, must also deliver individual to him, to empower them in making than your local Canadian Tire outlet. items ordered directly by customers to hiring decisions. In addition to its 500 general mer- their home or closest store for pick-up. “When one of my AVPs (associate chandise retailers, CTC also owns the Transportation is the artery that vice presidents) would need to hire a SportChek, National Sports, Pro Hock- provides an uninterrupted flow of manger, they would seek my opinion ey Life, and Atmosphere banners, goods from manufacturers all over the and then ask me to approve their combing to create Canada’s largest na- world to CTC’s store shelves. choice,” he tells Canadian Shipper in an tional sporting goods retailer; Mark’s The company’s transportation oper- exclusive interview. (380 stores), a clothing and footwear ations are Canada’s biggest importer of “If I have to approve of a hire then retailer; Canadian Tire Automotive, freight (22nd in North America), ship- that’s like me doing the hiring,” ex- with 5,600 service bays; Canadian Tire ping more than 160 million cubic feet of plains McKenna. “I want them to be Petroleum, one of the largest indepen- product to its retail network, utilizing accountable for their decision.” dent gasoline retailers, which pumps Canada’s largest fleet at over 14,000 McKenna joined Canadian Tire in more than one billion litres of gasoline pieces of equipment. Handling all that 1994 as finance manager in the trans- each year at over 260 outlets; Part- merchandise is done at four transload portation division. During his time at source (91 stores), an automotive parts facilities—three in Vancouver and one Canadian Tire, McKenna has been in- specialty chain; and as of this year, in Halifax—and six distribution cen- volved in just about every aspect of the Party City Canada (65 stores), a pre- tres, three in the Greater Toronto Area, company’s transportation supply mier retailer of costumes, accessories two in Calgary, and one in Montreal. chain, from director of international and decorations. Managing transportation opera- transportation, where he was respon- In 2018, CTC acquired Helly Hansen, tions in such a complex supply chain sible for bringing in product from a global brand in sportswear and work- requires constant innovation, some- around the globe, to ensuring those wear, with wholesale and retail distri- thing McKenna excels at, according to products made it on to the shelves of bution capabilities across more than 40 his successor as vice president of trans- CTC’s nearly 500 Canadian Tire Retail countries. The addition of Helly Hansen portation, Gary Fast. (CTR) stores as director of domestic has accelerated CTC’s ability to distrib- “Under Neil’s tenure CTC’s transpor- operations. In 2008 McKenna was pro- ute its consumer brands international- tation capabilities have become a mod- moted to vice president, transporta- ly, which is where McKenna plays an el of innovation and represent supply tion, a position he held for 11 years be- important role in expanding the com- chain best practices. He has been a fore moving into his current role, where pany’s supply chain capabilities. trailblazer in our industry.” he oversees the development of CTC’s McKenna’s latest role is evidence of Fast highlights several important e-commerce delivery capabilities the evolving retail landscape. Over the projects headed by McKenna during his across the enterprise, as well as work- past few years, the company has trans- term, including Canadian Tire becom- ing closely with the consumer brands formed to become a leading e-com- ing the first carrier in Ontario to run division, providing supply chain sup- merce organization, offering customers longer combination vehicles (LCVs) www.canadianshipper.com November 2019 11
SUPPLY CHAIN AWARD with containers, developing the world’s “At that time construction of our 53-foot container was identical to first 60-foot container and 40-60-foot Montreal DC had been completed but that of a trailer.” sliding chassis, as well as spearheading had yet to begin operations. We en- According to McKenna, within 72 the integration of all CTC’s transporta- gaged a retired Ontario Ministry of hours of the parking lot demonstra- tion functions and banners. Transportation engineer to construct tion, Ontario allowed containers to From McKenna’s perspective, get- an exact replica of two Ontario inter- be part of the approved LCV program, ting the province of Ontario to approve sections in the DC’s parking lot.” soon followed by Nova Scotia and the use of containers as part of its LCV Working with their partners at New Brunswick. program is one of his most satisfying Robert Transport, McKenna’s team accomplishments. assembled every possible longer com- Managing expectations “When Ontario was on the verge of bination configuration of contain- Key to McKenna’s success during allowing LCVs on its highways, which ers— two 53-foot, two 40-foot, and a his nearly 25 years at Canadian Tire were already allowed in Quebec and Al- 53-/40-foot. has been his mastery of what he calls berta, they were only going to allow LCV “We invited all the Transportation the “theory of competing margins.” trailers. We had 5,000 intermodal con- Ministers from Ontario, Quebec, “Transportation is essential to the tainers that would have been excluded, Nova Scotia and New Brunswick for a success of any retailer and it is a neces- which would have put us at a consider- demonstration and spent a day edu- sary cost. So, it is incredibly important able competitive disadvantage.” cating them on why containers should that it be managed efficiently and opti- Instead of the usual lobbying of gov- be included in any LCV program. They mally, but it’s not as simple as just ernment officials, McKenna came up took turns riding the LCVs, executing moving the product,” he says. with an ingenious plan that involved the on- and off-ramp turns, which dem- “When you are responsible for every use of an empty 200-acre parking lot. onstrated that the turning radius of a step in the supply chain, from the man- π SHIPPING SUPPLY SPECIALISTS OVER 875 GLOVES ALWAYS IN STOCK ORDER BY 6 PM FOR SAME DAY SHIPPING 1-800-295-5510 uline.ca 12 November 2019 www.canadianshipper.com
SUPPLY CHAIN AWARD ufacturer’s loading dock to a Canadian It is during this complex journey For McKenna, managing people is Tire retail store’s shelf, there can be as that McKenna’s theory comes alive. different than leading them. many as 20 different touch points “Normally you’d think that our “Managers manage people and/or along the way. margin would be the difference be- processes. Leading inspires people to “Once a purchase order is sent to a tween what we paid the manufacturer be better. If you have never been asked factory, we then engage our offshore for the unit and what we sold it to our by someone who reports to you about logistics provider, who trucks the customers for,” he says. “But in reality, leadership characteristics, you don’t product from the factory to either a every trucking company, third-party have them, and you are not leading,” consolidation location and then to the consolidator, ocean carrier, terminal he emphasizes. port or to the port directly in the case operator and railway did their part at a “Leadership is operating and perform- of full loads.” cost, for which they would also like a ing in such a way that gives people confi- From there, it is a dizzying array of margin, which eats into the only real dence. A role or title doesn’t entitle you to moves, as first an ocean carrier deliv- margin. So the real difference between be a leader. Only your actions will define ers a container to a Canadian port, what we pay and what the customer if you are an effective leader or not.” where it is trucked to a transload facil- pays is less all the costs in getting the Fast is among those who count ity to be transferred into a domestic product from there to here. McKenna in the former category. container, before being driven and “The more effectively you can man- “Above all, Neil’s mentoring has pro- loaded onto a train. Next up is another age margin expectations across the duced many senior leaders within Cana- truck trip to a distribution centre, supply chain, the more competitive you dian Tire’s supply chain and his collabora- where the goods are unloaded again will be, and CTC is known throughout tive approach and passion for developing and stored before the final-mile deliv- North America for this kind of best-in- talent is infectious and drives those ery—by truck—to a retail store. class management.” around him to be their best.” CS www.canadianshipper.com November 2019 13
BUILDING CONNECTIONS WHEREVER WE GO. CP prides itself on building partnerships. We work with our customers, wherever they are, to identify their needs and help meet their objectives, while providing the best service along the way. CP is your full supply-chain solution provider that gets your goods to where they need to be. Learn more at cpr.ca
OUTLOOK 2020 which reduces their lead time to plan a transition if their current device is not certified. That can be problematic and time-consuming if the device is inte- grated into back office systems.” On the two-year implementation period, Transport Minister Marc Gar- TRANSPORT neau said: “The two-year implementa- tion period may seem quick for some Transport Canada announces ELDs truck owners, but I want to reassure to be required by 2021 you that this period will allow them time to set up and install the devices. BY JAMES MENZIES In doing this we are looking to reduce truck and bus crashes due to fatigue.” But despite concerns about the re- moval of a grandfather clause, Millian welcomed the rule. “The PMTC is very pleased that C anada’s long-awaited electronic follow their work-rest cycles,” said Ste- Transport Canada has posted this logging device (ELD) rule has phen Laskowski, CTA president. “As regulation in Gazette 2 and has moved been published, which the Ca- we learned from the previous era of this file into the regulations. This file nadian Trucking Alliance (CTA) says paper logbooks, the non-compliant has been in the works for many years, will catapult Canada ahead of the U.S. segment of our industry, while a mi- and it is good to see it finally see the in terms of safety and compliance. nority, have a history of finding work- light of day,” he said. “We are also The made-in-Canada regulation re- arounds of the rules. We must ensure thrilled to see that Transport Canada quires third-party device certifica- that there are no gaps or opportuni- listened to industry and is making tion, something the U.S. did not pur- ties to manipulate the technology and third-party certification of devices sue, and a detail the Canadian that compliance is the only option.” mandatory, and not going down the trucking industry lobbied to have in- The final rule also accelerates the same self-certification mandate that cluded. In the U.S., devices are self- implementation timeframe, from the is causing many problems south of the certified, which has led to the arrival initially proposed four years, to two. border. This is a huge step in ensuring in the market of ELDs that can be But unlike in the U.S., existing auto- devices are actually compliant and modified or tampered with. matic on-board recording devices will will have the desired effect of improv- By June 2021, third-party-certified not be grandfathered. ing compliance with hours-of-service ELDs will have to be used by all truck driv- That worries Mike Millian, head of regulations.” The CTA’s Laskowski ers currently required to maintain a log- the Private Motor Truck Council of noted the requirement for third-party book. The announcement was greeted Canada (PMTC). certification meant the grandfather with enthusiasm by industry associations. “The PMTC is in agreement with clause had to go. “The vast majority of our companies the two-year compliance date at- “It became very clear that there and drivers in our industry fully comply tached to the posting, however we do were challenges in the self-certifica- with hours-of-service rules, but, un- have concerns with the removal of the tion world,” he said. “How can we have doubtedly, the implementation of tam- grandfather clause that was posted in grandfathering of non-third-party- per-proof, third-party ELD devices will Canada Gazette 1,” said Millian. certified devices? We were originally further enhance safety and help ensure “The removal of the grandfather asking for 24 months plus grandfa- all drivers and companies hold them- clause may actually place fleets who thering.” selves to the highest levels of compli- implemented devices years prior to a The CTA has hosted several meet- ance,” said CTA chairman Scott Smith. mandate, in a worse position that ings with more than a half dozen de- The hours-of-service rules them- those who did nothing. These fleets vice suppliers since January 2018. selves will not be changed; they’ll sim- will have to work with their supplier It says it will be embarking on an ply have to be recorded using an ELD. and hope that the device they pur- education campaign to ensure the in- “Third-party certification of ELDs chased can be updated to be third- dustry is ready for the mandate. It is is critical for hours-of-service compli- party-certified, or replaced with new also working with ELD manufacturers ance and fatigue management as the devices. As a certifying body has yet to and suppliers to ensure they are aware technology behind ELD devices is key be determined, they may have to wait of their requirements to become third- to ensuring drivers and companies to find out the status of their device, party-certified. CS Photo: iStock www.canadianshipper.com November 2019 15
BRINGING TO YOUR INTERMODAL SHIPMENTS YOU’LL NOTICE CONTACT YOUR FASTFRATE REPRESENTATIVE TODAY TO LEARN MORE ABOUT OUR REVOLUTIONARY INTERMODAL SERVICE OFFERING THE DIFFERENCE
OUTLOOK 2020 RAIL The good and the bad of rail improvements BY CARROLL MCCORMICK C N is spending record amounts on for its Huron Central Railway line be- Breach of service capital projects and maintenance. tween Sudbury and Sault Ste. Marie. This year, using the new “own mo- Two short lines in Western Cana- Last year it managed to wring some tion” provision in the Transportation da got their very first taste of federal money out of the Ontario government Modernization Act (Bill C-49), the grants for upgrades. But Huron Central to keep the line running till roughly Canadian Transportation Agency Railway is again pounding the streets in the end of 2019, but now it’s déjà vu all (CTA) determined that CN breached search of long-term stable funding. over again, as baseball great Yogi Ber- its level of service obligations in the CN is outdoing itself this year with its ra is said to have exclaimed. Vancouver area last winter to wood $3.9 billion capital expenditure (CAPEX) “Unfortunately, despite continuous pulp shippers by “unilaterally re- plan. Its ambitions range from increasing efforts on HCRY’s part to work with stricting the transportation of the capacity in Nova Scotia, maintenance both levels of government to secure shippers’ traffic.” work on bridges, culverts, signal systems funding to support the railway’s long- The ruling is significant. “The new and track in New Brunswick, to rebuilding term business plan, the only help pro- provision in C-49 gave the CTA new a rail bridge over the Steen River in Alber- vided so far was the $980,000 emergen- power to make investigations under ta. In Manitoba and Saskatchewan, for cy fund given by the government of its own initiative, and the very first example, CN is adding train sidings and Ontario last fall. This funding allowed time it was used was in the service double tracks. CN is adding a new train HCRY to make some emergency repairs problem in the Vancouver area last passing siding in Port Edward and in- to keep operations going throughout winter: the embargo and rationing of creasing capacity at the Port of Vancou- 2019, while we worked with govern- access, especially for forest products,” ver. Rail replacements and hundreds of ments to find a longer-term solution. says Robert Ballantyne, president of thousands of new railroad ties are part of We are hopeful that we will be able to the Freight Management Association the maintenance plan. lock in serious funding commitments of Canada. In what borders on the remarkable, as the Federal campaign unfolds,” says “If the agency sees a broad prob- considering the historic, overall indif- Claudine Bois, executive assistant and lem, the own motion investigation ference that federal governments have communication advisor, Genesee & does not require that a shipper file a shown short lines, this year Great Wyoming Canada Inc. complaint. The shipper community Sandhills Railway in Saskatchewan And while it has not yet reached feels that it may distance them from and Forty Mile Rail in Alberta re- the construction stage, the Alaska to potential retaliation, because a for- ceived a total of $16.6 million in Alberta Railway Development Corpo- mal complaint by a shipper is not matching funds from the federal gov- ration (A2A) continues to make prog- necessary under this new process,” ernment for track work. ress toward its goal to build a 2,400 ki- Ballantyne adds. “Before this we’ve never received a lometre railroad connecting the Alaska CN is appealing the ruling. What dime of federal funding for our mem- Railroad, and its four-port ocean ac- the Federal Court of Appeal decides, ber short lines. Transport Canada now cess in southcentral Alaska, with Al- possibly only next year, will have im- has a staff that has the funding of berta, via the Yukon and Northwest plications for this new provision, Bal- short line railways as one of their re- Territories. “We are in the process of lantyne explains. “One thing that is a sponsibilities. They have come to Sas- narrowing down a 10-kilometre plan- bit worrisome is that if the Federal katchewan, toured our short lines, ning corridor to a couple hundred feet, Court of Appeal decides in favour of come to our meetings. None of that has with aerial surveys and ground [work], CN, it may be difficult for the Agency happened before,” says Allison Field, later in 2019 and 2020,” says Mead to use this provision again. FMA director of communications and gov- Treadwell, A2A’s COO. “We are heading wants to get across that the jurispru- ernment relations, Western Canadian to a more detailed project description, dence that comes out of this appeal Short Line Railway Association. based on those surveys, to share with [should] not put roadblocks in front of Unfortunately, such largess was First Nations, other landowners and this provision, to make it more diffi- not extended to Genesee & Wyoming regulators.” cult to use it in the future.” CS Photo: iStock www.canadianshipper.com November 2019 17
WE MAKE TRANSBORDER SHIPMENTS EASIER. ONE SOURCE FOR ON-TIME, WORRY-FREE DELIVERIES Your business doesn’t stop at the border, neither does Old Dominion. Our people provide 100% real-time freight visibility for your shipments between Canada and the U.S., with direct loading to major U.S. markets. Your transborder crossings are pain-free with OD’s in-house 24/7 customs clearance and brokerage services and a single point of contact. Plus, OD’s industry-leading on-time record and low claims ratio provide confidence with every shipment. Old Dominion Freight Line, the Old Dominion logo, OD Household Services and Helping The World Keep Promises are registered service marks of Old Dominion For more information, visit odfl.ca or call 1-800-432-6335 1-800-432-6335. Freight Line, Inc. ©2019 Old Dominion Freight Line, Inc.
OUTLOOK 2020 border FedEx and UPS have announced similar plans to kick off at the end of the 2019 peak shipping season. While this shift should boost utiliza- tion and bring greater flexibility for op- erators, it also brings further cost pres- COURIER sure. “Extending an operation to seven days a week adds costs, particularly staff- The Amazon effect ing. We must ensure that the added costs continues to disrupt allow us to remain cost-competitive,” re- marks Porporino. BY IAN PUTZGER Regardless of the rate of acceleration of deliveries, e-commerce is set to keep growing. Steiner says that the outlook for B2B as well as B2C growth in Canada for 2020 is positive, although the momen- tum should be weaker than in 2019. N otwithstanding the continuing means businesses are wanting more vis- One impulse for additional growth growth it produced, 2019 has ibility, speed and direct-to-home or di- should come from the USMCA agreement been a disruptive year in the rect-to-site delivery. Supporting health- replacing NAFTA (once it has been rati- courier and express segment, as the care customers, for example, with more fied), as this should raise the de minimis wobbles of FedEx illustrate. Not sur- direct-to-home delivery options and tai- threshold for goods imported into Cana- prisingly, Amazon has been a major in- lored support during peak periods will da from $20 to $40 a d day, and express stigator of disruption again with sever- be increasingly important,” he remarks. shipments valued under $150 can be im- al steps this year. eShipper is looking to boost its ware- ported duty-free, although they will still The most recent move was the order house footprint beyond its current facili- be subject to sales tax, Steiner points out. for 100,000 electric delivery vans an- ties in Toronto and Vancouver to Mon- “Ratifying the USMCA and other nouncement in September. Imtiaz Ker- treal and Calgary in order to allow trade agreements will provide customers mali, vice-president sales and market- next-day service at a reasonable cost lev- and businesses with more certainty and ing at eShipper views this as massive el, says Mo Datoo, director of strategy confidence to invest in Canada and push into the final mile arena. “That’s a and partnerships. North America. This certainty is impor- key concern for anybody in the indus- The balancing act between service tant and helps solidify long-term busi- try,” he comments. levels and cost containment is going to ness planning,” comments Spanjaard. Earlier this year Amazon raised the be one of the key battles for the industry. Increasingly firms are looking fur- bar with the announcement that it would Dominic Porporino, president of UPS ther afield, both for inbound and out- slash the transit window for free delivery Canada, describes efficiency and lever- bound traffic, remarks Kermali. “The of goods ordered by Prime customers to aging scale to reduce procurement and international market is becoming very next day. Most pundits expect this to be- operating costs as one of the major chal- popular with young entrepreneurs. come the new norm for e-commerce de- lenges for operators in 2020. They don’t look just at Canada and/or liveries, which is bound to result in casu- Automation is a vital element in this. the U.S.,” he says. alties in the market. UPS is in the process of automating fa- Faced with a slowdown in regular air- “The biggest challenge for the courier cilities in Montreal and Caledon. freight, airlines will be happy to take on and express industry in Canada will be Employee safety is another issue, more e-commerce (despite less than stel- keeping up with anticipated demand and particularly for delivery drivers, notes lar margins). There are no signs of capacity meeting faster delivery times,” comments Spanjaard. bottlenecks at this point, but in the do- Paul Steiner, vice-president of strategic “We’re rolling out an industry leading mestic arena concerns have come up after analysis at logistics spend consulting firm health and safety management system Amazon and Cargojet signed a strategic Spend Management Experts. for our people, with advanced training, agreement under which the former can Chris Spanjaard, senior vice-presi- to make sure our people stay safe at every acquire up to 14.9 per cent of variable vot- dent and COO of Purolator, points out delivery point,” he says. ing shares in Canada’s largest cargo airline. that parts of the B2B segment are moving Purolator, which announced a $1 bil- Observers and customers are worried that in the same direction. lion growth and investment plan in June, Amazon could hog most of the lift on Car- “In these industries, B2B needs are is blazing a trail in Canada with the im- gojet, leaving others scrambling to move closely mirroring B2C needs, which plementation of seven-days-a-week ser- their traffic. The airline has dismissed vice in four major markets. South of the such fears, but worries are lingering. CS Photo: iStock www.canadianshipper.com November 2019 19
Delays not only hurt your reputation, they also damage your bottom line. It’s why we’re dedicated to getting perishable products to market quickly and efficiently. All so you can keep your promises and your profits. It’s how we deliver confidence. Learn more at gopenske.ca. © 2019 Penske. All Rights Reserved.
OUTLOOK 2020 AIR Slowdown means shifting sourcing patterns BY IAN PUTZGER A fter two years of rampant growth the air cargo sector shifted down a gear or two in 2019. Buoyed by e-commerce, Cargojet For DHL the slowdown in general Airports are ramping up for future has still enjoyed rising volume and rev- cargo has reinforced the focus of stal- growth. In response to a surge in sea- enue, but the other sectors have soft- warts like the healthcare and aero- food traffic to China Halifax Interna- ened. Interline traffic from Asia over space sectors. “We continued to do tional Airport has started work on a Vancouver was down 20 per cent year- what we do best,” says Vince. “Our mar- new cargo complex that includes an ex- on-year in September. ket share has grown.” tended cargo ramp and three buildings Gary Vince, head of air freight Cana- Edmonton International Airport is of about 50,000 square feet each. The da at DHL Global Forwarding, notes also jockeying for a role in pharmaceu- first of these, which is slated for comple- that anticipated challenges finding ca- tical flows. The emergence of a rapidly tion in early 2021, should have more pacity have not materialized. expanding cluster of pharmaceutical than 10,000 square feet of cooler space, Shippers have changed their ap- firms in the area has prompted a push says Glen Boone, director of cargo and proach in order to keep costs down, ob- for CEIV certification. According to real estate development. serves Chris Matthews, COO and presi- Alex Lowe, the airport’s cargo develop- Edmonton opened a cargo facility dent of Rodair International. “We’ve ment manager, this should be complet- with a large cooler last year to support seen an increase in ocean traffic and a ed before the end of the year. perishables traffic, particularly fresh decrease in air cargo. And we see a lot Edmonton has also benefited from meat. At the moment Aurora Sky is build- more consolidations,” he adds. the legalization of recreational use of ing a second facility with a footprint of Uncertainty over global economic cannabis, which has created a new 400,000 square feet at the airport. This development and barriers to trade has shooting star for air cargo, according to will be the cannabis producer’s interna- affected demand, as companies have Matthews. However, the bulk of canna- tional distribution center, says Lowe. adopted a wait-and-see stance. At the bis production at the 800,000 square- Air Canada Cargo is due to open a same time, some are moving to shift foot facility of Aurora Sky at the airport new cargo facility at Edmonton. Else- sourcing patterns. Imports from China is medical grade shipped to interna- where the carrier is looking to boost ca- have slowed, while traffic from South- tional destinations. There is strong de- pacity without increasing its footprint. east Asian countries like Vietnam has mand in markets like Europe, Australia “We’re putting $50 million into our increased, says Matthews. and the U.S., Lowe says. Toronto hub now. This includes putting Some forwarders are leveraging net- For many players e-commerce has in a new material handling system and works to respond to shifting trade flows been the main engine for growth. “E- adding about 30 per cent more ETV ca- and emerging lanes. “Our networks commerce has changed our business pacity,” says Strauss. have been a big help to us. We get a lot of model,” remarks Jamie Porteous, exec- “We’re also spending significantly at business back and forth and also sales utive vice-president of Cargojet. Vancouver and Chicago,” he adds. leads,” says Sandra Faraj, vice-president E-commerce also offers promising Air Canada Cargo is one year into a of AGO Transportation. openings for Canadian airports, says Stan three-year review of how it operates. At Rodair Matthew is looking for- Wraight, president and CEO of Strategic “We win in operations, not in the air. ward to the company’s marriage with Aviation Solutions International, the only Everybody flies at the same speed,” Rhenus Logistics, which will open up major Canadian-based and owned air- says Strauss. new network opportunities and client port consultancy. Besides the Canadian His outfit has been among the first introduction. market, an airport can target e-commerce batch of companies involved in ‘SCALE An improvement in the market is flows to the U.S., he argues. AI’, a supercluster supported by the fed- not expected for some time. “I don’t “There are only five U.S. airports eral government. Initial trials have think it’s going to get better before the designated to clear U.S. mail inbound. been successful second quarter of next year,” com- They are all congested. This is a tre- “We’ll start to roll out AI. This gives ments Tim Strauss, vice-president car- mendous opportunity for a Canadian us six to eight per cent more capacity in go at Air Canada. airport,” he comments high demand lanes,” says Strauss. CS Photo: iStock www.canadianshipper.com November 2019 21
IF TIME DOESN’T MATTER, WHY DO THEY CALL IT A RUNWAY? At most gateway airports, cargo spends a lot of time sitting around. Not at Rickenbacker International Airport. We believe runways are meant to be fast. So from the minute your cargo comes in, we’re off and running—unloading, reloading and sending it on to its next destination right from the tarmac. And because we’re strategically situated within a one-day truck drive to nearly half the U.S. and one third of Canada’s population, your goods get to market faster. Learn more at RickenbackerAdvantage.com Bryan Schreiber Air Cargo Business Development 011-614-409-3621 BSchreiber@ColumbusAirports.com IT’S ABOUT TIME.
OUTLOOK 2020 MARINE Global seafarer shortage felt in Canada BY LEO RYAN I f any proof were needed that Canada engaging in gymnastic maneuvers to Indeed, the industry offers pretty at- is impacted by the serious manpower keep their vessels in operation. Not be- tractive good-paying jobs. Typical shortage confronting the global ship- cause they lack contracts but because of deckhands in Canada start off at ping industry, it was supplied in strik- the shortage. The lack of superior officers $60,000 to $80,000, depending on the ing fashion shortly after Quebec City’s (captains, first mates, chief engineers, vessel. For second mates, it can reach Groupe Desgagnés last June held an etc.) is really preoccupying.” $120,000. And much higher still for first inauguration ceremony for two lead- Moreover, senior executives of Great mates and masters. ing-edge polar class duel fuel petro- Lakes carriers in Canada have become in- In an interview, Phillip Nelson, presi- leum-chemical tankers built in Turkey. creasingly vocal in complaining that some dent of the Vancouver-based Council of They represented the completion of an of their captains are being “poached” by Marine Carriers (CMC), said “CMC mem- investment plan of $200 million pilot corporations offering higher salaries. ber companies are acutely aware of the launched in 2015. Globally speaking, the latest manpow- shortage of qualified mariners to fill va- But one of the two state-of-the-art ves- er report by BIMCO and the International cancies of Master and Mate positions as sels, the Rossi A. Desgagnés could not rap- Chamber of Shipping (ICS) put the cur- senior personnel moves on to retirement idly begin trading, as hoped, simply be- rent shortfall at about 16,500 officers and or choose other career routes.” cause the shipping line was unable to find warned there will be a need for an addi- He explained that tug companies are an available captain with the required cer- tional 147,500 officers by 2025 to service not yet experiencing too much difficulty in tificate approved by Transport Canada. the world merchant fleet. Another study obtaining people to fill entry level posi- Such certificates are a pre-requisite for of- by the Ocean Policy Research Foundation tions, but the situation will change in the ficers seeking to work for Canadian-flag anticipates a shortage of 364,000 seafarers future as it becomes more and more diffi- operators. Foreign nationals must also by 2050. There are over 50,000 merchant cult to attract mariners prepared to be prove permanent residence in Canada. ships trading internationally that are away from home several weeks at a time. And the process can drag on for long peri- served by an estimated 1,647.000 seafarers Alluding apparently to such sectors as ods to obtain recognition of certificates of which 774,000 are officers. trucking, Nelson remarked that other in- accorded by training colleges in foreign Whereas the global supply of officers is dustries are also realizing that recruitment countries, including France and England. forecast to increase steadily, this is predict- is becoming an issue. To encourage new So for several weeks, a ship that cost ed to be outpaced by rising demand. Some entrants, the CMC is looking at establish- $50 million to build sat idle on the Que- categories are in especially short supply, ing a marine apprenticeship which would bec harbourfront. No cash coming in including engineer officers at manage- provide free funding for the required from customers for the owner shoulder- ment level and officers for such specialized schooling and seagoing assignments. ing not only the financing costs, mainte- ships as chemical and LNG carriers. The In a related development, the Seafar- nance costs and port charges, but also report suggests that in the past five years ers’ International Union (SIU) of Canada potential costs for maintaining crew on the industry has made progress in increas- initiated a “Be A Seafarer” recruitment stand-by. An industry source estimated ing recruitment and training levels. But it campaign in 2018 aimed at promoting the operational losses up to $20,000 a day. warns that unless training levels are boost- seafaring careers for younger generations Commenting on this specific occur- ed significantly, the growth in demand for of Canadians amidst a manpower short- rence at the time, Martin Fournier, gen- seafarers could generate a major shortage age and aging membership. “The SIU of- eral manager of the St. Lawrence Shipop- in the supply of seafarers. fered free education to select applicants erators, said the manpower shortage is ICS secretary general Peter Hinchliffe of our programs and a guaranteed job affecting the whole maritime industry. is not alone among marine industry offi- upon completion of the proper marine “In recent years,” he told Montreal’s La cials and stakeholders in calling for course,” indicated Patrice Caron, SIU ex- Presse newspaper, “shipowners have been greater efforts to promote careers at sea. ecutive vice president. CS Photo: iStock www.canadianshipper.com November 2019 23
You can also read