Improving Cost and Service in the Canadian Transportation Market

As the second largest geographical country in the world, and the 10^th largest economy, Canadian supply chains face different operational challenges than those in the U.S. So it’s important to examine the current trends and challenges in the Canadian transportation market and identify strategies and best practices to reduce supply chain costs and improve operations.

Transportation’s Impact in Canada

• In 2015, transportation spend in Canada accounted for $45-$55 billion
• The supply chain industry accounts for 900,000 jobs in Canada
  • 1.5% of those jobs are as truck drivers
• In 2016, the transportation industry grew by 3.1% in Canada
  • That’s quicker than all other industries in Canada, including health & pharma and oil & gas
• In Canada, 90% of consumer packaged goods are transported by truck
• In 2016, interprovincial trade was valued at $170 billion
• Transportation traffic between the U.S. and Canada exceeded $380 billion in 2016

 Common Shipping Challenges in Canada

Taking into consideration the geographical size of Canada and its small population of only 36.5 million people – with 85% of the population located 150 miles from the U.S. border (Toronto, Montreal, Vancouver, Calgary, and Edmonton) and the other 15% spread across the rural parts of the country – there is little population density.

Similar to some of the less-densely populated areas in the U.S., the ability to serve rural Canada poses some unique challenges, including:

• Managing supply chain cost – In Canada, shipment sizes tend to be smaller, leaving businesses relying heavily on LTL transportation. This can be more expensive than traditional TL costs by the pallet.
• Service – Because there are more LTL shipments, service can be unreliable, especially when moving goods cross-border. With the use of more LTL shipments, Canadian carriers and their U.S. partners have been known to miss requested arrival dates, causing customers to often lose trust in the service and incur additional costs in non-compliance fines and penalties.
• Production volatility – Challenges occasionally arise when U.S. manufacturers produce Canadian goods. As a bilingual country with different packaging standards, Canada is often the end run in the production line. The Canadian consumer is highly dependent on the U.S. production schedule, causing volatile day-to-day shipment imbalances and instability, ultimately adding overall supply chain cost.

 Strategies for Canadian Shippers to Improve Cost and Service

In order to combat some of these cost and service challenges, there are some best practices that Canadian shippers can follow, including:

• Shipment Consolidation – By taking LTL shipments and building them into consolidated TL shipments that are being delivered to the same location, shippers can pull excess trucks out of their network and improve overall savings.
• Collaborative Loading – This collaborative approach allows for multiple customers who are shipping products to the same region to build dynamic multi-stop truckloads – and can lead to significant savings.
• Improving processes through technology – With the help of the right transportation management technology, shippers can accurately evaluate the number of full-time resources that might be reduced, eliminated, or reallocated throughout their supply chain.
• Putting metrics to work – When viewing transportation processes, shippers should start by consistently reviewing their business metrics to help them work toward continuous improvements. Tracking and analyzing the right data can support business decisions that will help enhance supply chain efficiency and eliminate waste.

The Best Approach to Managing Canadian Transportation Operations

When shippers are assessing various approaches to managing their Canadian transportation operations, they should keep a few best practices in mind:

• Increase visibility within the entire network – Look at the full view of the supply chain and understand all of the related costs. Analyze all expenses, starting with base transportation spend and work toward more complex supply chain functions such as: accessorials, fuel, prepaid goods, and fines and penalties.
• Improve with technology – With the help of the right TMS, shippers can make information-based decisions about their entire network. The right data points can enable shippers to understand both the day-to-day and the macro view of all supply chain operations.
• Be open to new ideas – Maintaining a continuous improvement culture starts by encouraging employees to look at new and strategic ideas across all areas of the supply chain: including people, processes, and technology.

Sources

• https://www.canadacartage.com/canadian-industry-outlook/
• https://www.tc.gc.ca/eng/policy/anre-menu.htm

Brian Ware joined Transplace during the acquisition of Lakeside Logistics in 2016 as Vice President, Marketing & Business Development. Prior to that, Mr. Ware was a member of the senior leadership team and held the role as Vice President of Marketing & Business Development for VersaCold Logistics Services for more than five years. For two of those years he led VersaCold’s distributor services division – primarily servicing Unilever and Metro Private Label. Mr. Ware has held progressive roles in marketing and business development for 18+ years with companies such as Time Warner and Quebecor Media. More recently, he has led many projects focused on supply chain optimization and network solutions within multiple industry verticals. He holds a Master’s Certificate in Supply Chain Management from York University and Bachelor of Arts from the University of Ottawa, in addition to receiving various Lean Six Sigma certifications. He is also a member of the Council of Supply Chain Management Professionals (CSCMP) and Supply Chain Management Association (SCMA).