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Welcome to the Freight Management Association of Canada's blog!

The information found in this blog is written by professionals in the transportation industry and is sourced by the FMA News Bulletin, the FMA magazine (The Shipper ADVOCATE), and FMA staff. FMA is blogging to give you insight into the latest trends, issues and successes in the industry and to keep you aware of what's next! 

FMA will be posting at the beginning and end of each month so be sure to check back each month for the next post.If you wish to provide feedback or submit an article for posting, please e-mail Kelsey Lemieux



October 6, 2017


CITT’s annual national learning & networking event, Canada Logistics Conference, 
is happening in Montreal October 25-27!

 
Canada Logistics Conference 2017 – the annual learning & networking event presented by CITT and open to all supply chain logistics professionals, is coming up soon. CITT recommends registering no later than October 20th to guarantee your seat, and cautions that the hotel may book up sooner than that. 

Canada Logistics Conference opens on Wednesday, October 25 with an evening networking reception at Au Sommet Place Ville Marie in downtown Montreal, followed by two days of learning sessions and networking opportunities at the Delta Montreal on October 26 and 27. The conference wraps up on the evening of Friday, October 27 with a cocktail reception and awards dinner (also at the Delta Montreal). The full conference agenda is available here.

Session topics include:

  • Digital disruption & tech innovation in supply chain
  • Canada-US trade update
  • International trade agreements
  • Inventory and warehouse efficiency
  • Transportation buying trends
  • Plus many other topics, including leadership sessions and logistics & transportation case studies
To register for the full conference registration, as well as à la carte registration options to attend the networking events, a single day of the learning programming, or to participate via webcast, click here: Register Now!
 

Opportunities to sponsor Canada Logistics Conference are also still available! For any questions, please contact Jennifer Traer at jtraer@citt.ca or 416-363-5696 ext. 32.


September 1, 2017
New Laws Loom as Driver Shortages Continue

By Delany Martinez 

Long-haul trucking has been in the midst of a staffing crisis for some years now, with numbers of available candidates dwindling and driver turnover hovering near a staggering 80 percent across the board.

Faced with this issue, some companies have chosen to pursue the route of innovation, with Google/Waymo hard at work both innovating in the driverless concept as well as sparring in court with rival Uber/Otto. Other truck-driving companies have chosen to stay the course, but find themselves with a particularly troublesome roadblock looming: electronic logging device (ELD) mandates.

It's a poorly kept secret that many truck drivers, burdened by low per-mile rates and sky-high truck leasing costs, choose to drive farther and longer than legally permissible. These drivers would alter or falsify their paper log books to look as if they'd only driven within legal limits, despite logistical impossibility in some cases.

With a new federal law requiring a transition to electronic logging devices by December, these paper logbook drivers are being forced to accept limitations without recourse, regardless of financial need or desire to work. Critics fear that the relatively slim percentage of drivers choosing to "stick it out" and remain in their careers might be forced out of work by the ELD mandates, found in an unenviable position of being "upside down" in their truck lease payments to their requisite companies.

While the 1911-era imagery of labor rights protester Rose Schneiderman's "Bread and Roses" — a rallying cry for both quality of work life as well as fair wages — seems an unlikely fit for a long-haul truck cab, it might be apropos.

A U.S. House bill passed in early July calls for an end to states' rights to require rest and meal breaks for truckers. If it becomes law, the bill might just be the proverbial nail in the coffin for drivers already anxious about the ELD rollout.

For an industry already struggling to retain its current workforce — much less woo fresh blood — this seemingly-unending wave of legislation and oversight could end up stoking the innovative fires for driverless-championing companies like Waymo.

For the logistics industry, every aspect of workflow is affected by changes like these. Raw materials coming into port need to make their way to manufacturing facilities. Finished components and products need to make their way to distributor facilities. Distributor facilities need a fast, easy way to move product to retail warehouses and stores. E-commerce outlets need to ship their products to the end consumer.

While new solutions in "last mile" delivery might help bridge some of that final gap, ultimately the end of 2017 will be a time of industrywide reckoning for driving companies across the nation.

There is no clear-cut solution, but it would benefit driving companies greatly if the implementation of these laws were pushed back by a few years. In a time of economic uncertainty, faced with a huge labor shortage, greater oversight could have a severely dampening effect on the 18-wheelers of commerce as they criss-cross the country.  

Click here to subscribe to the FMA News Bulletin

 



August 4, 2017

The Infrastructure that Matters Most to Canada

John Law and Ryan Greer 

Prime Minister Trudeau and his new government in Ottawa have made increased investment in infrastructure a defining feature of their long-term economic plan for Canada. Infrastructure investment was staked out as a priority in the Liberal Party election platform and was followed by high billing in the government’s first budget. So far, most of the government’s focus on infrastructure has been devoted to its newly established priorities of social, transit and green infrastructure. Budget 2016 provided each of these three categories with initial federal funding of $20 billion over the next 10 years for a total of $60 billion. Combined with the existing $60 billion Building Canada Plan (BCP), the government has committed to a record level of federal seed capital for national infrastructure investment.

The Canadian Chamber of Commerce and our network of 200,000 members are supportive of this new effort to upgrade the quality of infrastructure across Canada. However, notably absent in Budget 2016 with its focus on new social, transit and green infrastructure funding, was any clear commitment to the category of infrastructure which is of greatest long-term value to the Canadian economy, trade infrastructure.  

For a country that trades as much as Canada does, the competitiveness of its trade infrastructure is one of the most significant determinants of the quality of life that Canadians have come to expect. This is because Canada’s export-based economy relies upon its roads, ports, waterways, railways, airports and pipelines to move Canadian products and services to the markets of its trading partners around the world. Together, these transportation and logistics assets that we call trade infrastructure combine with information systems and Canadian ingenuity to form the backbone of a trade network that, today, accounts for more than 60% of the country’s collective income.

While the connection between trade and transportation infrastructure and Canadians’ quality of life is not new, what is, it can be argued, is the urgency for meaningful action. More than anything else, this urgency arises from accelerating competition from other nations seeking a larger share of the international trade pie. It is all about competitiveness. At a time when the quality of Canada’s own trade infrastructure is showing signs of increased strain, competitors are raising the bar by aggressively investing financial resources and political capital to improve their own trade infrastructure.

In the face of these new realities, the impacts of recent shortcomings in Canada’s infrastructure network, such as that evidenced by the 2013 grain crisis, extend beyond the multibillion dollar impact that this event had on the Canadian economy. We are learning the hard way that Canada’s reputation for producing high quality products and services is quickly eroded when we are unable to get them to destination markets in a timely manner.

Consequently, a significant measure in this coming test for Canada will be the ability to demonstrate improved reliability and efficiency in our trade infrastructure network. And the standard by which our progress will be judged will not be a domestic one. Canada’s will be graded by international customers who, to a much greater extent than ever before, will gauge Canada’s reliability against that of competitor nations that offer similar products and services. Our collective response will carry consequences for the country’s trade performance and the individual wealth of our citizens. 

Find out more about Trade Infrastructure in the Shipper Advocate Magazine and the Canadian Chamber of Commerce Report - The Infrastructure that Matters Most: The need for Investment in Canada's Trade Infrastructure 


July 7, 2017

The Future of Transportation in Canada: Developing a Long-Term Agenda

Bob Ballantyne 

 After making the final report of the Canada Transportation Review public on February 25, the Honourable Marc Garneau, Minister of Transport, announced the government’s initiative to develop a “Long-Term Agenda” for the future of transportation in Canada.  It is an ambitious and necessary project.  In addition to the recommendations of the CTA review, the Minister has been holding broad consultations to obtain input from stakeholders, and has been making use of several social media platforms to reach out to all interested Canadians. 
 

In a speech to the Economic Club of Canada on April 27th, the Minister outlined his approach to consultation.  It included five themes:

  1. Safer transportation
  2. Trade corridors and global markets
  3. Green and innovative transportation
  4. The traveler and
  5. Waterways, coasts and the North

The Minister held eight roundtable meetings with invited stakeholders on these five themes during the spring and summer.  While all themes impact freight transportation, either directly or indirectly, theme 2 is the one that focuses specifically on freight transportation and its importance to the Canadian economy.  The first of the roundtables was held in Toronto on May 24 on theme 2, “Trade corridors and global markets”.  FMA was one of 15 groups invited to this session, represented by the FMA chairman, Neil McKenna, Vice-President, Transportation at Canadian Tire.  Transport Canada has published summaries of the Roundtable discussions and they can be found at http://www.tc.gc.ca/eng/future-transportation-canada-678.html .
  
The Roundtables were not expected to reach conclusions or make recommendations, but to give stakeholders an opportunity to put their issues and perspectives on the table.    
In addition, the Minister was soliciting written submissions to be sent to Transport Canada by September 16.  After consultation with the membership, FMA submitted a comprehensive paper to the government covering all modes of transportation.  This paper can be found on the FMA website at http://www.fma-agf.ca/CMFiles/FMASubmissionFutureofCdnTransport.pdf .
  
News reports earlier this year quote Transport Canada officials as saying that the Department will not be making public statements on the CTA Review final report until at least the fall of 2016 and until they have had an opportunity to review and consider stakeholder input.  On October 21, FMA received a note from the Minister’s office that he will be setting out his plans for “The Future of Transportation in Canada” in a speech to the Chamber of Commerce of Metropolitan Montreal on November 3. FMA attended the Minister’s speech in Montreal and the Transportation 2030 article provides a summary and preliminary comments on the Minister’s announcements.

FMA has met with officials in Transport Canada and with political staff in the Minister’s office on several occasions since the CTA Review final report was published and will continue to meet with officials as the government’s plans evolve.

In late September, the Minister also met with his provincial counterparts to discuss a number of issues, including the “Long-Term Agenda”.  No information from that meeting on the Long-Term agenda has been made public.  Given the breadth of this review and in addition to the provinces, other federal departments including Agriculture, Industry, Environment, and Infrastructure will be asked to review and make recommendations to the Minister and the Cabinet on legislative changes that may be required to the Canada Transportation Act and other laws.  It is unlikely that broad legislative amendments will be introduced before late 2017 or some time in 2018.

In his April 27th speech, the Minister stated:
“For me, the transport portfolio is critical for economic growth. To put it bluntly, I regard the Transport portfolio as an economic portfolio. I see transportation in Canada as a single, interconnected system that drives the Canadian economy.”

While it is a single integrated system, many decisions are made on a “silo” basis, by the many private and public sector participants, who must meet the needs of their shareholders or political masters.  How to get the supply chain stakeholders to consider transportation as a single interconnected system, will be a tall order for the government.
   
FMA will continue to be engaged and looks forward to working with government officials on this important work.  As the CTA Review final report notes: “the quality of transportation and logistics systems may be the single greatest contributor to a country’s economic performance”.  The government and all stakeholders need to make sure that we get this right.

 


June 2, 2017

Experiencing Delays in your Air Cargo Shipments? Find out what you can do to speed up the process!
 By Transport Canada

TRANSPORT CANADA amended the Canadian Aviation Security Regulations, 2012 in May 2015, after extensive consultation with industry.

Air Cargo Security Program took effect on October from 17, 2016.

These changes address security concerns and align Canada with key international trading partners. We are working closely with air carriers and the supply chain sector to ensure as smooth a transition as possible.

Regulated Program participants can now screen and make cargo secure at different points within the supply chain, using Transport Canada’s prescribed methods. The cargo remains secure through verifiable chain-of-custody procedures between regulated members of the secure supply chain. This ensures that secure cargo can be loaded onto passenger flights without additional screening. Transport Canada will conduct scheduled and random inspections of participants to ensure they meet program requirements and standards.

The benefits to Program participants are clear: Cargo from Known Consignors can be loaded onto domestic, transborder and international passenger flights without rescreening because participants maintain its security status throughout the secure supply chain.

Obstacles to non-members may include: 

  • Delays and security fees: Cargo from outside the secure supply chain would have to pass through screening to make it secure for loading onto domestic and international flights carrying both passengers and cargo. This could result in security delays and additional security fees.
  • Restrictions: Cargo from non-regulated shippers could be restricted from air transport to the United States altogether, even after screening, unless the shipper is registered with Transport Canada.

How to Apply
Joining the Air Cargo Security Program is voluntary and free. Based on the goods it ships by air, as well as its overall business needs, a business can choose the best location to screen and make cargo secure.

Transport Canada accepts applications at any time. The process takes about six months, depending on a business’s existing security controls and its responsiveness during the application process.

Since November 2015, existing Air Cargo Security Program participants and those who use the Canadian aviation system to ship their goods have been able to apply to the Air Cargo Security Program under five new participant categories (Table 1).

Participant Requirements
Transport Canada has grouped Program requirements for participants around five security themes or “pillars.” In addition to some administrative information, applicants must provide information related to:

  1. Personnel Security: information about personnel with access to secure cargo, and the types of background checks performed.
  2. Facility Security/Transportation Security: details about the security of facilities in which cargo is screened and/or stored. Where applicable, Program applicants can also expect questions related to security of the vehicles in which secure cargo is transported.
  3. Chain of Custody: details about how they will maintain the secure status of cargo when accepting secure cargo from another Program participant, as well as details about the type ofcargo-related information it will require at the time of tendering.
  4. Training, Exercises and Audits: details about training personnel with access to secure cargo receive, to perform their security duties. We will also ask Program applicants if they perform security exercises and/or audits to assess the effectiveness of their cargo security controls.
  5. Screening: details about the procedures used to screen and make cargo secure, in accordance with Transport Canada-prescribed methods. This includes screening via physical security controls or the use of certain types of approved screening technology.

Learn More
Transport Canada encourages businesses wishing to participate in the Air Cargo Security Program to contact its Air Cargo Security Support Centre, or begin the application process directly through the Program website at www. tc.gc.ca/aircargosecurity.

For more information, contact the Air Cargo Security Support Centre toll- free at 1-866-375-7342 or by email at aircargo-fretaerien@tc.gc.ca. 

 


May 5, 2017

Environment Updates: Marine and Air Cargo  

By Alex Veitch, Global Shippers Forum 

The last few months have seen some highly significant developments in global environmental regulations relating to both air and marine cargo. For both sectors there have been changes in the way Greenhouse Gas (GHG) emissions are monitored and managed. In addition, the marine sector will see a global approach to reducing harmful Sulphur emissions. This article describes the key points and likely implications for shippers.

Air Cargo GHG emissions
ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), agreed at the ICAO General Assembly in October 2016, is designed to complement the basket of mitigation measures the air transport community is already pursuing to reduce CO2 emissions from international aviation.

These include a goal of carbon-neutral growth of international aviation from 2020, delivered by technical and operational improvements and advances in the production and use of sustainable alternative fuels for aviation (this includes, for example, an aspirational goal of improving fuel efficiency by two per cent by 2016), with CORSIA addressing remaining emissions.

Cost impacts for shippers of the ICAO approach to CO2 emissions on the air freight sector are unclear, but briefings by the UK national government delegation indicate that they are likely to be low, as they will be shared between passenger and cargo customers.

GSF has produced a briefing paper on Aviation CO2 emissions, available at www.globalshippersforum.com

Marine GHG Emissions
Following the Paris Climate Change Agreement, the IMO has been under increased pressure to take further action on GHG emissions. The IMO has already made some important steps forward in this regard – in particular new ships must meet energy-efficiency design standards. However with marine emissions continuing to rise, many Member States were keen to take accelerated action.

At the 70th Marine Environment Protection Committee (MEPC) meeting held in London in October 2016 MEPC meeting there was agreement to launch a new data collection mechanism, and also a 6-year process (from 2017 to 2023) to find agreement on what future policy measures, if any, to take on GHG emissions. These are explained below. 

Fuel consumption database
The IMO approved a fuel consumption database, which will require ships of 5,000 gross tonnage and above to collect consumption data for each type of fuel oil they use, as well as other, additional, specified data including proxies for transport work. These ships account for approximately 85% of CO2 emissions from international shipping. The data collected will provide a firm basis on which future decisions on additional measures, over and above those already adopted by IMO, can be made.

GHG “Roadmap”
The other important development related to GHG emissions was the approval, after a long and difficult debate of 6-year “roadmap” (2017 - 2023) which is a plan for how IMO member states will negotiate whether or not to introduce measures to reduce GHG emissions from ships.

The roadmap contains a list of activities, including further studies to forecast the future trends for maritime GHG emissions, which will be aligned with the data collected by the fuel consumption database (see above). At the end of the 6-year period, in 2023, the IMO member states will adopt a strategy to address GHG emissions.

Marine Sulphur emissions
In addition to the developments on GHG emissions, the October 2016 MEPC meeting made a vitally important decision on the reduction of harmful Sulphur emissions.

Ships generate approximately 5-10% of all man-made Sulphur Oxide emissions at a global level, which have significant health impacts. However, because the vast majority (around 70%) of these emissions occur within 400 km of coastal communities, around 60 000 early mortalities each year are attributed to shipping emissions, mainly in the seaside areas of East Asia, South Asia and Europe.

Recognizing these health impacts, the IMO has set January 1, 2020 as the implementation date for a significant reduction in the Sulphur content of the fuel oil used by ships. The decision is to implement a global Sulphur cap of 0.50% m/m (mass/mass) in 2020. Exemptions are provided for situations involving the safety of the ship or safety of life at sea, or if a ship or its equipment is damaged. This represents a significant cut from the 3.5% m/m global limit currently in place.

The decision was taken by the International Maritime Organization (IMO), the regulatory authority for international shipping, and followed the completion of an independent review which concluded that sufficient compliant fuel oil would be available to meet the fuel oil requirements. The IMO Member States had the option to defer the implementation date to 2025, but decided that given the positive outcome of the fuel availability study, and the health improvements that will result, the earlier date was preferred.

For shippers, the key issues are around implementation. The fuel supply and shipping industries have been aware that this regulation was highly likely to enter into force globally in 2020, and further, have already several years’ experience in ensuring they meet regional low-Sulphur requirements in ECA areas. There is no justification for additional surcharges on shippers to meet these air pollution requirements, particularly for trades into existing ECAs, where the rules are already in force.

That said, some industry analysts anticipate price increases and volatility as the market adjusts. Shippers should be particularly aware of additional surcharges blamed on increased costs of low Sulphur fuel, which is likely to be the main route to compliance for container ships. The Global Shippers’ Forum will be following the implementation phase at the IMO will provide more detail on this issue in future communications.  Further information is available from the IMO website, www.imo.org 

 


April 28, 2017

Free Report about the Arrival of Automated Vehicles

The Conference Board of Canada

The arrival of automated vehicles (AVs) is imminent. This report provides an overview of the potential benefits of AVs and highlights issues that we need to start planning for—now.

Document Highlights
The arrival of automated vehicles (AVs) is imminent. And, the first generation of AVs is already with us. Google has—as part of its “Chauffeur Project”—rolled out prototype AVs in California and elsewhere. And, there are numerous other developments in the U.K., Singapore, and other countries that are speeding-up the development of AVs. However, Canada needs to keep pace with this rapidly evolving technology. AVs have the potential to bring immense benefits—particularly saving us time and reducing the number of collisions on our roads. But as they roll out, AVs will be disruptive to both the public and private sector in the process. Governments and businesses must begin to plan for the arrival of AVs sooner, rather than later. This report provides an overview of the potential benefits of AVs and the highlights some of the issues that we need to start planning for—now.

Table of Contents
   Executive Summary
   Chapter 1—Introduction
   Chapter 2—Status of Automated Vehicles and Trends
      Rollout
      Rate of Adoption
      Benefits
      Planning for AVs in Canada
   Chapter 3—The Impact of AVs on Canada’s Economy
      Collision Savings
      Time Value Benefits
      Fuel Savings
      Savings From Congestion Avoidance
      Total Potential Benefits for Canada
      Other Impacts on the Economy
      Social, Economic, and Technological Changes
      Conclusions
   Chapter 4—The Impact of AVs on Infrastructure
      Standard Transportation Infrastructure
      Proposed Major Infrastructure Projects
      Conclusion
   Chapter 5—The Automated Vehicle’s Impact on Our Wallets
   Chapter 6—Conclusion
   Appendix A—Bibliography

Access full document here. 


April 7, 2017

Automated Vehicles 2017: Planning the Next Disruptive Technology

Wednesday April 19 - Thursday April 20 2017 • Sheraton Centre Toronto Hotel • Toronto, Ontario

Featured Keynote Speaker
The Hon. Marc Garneau
Minister of Transport
Transport Canada

 


The Conference Board of Canada is pleased to host The Honourable Marc Garneau, as he discusses Automated Vehicles and the future of transportation in Canada.

The era of driverless vehicles is just around the corner. How can we leverage this technology to help create the kinds of cities we want to live and work in?

Automated vehicles (AVs)—more popularly known as driverless cars—offer numerous societal benefits. Enhanced personal mobility (particularly for “car-less” populations), a decline in the number of injuries and fatalities, increased productivity due to freed up time while travelling, and reduced congestion are just some of the anticipated benefits. As the technology is being applied to the movement of goods as well as people, a number of commercial benefits are also expected.

As a disruptive technology that is poised to change the ways in which people and goods are moved, there will be numerous impacts within and between cities. Given there is public and government support for sustainable and complete communities, it’s even more important that we make sure that these priorities thrive in light of AVs.

It is for these reasons that The Conference Board of Canada will be holding the 2nd annual Automated Vehicles 2017 April 19 and 20 in Toronto. Building on the success of last year’s conference, which laid the foundation for key issues, opportunities, and challenges, this year’s event will take the conversation to the next level; beyond fundamentals and scenarios to strategies for achieving desired outcomes. 

To ensure a positive driverless future, we need to start planning now

A key message that emerged at the last event was that AV technology should be used as a tool to help realize a shared-vision for the kinds of cities we all want to live and work in. The technology is moving fast, with many companies working to make automated vehicles commercially available by 2020. Without a doubt, the time to start planning for AVs is now.

Gain practical insights from national and international experts and leaders

At this event you will hear experts from across Canada and abroad share their insights on how to proactively manage the transition to a transportation sector that includes AVs, while at the same time understanding key impacts on cities and the importance of a shared-vision for our cities.
This 2nd annual transportation conference will bring together industry experts, government leaders and strategic thinkers with expertise on AVs as they relate to planning, policy and practice. The event will offer a variety of insights, and consider implications for industry, all levels of government and the Canadian public at large.
This conference will ask and address some of the most pressing issues around AVs, including:
  • What is the role of AVs in creating sustainable and complete communities?
  • What policy actions are needed at all levels of government?
  • How will the technology affect Canadians’ lifestyles and mobility choices?
  • What is the future of mass public transit?
  • How can we further a shared mobility system to reduce traffic congestion and emissions and prevent zero-occupancy vehicles from being the new normal?
  • What is the role of partnerships between government and industry?
  • How might city size play a role in AV preparedness?
  • What are the opportunities and challenges for planners around AVs and social exclusion?
  • How can we maintain the priority for active transportation in the face of on-demand, driverless mobility services?
  • How will our changing parking needs present opportunities and challenges for cities?
  • What is our workforce transition management plan?
  • What are the implications for goods movement strategies and plans?
  • How can we manage the arrival of AVs without going back to car-centric planning?

Join us April 19 and 20 to discuss the impacts of AVs on cities and the role of the planning profession in managing the arrival of this disruptive technology.

This is your chance to explore key issues, network with your peers, and have your say on how we can strategically use the technology as a tool to help realize a shared vision for the kinds of cities we want to live and work in.

 


March 31, 2017

Mega-Ships, Alliances and Competition: what shippers need to consider

By Chris Welsh, MBE, Secretary General, Global Shippers’ Forum 

The Global Shippers’ Forum has been monitoring the impact of mega-container ships since their arrival in the Asia-Europe trade in 2011-12. Mega-ships have been defined as ships of 18,000 plus TEUs.  While largely confined to the Asia-Europe trade their effects have been felt more broadly internationally due to the knock-on effect of “cascading” larger vessels into other liner trades and the associated development of strategic alliances. This in turn has precipitated a major re-alignment of consortia and vessel sharing agreements world-wide which continues to be in a constant state of flux.

The deployment of mega-ships coincided with the slowdown in global trade stemming from the world financial crisis. The present difficult financial and trading position for the liner industry has been affected by two key factors: the slow-down of the Chinese economy resulting from a slow recovery in the key OECD economies; and unparalleled investment in new container ships, particularly in mega-ships which has created a significant imbalance in supply and demand, thus exacerbating poor financial returns. This has been starkly illustrated by the recent bankruptcy of Hanjin Shipping and the recent announcement that the three main Japanese carriers, K Line, NYK and MOL are to merge their operations. 

The growth of mega-ships has been a major driver for the development of the four main strategic alliances  and concentration of the container shipping market. As a result, the GSF has undertaken a detailed analysis of the potential impacts on shippers. In a major report issued in November 2016, the GSF has identified that the growth of mega-ships across many liner shipping routes has wide ranging implications for competition for shippers, between shipping lines and total supply chain efficiency.

The report illustrates that mega-ships and alliances may be harmful to shippers and ultimately to end consumers by reducing supply chain efficiency. It points out that the reduced frequency of sailings and promoting practices such as slow steaming has undermined just-in-time logistics deliveries for many shippers. These shippers have on occasion experienced overall additional supply chain costs through increased stock holdings and inventory as well as costs associated with unexpected supply chain disturbances, such as changes to shipping schedules at short notice, changes to ports of call and other disruptions which cause delays in deliveries to customers.

GSF’s economic analysis highlights that with the higher economies of scale associated with mega-ships, fewer ships will operate in a market of a given size. Given the cost advantages associated with larger ships relative to smaller ships, it is reasonable to expect that entry into a particular route will occur only with larger rather than smaller ships, provided the volume of trade is sufficient to warrant larger vessels. This, in turn, has implications for potential entrants on any particular high volume route. Moreover, the entrant must be able to operate a larger ship, and in order to be viable, the entrant must expect to fill the larger ship. These considerations raise the costs and risks of entry for ship-owners.

Given that higher economies of scale mean that fewer firms can operate viably in a market of a given size, the growth of mega-ships, by increasing economies of scale, and increasing the fixed costs associated with operating on a particular route, reinforce the trend in liner shipping towards fewer independent operators, with smaller operators being driven out of the major routes and into niche markets. It is therefore clear that the issues faced by shippers, as a result of the trend towards consolidation and cooperation due to mega-ships, are unlikely to be resolved by new entrants into liner shipping. This is particularly the case given the Organization for Economic Cooperation and Development (OECD) findings that today almost all major liner carriers are part of a global alliance, which creates a network of economic links between carriers and will tend to disincentives independent entry into liner shipping markets.

GSF’s report identifies a number of key recommendations in response to the economic issues and competition analyses raised by mega-ships, strategic alliances and growing consolidation in the container shipping market.

First and foremost, the report raises serious questions regarding the mega-ships and alliances business model. In particular, it questions whether competition authorities and regulators need to review their existing regulatory powers to deal with the new competition issues raised by consolidation and strategic alliances.

GSF believes that due to the complexity of the issues confronting the industry and the desirability of aligning the interests of shippers and carriers that there should be an active debate in in an on-going industry forum to discuss a sustainable future business model for the container shipping industry.

A copy of the full report can be found on www.globalshippersforum.com 


March 3, 2017

Transportation 2030: Encouraging for Shippers

By Bob Ballantyne


On November 3rd, 2016, the Honourable Marc Garneau, Minister of Transport, announced the government’s long-term transportation plans and policies under the title of Transportation 2030.


The plan covers five main themes: The Traveler, Safer Transportation, Green and Innovative Transportation, Waterways, Coasts and the North, and Trade Corridors to Global Markets. While most of the themes have implications for freight transportation, theme 5,Trade Corridors and Global Markets focuses most directly on freight transportation.

Following from the recommendations of the Canada Transportation Act Review, and the extensive consultation over the summer, the Minister’s statement indicates that he has heard, and responded to the concerns of Canadians with regard to both freight and commercial passenger transportation.

For rail freight transportation, FMA is gratified to see the Minister’s announcement on improved information sharing, on reciprocal penalties between railways and shippers in service level agreements, on a better definition of Adequate and Suitable service, and on considering the future of extended interswitching. All of these announcements are in line with FMA recommendations made to the Canada Transportation Act Review and also in recommendations we made over the summer directly to the Minister of Transport.

The safety and environmental policy announcements will have an impact on the shippers using all modes of transport, and will require continuing dialogue with stakeholders as the government’s plans evolve. The $10.1 billion investment for transportation infrastructure will help keep Canadian industry competitive globally, and will also be positive for consumers by maintaining effective service for Canadian retailers who are large importers. 


February 27, 2017

The World of Cargo Logistics Descends on Vancouver

Article by Peter Hurme, Show Director & Editor, Cargo Logistics Expos 

Those who move, warehouse, and distribute freight descended upon the Vancouver BC Convention Centre, en masse, Feb 7-9 for the 4th Cargo Logistics Canada Expo + Conference.

Over 2,600 delegates, exhibitors, sponsors, and speakers from around North America, and internationally, representing many different supply chains, converged upon the largest Multimodal show in Canada to engage, learn, network, and source a wide variety of logistics services and solutions.

The inaugural CLC17 VIP Shipper Pass program was a success, attracting over 300 cargo owners to Vancouver, including Wal-Mart, Best-Buy, Home Depot, Electrolux, Loblaws, London Drugs, Toyota, Tech Resources, Viterra, High Liner Foods, Stemcell Technologies, and many more.

Conference highlights included two well-attended lunch keynote fireside chats with Bjorn Vang Jensen, vice president, global supply chain for global appliance giant, Electrolux, and Jean-Jacques Ruest, executive vice president and chief marketing officer for Canadian National Railway.

Popular conference panels and presentations featured several popular tracks within the Shippers, Distribution, Port Productivity, and Commodities & Cold Chain summits, plus the Professional Development series. Some of the seminars were standing-room only. The first-floor conference level also featured the busy CN Media Lounge that was courtesy of one of CLC17’s largest sponsors: Canadian National Railway.

Other major CLC sponsors included: Vancouver International Airport, MercuryGate, Calgary Regional Partnership, Macropoint, Halifax Gateway, and Port of Vancouver.
The CLC17 exhibition floor featured 150 + exhibitors, that included: JB Hunt Transport, Transport, Leavitt Machinery, Williams Machinery, G.N. Johnston Equipment, and Hub Group.

This year’s CLC expo floor also featured the new Main Stage series of content that became part of CLC Live. The Main Stage helped kick off the opening of the show with a packed audience for The Outlook for the North American Economy by two noted economists: Dan North, chief economist for Euler Hermes, and Jock O’Connell, international trade advisor for Beacon Economics.

Other popular Main Stage panels included: Future Technologies Available Right Now; Deloitte’s Disruptive, Necessary, or Both? The impacts of evolving logistics technologies on your supply chain; The Refrigerated Transportation Best Practices Guide; and Is Privatization of our National Ports and Airports in Canadians’ best interests?

The CLC Main Stage, VIP Shipper Program, and much more will return to Vancouver Convention Centre West, Feb. 6-8, 2018, for the 5th Cargo Logistics Canada Expo + Conference, which promises to be the largest show yet.

If interested in attending, exhibiting, sponsoring, or speaking at CLC18, please visit: cargologisticscanada.com.

________________________________________

FMA at CLC 2017 



FMA participated in Cargo Logistics Canada 2017 as an Association exhibitor and also hosted a session on Shipper Protection in the Canada Transportation Act.

The session included some good discussions regarding dispute resolution and SLA processes and enlightened attendees on the options available to them through the Canadian Transportation Agency. John Corey, Team Leader, Mediation Services, Canadian Transportation Agency, and the speaker at this session, joked about his short but sweet presentation, answered questions on tariffs, level of service provisions and reciprocal penalties and explained why the U.S. is envious of Canada's interswitching regulations. FMA is very pleased with John's presentation and is encouraging shippers to take advantage of the services provided by the Canadian Transportation Agency.   

 



The FMA Marketing Manager, Kelsey Lemieux, was at the FMA booth in the tradeshow area exchanging socks for business cards! A unique take on the effort to make industry professionals more aware of the Association. 

Overall, FMA is proud to be a part of the largest supply chain conference in Canada and will continue to return year-after-year.   

 

 





February 3, 2017

Here comes the cargo: Is Canada ready?
 By Peter Hurme, show director and editor, Cargo Logistics Canada

The primary theme to come out of the third Cargo Logistics Canada Expo + Conference (CLC) in Montreal earlier this year was that of growth, which is the ideal lead-in for CLC17, returning to Vancouver February 8-9, in terms of how the logistics and multimodal transport sectors are preparing to handle these increases.

Industry leaders in Montreal shared forecasts that included close to a million more TEUs (20-foot equivalent units) entering the Canadian market over the next five years.

New and impending trade deals, such as the newly inked Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union could help spur this growth.

These trade agreements, along with where and how the ensuing global cargos they produce will move, shall be discussed in a variety of ways at CLC17 in Vancouver with panels that include: 

  • Ocean Shipping Outlook: The world of ocean shipping has been going through upheaval and change in recent years and there’s likely more to come as a group of experts and stakeholders present an outlook and forecast for this crucial supply chain sector
  • Air Cargo 2017: Providing the air-side perspective
  • North American Economic Outlook: From a thorough macroeconomic overview to discussion of the significant change in political leadership on the other side of the border, two noted economists offer up complementary economic outlooks for North America as we kick off the CLC Main Stage series
  • Competitive Trade Routes: Will focus on the Panama and Suez canals, among other related global trade routing trends
  • Shippers Roundtable: Cargo customers will include discussion on these growth patterns and challenges from the cargo customers’ perspective
  • Lunch Keynote fireside chat: With Bjorn Vang Jensen, global logistics director of Electrolux, the second-largest appliance manufacturer in the world
  • Mayors’ Summit: The featured Day 2 Lunch Keynote roundtable with the leaders of major Canadian cities discussing the opportunities and challenges their regions face with economic growth

For all the goods moving throughout Canada, the many corresponding supply chains need to be ready, and several panels at CLC will deal with this, including:

  • Goods Movement Strategies parts 1 and 2: Will go from the importance of different yet interconnected stakeholders being on the same page in terms of freight mobility, to plans for intermodal rail all over North America
  • Meeting the Challenges of Growth Demand: A Shipper’s Perspective
  • The Shortage of Logistics Land and the Evolving Warehouse
  • The Nexus of Economic Development and Logistics
  • Commodities Transport and Logistics Trends
  • Seafood Logistics: Nothing Fishy Here

The CLC conference agenda will also drill down into how the many diverse, multimodal supply chains operate, especially from the technological side of things, which can present its set of challenges if not navigated properly. Panels in this subject area will include:

  • Future Logistics Technologies Available Right Now
  • Multimodal Technology Trends
  • Disruptive, Necessary, or Both? The impacts of evolving logistics technologies on your supply chain
  • The Refrigerated Transportation Best Practices Guide
  • Dock Safety: Where trucks and the warehouse meet
  • Time for a Checkup: Optimize your Canada Border Services Agency container exam

What is just as important as the trends, issues and operational aspects for cargo logistics supply chains is the professional development and educational aspects, and the conference will also feature this type of content, including:

  • Trying to Reduce Operational Costs? Leadership strategies for improvement
  • How Effective Leaders Build Strong Teams
  • Motivation: Getting the most from yourself and your team
  • Responsible Procurement and Sustainable Supply Chains
  • Comply or Die? Untangling compliance issues

Cargo Logistics Canada aligns a lot of the show conference content under the respective banners of the following summits, befitting North America’s only multimodal expo where all supply chains gather under one roof:

  • Commodities and Cold Chain Summit
  • Distribution Logistics Summit
  • Port Productivity Summit
  • Shippers Summit

With regard to the Shippers Summit, CLC has instituted a VIP Shippers Program whereby importers, exporters and manufacturers from around Canada and the U.S. will be attending as part of an exclusive program tailored for them.
Cargo Logistics Canada will also offer a variety of additional, dynamic platforms for attendees to network, connect and do business with 2,500-plus peers, customers, prospects and vendors in attendance, including:

  • A show floor of 150-plus exhibitors representing a wide array of products and services
  • More conference content on the show floor including the new CLC Main Stage for VIP all-access and a la carte pass holders, plus the free CLC Live! area
  • A big welcome reception on the third floor of the Vancouver Convention Centre with spectacular evening views of the harbour on February 7
  • Networking reception on the show floor February 8 followed by the Halifax Social at Mahoney & Sons Burrard Landing
  • Happy hour on the show floor February 9

For more information about attending, exhibiting or sponsoring at Canada’s largest logistics event, go to: www.cargologisticscanada.com.

 


January 31, 2017

Environmental Carbon Pricing Mechanisms

By Kelsey Lemieux

Greenhouse Gas (GHG) emissions have been a looming issue in Canada, and the rest of the world, since it became evident that human activities were significantly contributing to climate change. With this issue now on the minds of humans globally, the challenge is to change the way in which we contribute to GHG’s by decreasing the use of fossil fuels and increasing the use of clean energy. A carbon tax program was introduced in British Columbia in 2008, a cap-and-trade program was introduced in Quebec in 2013 and this year a carbon tax program has been introduced in Alberta and a cap-and-trade program has been introduced in Ontario. It is believed that these initiatives will encourage individuals and businesses to reduce fossil fuel consumption and will limit the amount of pollutants emitted.
  
Carbon Tax vs. Cap-and-Trade
A Carbon tax is placed on the greenhouse gases emitted by a company usually on a per tonne GHG emission. An example, as mentioned earlier, of a carbon tax initiative, is B.C.’s introduction to a carbon tax program in 2008, which is now seeing a positive impact: “the latest numbers from Statistics Canada show that B.C.’s policy has been a real environmental and economic success after six years. Far from a being a “job killer,” it is a world-leading example of how to tackle one of the greatest global challenges of our time: building an economy that will prosper in a carbon-constrained world.” The B.C. carbon tax rate started at $10 per tonne of carbon dioxide and is currently $30 per tonne. The Government of Canada stated that the Ontario “{carbon} pricing should start at a minimum of $10 per tonne of carbon dioxide emissions in 2018, rising by $10 each year to $50 a tonne by 2022."

The other emission reduction program, cap-and-trade, allows “government {to} put a firm limit, or cap, on the overall level of carbon pollution from industry and reduces that cap year after year to reach a set pollution target. As the cap decreases each year, it cuts industry's total greenhouse gas emissions to the limit set by regulation, and then forces polluters that exceed their emissions quota to buy unused quota from other companies.” In 2013, Quebec introduced a cap-and-trade program which focused on reducing emissions for any “entities emitting 25 kilo-tonnes of CO2 or more of CO2 equivalent”. In 2014, Quebec linked its cap-and-trade program with California in order to inflict a “global effort to combat climate change”.  While it is difficult to determine how successful this initiative has been for Quebec, since “caps on greenhouse gases were applied to the full spectrum of polluters” in 2015, Quebec’s program is expected to perform comparably to B.C.'s.

Some citizens have been concerned that a carbon tax or cap-and trade program would damage the Canadian economy, but when one researches B.C.’s initiatives, the B.C. experience does not support this conclusion. Since 2008, the people of B.C. have “the lowest personal income tax rate in Canada, one of the lowest corporate rates in North America” and “fuel use in B.C. has dropped by 16 per cent; in the rest of Canada, it’s risen by 3 per cent”. In addition to these results, B.C.’s GDP has also “slightly outperformed the rest of Canada since 2008”.

Canada could see benefits from the introduction of the carbon tax program in Alberta and the cap-and-trade program in Ontario including environmental and economic improvements, competitiveness, job creation, innovation, and acceleration of the development of a clean economy. As more provinces adopt carbon pricing programs, individuals and businesses will be watching closely to see if the forecasted environmental and economic gains are achieved.

FMA Involvement
With the initiation of these carbon pricing mechanisms there will be climate issues with the federal and provincial governments and with international agencies that will impact freight transportation in Canada and internationally. FMA will continue to be involved and will represent the interests of shippers.

Sources
World Leaders in Paris at COP21 Embrace Carbon Pricing To Hasten a Low-Carbon Future 
Carbon tax or cap-and-trade?
Canada - Québec Cap-and-Trade System
The Quebec Cap-and-Trade System Strengths and Advantages
The shocking truth about B.C.’s carbon tax: It works
Here's where the provinces stand on carbon prices

 


January 3, 2017
Top Articles of 2016

1. FMA celebrates 100th anniversary with centennial reception! 

Freight Management Association of Canada 
From July 14: This year marks a major milestone for the Freight Management Association of Canada (FMA), the 100th anniversary of the Association. The Canadian Traffic League was founded on Oct. 25, 1916, at 67 Yonge Street, Traders Bank Building, Room 1404 in Toronto.  
READ MORE 

2. Bipartisan bill to protect northern border passes US Senate 

Homeland Security & Governmental Affairs 
From Dec. 1: The Senate passed S. 1808, the Northern Border Security Review Act, a bipartisan bill introduced by Sen. Ron Johnson (R-Wis.), Sen. Heidi Heitkamp (D-N.D.) and Sen. Kelly Ayotte (R-N.H.). The bill would require the U.S. Department of Homeland Security (DHS) to conduct a comprehensive examination of the current resources and personnel levels, and to fully evaluate security threats and challenges at the border.  
READ MORE 

3. Transport Canada issues SOLAS container weighing procedure 

Materials Management & Distribution 
From June 2: Transport Canada strongly suggests that shippers, carriers, forwarders and terminal operators need to plan how to apply these new SOLAS requirements in an efficient and effective manner. They all have a strong incentive to encourage compliance, to avoid disruptions in the supply chain. The department encourages shippers to use trade approved weighing equipment to fulfill the SOLAS requirements. This will ensure they declare accurate container weights according to the well-established and understood regulatory regime for weights and measures.  
READ MORE 

4. Hybrid Airships to move freight to Alaska and Northern Canada 

Air Cargo Week 
From Sept. 8: Hybrid Enterprises has signed a strategic partnership with PRL Logistics and Straightline Aviation to use LMH-1 airships to move airfreight and personnel to isolated regions of Alaska and Northern Canada. Hybrid Enterprises is the reseller of the LMH-1 airship, which was developed and built by Lockheed Martin's Hybrid Airships, and is designed to land on almost any surface including snow, gravel or water and can carry up to 22 tonnes of freight along with 18 passengers and crew.  
READ MORE 

5. Getting older is cruelest blow to global growth, just ask Canada 

American Journal of Transportation 

From Oct. 6: An older population is becoming the most powerful drag on Canada's job market and growth prospects. And it's also a reason why the global economy may get stuck in an era of low interest rates and weak demand. Bank of Canada Governor Stephen Poloz gave a blunt speech, saying that five decades of expansion powered by the Baby Boom generation is ending, and Canada's potential economic growth has slowed to 1.5 percent.  
READ MORE 

6. Canada's share of US imports the lowest since free trade began 

Huffington Post 
From Feb. 25: America doesn't need Canada anymore — at least not nearly like it used to. The share of U.S. imports that come from Canada has hit its lowest point in decades, lower than at any point since the U.S. and Canada entered into free trade in the late 1980s, Desjardins Economics says. Canada's share of U.S. imports fell to 13.2 per cent in 2015, down from 18.5 per cent in 1990 and 19 per cent in 2000, Desjardins senior economist Francis Généreux wrote in a report issued.  
READ MORE 

7. Shipping could replace pipeline in Canada 

The Maritime Executive 
From Feb. 25: The Western Canadian province of Alberta is blessed with abundant oil reserves, while an oil refinery located in the Eastern Canadian province of New Brunswick seeks delivery of that oil, via pipeline. However, several mayors of towns and cities located in the province of Quebec oppose the pipeline carrying oil through their towns. The town of Magog, Quebec, was the site of a tragic derailment involving a train carrying crude oil from Western to Eastern Canada.  
READ MORE 

8. Minister Garneau presents his strategy for the future of transportation in Canada: Transportation 2030 

Government of Canada 
From Nov. 3: The Honourable Marc Garneau, Minister of Transport, is delivering on his commitment to create a safe, secure, green, innovative and integrated transportation system that supports trade and economic growth, a cleaner environment and the well-being of Canadians and their families. Minister Garneau was at the Chamber of Commerce of Metropolitan Montréal today to present his strategy, Transportation 2030, to over 550 key transportation stakeholders from across the country.  
READ MORE 

9. CN and CP railways both on track for more layoffs 

The Globe and Mail 
From May 19: Canada's two major railways are slashing expenses and eyeing more layoffs amid a slump in freight made worse by the fires in Northern Alberta. Canadian National Railway Co. has laid off 1,200 people from its staff of about 23,000 and parked 400 locomotives or 20 per cent of its fleet. Jean-Jacques Ruest, CN's marketing chief, said there are "probably more layoffs" to come.  
READ MORE 

10. Lithium Ion battery ban as cargo on passenger aircraft now effective 

Canadian Shipper 
From April 7: On Feb. 22, the ICAO Council adopted the recommendation of the ICAO Air Navigation Commission that lithium ion batteries, UN 3480, Packing Instruction 965 only, be forbidden, on an interim basis, as cargo on passenger aircraft. As a result, all packages prepared in accordance with Section IA, IB or II of Packing Instruction 965 will be forbidden for carriage on passenger aircraft starting April 1, 2016.  
READ MORE 

 

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October 31, 2016
Why Singapore Changi is consistently the best airport in the world

By Matt Falcus


Look at the Skytrax rankings for the world's best airports, and you'll see a common name topping a number of categories for the past few years. Singapore's Changi Airport repeatedly sets the target for passenger experiences, but what makes it so special?

 

As a major Asian hub airport and home to the renowned Singapore Airlines, Changi has its work cut out, handling more than 55 million passengers per year and nearly 350,000 aircraft movements. So it would be forgiven for struggling to cope with overcrowding. Yet the passenger feedback and awards consistently prove otherwise.

Part of what makes Changi so special is that the two-runway facility acts like a destination in its own right, offering the kind of amenities found in luxury resorts and shopping malls and not in an airport that sees a plane land or take off every 90 seconds.

Among the attractions on offer are spas, a butterfly garden, swimming pool, cinema, hotels and concourses laid out with tropical vegetation and areas for relaxation. This is on top of the range of airline lounges that are normally the height of luxury found in an airport by frequent fliers.

The latest installation that will grace Changi Airport is an indoor water fountain that is set to be the tallest in the world.

Developed by the specialist company WET, who are behind prominent fountains in Dubai and Las Vegas, it will incorporate a curved glass roof with a hole in the center, through which water will fall nine stories to a pool below. Combined with lighting effects, it will represent a tropical rain storm typical of the region and provide a tranquil calm among the busy surroundings of the airport.

The new fountain is expected to be in place by 2018, set in the new Jewel Changi Airport connector building, which will also act as an extension to Terminal 1, linking it to terminals 2 and 3. The whole Jewel experience will fuse shopping mall, dining and passenger services inside a huge dome filled with elements of nature.

In the meantime, the new passenger Terminal 4 is scheduled to open in 2017 on the site of the airport's former Budget Terminal. It will feature even more amenities to enhance the passenger experience, as will the new Terminal 5 due in the mid-2020s.

Singapore Changi's management is now so pleased with its ability to run airports that it is looking to invest in airports in other countries. Changi Airport Group Chairman Liew Mun Leong said in a recent interview that airports in ASEAN countries — and in particular China, where there is a great demand for new airports — are interesting opportunities for the Group.

Changi's dominance in the popularity stakes is likely to continue, but its dominance as Southeast Asia's largest hub could be challenged as work commences on doubling the capacity of Bangkok Suvarnahbumi Airport in Thailand.

"The airport business is growing very fast," Liew told Nikkei Asian Review. "We are pushing ahead to make sure we don't lose out in this competition."

Matt Falcus is a British aviation writer and author, and editor of the Airport Spotting Blog, which delivers daily news on airline and airport operations around the world.

 

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October 6, 2016
A Century of FMA

By Kelsey Lemieux



This month, the Freight Management Association of Canada will celebrate it’s 100th anniversary. We would like to thank our members, employees, partners and other stakeholders for their continuous support and contributions to our accomplishments.

Canada has changed a lot over the past 100 years but transportation in Canada (and the rest of the world) has changed exponentially. At the beginning of the Association’s journey, the First World War was in full swing and Canada was heavily involved in the war effort in many ways.  Canadian industry was geared up to produce munitions and other war supplies and a particular challenge was to move these vitally needed goods to the front in Europe.  The railways were being stretched to move goods to east coast ports and availability of ocean shipping was also an issue. The Canadian government was becoming increasingly concerned about the freight situation and strongly encouraged the railways to coordinate their activities to support the war effort.

With this background, a meeting was convened on October 25, 1916 in Room 1404 of the Traders Bank Building, Toronto “for the purpose of organizing the {then} Canadian Traffic League”.   There were eighteen people (all male) present at this founding meeting representing a number of companies in the Toronto area, and one association: The Canadian Manufacturers Association.  

When the League began, it scheduled monthly meetings in the evenings.  This was before the era of TV and other electronic diversions and so these sessions were not only business, but appear to have been at least partly pleasure with an indication that there were usually refreshments involved after the business meetings.

Most of the early consideration was with railway transport and it is interesting to compare the railway topics under discussion in 1916 with those under discussion in 2016.  Some problems, it seems never get solved.  On-time delivery was a problem then and remains a problem today.  On February 5, 1919, the League passed a resolution asking members to “tabulate any excessive delays experienced to their traffic over” (a three-week period) “the idea being to subsequently send a statement to the chief traffic and operating officials of the interested railways …. with the idea of bringing about an improved service”.

Each year, new issues arise and some can be unexpected, but as we celebrate this time in FMA history, we are aware that each issue will impact the Canadian economy, the environment and shippers’ bottom lines. FMA will be pursuing these with the appropriate Canadian or international authorities, communicating these to the membership and obtaining member input.

When these men started the Canadian Traffic League, they were, of course interested in the problems of the day, but they started something that was of value to Canadian industry then and is of more value to Canadian industry today.  The current environment for FMA members is at least as challenging as it was for League members in 1916, but as the first constitution stated, FMA will continue to work to “bring about better transportation conditions generally”.  

Come Celebrate with us at the International Centre on October 12 & October 13


September 09, 2016
Driver Retention comes down to Company Culture


By Elizabeth Kraus

With a driver shortage nearing epic proportions, small wonder that driver retention tops the list of carrier objectives.

A new report by employment screening firm HireRight offers insights into why drivers leave their jobs, and sometimes leave the industry altogether. Among the list of top reasons for driver turnover is company culture. In fact, about 1 out of every 5 drivers who leaves the industry does so because they don't feel like the organizational culture is right for them.

Let's take a closer look at why driver retention depends heavily on company culture and how you can better increase engagement and buy-in with drivers and other employees who spend a majority of their time away from corporate offices.

Driver turnover is a serious problem. The Upper Great Plains Transportation Institute estimates it costs more than $8,200 on average to replace a truck driver. Not only does it drive up costs across the organization, but it's also likely to impact the customer experience negatively. Clients may even stop doing business with carriers when they feel like they have to "break in" new drivers on a regular basis.

It's no surprise that carriers participating in the HireRight study recognize the importance of addressing driver concerns, including improving company culture. In fact, 59 percent of study participants said finding, retaining and developing talent was their biggest challenge, more than twice as many as any of the other challenges identified in the study.
Improving company culture is a complex issue, especially in the case of a trucking business where drivers may be on the road for days, weeks or even months at a time before coming in to a carrier's offices. Here are some ways to make your culture relevant to drivers and other employees whose work is done from outside your company's physical location. 

  1. Hit the ground running
    For 90 percent of drivers, the first six months on the job determine whether they will stay or go. Instead of focusing on how quickly you can get new drivers out on the road, your trucking business may become more profitable if you focus on getting new drivers integrated into company culture so they feel their success and your company's success are intertwined.

  2. Employ a marketing mindset
    When you want to land important customers and retain them for the long term, you take the time to find out what matters most to them — where their pain points, concerns, wants and needs lie. The more you are able to demonstrate concern and develop solutions that meet their needs in the here and now and over time, the more likely they are to sign on and stay on as customers.

    The same principles can be applied to driver retention. Looking beyond the hiring and onboarding process, make it a priority to find out what is and is not working well for them. Minimize their on-the-job pain points. Discover and address their concerns. Repeat this process over time so your company culture continues to evolve in alignment with changing driver needs.

  3. Maximize communication
    Drivers don't have a chance to catch up with other employees in the break room or at the water cooler, and they are often out of town when employee and departmental meetings are taking place. However, today's technology eliminates many of the logistical problems corporate communications used to face.

    Expand the number of communication channels drivers can use to find out what's going on in the company so they stay connected to company news, changes that will affect their work or impact compensation and benefits, and enable them to attend important meetings and corporate events virtually when they cannot attend in person.

  4. Deputize liaisons
    The benefits that follow success when integrating drivers (or any remote workers) into company culture are significant. Appoint company culture liaisons whose job is to interact with drivers on a daily basis, ensuring their voices are heard within the company and that they are getting the information they need from the organization.
    Not only will it give drivers a direct line in to your trucking business, it will let them know they matter, as individuals, to the company.

Study after study demonstrates the direct correlation between employee engagement and retention. Carriers who improve driver retention rates aren't just cutting expenses, they are creating competitive advantages that will set them apart from the rest. 

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 August 05, 2016
How to win the battle against rust on your trucks 

By Alan Kelsky

Rust is a major concern for small business owners who depend on their trucks for their livelihood as well as fleet owners for whom trucks are a major investment. Trucks with corrosion damage can lead to lost income as well as high repair bills.

Rust on trucks usually shows up during the winter and spring and is caused by road salt used to melt winter ice and snow.
Environmental conditions also play a part in truck corrosion. Items such as sea air, industrial pollution, pesticides, weed abatement and dust control chemicals, and high humidity can also accelerate the corrosion process on your truck(s).

This post will discuss the prevention and treatment of corrosion on trucks.

Rust prevention
When it comes to truck ownership, the number one way to treat rust on trucks is to prevent it. For the most part, truck corrosion is preventable. Frequent washings can keep the truck body and the underside clean of salts, grime and dirt that directly leads to rust.

One often overlooked part of rust prevention is to make sure the drain holes in rocker panels and door bottoms are clear of dirt and debris so that rainwater or high puddles through which you drove can drain properly from your truck.

Whether you drive a pickup or a rig, a wax application is a good way to keep rust under control, especially in winter. So, when you are finished washing your vehicle in the winter, apply a coat of quality wax to protect surface rust from taking root.

Surface rust
Surface rust occurs when paint breaks down because of mechanical or UV damage. Sadly, every vehicle on the road has flaws in paint jobs.

Surface rust will not harm your truck(s) in any way. However, depending on your truck's metal thickness and the composition of the alloys used in making it, it can cause problems later on — passivation of rust levels is a bad idea. Fix minor surface rust problems before they become major problems.

Scale
If you find a bubble in your truck's paint job, it comes from surface rust that you didn't notice or failed to correct properly. To understand the phenomena of rusting, you need to know rust molecules are larger than iron or steel molecules. This causes rust to self-propagate by expanding and flaking off. This process leaves metal exposed, and the corrosion begins again.

Once the rust finds its way to the surface, it makes for a pitted and rough surface known as scale. The repairing of scale is more difficult than fixing the surface rust and sometimes it is just easier to replace a panel on a van or truck cab.

Penetration
Left unchecked, scale leads to penetration. This is bad — very bad. There are two ways to fix this problem and both are not easy.

Option 1: Replace a panel on your truck cab; for pickups and vans the same advice holds.
Option 2: Cut out the bad parts of the truck cab and weld patch panels where you cut out pieces.

Whichever method you decide on, it will take time and money to properly repair your vehicle to make it roadworthy again.

4 takeaways 

  1. Rust, if left to its own, will ravage your cab or truck and cause expensive and time wasting repairs.
  2. Rust is preventable.
  3. Treat minor paint defects promptly to prevent further rust damage.
  4. Rust is a reaction of metal to moisture, dirt and road grime.

Alan Kelsky holds a master's degree in business administration and a bachelor's degree in comparative economics. He spent many years in the healthcare sector before becoming the owner of Electric Control Services (ECS). Electric Control Services uses innovative technologies to reduce utility consumption of manufacturing and commercial buildings. Most jobs have a payback period of three years or less. Alan lives in Folsom, California, with his wife Mary and rescue dog Jake. 

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July 29, 2016
How women in trucking undervalue themselves (and how you can stop)

By Elizabeth Kraus

Studies show that women undervalue themselves and underprice their business services compared to male counterparts. Here are some ways women in trucking and logistics roles can be aware of this tendency and work to reverse the trend.

Studies Show Women Undervalue Themselves and Their Businesses
In "7 Ways Women Limit (and Sabotage) Their Success," business owner and leadership trainer Kathy Caprino talks about seven things women seem to do more often than their male counterparts. These seven factors may stem from the tendency women have to undervalue themselves, which in turn may contribute to perceived reduced value from colleagues and customers. It’s a cycle that can and should be reversed.

Women in transportation and logistics roles may be especially vulnerable to this kind of thinking given the traditionally male-dominated aspect of the industry. According to Ryder.com, a mere 14 percent of leaders in the trucking industry are women. The lack of representation and female success stories to aspire to may even lead female trucking industry professionals to doubt their abilities.

What’s more, a double standard seems to exist in some cases. In one study, Yale University associate professor Victoria Brescoll discovered that women who go against gender stereotypes are viewed as angry, incompetent and unworthy of power in the workplace when judged by the same behaviors male counterparts use to get ahead.

If there is inherent bias to overcome in the trucking industry as well, it makes for a steep hill to climb. However, there are some things to keep in mind that can help you avoid undervaluing the contributions you make in the workplace or the prices you should be charging for your company’s goods and services as a woman in the trucking industry.

Admit There’s a Problem
“You can’t change what you won’t acknowledge.” Women, who make up half the U.S. workforce, are underrepresented in trucking and logistics leadership roles. When it comes to their own business pricing strategies, again, women undervalue themselves and their companies.

A Texas Christian University Neely School of Business study found that female entrepreneurs routinely underpriced their services as compared to those of their male counterparts, even when those women had a significant amount of decision-making power and discretion in setting prices.

Discover Cause and Effect Relationships
Numbers alone don’t tell the tale. In the Neely School of Business study cited above, the tendency of women to place a higher degree of value on relationships than making money was indicated as one possible cause. If you find that you’re undervaluing yourself or your business in the marketplace, determining the root cause of this tendency can help you understand why, and help you satisfy this inclination in a different way.

For instance, female owner-operators who consider dropping their prices for friends or out of compassion for a customer may determine they can do more good by charging a competitive price and using some portion of proceeds to help. Women in trucking and logistics management roles may need to prioritize researching salaries and negotiation skills in order to close the gender gap in the workplace.

Avail Yourself of Resources
The Women in Trucking Association (WIT) exists specifically to progress the professional success of women in trucking and logistics. This organization brings resources to bear to change the industry itself, but it also has resources that female trucking entrepreneurs and leaders can take advantage of individually. In addition, you can seek out skills training, support, resources and programs that are designed to help women entrepreneurs in any profession; such as:

  • SBA.gov’s resources for Women Business Owners
  • Podcasts and events hosted by Women Who Startup
  • Podcasts for women in male-dominated industries at Women’s Tech Radio

Remember You’re Setting a Precedent
Whether you’re a female entrepreneur or a woman in a leadership role in the trucking industry, or you’re on the other side of the table, it’s important to remember that everyone has a role to play. The precedents you set in under-pricing your trucking services or taking a lower salary will have ripple effects.

These consequences can impact the amount of money your company will ultimately earn and the compensation you’ll be able to give your employees. They will impact your future earnings as a leader and may set a lower salary for future women leaders in the industry.

Women undervalue themselves and their businesses — or at least some have up until now. We all have the opportunity to be part of the generation that raises awareness and erases any gender gaps that exist in the trucking industry.

Elizabeth Kraus directs the marketing initiatives of receivables financing company DB Squared. A freelance marketing strategist based in the Seattle area with more than two decades experience in human resources and marketing leadership, she is also the author of the small business marketing calendars and books, including "365 Days of Marketing," which is available through Amazon.

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July 1, 2016
Weighing In

By Julia Kuzeljevich

Bob Ballantyne, President of the Freight Management Association of Canada, led a panel discussion at this year’s Cargo Logistics Canada conference in Montreal on February 18, to discuss the International Maritime Organization’s (IMO) amendment to the Safety of Life at Sea Convention (SOLAS). 

The amendment will require, as a condition for loading a packed container onto a ship for export, that the container has a verified weight. The shipper is responsible for the verification of the packed container’s weight. This requirement will become legally effective on July 1, 2016. After that date, it would be a violation of SOLAS to load a packed container onto a vessel if the vessel operator and marine terminal operator do not have a verified container weight.

Canada is a signatory to SOLAS and is obliged to follow the SOLAS regulations as amended. The SOLAS amendments provide that there are two methods shippers may use to determine the container weight once the container packing process has taken place. This requirement will apply globally. Shippers, freight forwarders, vessel operators, and terminal operators will all need to establish policies and procedures to ensure the implementation of this regulatory change. Also participating in the panel were Karl- Heinz Legler, General Manager at Rutherford Global Logistics, and Karen Kancens, the Shipping Federation of Canada’s Director of Marine Administration.

The FMA has been working with its members, the government and other stakeholders since mid- 2015 and said it continues to be available to assist the shipper community meet the revised SOLAS verified gross mass (VGM) requirements.

The misdeclaration of container weights has led to marine accidents and significant losses to shipping lines and carriers. The sinking of the MSC Napoli between England and France in January 2007 was a prominent example of this.

Regarding the MSC Napoli, the UK’s Marine Accident Investigation Branch (MAIB) stated at the time that “the problem of misdeclared weights was prevalent in the industry due to a lack of weighing facilities, and shippers knowingly declaring lower weights to avoid import duties, maximize container use, and to get around road and rail weight rules.”

The Main Provisions

  • The shipper is responsible for obtaining and documenting the VGM of a packed container.
  • The VGM must be communicated to the ship’s master or the shipping line’s terminal representative prior to loading on the ship.
  • The communication should be signed by a duly authorized representative of the shipper (may be an electronic signature).
  • Packed containers will not be loaded on ships unless the verified mass is provided to the master.
  • There are two authorized methods for obtaining the VGM:
    - Method 1: Weighing the packed container. – Method 2: weighing the cargo, e.g. pallets, cartons, etc., dunnage, packing and bracing material, and adding those weights to the tare weight of the container
    - Method 2 is not to be used for bulk cargo, e.g., bulk grain, scrap metal, etc.
  • Estimating weight is not permitted.
  • Weighing equipment for either method 1 or 2 must be certified by the appropriate national government agency (Measurements Canada).

Who is the Shipper?
According to an IMO circular, a “shipper” is a legal entity or person named on a bill of lading, sea waybill or equivalent transport document (e.g., through bill of lading) as shipper and in whose name or on whose behalf a contract has been concluded with a shipping company. The shipper can be the beneficial cargo owner, the freight forwarder or a 3PL, i.e. the party named as shipper on the ocean bill of lading.

Documentation and Transmission
The IMO has issued no regulations on the form of document; this will be left to the commercial partners. It is not proposed that specific requirements be introduced in relation to the format or location of the verified weight, except that it must be provided on the shipping documents, clearly state that it is the verified weight, and be signed by the person authorized to do so by the shipper. The signature may be an electronic signature or may be replaced by the name in capitals of the person authorized to sign it.
It’s recommended that shippers negotiate the communication details directly with their marine carrier as soon as possible, the FMA noted.

Regulations in Canada
Transport Canada is developing a procedures guidance document, in accordance with the Canada Shipping Act. The Act has provisions for administrative monetary penalties (AMPs) that would apply to contraventions of the VGM requirements and that would range from $600 to $12,000.

  • Transport Canada Marine Safety and Security (TCMSS) is responsible for enforcement of the provisions of Chapter VI to the SOLAS Convention. TCMSS will conduct oversight activities with a risk-based approach and on receipt of breach notification. It will do spot checks of paperwork to verify transmission of VGM to the carrier. Transport Canada will not weigh containers.
  • If a container is found not to have a VGM, or if Transport Canada receives notification of a problem with a VGM, TC will prevent the container from being loaded. Reweighing will be left to the commercial parties.
  • While the shipper is obliged to provide an accurate weight, a five-percent variation will be the threshold applied by TC for enforcement purposes. (Some cargo products can incur minor changes in mass from time of packing until delivery due to environmental factors [e.g., evaporation or humidity].)

A Few FAQs

  • Transport Canada will not consider a 3-to-6-month soft implementation of warnings without penalties.
  • Transport Canada will not enforce the transfer of VGM information to others in the supply chain having custody of a loaded container. It will only consider that VGM is supplied to the shipping line.
  • The VGM must be received by the carrier in time for preparation of the stowage plan, to be determined by the shipping line.

Issues to Consider

  • The way that containers deliver to ports is not the same worldwide, and nuances have to be dealt with in each country (162 signatory countries!).
  • The SOLAS convention does add additional layers of reporting and is expected to have commercial consequences, i.e. ultimately, who pays for the scaling, the potential deviations?
  • Terminal operators have brought up questions about scale variations – something that will have to be examined.
  • The Shipping Federation of Canada is trying to come up with a viable industry procedure to meet the SOLAS regulations. According to Karen Kancens: “Shipping lines need to standardize on a global basis, then according to each country they are dealing with. There is room to play in terms of carrier response in verifying and reverifying weight – a concern for everyone. What happens if the container arrives at the terminal without a VGM? We don’t have answers to those questions.”
  • A VGM “certificate” as such does not exist. It can be reported on the waybill as the signature of the person reporting.
  • Some terminals have announced non-acceptance of containers without an electronic VGM. Some say they could offer the weighing as a service.
  • The original IMO concept was that all containers would be weighed at ports – which could be a huge productivity issue. “IMO has said it’s a commercial issue and stakeholders must work it out. Eventually it will put more pressure on shipping lines to improve the accuracy of container weights,” said Ballantyne. 

What’s Happening in the U.S.?
The Ocean Carrier Equipment Management Association in the U.S. is mapping out a path for shippers, determining how commercial partners could best handle the information flow, while the U.S. Coast Guard handles the regulations. As Canadian Shipper was going to press, Adm. Paul Thomas, who oversees inspections and compliance for the U.S. Coast Guard, said that U.S. shippers that fail to properly weigh containers won’t face fines or other penalties under SOLAS.

At a meeting hosted by the Federal Maritime Commission, the Coast Guard said it was up to shipping lines to enforce the new requirement. Carriers could then call on the Coast Guard to block or remove containers from ships if they aren’t certified, but the shippers wouldn’t be penalized by law enforcement. Thomas added that the Coast Guard does not see a need to publish any guidelines or clarifications.

Several shipper groups representing farmers, manufacturers and retailers have said they are not equipped with the industrial scales needed to weigh entire containers, and that it is unreasonable to make them bear all of the costs to comply.

Thomas stressed that shippers and carriers must negotiate to meet the July 1 deadline.

 Julia Kuzeljevich is Associate Editor of Canadian Shipper magazine, in which this article was originally published. It is republished with permission. 


June 30, 2016
Will Strict SOLAS Enforcement Policy Make Canadian Shippers Uncompetitive?


By John Doble

For the most part, Canada is a nation of rule followers. Most of us file our taxes accurately and on time.  We obey posted speed limits (within reason), stop at cross walks and many Canadians would bring to the attention of a store clerk if they overpaid our change.  Our honesty is so well known globally that we rank ninth out of 168 countries as least corrupt according to Transparency International, the global coalition against corruption.

So when the International Marine Organization (IMO) issues new rules on verifying container weights (VGM), Canada will be the first to regulate, enforce and penalize.  But in this case is our penchant for following rules, putting Canadian businesses at a competitive disadvantage?

Verified Gross Mass rules implemented by the IMO in the Safety of Life at Sea (SOLAS) rules state that effective July 1 of this year, shippers must declare the weight of their goods and the container in one of two ways.  They can load the container then have it weighed on a certified scale before delivering to the port or they can weigh the contents, packaging and dunnage, add the plated container weight and declare that to the carrier.  Either way the shipper has to electronically declare the VGM to the carrier.

The penalty for non-compliance is that the container will not load on the intended ship.  No VGM, no load.  Sounds simple, right? Not quite.
The IMO called for leniency in enforcing a no VGM, no load policy at least for the first three months of implementation.  In other words, shippers should get a reprieve.  This, however, is not so in rule happy Canada.

As of this writing, Canadian based carriers and terminals have made it clear they will strictly enforce VGM rules effective July 1.  This is not the case in the U.S.A (which by the way ranks 16th on the least corrupt index), where the Agriculture Transportation Association has lobbied the U.S. Coast guard to delay implantation of SOLAS.  The result of that lobbying is a much more flexible policy at East and Gulf Coast ports in the U.S., which will make SOLAS compliance much more palatable for American shippers.   

Canadian exporters often compete with their American counterparts in the international arena. Our resources and products are similar and overseas buyers tend to source from both countries.  There is a cost to strict implementation of no VGM, no load.  

If for some reason the exporter does not get the information to the carrier on time, or if that carrier does not relay the information to the terminal, the shipment will be rolled to the next ship, which could delay it for a week, or more.  What’s worse is that all charges for shifting the container at the terminal is for the account of the shipper.  This could mean hundreds or thousands of unnecessary dollars per shipment.  Why would ardent rule followers want to put Canadian businesses through this when it can be avoided.  

The counter argument is that shippers may as well get used to it now.  This is silly.

Let’s take the grace period issued by the IMO and not be so heavy handed.  Give warnings in writing if you have to.  But let’s not burden our Canadian companies by adding needless costs. 

 SOLAS approach favourable to US exporters coming together


June 3, 2016

CTA Review Final Report - Some Preliminary Observations

By Bob Ballantyne

On June 25, 2014, the Minister of Transport commissioned a formal review of the Canada Transportation Act (CTA) and also mandated a broader look at Canadian transportation and the transportation needs of Canadian society and the economy over the next two to three decades.  It is written into the Act that these periodic reviews must be undertaken and this one was commissioned a year before the law required, because of the grain transportation crisis in the 2013 – 2014 crop year. 

The Canada Transportation Act enunciates federal transport policy, provides the legislative framework for the federal transport regulator, the Canadian Transportation Agency, and provides the legal framework for the commercial activities of airlines and federally regulated railways.  It also addresses some aspects of marine transportation. 

The Hon. David Emerson, the Review chairman, submitted the final report, entitled Pathways: Connecting Canada’s Transportation System to the World, to the Minister of Transport, the Hon. Marc Garneau, on December 21, 2015 and the Minister made the report public on February 25, 2016 by formally tabling in the House of Commons.  Volume 1 of the report is 283 pages and Volume 2, Appendices, is a further 228 pages.  

The report is broad in scope and in addition to making specific recommendations to the air, marine, and rail transportation modes, it also addresses trade, climate change, transportation in the north, innovation, infrastructure needs and the role of the Canadian Transportation Agency.

From a shipper perspective, there are some positive recommendations, some that will disappoint, and there are some longer-term issues that were not addressed at all.  

The report states a preference for a system “disciplined by competition and market forces” [page 254], but also acknowledges that “Shippers and consumers should be able to expect predictable treatment from operators, according to clear rights and a transparent means of resolving complaints when a party does not meet its obligations” [page 255].  

The report makes a total of 60 recommendations covering all commercial modes of freight transportation.  It should be noted that there is only one recommendation that is explicitly directed at trucking, (Recommendation 5 in Chapter 3: Linking Trade with Transportation).  This recommendation exhorts the government to continue to work with the provinces to “harmonize regulatory standards” in support of interprovincial and international trade.  

FMA continues to stress that there is effective competition in all modes of transportation, except rail freight and the report acknowledges that: “Finding a way to reconcile competing pressures between railways and shippers has been difficult” [page 117].

The difference between rail and the other modes is emphasized by the number of pages in the report given over to the three federally regulated modes as noted below. 

  • Air Transport 27 pages
  • Marine Transport27 pages
  • Rail Transport 75 pages 
Similarly the report makes 17 rail recommendations, 10 for air transport, and 6 for marine transport.  It is noted that the recommendations related to transportation “Governance” and on the Canadian Transportation Agency will also have an impact on all three modes.  

FMA has commenced its analysis of the Review final report and will be obtaining input from its member companies as part of the analysis and will be providing its input to the Minister of Transport in due course.  We are not commenting on the specifics of the report at this time.  FMA and its members will comment once we have had the opportunity to thoroughly analyze the recommendations.  

Recent news reports quote Transport Canada officials saying that the Department will not be making public statements on the report until at least the fall of 2016 and that they will be seeking stakeholder input.  

If the government follows the practice from previous reviews, after obtaining stakeholder input, they will likely convene officials from Transport Canada and other government departments, e.g. Agriculture, Industry, Environment, to review and make recommendations to the Minister and the Cabinet on legislative changes following from the recommendations of the Review.  We would not expect the government to introduce legislation following from the Review until 2017 or 2018.  
 
FMA will continue to be engaged and looks forward to working with government officials on this important work.  As the report notes: “the quality of transportation and logistics systems may be the single greatest contributor to a country’s economic performance”.  

An effective and efficient transportation system is vital to support the economy, international trade and the mobility of Canadians, and the Review is an important step in planning for future needs.  The government and all stakeholders need to make sure that we get this right. 
 

 


April 29, 2016 

Combining Environmental Sustainability and Profitability

By Kelsey Lemieux
The prime, and in many cases sole, objective has been to organize logistics in a way that maximizes profitability. The calculation of profitability, however, has included only the economic costs that companies directly incur. The wider environmental and social costs, traditionally excluded from the balance sheet, have been largely ignored – until recently”.  -Green Logistics: Improving the Environmental Sustainability of Logistics

Environmentally friendly initiatives are essential in today’s world and it is important for companies to keep up with sustainability developments in order to garner customer trust and satisfaction.  Since commercial organizations have such an immense impact on society, it is important for these organizations to act on the issues influencing their customers. This is why sustainability has become so prominent in the management of supply chains. Organizations are now factoring in environmental management in addition to the other important cost effective factors of their supply chain and profitability.

Since freight transportation is a heavy emitter of carbon dioxide, a large portion of these sustainability initiatives is coming from supply chains. Sustainability has become so prominent in the management of supply chains that the Canada Transportation Act (CTA) review panel made recommendations to the Government of Canada indicating that it must set objectives and report results on initiatives. The CTA review panel also indicated that the Government of Canada should develop performance-based emission regulations to mitigate the large impact that transportation has on the environment. As we begin to understand these impacts, companies are beginning to develop strategies to reduce the environmental impact of their supply chains. It is important to note that such changes may not lead to higher costs. All modes of freight transport in Canada are currently implementing strategies to reduce their GHG emission impact on the environment.

Carbon dioxide is not the only negative environmental impact on supply chains; each mode of transportation has other environmental influences. Truck transportation contributes to traffic congestion which increases fuel consumption; air transportation contributes to poor local air quality at airports which increases health problems; rail can contribute to the fragmentation of ecosystems and wildlife habitats, and marine transportation, even though it is the most environmentally-friendly mode of freight transportation (per tonne/km of CO2) can contribute to underwater noise which can disrupt marine mammals. Carriers in all modes will need to develop strategies to mitigate these negative impacts in order to produce long-term environmental and economic sustainability for the organization. The environment is becoming a consideration in consumer choice and large retailers are responding in all areas of their operations including their supply chains.  

As younger generations begin to change organizations’ supply chains, sustainability performance will assume greater importance and will need to be reported alongside financial performance in annual reports. One of the most pressing issues that younger generations are focused on is reducing the effects of global warming and increasing environmental sustainability. These generations are so sensitive to sustainability issues that being environmentally friendly is second nature to them. In the U.S., some have even gone as far as “filing a landmark constitutional climate change lawsuit against the federal government in the U.S. District Court for the District of Oregon” asserting that “in causing climate change, the federal government has violated the youngest generation’s constitutional rights to life, liberty, property, as well as failed to protect essential public trust resources”. Research conducted by Nielsen also determined that "The rise in the percentage of respondents aged 15 - 20, also known as Generation Z, who are willing to pay more for products and services that come from companies who are committed to positive social and environmental impact was also strong—up from 55% in 2014 to 72% in 2015."

Commercial organizations will need to give greater emphasis to more sustainability programs to remain relevant to a generation that is considering sustainability as well as cost when deciding on purchases. In order to continue to foster change, companies should establish metrics to define and track sustainability, assess other opportunities to identify green freight projects, choose and implement strategies to help them achieve their goals and report the results to the public. This will help customers understand how the company is implementing change and why they have decided to do so. Market competition will encourage other companies to follow suit. If these organizations can be profitable while implementing sustainable practices and strategies, they will continue to be successful in serving customers who place a high value on environmental performance as well as price.

Sources
Green Generation: Millennials say Sustainability is a Shopping Priority
10 Ways for the Freight Sector to Lessen its Environmental Impact
Green Logistics: Improving the Environmental Sustainability of Logistics
Green on the Ground
Rail Transportation: The Environmental Literacy Council
U.S. Federal Climate Change Lawsuit
Environmental and Social Impacts of Marine Transportation
Air Cargo Environmental Challenges
5 Reasons Generation Z could be the Ones to Save Us
The Green Freight Handbook  

 


April 4, 2016

On-line Training for Canada's Air Cargo Community Reflects Transport Canada's Changing Regulatory Framework


By Lansdowne Technologies Inc. 

As the summer of 2016 fast approaches, it is clear that there will be significant changes in the way that Canada’s air cargo community will be able to conduct their business operations, specifically in relation to recent amendments to Transport Canada regulations — the Regulations Amending the Canadian Aviation Security Regulations (CASRs), 2012 and the Designated Provisions Regulations (Air Cargo). The amended Regulations will come into force on October 17, 2016.

In a continued effort to enhance its voluntary Air Cargo Security (ACS) Program and air cargo security overall, Transport Canada has begun to invite companies to join its Program under five new participant categories that previously did not exist. The department also wants Approved Participants and Registered Shippers currently in the ACS Program to update their applications under one of these new categories. As part of these amendments to the ACS Program, Transport Canada states that participants will now be able to screen cargo — make it secure at a variety of different points in the secure supply chain (“as early as the time it is packed, and up until the time it is tendered to an air carrier”). “A secure supply chain is seen as a very practical approach for moving air cargo. It keeps air cargo secure and free from tampering while being handled at different stages of its journey.” It may also reduce costs and time delays (bottlenecks) due to the requirement for extra screening and verification prior to moving cargo onto air carriers.

In other words, in order to participate in the air cargo secure supply chain in Canada, a company must register, and meet the requirements of the Air Cargo Security (ACS) Program in relation to key compliance pillars including, facility security and access control; cargo screening; personnel security; chain of custody; and, oversight and compliance. To fulfill these requirements, and subsequently, be accepted as a participant in the ACS Program, Transport Canada requires an applicant to successfully write and implement a Cargo Security Plan (CSP); train its employees “in relation to their duties”; and, pass onsite inspections.

Overall, Lansdowne and Battelle’s air cargo training is designed to assist air cargo managers and other personnel in complying with Transport Canada’s new regulatory requirements and its voluntary Air Cargo Security Program requirements, specifically those related to the development of strong Cargo Security Plans (CSPs) — including its key compliance pillars; and, preparation for onsite inspections and ongoing oversight activities. As Transport Canada states on its website, “If a business wants to be involved in screening, storing, transporting, tendering and/or accepting secure air cargo, it can apply to participate in Transport Canada’s Air Cargo Security Program”. “A secure supply chain is a practical (and necessary) approach for moving air cargo.”

Training options consist of six interactive on-line theoretical and administrative courses that provide comprehensive awareness of the ongoing security situation within the air cargo industry, and the potential threats and hazards that may be encountered. For example, key elements of facility security are examined, as are physical mechanisms and procedural protocols to ensure effective access control of secure-cargo areas across facilities/warehouses, front offices, and in vehicles transporting cargo. These interactive courses also focus on developing and maintaining mandatory chain of custody record-keeping procedures as well as fundamental and mandatory elements of personnel security within the Air Cargo Security Program. Auditable and reliable chain of custody procedures and processes for each item of air cargo are critical to the security and safety of personnel, and passengers, and aircrew as air cargo is moved through the supply chain from its original source to a warehouse then via ground transport to uplift onto an aircraft — or via a myriad of other supply-chain scenarios.

Not only are the four methods of air cargo screening — X-Ray, Physical Search, Canine, and Explosive Trace Detection (ETD) explored theoretically, in terms of functional requirements and benefits, but practical on-line screening courses in X-Ray screening and Explosive Trace Detection (ETD) screening feature state-of-the-art screening techniques and processes that are explored interactively on-line and thus transferable to infinite practical applications. Both practical screening courses have been created by Battelle and are offered through its ProDetect™ Security Screener Training program.

Lastly, two (2) in-class courses — Facility and Vehicle Search; and, Telephone Threat and Managing a Bomb Threat — are also available. The courses review the experiences, lessons learned, and recommendations from select authorities from around the world. Both courses provide an in-depth examination of procedures needed to most effectively address adverse security activities.

Ultimately, the fact that passenger flights move 80% of all air cargo departing from Canadian airports, necessitates the effective and efficient handling of air cargo, including its acceptance and tendering, through the secure supply chain. This painstaking effort is essential to providing a safe and secure environment for all personnel within the air cargo industry. The safe, reliable, and timely movement of air cargo — part of the rationale behind Transport Canada’s Air Cargo Security Program — is also crucial to the economic well-being of Canadian society, industry, and government. Furthermore, the securing of air cargo is fundamental to the Government of Canada’s and industry’s relationships and partnerships with the United States and others in the international community, especially as we all continue to do business in a global environment, which although uncertain, is a powerful and prosperous network. 

The Regulations, which were passed in late 2015, stipulate that companies (particularly shippers, freight forwarders, including third party service providers such as truckers and warehouse operators, and logistics-only companies), who want to become participants in the ACS Program, must comply with the requirements set out in the Regulations, including ensuring that their employees — Authorized Cargo Representatives (ACRs), Cargo Screeners (CS), and/or Cargo Security Coordinators (CSCs), who handle secure cargo or screen cargo — “are trained in relation to their duties.” 

As Transport Canada provides only general guidance about training in its training guidelines and best practices, companies in the air cargo community will need to be trained by Canada’s private sector. One company among very few air-cargo security training providers in Canada is Lansdowne Technologies Incorporated (Lansdowne). Specifically, Lansdowne, in association with Battelle Memorial Institute, the world’s largest independent, non-profit R&D organization, has developed an advanced, web-based, interactive, on-line training system for Canada’s air cargo employees, screeners, and managers. By working with recently retired Transport Canada Security Inspectors, Lansdowne has been able to create and document a relevant and comprehensive training offering that covers all requirements set forward in the new regulatory framework. 


March 31, 2016 

CILTNA:  A Valuable Link for Transportation and Logistics Professionals

By Kristine Burr

Today, more than ever, well-integrated transportation and logistics links are vital to an individual firm’s survival and a country’s national competitiveness. With social media driving new patterns in retailing, this is a sector that is evolving rapidly.  Forty years ago, the container created a revolution in how goods are shipped, and spurred the globalization that has had such a strong impact on countries around the world.  Today, technology is offering new breakthroughs in the way commodity shipments are tracked, citizens shop for goods and data is analyzed to identify trends and solve problems more rapidly.
  
Over the next 20 years, forecasts suggest there will be a steady trend of economic growth and rising population, creating additional pressures on transport networks while the public will demand a higher quality journey experience.  At the same time, how we travel and move goods, and the technology we use, will have a major impact on congestion and the environment.  And as a consequence, these factors create a growing need for knowledgeable and well-trained professionals to meet the varied challenges of a rapidly-changing world.

All this means that logistics and transportation are increasingly recognized as career choices offering lots of opportunities, plus being highly recognized parts of a successful firm’s performance.  But it also puts pressure on those in the business to stay at the top of their game.
One organisation that offers industry members an opportunity to learn and connect with like-minded professionals is the Chartered Institute of Logistics and Transport in North America or CILTNA as it is commonly known.  With chapters in major cities across Canada and in Washington, DC, it is a unique cross-border, multi-modal transportation and logistics association.  And with increasing globalization one of the predominant themes of our time, it also offers members a rare opportunity to network on an even broader basis, as CILTNA is the North American arm of a network of Chartered Institute of Logistics and Transport (CILT) institutes scattered around the globe.  While CILTNA is celebrating just its thirtieth anniversary this year in North America, sister organizations have been active in the rest of the world for much longer.

The parent CILT is a professional body representing the transport and logistics industries worldwide. It is membership-based, with over 33,000 members and more than 200 corporate partners working in 100+ countries. The principal objective of the CILT is "to promote and encourage the art and science of logistics and transport", which it achieves both through membership and the professional qualifications it offers.  It provides extensive opportunities for training and mentoring.

The original Chartered Institute was founded in 1919 in London, England in the aftermath of World War 1.  Its initial focus was to integrate the new modes of air and trucking that had emerged during the conflict with the more traditional rail and marine sectors.   Since then, it has evolved into a network of ten National Councils and Institute branches across the world. Each council is, in its own right, a separate non-profit organisation representing the Chartered Institute of Logistics and Transport in its territory.   Today, CILTNA is part of this CILT international network.  National Councils are well-established in the UK, Australia, New Zealand, Singapore, Hong Kong and increasingly, in other parts of Asia and Africa.  This allows Canadian and American transportation and logistics professionals to stay abreast of developments around the world as well as providing unique networking opportunities for those trying to do business in emerging markets.

As the North American component of this network, CILTNA’s board of directors is binational in makeup, and reflects the varied interests and professional expertise of the transportation and logistics sectors. Current president, Bob Armstrong, has over 45 years of experience in the field of cross-border trade, and transportation and logistics management. His experience includes serving as president of several leading not-for-profit industry associations such as SCL Canada and IE Canada, and he has been a consultant for his own firm, ATLAS Trade & Logistics Advisory Services, since 2004.  Bob was appointed president of the Chartered Institute of Logistics and Transport in North America in July, 2011.

Next year will bring new challenges and new opportunities as CILTNA plays host to the International Convention of National Councils in May 2016 in Montreal.  Over 200 delegates will attend this year’s meeting in Dubai, with a similar number anticipated to come to Canada next year.  Outgoing CILTNA Chair, the Honourable David Collenette, also an International Vice-President to CILT, sees hosting this key event as a great opportunity to showcase North American leadership in supply chain management.  “CILT International 2016 marks the second time we have hosted this important gathering of CILT executives from around the world.  In 2003, the Convention in Ottawa spurred growth in CILTNA and we hope that next year’s meeting will give the organization a similar boost in awareness and membership.”

Building Linkages Beyond North America
With the North American transportation and logistics sector well-endowed with trade associations, the question “Why CILTNA?” is a valid one.  Certainly, international recognition and connectivity are factors that differentiate this organisation from many others.  One of the most important considerations for many North Americans is the fact that CILTNA promotes professionalism via designations that are well-recognized internationally, thanks to CILT’s global reach.  These range from the Member (MILT) category through Chartered (CMILT) and Chartered Fellow (FCILT) designations, all of which are determined by a combination of formal education and experience in the field.  These designations are particularly useful for anyone doing business in those parts of the world where CILT is well-established, including Africa and Asia.
  
Another attraction is that CILTNA is multi-modal in scope.  Where many trade associations see their principal role as that of representing their members with governments and the media,  CILTNA’s focus has tended to be centred more on professional development and supporting continuous improvement via recognized education programs and professional development opportunities.  With sound ssupply chain management essential to company success and customer satisfaction, the multi-modal focus of many of the CILTNA workshops has proved popular with members.

With the transportation and logistics fields facing rapid change, as well as new risks associated with security and safety concerns, staying abreast has never been more important.  In addition, demographics is spurring the retirement of many long-time practitioners, with the result that training and recruiting a new generation of employees is becoming one of the industry’s top priorities.  CILTNA has been reaching out to educational institutions with a view to strengthening the linkages between business and academia.  Attracting young people into these sectors also means embracing new ways of learning.  It has recently entered into an agreement with Toronto-based Trios College to accredit the first year of its supply chain program and is working with the college to expand accreditation to the full three-year program.  In addition, Dr. Bill DeWitt, Executive Director, of the Transportation Institute of the University of Denver has recently joined the board of directors as Vice Chair (United States) and will be a valuable advisor on how transportation and logistics education should evolve in the coming years.

Today, with lifelong learning a common feature for most professionals, many practitioners are attracted to CILTNA because membership comes with access to CILT UK’s online Knowledge Centre.  This feature includes a Knowledge Bank that operates 24 hours a day, 365 days a year, and offers access to an online business intelligence service as well as a wide array of over 2000 newspapers from around the world.

International Vision; Local Connections
Here in North America, given our geography, local chapters play a key role in connecting members both regionally and at the national and continental level.  The association covers all those who work transporting passengers, moving freight and managing domestic and international supply chains from the most junior recent graduate to the most senior CEO.  Chapters are located in several major Canadian cities as well as in Washington, D.C.

Working at the regional or local chapter level gives members a chance to tailor activities to their specific needs, as well as providing a valuable networking opportunity for busy practitioners.  Nowhere is this more evident than in Pacific Region, which has developed strong partnerships with local universities and technical schools, in response to a need to recruit a new generation of well-trained transportation and logistics professionals.  Pacific Chapter Director Marian Robson reports “We have successfully developed relationships with UBC, BCIT and Capilano University in the disciplines of International Business, Transportation, and Logistics/Supply Chains, with the result that these students have been generously sponsored by the industry to attend our events; as an industry member, you can be part of this exciting development of our leaders of tomorrow; as a student, you have the opportunity to hear excellent speakers in your field and network with potential employers.”

Challenges Ahead
CILTNA has just concluded an online survey of members’ views on current and future challenges.  Almost 50 percent of members answered the survey, a response rate that any survey company would tell you is pretty darn good.  This probably reflects the interest and commitment that most professionals in this field bring to their work.  While there are some variations from chapter to chapter, there is considerable consistency across all regions on what are perceived to be the most important issues for today’s transportation and logistics systems across North America.  Interestingly, infrastructure capacity, both public and private is seen everywhere as the most pressing shorter term and longer term challenge.  Rating almost as high, at both the North American and regional level are concerns around congestion, whether urban or at specific chokepoints, and the impact both these factors are having on moving goods within North America and to international markets.

Receiving slightly less mention, but still of importance, are concerns around general productivity within the system, the availability of new employees with appropriate skills and the removal of provincial, state or regional barriers to smooth transportation and logistics.

Locally, some chapters placed greater weight on specific factors.  For example, both Quebec and Pacific chapters rated social licence and environmental concerns more highly than in other regions – not surprising given the high profile these topics hold in those regions.

These topics offer lots of scope for workshops and seminars, as well as networking. CILTNA members also showed an interest in greater collaboration with other industry associations, and this may be a way to ensure that some of these important topics remain front and centre.CILTNA is a relatively young organisation on this continent, and is definitely youthful in comparison to other national councils such as Australia’s which has been in existence for 80 years.  The board of directors is making a concerted push to expand membership and reach out to corporate partners.  North Americans have much expertise to offer potential clients and partners elsewhere in the world as well, so under former Transport Minister David Collenette’s leadership as CILTNA Chair, closer ties have been established with the international community within CILT.  “One of my priorities when I became Chair in 2010 was to have CILTNA re-engage with our international partners.  Board members are active participants on international committees and have been present at the annual Conventions in Malta, Sydney, Birmingham, Sri Lanka, Malaysia, and this year in Dubai.”

Save the Date
The International Convention next year in Montreal offers a good opportunity to showcase some of North America’s best practices as well as providing a chance to meet and discuss common interests with colleagues from around the world. Running from May 8 to 11, 2016, it will involve international specialists in supply chain management as well as a solid day devoted to North American transportation and logistics issues.  Plan on attending to see for yourself what CILTNA has to offer, or get in touch with one of the regional chapter chairs in Washington, D.C., Vancouver, Montreal, Toronto, Halifax or Ottawa.  In the meantime, if you are interested in learning more about CILTNA, including contact information for regional chapters, check out the website which is located at www.ciltna.com.

 

March 4, 2016

Canada’s Ports: Working With Shippers to Improve Logistical Efficiency
By Kim Biggar

Canada was ranked number 12 in 2014 in the World Bank’s Logistics Performance Index. That fact rankles Wendy Zatylny, President of the Association of Canadian Port Authorities (ACPA), who believes that Canada should be in the top 10. We can get there, she says, if stakeholders in the freight transportation industry work in partnership to improve efficiencies and develop innovations.

The 18 corporate members of ACPA – the major ports in Canada’s Pacific, Great Lakes, St. Lawrence and Atlantic regions – are positioned, says Zatylny, to serve as “honest brokers to bring partners together to move cargo as efficiently as possible.” Through their role in handling goods worth more than $400 billion each year (and employing 250,000 people, either directly or indirectly), the port authorities already work with all of the major players in the industry. What Zatylny hopes to see further develop is the sense of partnership that is so vital to successful supply chains. “Shippers should view their relationships with the ports as partnerships.”

Port Investments to Improve Cargo Flow
Time and cost are clearly important considerations for shippers as they select transportation routes and service providers. As competitors for shippers’ business, the ports are, therefore, concerned with minimizing both of those elements. On a broader scale, the federal government aims to increase Canada’s competitiveness globally. As the gateways to Canada from abroad, the major ports are plainly key contributors to our level of competitive success. Improvements at the ports designed to attract and retain shipper customers thus equate to improvement in overall Canadian competitiveness, which certainly makes a case to support infrastructure, equipment and technology investments in the ports. And improvements at Canada’s port authorities are regularly being made.

Optical character recognition (OCR) readers, for example, are now in use at some ports, providing secure access, enabling the tracking of trucks on site, and making it easier for drivers to determine where they should unload their containers.

New technologies being used at Canada’s ports allow partners to share information related to key performance indicators, to assess needs and adjust port opening and closing times to accommodate those needs, and to communicate load expectations with the railroads to help ensure that trains arrive prepared to take the number and type of containers ready to move inland.

New and deeper berths, more laydown and warehouse space, larger cranes and so on are among the infrastructure and equipment improvements the ports undertake.
The recent and continuing enhancements are signs of the ports’ focus on speed, efficiency and innovation, all of which, says ACPA’s Zatylny, are necessary for success in the competitive global market. She adds that the ports’ implementation of increased security measures over the last 10 to 15 years was designed to have a minimal impact, both financially and operationally, on shippers, thanks to efficiency improvements being made at the same time.

Canadian Port Advantages
Because the theme of this issue of The Shipper Advocate is accessing Europe, we’ll consider some of the advantages offered by Canadian ports in that pursuit. Zatylny notes that Canada’s East Coast ports, in particular the Halifax Port Authority, are closer to Northern Europe than are any American ports. (As noted in the article on the Port of Halifax in this issue, Halifax is two days closer to Northern Europe than any other North American container port on the East Coast.)
The strong intermodal ties at Canadian ports enable, she says, the faster movement of cargo to destinations in the U.S. Midwest, particularly Chicago, and eastern states than would be possible if the cargo were delivered through a U.S. port.

Zatylny adds that, while American ports are experiencing backlogs, Canadian ports are not. “There are continuous backlogs in the U.S., especially in New York/New Jersey,” she says. The Port of Halifax is fortunate to be a natural deepwater port, but dredging challenges are a major problem for many U.S. ports on the East Coast. With the increasing use of post-Panamax ships, that problem will likely continue to be an issue for some time.

Challenges for Canadian Ports
Despite some current advantages, Canadian ports will remain competitive only by continuing to upgrade and maintain facilities, equipment and technologies. Herein lies a problem: an ongoing need for investment funds.

Within the last decade, the Canadian government has reduced its contribution to port improvement costs, from 50 percent to 30 percent or less. The ports have to come up with a larger share of the money required for projects, and are putting together what Zatylny calls a “patchwork of partners” to do so. This means more time and effort for the ports to complete any major upgrades.

Further, to qualify for funding through the Building Canada Fund, a project must have a price tag of a minimum of $100 million. That threshold usually disqualifies Canada’s small ports from receiving funding through the program for most of their projects, which tend to be smaller in scope than the projects of the larger ports. And it requires, says Zatylny, that all of the ports be creative, including in their partnerships, to source funding to finance improvements that will cost less than $100 million.

Yet another financial constraint for Canada’s port authorities is that they are “handcuffed,” says Zatylny, “by borrowing limits that are artificially low.” The Canada Marine Act (CMA) of 1998, which established the port authorities, reflects an aversion, Zatylny says, to financial risk-taking by the ports. The Act also The Connector tool was created with funding from the Government of Canada’s Sectoral Initiatives Program. creates “an administrative burden” for the port authorities, requiring changes to their letters patent that can take up to two years to process before they can acquire land or build on the land they own. ACPA is advocating for changes to the CMA, including an increase in the port authorities’ borrowing limits.

Working in Partnership with Canada’s Ports
Because of the focus in the past few years on Canada’s gateways and corridors – in which ports play a key role – transportation partnerships receive more attention than ever before. With their significant intermodal connections, the port authorities are equipped to facilitate concerted responses to supply chain delays. A partnership approach to problem-solving is the best way, emphasizes Zatylny, to “address supply chain speed bumps.” With that in mind, she encourages shippers to adopt a partnership mindset in their dealings with Canada’s ports and to bring to the partnership innovative ideas to improve efficiencies together.


 


February 29, 2016

Transportation Challenges Face the New Government and Transport Minister
By Bob Ballantyne

Marc Garneau, MP for Notre-Dame-de-Grâce–Westmount was, appointed Minister of Transport in the new Liberal government which was sworn in on November 4. Minister Garneau is facing significant challenges in a number of areas and he and his officials will be well-occupied in addressing these issues in the coming months.

One of the first matters that he will have to address will be the report and recommendations of the Canada Transportation Act Review that are due to be presented to the Transport Minister on December 24 of this year. In addition, air cargo security, port capacity and many other policy, regulatory and infrastructure issues will have to be considered by Dr. Garneau and his Cabinet colleagues.

Dr. Garneau brings impressive credentials to his new role as Minister of Transport and expectations will be high among the many industry stakeholders, including the Freight Management Association of Canada, who have a direct interest in freight transportation. Having earned a BSc in Engineering Physics from the Royal Military College, Kingston, and a PhD in Electrical Engineering from the Imperial College of Science and Technology in London, England, Dr. Garneau first worked as a combat systems engineer in the Canadian Navy. He became widely known to the Canadian public, however, as the first Canadian astronaut to go into space. He subsequently served in several different Space industry positions, including President of the Canadian Space Agency, until he entered federal politics in 2005. He was first elected to the House of Commons in 2008.

In opposition, Dr. Garneau served as the Liberal Critic for Industry, Science, and Technology, as well as for Natural Resources.
Dr. Garneau has received many honours. In 2003, he was made a Companion of the Order of Canada. Two Ontario high schools are named after him, as is a spaceship in a book that is part of the popular Star Trek series (Millennium: The Fall of Terok Nor). He has also served as the Chancellor of Carleton University and is an Honorary Captain of the Royal Canadian Sea Cadets.

If the government follows the previous practice, the Minister of Transport will have responsibility for both VIA Rail Canada and the Canada Post Corporation. As the new government has indicated it would review the Post Office plan to phase out home delivery in urban areas, this controversial issue will likely be addressed by the Minister early on in his mandate.

As transportation oversight is split between the three levels of government, and given the Prime Minister’s pledge to work in a more collaborative way with the provinces, Minister Garneau is expected to reach out to his provincial counterparts early on to develop integrated policies and plans with the provinces. Much of the discussion with the provinces will centre on infrastructure funding and, while the prime Cabinet responsibility for infrastructure rests with the Honourable Amarjeet Sohi, Minister of Infrastructure and Communities, much of the infrastructure funding will be to support transportation and will require collaboration with the Transport Minister. Much of the infrastructure focus will be on transit in the large urban centres, but the need for road and highway expansion will continue to require funding from federal infrastructure programs. Two
examples, important to shippers are the twinning of Quebec Highway 185 from the New Brunswick border to Rivière du Loup, which is currently underway, and the proposed Morriston Bypass on Ontario Highway 6 northwest of Hamilton Ontario.

As has been the case for the past century, rail freight transportation will continue to be a highly political issue going forward. The Canada Transportation Act Review was triggered by the serious rail freight problems in moving the record grain crop in the 2013-2014 crop year. While there is effective competition in the other modes of transport, competition in rail freight is limited and the government will continue to be faced with the need to find the right balance between the competing demands of shippers and railways.

The Minister will have no end of interesting challenges in the next four years of this mandate and, at FMA we look forward to working with him and his officials.


 


January 29, 2016

Tell your Story: Peace River Coal

On May 23, 2014, in a unanimous decision, the Supreme Court of Canada dismissed a CN Appeal and confirmed the 2010 Canadian government decision that clears a major hurdle for shippers who have complaints about the growing incidental and supplementary charges that railways arbitrarily impose on their customers. These charges were over and above the railways' freight charges and were extra costs for such things as currency surcharges, fees for submitting paper bills-of-lading, weighing of cars, and penalty charges such as demurrage, overload cars, etc.

The first complaint about the incidental and supplementary charges was filed by Freight Management Association of Canada (FMA) member, Peace River Coal (PRC) relating to a fuel surcharge tariff imposed by CN. In 2008, the Canadian Transportation Agency declined to render a decision on the merits of the complaint based on the existence of a confidential contract between CN and PRC for the movement of traffic.  The FMA filed a petition requesting that the Cabinet order the Agency to rule on the merits of the complaint, despite the existence of a confidential contract between PRC and CN.

In 2010, the Canadian Cabinet granted the Petition to the Governor-in-Council, filed by FMA. In granting the Petition, the Federal Cabinet rescinded Canadian Transportation Agency Decision No. 392-R-2008, a decision which had the effect of preventing shippers who have confidential contracts with the railways from seeking relief from unreasonable incidental charges.

FMA and its member companies, especially PCR, were gratified that the Supreme Court upheld the Cabinet’s decision on the FMA petition.  It confirmed that all rail shippers are now able to challenge such charges and associated terms and conditions.  These charges add significant costs to the movement of freight, are arbitrarily imposed by the railways and, for some shippers, measure in millions of dollars annually.

The Supreme Court’s decision recognizes that the complaint filed by PRC was for the benefit of all shippers subject to CN’s fuel surcharge (CN Tariff No. 7402).  Now, all shippers that have a complaint about the growing list of incidental and supplementary charges imposed by the railways know that they have the option to complain to the regulator, whether or not there is a confidential contract in effect.



January 4, 2016

Top Articles of 2015

1. Canadian Pacific girds for strike putting earnings at risk

Bloomberg
From Feb. 12: Canadian Pacific Railway Ltd. is preparing to deploy managers to run trains if locomotive engineers, conductors and other workers walk off the job, Chief Operating Officer Keith Creel said. A work stoppage by more than 3,000 locomotive workers represented by the Teamsters Canada Rail Conference may start, according to the Calgary-based railroad. Canadian Pacific also is facing a possible strike by Unifor Local 101R, which represents about 1,650 maintenance and safety workers across Canada and has set the same deadline for reaching a deal.  
READ MORE

2. CP issues revised buyout offer; NS rebuffs it as a 'reduced proposal'

Progressive Railroading
From Dec. 8: Canadian Pacific has sent a letter to Norfolk Southern Corp. outlining a revised buyout offer that's financially more attractive than the previous merger proposal, less risky and "dramatically reduces regulatory uncertainty" for NS shareholders, CP leaders announced this morning. The new offer addresses several concerns cited by NS about the initial buyout proposal, they said at an analyst conference.  
READ MORE

3. Capitol Watch: Freight on the FAST track

Cargo Business
From Dec. 9: On December 4, President Barack Obama signed H.R. 22, the Fixing America's Surface Transportation (FAST) Act into law. The five-year surface transportation bill provides $281 billion in contract authority, paid for with gas tax revenue and a $70 billion transfer from the General Fund of the Treasury to the Highway Trust Fund. Pursuant to House rules, the General Fund transfer is paid for through a series of budgetary offsets unrelated to surface transportation.  
READ MORE

4. The TPP text has been released — Where does Canada go from here?

By Katherine Radin
From Nov. 19: The Trans-Pacific Partnership, or TPP, was signed by 12 Pacific Rim countries, creating a global trading block that represented about 40 per cent of the world's domestic product. At the time the TPP was announced, Canada's then-prime minster, Stephen Harper, said the document would be made available after the federal election. A lot has happened since then, and businesses across Canada have speculated on how the TPP would impact their respective industries.  
READ MORE

5. How can low gas prices be bad for the transportation industry?

By Ryan Clark
From Feb. 26: Nothing affects the transportation industry quite like fuel. Whether it's price, type or scarcity, the specter of gas always looms heavy over the nation's infrastructure and the industry of trains, planes, boats and automobiles. It seems, now more than ever, low gas prices are helping alleviate pain at the pump, while also pushing economic and political movement forward. So why are so many in the transportation industry unhappy?  
READ MORE

6. Keystone boosters turfed from office in bitumen's homeland

RailwayAge
From May 21: Prospects for the contentious Keystone XL pipeline proposed to connect Alberta's northern tar sands with U.S. Gulf Coast refiners has endured another brutal body check, this time from the home team. The province's brand-new, left-leaning government elected May 5 says it will cease its predecessor's long campaign of supplicating and bullying President Barack Obama for the pipeline's approval.  
READ MORE

7. CN Rail alleges corporate espionage in suit against CP, ex-employee

The Globe and Mail
From Nov. 24: An employee of Canadian National Railway Co. shared secret customer information with Canadian Pacific Railway Ltd. to help the rival lure clients and win market share, CN says in a lawsuit that sets up a courtroom battle over alleged corporate espionage. CN alleges it lost revenue and market share to CP after confidential customer contracts, pricing information and the corporate business plan were downloaded by an employee who then quit and accepted a job at CP.  
READ MORE

8. Logistics firm Exel uses wearable tech to boost warehouse efficiency

Cargo Business
From Aug. 27: The latest innovation in warehousing equipment involves wearable worker technology. Logistics operator Exel, the North American supply chain management unit of Deutsche Post DHL Group, is preparing for what it calls "vision picking" at two U.S. warehouses. Warehouse workers will be equipped with "smart glass" eyewear which can read bar codes and show the fastest route to find products — doing away with the need for hand-held scanners and paper job orders.  
READ MORE

9. Broad industry coalition offers clarity on new container weighing regulations

American Journal of Transportation
From Dec. 9: Today, the World Shipping Council, the TT Club, the International Cargo Handling Coordination Association, and the Global Shippers' Forum jointly released a new Frequently Asked Questions document to address issues arising from the new container weighing regulations due to take effect globally on 1 July 2016. The amendments to the SOLAS Convention require packed shipping containers to have a verified gross mass before they can be loaded on a ship for export.  
READ MORE

10. Former astronaut, Marc Garneau appointed as Minister of Transport

Transport Canada
From Nov. 5: Marc Garneau has served his country his entire professional career, beginning with the Canadian Navy, then as an astronaut and President of the Canadian Space Agency, and now in political life. Marc began his service to Canada as a navy combat systems engineer in HMCS Algonquin from 1974 to 1976. He was promoted to commander in 1982 while at Staff College and was transferred to Ottawa in 1983. In January 1986, he was promoted to naval captain and retired from the navy in 1989.  
READ MORE

11. Craig Olley of Teck named 2015 Supply Chain Executive of the Year

Freight Management Association of Canada
From Dec. 7 The Freight Management Association of Canada (FMA) is pleased to announce that Craig Olley, Director of Logistics for Teck Resources Limited’s coal group has been chosen as the 2015 Supply Chain Executive of the Year. Craig leads Teck's coal global logistics operations which involve port facilities, vessel and Great Lakes operations, rail service with CN, CP, BNSF, and transload operations in other countries.  
READ MORE

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December 1, 2015

In Praise of Canadian Democracy
By Bob Ballantyne

This is being written four days after the federal election that saw the Liberal Party win an unexpected majority of 184 seats on our 338 seat House of Commons.
  
On seeing a peaceful change of government, through our electoral system, there are several observations worth considering about the state of our democracy.
  
“Our system of government is the worst in the world except for all the rest.”  This is one of Winston Churchill’s many famous quotations.  Said in a less Churchillian way, our system is slow, cumbersome and may not always work very well but it is the best that humankind has yet developed.

Despite its faults, there is accountability.  The politicians have to face the voters periodically, and they know, and the voters know, that this places constraints on their activities.  In the election on October 19, 68.49% of eligible voters cast their ballots and this is up from approximately 60% in the previous election. The increase in citizen participation is very encouraging.

For the cynics who say “why vote, my vote is wasted” or “nothing changes”, there are two answers.  First, there is no such thing as a wasted vote.  Whether or not your party wins or loses is less important than the statement we make as citizens that we are engaged in this process.  If we don’t vote we will surely get the government we deserve.  Secondly, as is oft stated, the veterans that we honour on Remembrance Day gave life and limb to ensure that all citizens have the right to have a say in who will govern us.  Casting our ballot in all elections from school board to federal government is something we owe our veterans, our children and ourselves.

In the recent election, the distribution of seats is a reasonable reflection of the votes cast for the major parties and means that the various views of citizens will be represented in Parliament.  While a “majority government” gives the party in power more latitude to follow through with its priorities, the opposition parties have a significant voice, not only in the House of Commons, but in the Parliamentary Committees where much of the work is done behind the scenes.  I appear before Parliamentary committees periodically and it is interesting to see, not only partisanship on display, but also, a level of cooperation between members of the different parties.  On many issues “that are below the radar”, there is often broad consensus across party lines.

The success of our western democracies is that all of us, including the young and cynical, have the right:

  • To vote or not to vote
  • To criticize the government
  • To receive a fair trial
  • To express any opinion with very few restrictions (liable, slander)
  • To choose to work or not work
  • To live wherever we choose
  • To travel freely
  • To receive an education to the limits of our abilities
  • To receive adequate health care
  • To read what you wish
  • To live as you wish

The other event that happened three days after the election was the first anniversary of the shooting of Corporal Nathan Cirillo at the National War Memorial in Ottawa and the storming of the Centre Block of the Parliament Buildings by the shooter.  The contrast between the peaceful change of government on the October 19 2015 and the violence of October 22, 2014 is stark.
  
The events of October 22, 2014 remind us of the work of our military and law enforcement officers in protecting our freedoms and the risks to which they are exposed and willingly accept.  We can, and do, take our freedoms for granted, but they are precious and fragile and are not available to many of the world’s people.  Their preservation requires constant vigilance, and the events of October 22, 2014 remind us of the sacrifices that are sometimes required.
  
There is relevance in the functioning of our democracy to freight transportation.  Transportation is always “political” and the policies, laws, regulations, and investments of all levels of government have a significant impact on how well our transportation system supports the Canadian economy.

Our democratic institutions may not be perfect and their ability to keep up with the explosive growth in 21st century communications technology may indicate a need for some reforms.  Our system of government “may be the worst in the world except for all the rest”, but let’s support it, amend it as necessary, and pass it on to future generations so that it keeps this ranking.

  


November 6, 2015 

The Freight Management Association of Canada at 99
By Kelsey Lemieux

FMA had its 99th anniversary on October 25, 2015 and we are now preparing for our 100th anniversary in 2016.  However it is useful to reflect back on that 99 year period and on the conditions that existed to cause “traffic” people to come together to create the organization that is now the Freight Management Association of Canada.
In 1916, the First World War was in full swing and Canada was heavily involved in the war effort in many ways.  Canadian industry was geared up to produce munitions and other war supplies and a particular challenge was to move these vitally needed goods to the front in Europe.  The railways were being stretched to move goods to east coast ports and availability of ocean shipping was also an issue.  Car supply, freight claims, and railway tariffs were of particular concern.  The Canadian government was becoming increasingly concerned about the freight situation and strongly encouraged the railways to coordinate their activities to support the war effort which led to the creation in 1917 of the Canadian Railway War Board, the forerunner of the Railway Association of Canada.

With this background, a meeting was convened in the evening of October 25, 1916 in Room 1404 of the Traders Bank Building, Toronto “for the purpose of organizing the Canadian Traffic League”.   There were eighteen people (all male) present at this founding meeting representing a number of companies in the Toronto area, and also one association: the Canadian Manufacturers Association.  

It is instructive to look at the names of the seventeen founding companies.  Twelve of those company names have disappeared over time.  The Russell Motor Car Company Ltd. was a member which is the motor car brand that is considered to have produced Canada's first successful automobile. Gutta Percha Rubber Ltd., a brand of tires remembered from the 1940’s, was also a member but has since disappeared.  Some companies are still going strong, like Grand & Toy Ltd. and Goodyear Tire & Rubber Ltd.   

The chairman of this first meeting was Mr. W.C. Thompson of Goodyear Tire and he was subsequently confirmed as the first President of the Canadian Traffic League.  A constitution was adopted at this meeting and the annual fee for members was set at $5.00.

The objective of the League was set out as follows:

The object of the League shall be to promote a better understanding
of transportation matters by the interchange of ideas, the discussion
of questions of mutual interest and importance, and the presentation
of the results of such conference to the proper parties, thus bringing
about better transportation conditions generally.

When the League began, it scheduled monthly meetings in the evenings.  This was before the era of TV and other electronic diversions and so these sessions were not only business, but appear to have been at least partly pleasure with an indication that there were usually refreshments involved after the business meetings.

Most of the early consideration was with railway transport and it is interesting to compare the railway topics under discussion in 1916 with those under discussion in 2015.  Some problems, it seems never get solved.  On-time delivery was a problem then and remains a problem today.  On February 5, 1919, the League passed a resolution asking members to “tabulate any excessive delays experienced to their traffic over” (a three week period) “the idea being to subsequently send a statement to the chief traffic and operating officials of the interested railways …. with the idea of bringing about an improved service”.

Shippers were also having problems obtaining up-to-date tariffs in a timely manner.  Demurrage rates were supposed to be reduced after the war’s end and in the February 5th minutes it is recorded: “It was stated certain of the railways apparently were after every cent they could collect, without regard to the conditions prevailing”.
In 2015 there is considerable discussion of demurrage and of the growth of ancillary charges for a variety of items from fuel to currency to border related charges.  Also in 1919, the government imposed a charge on the preparation of certain export documents by Customs.  The charge could be either 10 cents or 20 cents, depending on the circumstances.  The CPR issued a circular indicating they would charge comparable amounts if they had to prepare the documents.  The League minutes go on to state: “When pointed out to the CPR that under certain circumstances no payment was due the Customs, they replied the charge of 20 cents had been imposed by the Canadian Freight Association (the railway industry tariff bureau) but this toll had never been published”.  

When these men started the Canadian Traffic League, they were, of course interested in the problems of the day, but they started something that was of value to Canadian industry then and is of more value to Canadian industry today.  In 1916, rail and shipping were the only significant modes.  Today trucking, airfreight, and inter-modal are available to supply chain officials and all of these options require knowledge to use effectively and vigilance to ensure that the law-makers, regulators, and the carriers understand the needs of the shipper community.  The current environment for FMA members is at least as challenging as it was for League members in 1916, but as the first constitution stated, FMA will continue to work to “bring about better transportation conditions generally”.  

In light of the 100th Anniversary of the Freight Management Association of Canada, the Board of Directors, Members and Staff of FMA are planning to host a celebratory event sometime during the year. We hope that you will join us in celebrating this time in history.   

Logos through the years


October 1916-July 1985                  August 1985-May 1998                                        June 1998-December 2013                                    January 2014- Present 

 


October 9, 2015

 

Overweight Containers and Capsized Ships Prompt New Container Weight Provisions
By Kelsey Lemieux

The Challenge
The mis-declaration of container weights in the shipping industry is the cause to many capsized ships in the ocean. Over the years, the challenge with overweight containers has been a concern to industry, insurance, government and even the public as more and more incidents arise from overweight containers and ships.  Some of the more known incidents include MOL Comfort, capsized in June 2013, which suffered a crack in the middle of the ship due to overweight containers, the MSC Napoli, capsized in January 2007 (seen in the picture), which had a weight that was 312 tonnes heavier than the cargo manifest and container ship Deneb in Algeciras, Spain where one out of every ten containers were grossly overweight by a factor of 1.9 to 6.7 times the declared figure. This issue has lost the shipping industry an estimated $130 million annually and has been an issue that has concerned many in the shipping industry for some time. The World Shipping Council (WSC) and the International Chamber of Shipping (ICS) set out to change the rules to make shipping containers a safer way of exporting and importing.

The Solution
A revision to the rules of the Safety of Life at Sea (SOLAS) Convention was the most plausible solution to the issue of over-weight containers. The World Shipping Council stated that “global containerized maritime commerce will need to comply with new international regulations that require every packed container to have a verified container weight as a condition for vessel loading”. For shippers, this means sole responsibility for a containers documented weight. The documented weight must be verified by a shipper authorized person and it must be confirmed that the individual cargo items have all been weighed.

The main provisions to the rules are:

  • The shipper is responsible for obtaining and documenting the verified gross mass of a packed container.  
  • The verified gross mass must be communicated to the ship’s master or the shipping line’s terminal representative prior to loading on the ship.  
  • The communication should be signed by a duly authorized representative of the shipper.
  • Packed containers will not be loaded on ships unless the verified mass is provided to the master.
  • There are two authorized methods for obtaining the verified gross mass:
                • Method 1:   Weighing the packed container as a whole
                • Method 2:   Weighing each item of cargo that will be packed into the container (ex: pallets, cartons, dunnage, packing and bracing material) and adding those weights to the tare weight of the container. Method 2 is not to be used for bulk cargo (ex: bulk grain, scrap metal, etc.)
  • Estimating weight is not permitted
  • Weighing equipment must be certified by the appropriate national government agency (Measurements Canada). 
  • To accommodate potential deviations in method 2, the verified gross weight of a packed container should be accepted with a margin of ± 5 % of the total gross weight.

The weighing process for method 2:

  • Calculation of the gross weight of the packed container, under Method 2, should follow the process below: 
                • Step 1 – Weight of the cargo
                        • Adding the weight of each individual cargo items together.  In the case of suitable bulk products the weight may be obtained from the production process.
                • Step 2 – Weight of the packaging
                        • The weight of the packaging is either obtained from the manufacturer of the packaging material or based on shippers’ / forwarders’ data, as verified and captured in the company’s Enterprise Resource Planning (ERP) or similar auditable system.
                • Step 3 – Weight of pallets, securing materials and dunnage
                        • The weight of pallets, packing materials, securing devices such as shoring poles and dunnage is obtained either from the manufacturer or based on shippers’ / forwarders’ data, preferably verified and captured in the ERP (or similar) system.  
                • Step 4 – Tare weight of the empty container
                        • The carrier should provide the correct tare weight of the empty container timely for the shipper to be able to include this in the gross weight calculation of a container.  In the absence of this information, the shipper should use the tare weight indicated on the container or any specific information provided by the carrier.   
                        • The posted tare weight on the container is also acceptable. 
                • Step 5 – Gross weight of the packed container 
                        • The weights obtained in steps 1 to 4 above are added together to get the gross mass of the packed container.

The History
The WSC and ICS saw a trend in the amount of international incidents involving overweight containers and capsized ships. These incidents provided the evidence of the need for a regulation to declare container weights.

 
In 2010, the WSC and ICS issued a joint statement emphasizing experiences and concerns regarding miss-declared container weights.  A formal proposal was submitted to the International Maritime Organization (IMO), in 2011, in hopes of developing a regulation that would make it mandatory for packed containers to be weighed before being stowed on ships. By the end of 2011, the IMO addressed the issue of mis-declared container weights and began to undertake other measures to improve the safety of container stowage and ship operations. At this point, in conjunction with BIMCO and with the support of the International Association of Ports and Harbours (IAPH), the WSC and ICS submitted a joint paper to the IMO Dangerous Goods sub-committee that recommended that the SOLAS Convention be revised to include the verification of containers weights before storing aboard a ship regulated by SOLAS. In 2012, the group of maritime industry associations, led by the World Shipping Council, convinced the governments of Denmark, Netherlands and the United States to come on board the SOLAS revision. They sponsored a formal proposal to the IMO to show their agreement that the weight of all packed containers be verified prior to loading onboard a vessel. The group was asked to develop specific amendments to SOLAS and draft guidelines for implementation to propose at the groups’ next meeting. By the end of 2014, with the help of WSC, ICS, BIMCO, IAPH, International Governments and the Global Shippers Forum (GSF), the IMO's Maritime Safety Committee adopted the new SOLAS requirement that requires the weight of a packed container to be verified by the shipper using one of two permissible methods. The SOLAS container weight verification requirement will enter into force on July 1, 2016.

The Global Shippers Forum was particularly influential in advocating for Method 2, primarily to assist shippers in developing countries where there is a lack of scales capable of weighing loaded containers.


The Benefits
The main benefit to the change in the rules is safety; safety for the shippers, safety for the crew, safety for the carriers and reduction in damage to cargo. The amendments provide global consistency to container weighing which will benefit shippers, carriers and ships’ crew.


The full text of the applicable SOLAS regulations and the Implementing Guidelines issued by IMO MSC (MSC.1/Circ. 1475) which covers issues including definitions, core principles and responsibilities of the parties; how to deal with weight discrepancies and any lack of accompanying documentation can be found at www.worldhipping.org. 

 


September 30, 2015

Do Business the SmartWay 

From Natural Resource Canada

Gap Canada, Nestlé Canada Inc., and Catalyst Paper Corporation: What do these companies have in common? They are all SmartWay Partners! More than 3,100 companies in Canada and the United States have registered in the SmartWay Transport Partnership (SmartWay).

SmartWay is a free program offered by Natural Resources Canada. The program helps shippers identify fuel-efficient carriers through SmartWay’s Partner List. The Partner List identifies all of SmartWay’s Carrier Partners who have committed to reducing their emissions.

SmartWay provides shippers, logistics companies and carriers with uniform metrics and an integrated framework that is supported and consistently applied across Canada and the U.S. In other words, SmartWay helps businesses credibly track the fuel costs and emissions footprint of the transportation component of their freight supply chain. Being aware of fuel costs allows companies to identify savings opportunities and maximize profits.

As SmartWay Partners, shippers are able to provide customers, shareholders and employees with tangible and credible results – a great resource for corporate sustainability reporting. While many companies know the amount of energy consumed and emissions generated from their buildings or manufacturing processes, this information has been traditionally much more difficult to calculate from the transportation component of the supply chain.

Make Your Business Stand Out — Benefits You Can Expect
Another benefit of SmartWay is that Partners are able to differentiate their company from competitors by associating themselves with an internationally recognized brand that symbolizes more-efficient transportation choices. SmartWay Partners have the opportunity to enhance their company’s image by promoting their Partner status to customers and employees. Partners, who submit their data according to the program’s deadlines, become eligible to use the SmartWay Transport Partnership logo. The logo is an excellent way for companies to distinguish themselves from their competitors in bidding processes.

Each company also gets visibility on the Canadian and U.S. SmartWay websites by having their company name listed. In addition, SmartWay recognizes its top-performing Partners annually with the SmartWay Excellence Awards. Candidates for the awards are identified based on their annual SmartWay data submissions and leadership actions.

How to Join SmartWay
To become a SmartWay Partner, companies should submit their complete data using the Shipper Tool to report on their activities and fuel use. The data requirements and the Shipper Tool can be downloaded from the SmartWay website, at www. nrcan.gc.ca/energy/efficiency/transportation/commercialvehicles/ smartway/7615.

Matthew Rankin, Partner Account Manager with SmartWay, explains that, “the data-collection tool allows SmartWay shippers to track their environmental performance by incorporating the data of the SmartWay carriers they ship with. This makes shippers’ data more accurate and encourages fuel efficiency throughout the supply chain. Shippers can readily compare freight carriers and identify the top performers.”

A Smart Business Decision
Bob Ballantyne, President of the Freight Management Association of Canada, explains the benefits of SmartWay: “I think joining SmartWay is a smart business decision for shippers because it gives them access to information that will allow them to evaluate their carriers on a consistent basis. And that has got to be in the interests of not only the shippers, but also the carriers and … society at large.”

Many companies have given SmartWay direct feedback on the program. Stelios Chrysandreas, Transportation Manager at Kimberly-Clark, says, “We see SmartWay as both good environmental policy and good business. The transportation strategies that SmartWay recommends are saving us fuel, lessening our carbon footprint, and making a big difference in bringing us closer to our sustainability goals.”

In addition to providing data-collection tools for shippers and carriers to lessen their carbon footprint, SmartWay also works with Affiliates to promote the program. Realizing the fuel savings and other benefits of Smartway, Affiliates encourage their members or customers to become SmartWay Partners. Supply Chain Management Association (SCMA) is one of SmartWay’s Affiliates generating visibility for SmartWay. Alison Toscano, Project Manager of SCMA, says, “Through a series of case studies and events, we have connected with many companies in transportation and the 3PL industry. These companies have not only realized substantial fuel savings, but also reduced their greenhouse gas emissions.”

To help companies complete the tool with their data, SmartWay offers free webinars in English and French. Matthew Rankin from SmartWay says, “New Partners should inquire about our webinars. They’re free and offer a good introduction to the program and tools, and are an opportunity to ask questions.” The SmartWay website has a list of the next-available webinars. If a company  has a number of participants interested in a customized webinar, SmartWay will gladly arrange one.

On top of having access to free webinars, each company joining the program is set up with a SmartWay Partner Account Manager, a person who will help them fill out the tool via telephone and email, and answer any questions along the way.

For more information or to join the program, contact the SmartWay team, at 1-855-322-1264 or Smartway.Canada@ nrcan-rncan.gc.ca or watch the SmartWay Continues to Grow video. 

 


August 31, 2015

Forecasting Demand, Building Capacity — Not Easy!
By Bob Ballantyne

The current review of the Canada Transportation Act, mandated last summer by the Minister of Transport, was triggered by a short term emergency situation, i.e., the inability of the railways to move the record grain crop from the 2013-2014 crop-year. Did the railways have the necessary capacity? There were several factors contributing to the grain transportation problem, but that problem, and the Minister’s subsequent announcement, shone a light on the issues of demand forecasting and on the overall capacity in the transportation system to meet forecast demand.

The Minister’s charge to the Review states: “The Review will also examine the extent to which the national transportation system has the capacity and adaptability that will allow it, and its users, to respond effectively to evolving international and domestic conditions and markets.
” The future is an “unknown country,” and forecasting weather, the price of oil, or if and when we will need new transportation capacity is, at best, an educated guess, and the further out we try to forecast, the greater the variability of possible scenarios. I’ll leave the demand forecasting to others; in this commentary, I’ll focus on freight transport capacity.

“Capacity” is not a straightforward issue. It is very complex. It is much more than having enough roads, tracks, ports and airport runways. It also encompasses the ability to recover quickly from service interruptions, such as landslides or labour disputes, or providing for surge capacity and seasonality. It also includes the ability of the transportation modes to coordinate their capacity building decisions. Twenty-thousand-TEU-capacity container ships may increase the marine capacity, but what do the ports and the railways have to do to handle such volumes expeditiously?

The carriers in various modes have picked most of the “low-hanging fruit.” The allowable axle loads for trucks have increased over the years, double-trailer configurations (long combination vehicles) are allowed in most provinces, and shippers with loads that “cube-out” are now experimenting with 60-foot trailers. A major issue for the trucking industry that will affect capacity is the looming driver shortage. Hours-of-service regulations and the cooperation of shippers and consignees to quickly load and unload trailers will also impact capacity.

Similarly for rail, the carriers have made significant gains in productivity involving increased axle loadings and thus car capacity, using distributed power to run trains as much as two miles in length and introducing double-stack container cars. This has required investment in terminals and in passing sidings to accommodate the long trains. As with trucking, improving the cycle time of rolling stock and ensuring a stable and well-trained labour force, especially locomotive engineers, will have an effect on capacity.
In addition to the large-capacity ships mentioned above, even the price of fuel can affect capacity. Prior to the recent downturn in fuel costs, the major container lines had introduced “slow steaming,” i.e., cruising-speed reductions to save fuel and thus costs. This decision increased the cycle time for ships, thereby altering capacity. Port terminals’ abilities to effectively move containers and bulk shipments between ships and land carriers (railways and trucks) and provide appropriate surge capacity are further factors that influence overall transportation capacity.

Major ports are mostly in urban areas where land for expansion is at a premium. Will the ports be able to find land, and what investments will be necessary in cranes and other port equipment?

Government policies and regulation will also have an impact on capacity. Airfreight security regulations and related advance shipment data requirements will need to be harmonized on a global basis. The International Marine Organization (IMO) is introducing a new convention related to ensuring the accurate weight of containers for safety purposes. Meeting new environmental standards is another issue that shippers and carriers will face. If carbon pricing or limiting sulfur content in fuels changes the economics for carriers, will this affect capacity-related investment decisions? While much of the input received by the Review has focused on current problems, the charge by the Minister of Transport to look at capacity needs is an important part of the Review’s mandate, and it will require considerable skill and expertise to address this complex but vital issue. Stakeholders will be looking forward to the Review’s comments and recommendations on this vital issue.

 




August 10, 2015

A Bill of Lading for the 21st Century
By Kelsey Lemieux 


What is a Bill of Lading?
The Bill of Lading (BOL) remains one of the most fundamental and important shipping documents. It is evidence of a contract between the shipper and the carrier and acts as a receipt that the carrier has accepted the shipment in good order. 

Why is the FMA BOL different from other BOL’s?
Many current BOLs do not reflect current law and regulation. The FMA BOL, developed by Gowlings law firm, includes, or references, all current laws and regulations as of March 2009 for truck, rail or intermodal truck/rail shipments in Canada.

The front of the bill updates and clarifies a number of requirements such as the requirement for inclusion of an emergency response telephone number if the bill is for a dangerous goods shipment. The new federal Condition of Carriage Regulations are included on the reverse side of the bill and the reverse side also incorporates the federal railway and provincial trucking terms & conditions by reference. The website links to the rail regulation and to each provincial regulation are also included on the reverse side.


What do you get?

The electronic package, sent by e-mail, includes three pdf files:

  • General Introduction and typical provincial Terms and Conditions for truck transport, based on the Alberta regulation. This document is annotated to indicate where there are significant differences in other provincial regulations from the Alberta regulation.
  • A "locked" pdf version of the BOL (front and reverse sides) that can be used "as is" as a standard BOL.
  • An "unlocked" pdf version that purchasers can customize to meet their specific company needs.

How much does it cost?

  • For FMA Members, a one-time payment of:    $500 + applicable taxes
  • For other companies, a one-time payment of: $800 + applicable taxes

* An electronic copy will be sent once payment is received. *

For more information, please contact Cindy Hick at (613) 599-3283 x 2.

-or-  

REQUEST AN ORDER FORM 


July 31, 2015

Takeaways from the 2015 GSF Annual Meeting
By Chris Welsh

The Annual General Meeting of the Global Shippers' Forum took place from 2 to 4 June 2015 in Toronto. Over 35 delegates attended from shipper councils including those representing Canada, Germany, Hong Kong, Korea, South Africa, Sri Lanka, Thailand UK, US and other observer shipper associations. There were also representatives from numerous countries in the membership of the Union of African Shippers' Councils as well as individual shippers taking part in the meeting.

The meeting discussions included:

  • actions for a global surcharges campaign for 'all in' container shipping and air cargo rates and to identify regulatory approaches to improve shippers bargaining power
  • the new joint BIMCO/GSF standard container contract and how the contract can be used by small and medium sized shippers to enhance their bargaining power
  • verification of container gross mass weights with GSF best practice advice and activities to assist members with implementation
  • anti-trust reforms in Australia and New Zealand, and current reviews in Singapore and Hong Kong of anti-trust immunity and other enforcement activities, including the European Commission price signalling case
  • GSF's involvement in International Maritime Organization policy work on shipping emissions
  • an air cargo session to raise awareness of how shippers and carriers are working together to promote sustainable air cargo

The meeting also included a freight and logistics field trip to see some unique Canadian logistics operations, including the Welland Canal and freight operations at the Port of Hamilton on Lake Ontario.

GSF calls for the value of air cargo to the global economy to be recognised
At its Annual Meeting in Toronto from 2 to 4 June GSF emphasised the importance of recognition of the advantages of air freight and the need for the growing challenge of climate change to be tackled. GSF was publishing a new briefing document 'The value of air cargo to the global economy' This underlines that air is an essential mode of transport for many industry sectors, including high end manufacturing, engineering, pharmaceuticals, retailing and the automotive sector. There are also time-sensitive goods such as medicines and documents which cannot travel any other way. Launching the document, Chris Welsh, GSF Secretary General, said: "The importance of air freight to the global economy is often overlooked, with the focus almost exclusively centred on passenger and business travel. Aviation is a key enabler of global economic growth and social development, and GSF aims to champion the 'value' of air freight."

Aviation is often presumed to be an environmentally damaging form of transport when, in reality, the industry has been taking extensive action to reduce emissions. In its publication, GSF examines how the aviation sector is reducing emissions, including industry targets and the work of the International Civil Aviation Organization (ICAO).
The GSF 'Green Day' air cargo session at the Annual Meeting included the launch of GSF's shippers' best practice case studies to support the Global Air Cargo Advisory Group's (GACAG) campaign to raise awareness of how shippers and carriers are working together to promote sustainable air cargo. There was also a roundtable discussion involving GSF, the International Air Transport Association (IATA) and ICAO (International Civil Aviation Organization) officials on proposals to cut aviation emissions including Celine Hourcade, Cargo Industry Affairs Manager of IATA and Sam Brand, Environmental Officer of ICAO.

Launch of BIMCO/GSF contract
GSF has now formally launched the BIMCO/GSF SERVICECON container shipping contract together with BIMCO at the annual Containerisation International Conference in Hamburg on 22 April. BIMCO, the Baltic and International Maritime Council, is the largest and one of the oldest international ship-owner associations, and specialises in producing standard documents for the shipping industry; it has already developed standard terms and conditions for the bulk shipping sector covering charter party contract terms, such as GENCON, GUARDCON and BARCON which cover most of the world's bulk shipping sectors.

Now, working together, BIMCO and GSF have produced the world's first standardized contract terms and conditions for use in container shipping markets worldwide. While many large multi-national shippers have developed their own bespoke contractual arrangements, until now no contract has been available to meet the needs of small and medium-sized shippers. Consequently, many such shippers ship goods without any contractual arrangements/protections, and are subject to carriers' standard terms and conditions incorporated in bills of lading and sea waybills. As one would expect, carrier bill of lading and sea waybill terms and conditions are highly favourable to ship-owners and offer limited protections other than mandatory limits of liability.

While the contract has been devised with smaller shippers in mind, GSF believes that the contract will be useful for many larger shippers as a framework/starting point for more individualised bespoke contracts - especially for cargo shipments outside the scope of individualised contracts. The BIMCO/GSF standard contract is the result of discussions between GSF and BIMCO over a two-year period between shipper and carrier representatives in a joint working group. As such, it is a compromise between shipper and carrier interests, but the GSF believes it is a reasonable compromise from a shipper's perspective. However, it is important to point out that SERVICECON is a boilerplate or framework contract and therefore represents a starting point for negotiations with carriers. As with any contractual agreement it needs careful scrutiny, and in that regard the GSF has prepared a guidance note and legal advice to assist shippers intending to use SERVICECON. The advice provides clause by clause comment and, where appropriate, provides tips and recommendations for shippers to use as negotiating points. For example, the provisions regarding liquidated damages and 'Minimum Quantity Commitment' require close attention.

The BIMCO/GSF SERVICECON contract and guidance note will be placed on the GSF website. Your members will be able to download the contract and guidance note from the website. They will also be able use the downloaded contract template as a working document, being able to fill in the contract boxes and annexes for rate agreements and listing of other charges and surcharges and service and equipment provisions.

Read the SERVICECON Standard Service Agreement
Read the SERVICECON Guidance Note

EU monitoring of maritime alliances
Following the Chinese authorities' rejection of the P3, the world's top 16 container shipping lines have quickly reconfigured their strategic partnerships in four major alliances which dominate the world's main liner trades, with knock-on effects for many small liner markets. The alliances include:

  • 2M (Maersk and MSC)
  • Ocean Three (CMA CMG, China Shipping Company and United Arab Shipping Company)
  • CKYHE (Cosco, K Line, Yang Ming, Hanjin and Evergreen)
  • G6 (APL, Hapag Lloyd, HMM, Mitsui, NYK and OOCL)

While shippers are broadly supportive of traditional consortia and vessel sharing agreements (VSAs), many shippers are concerned that the new breed of alliances go well beyond vessel sharing in terms of their scale, the sharing of information and data on capacity, costs and pricing in the context of conference and rate discussion agreements, such as the Transpacific Stabilization Agreement and Intra-Asia discussion agreement. For example, UK shippers transhipping goods via Singapore and Hong Kong from and to intra-Asia points of origin may unknowingly be subject to rate agreements covering non-European transhipment ocean legs.

Note: GSF strongly recommends inserting a clause in contracts covering global business or trades inside and outside Europe jurisdiction requiring shipping lines to comply with the competition law relevant to them, e.g. EU law, on a global basis.

While traditional consortia/VSAs with market shares of less than 30 per cent are covered by the EU consortia block exemption, the alliances may not automatically benefit from the exemption owing to their extended market shares and integrated nature of their joint operations. They are therefore likely to be subject to the normal application of EU laws. They must therefore self-assess whether their agreements are likely to breach EU competition rules. This is a complex area of EU competition law. GSF has previously raised various questions with the EU competition authorities and the US Federal Maritime Commission asking whether the proposed sharing of strategic information on capacity allocations, investment decisions and costs is likely to lead to collusion on rates. With regard to the rejected P3, the US FMC was sufficiently concerned to announce that it would seek information from carriers to enable the FMC to monitor rates and capacity movements to see if the agreement led to "unreasonable increases in transportation costs". More recently the new incoming European Competition Commissioner publicly stated that the European Commission would closely monitor the maritime alliances.
This latter move by the European Commission is welcomed by GSF. Experience in the aviation sector has shown that various concerted actions by Star Alliance and Skyteam Alliance members have led to competitors being forced out of markets and substantial increases in air fares on specific routes. These alleged infringements are currently subject to legal proceedings.

GSF therefore wishes to protect members by assisting the Commission with its proposed monitoring arrangements and has invited view on the following potential monitoring criteria.

  • Liner company name(s)
  • Number of vessels
  • Total capacity
  • Capacity changes total +/-
  • Price (against an index - 100)
  • Transit times
  • Frequency/route/port etc.
  • Europe/HK
  • Europe/Shanghai
  • Singapore
  • Bunkers/per/TEU
  • Ancillaries/per/TEU

Verification of container weights and shipper accreditation
At the end of 2014 the International Maritime Organization (IMO) adopted amendments to the Safety of Life at Sea Convention (SOLAS) requiring every packed export container to have a 'verified' weight prior to it being loaded on board a ship. This requirement will come into force from 1 July 2016. The IMO amendments provide two alternative means for shippers (or other freight forwarders/agents arranging the transport on their behalf) to comply with the agreed methods of weight verification of containers (refer to previous article). Method 1: by weighing the packed container, using calibrated and certified weighing equipment such as a weighbridge; or method 2: weighing the separate packages and cargo items, including the mass of pallets, dunnage, securing devices etc. to be packed in the container and adding the container's tare weight to the sum of the single masses using an approved process (the calculated weight method). Not all goods lend themselves to weighing of the individual items (scrap metal, unbagged grain, electronic waste) and in such cases method 1 would have to be used instead.

GSF staff have been working with the Maritime and Coastguard Agency (MCA), the competent authority in the UK, which has decided that in order to comply with the details of the new SOLAS amendments, all UK-based exporters/shippers using containers will have to be approved by them or an authorised third party and then listed in an official database of accredited companies. This is in order to ensure that those companies exporting goods are complying with their responsibilities as prescribed within SOLAS.
Guidelines for a UK approval scheme have been drafted following discussions between GSF and other relevant UK trade bodies, as well as the UK Department for Transport.
The database will be accessible to the companies themselves, the shipping lines and port/terminal operators, in order each can confirm, if they so wish, that containers are being presented for transport by reputable, known shippers/manufacturers or their agents.

At present the UK accreditation scheme remains a 'work-in-progress' but some of its key features are as follows.

Shippers' routes to approval include ISO 9001, ISO 28000 or other auditing schemes approved by the competent authority; as will

  • Businesses holding the EU Customs AEO certification type 'S' or 'F'; or using ERP/SAP auditable quality management systems
  • On-site audit for applicants without audited and certified procedures
  • Accreditation will be valid for a period not exceeding three years
  • Initial audit fee/set-up fee will apply plus subsequent renewal fee (amounts to be determined)
  • GSF, through the FTA, will apply to become an authorised party to manage the accreditation database on behalf of the MCA in the UK.

GSF remains in close contact with the MCA to ensure the amendment to the SOLAS VI text will not create an unmanageable burden for its shipper members. MCA has stated that the scheme will be managed "with a light touch" and, given the variety of avenues by which businesses may be approved, GSF remains optimistic that there will be many successful applications made by UK shippers. GSF believes the simple accreditation scheme that has been developed for use in the UK could also be used as a template in other countries and is working now with other industry bodies such as ICHCA to spread the message. More details on the UK accreditation scheme here.

GSF at IMO MEPC 68
GSF attended the International Maritime Organization's Marine Environment Protection Committee (MEPC) 68 in May which made further progress on the development of a data collection system to monitor carbon emissions from ships. Prior to MEPC 68, GSF had submitted a technical paper expressing concern that a data collection system restricted to collecting data on fuel consumption will fail to assist shippers in reporting on their supply chain emissions. Instead, data should be included to enable an assessment of the energy efficiency of ships. GSF made an intervention during the plenary session on this matter. The correspondence group for the data collection system reconvened during MEPC 68. There was consensus on the collection of fuel data from ships with the added agreement that there should continue to be discussion about including activity data, such as distance travelled, cargo characteristics and service hours. An inter-sessional group will be formed to conduct an analysis of the different types of activity data that could be calculated and to evaluate the options for whether energy efficiency metrics can be applied. A report will be submitted to MEPC 69. A three-step approach proposed by the United States - data collection, data analysis, followed by decision-making - was particularly influential as this is the usual approach adopted by IMO bodies when considering additional measures. However, representatives of ship-owners remain concerned over the confidentiality of data and this will need to be further considered. IMO will also need to decide whether the data collection system will be voluntary or mandatory. Overall, this outcome is very pleasing and GSF has made progress in raising the profile of shippers' needs in the debate.

GSF has launched its fourth edition of its Maritime Emissions Guide featuring the latest comprehensive information on the sector's role to reduce carbon emissions. The guide provides insight into the climate change debate from the perspective of the shipper. The key challenges facing the IMO are examined, alongside the latest negotiations on climate change and GSF's increasing influence. Download the guide here

 

 


July 7, 2015

The Fair Rail Freight Service Act – 2 Years Later
By Kelsey Lemieux


The Challenge
Rail service issues have become a pressing and urgent concern for many industries across Canada. The difficulty that shippers face is directly related to the unresolved balance of power between shippers and railways.

Shippers have been unable to directly negotiate service agreements with railways and many shippers receive inconsistent service.  In an interview on March 22, 2013, Wade Sobkowich of the Western Grain Elevator Association said “Service is very poor on both railroads. Overall the railways are delivering less than 50 per cent of the rail cars in accordance with their own service plans.”
Rail shippers, in many industries, continue to express the need for a legal backstop to promote more balanced negotiations on service agreements.

The need to make it easier to reach rail service agreements has been considered and new legislation has been implemented to help shippers reach service agreements. The legislation is called the Fair Rail Freight Service Act (Bill C-52) and it amends the Canada Transportation Act.

Shippers are able to use the new act when a direct negotiation with the railways fail and gives shippers the right to obtain a service level agreement through arbitration.

The History
The rail service review, initiated in 2009, determined that railway service in Canada was inconsistent and shippers were facing the consequences.  In September 2009, Transport Canada assembled a panel to conduct a review of Canada’s rail based logistics system, focusing on rail service provided to Canadian shippers and customers. By 2010, the panel released an interim report and by March 2011, the final report with recommendations was released. In the fall of 2011, a facilitator was appointed by the Government to help stakeholders negotiate commercial approaches to railway level of service. After a six month facilitation process, the Government tabled Bill C-52 and it was passed into law in June of 2013.

Since passing the bill into law, several service agreements have been achieved through arbitration.  FMA understands that, in some cases, there have been successful direct negotiations once the shipper has notified the railway that is has applied for arbitration.
 
The Solution
Wide spread complaints of service failures led the Government to take this action. While the railways objected to Bill C-52, former transport Minister Lebel stated that “We have introduced legislation that will enhance the effectiveness, efficiency and reliability of Canada's rail system. The railway-shipper relationship is vital to Canada's economy as a whole because when shippers can move more volume this means more exports, more revenue and, for sure, more Canadian jobs."

Essentially, an efficient system when shipping goods by rail will help improve the Canadian economy and pave the way for future export successes. If more and more shippers begin using the new legislation when negotiations with railways fail, it is hoped that market power will be rebalanced to the benefit of shippers and railways.

The Benefits
It is expected that the Fair Rail Freight Service Act will lead to broad supply chain improvement. The act allows the shipper to trigger the process which means the shipper can determine if it needs to use arbitration to improve the predictability, clarity and reliability of rail freight service. As David Lindsay, president and CEO of the Forest Products Association of Canada said "Ensuring a fair and balanced relationship between shippers and the railways will help the {forest products industry} retain and create jobs for the benefit of the entire Canadian economy." This will also be the case for many other industries that depend on reliable and consistent rail service.
 
Review the Act Today
This act helps improve service quality between railways and shippers, will help shippers increase productivity and revenue and will also allow shippers to make a complaint when railways are not compliant.

The FMA and the Canadian Transportation Agency encourage shippers to review the act to determine if it will assist in obtaining service improvements. If you have questions resulting from your review of the act, contact FMA and we will find answers.

Review the Fair Rail Freight Service Act today.


June 30, 2015

The War for Talent
By Chip Scholz 

There is a war for talent today, and it affects every American business. It is driven by demographics: the Boomers are retiring and leaving the workforce in ever-increasing numbers; college and university graduation rates can’t keep up with the need for educated talent; and there is a shortage of people willing to work in a warehouse for the wages now paid in that environment. Here are some of the facts:

  • By 2020, the U.S. Bureau of Labor Statistics says that over 50 percent of the workforce will become eligible for retirement. We do not have workers with enough training or skills to replace experienced retiring workers. The shortage of available skilled workers is likely to exceed 10 million by 2020.
  • One-fifth of this country’s large, established companies will be losing 40 percent or more of their top-level talent in the next five years. The replacement pool of 35-to-50-year-olds has declined by 20 percent during the same period.
  • Within the next 10 years, 18 million jobs will require individuals with baccalaureate degrees. At current graduation levels, the Employment Policy Foundation predicts a shortfall of 6 million Candidates.
  • In 1973, blue-collar workers represented over 60 percent of the workforce. Very soon, just 10 percent of the workforce will be blue-collar. The Hudson Institute estimates that only 20 percent of our workers will have the skills to do 60 percent of the jobs.

The competition for talent is pervasive. Jobhopping has increased as the economy has lost active workers. According to a Society of Human Resources Management (SHRM) survey, 75 percent of American employees and 82 percent of American executives are looking for a new job. Here are a few more stats you need to pay attention to:

  • Despite economic uncertainty, nearly seven out of 10 U.S. workers say job change will be at their own initiative.
  • Thirty-nine percent of the workforce has worked for six or more companies – up from 27 percent in 1999.
  • Forty-five percent of workers want to change jobs at least every three to five years – up from 26 percent in 1999.

Why is this important to you? Only 15 percent of the executives surveyed by McKinsey & Co. said improving the talent pool is a top priority, even though 75 percent of those same executives said that “a chronic shortage of talent” is one of the constraints on their companies’ growth.
Many studies have shown that low-performing companies have nearly twice as much turnover among top-performing employees as highperforming companies. To put that fact into context, consider that three out of every four Fortune 5000 companies on the list in 1970 are no longer on the list. One out of three firms that went public since 1988 are out of business.

What are you doing to win the talent war? What are you doing to change your outcomes? What do you need to change in the way that you recruit, hire, train and develop your employees? How can you maintain a high-performing workforce?
One way is to keep a handle on your turnover.

Imagine, if you will, that you are a typical 3PL. Your customers are demanding that you continue to reduce the cost of your service to them. You, therefore, require more cost savings, so that margins remain bearable and there is some return on the time, effort and money invested.

You have done just about everything you and your team can think of to reduce costs further. You have squeezed your current suppliers, changed to new suppliers, and stripped the workforce to its bare bones. You absolutely don’t know where you are going to find anything else to cut!

Turnover impacts your bottom line in a lot of sneaky ways. It is usually the last place that companies look to improve their returns because there is no line item on a P&L marked “turnover.” The costs are soft, hidden. Labour costs on the P&L may even show a decline in times of high turnover, providing misleading information.

However, depending on the source of the information, it is estimated that turnover costs three to five times the annual  salary of the position that turns over. Those numbers may be high, so let’s put some meat on those bones to assess the conservative costs of turnover. Let’s assume that the position that turns over has an annual salary of $50,000. Here are the costs that are incurred:

  • While the position is vacant, co-workers are asked to fill in. Productivity drops as others cover the tasks of the open position. Morale suffers – which leads to more turnover. Stress levels increase due to longer hours, leading to mistakes, accidents, injuries, illness and reduced quality.
    Estimated Costs: $25,300
  • Recruiting costs include lost productivity of the managers that have to recruit. Additional costs may include a recruiter or temp agency. Advertising a position, going through résumés, travel arrangements for meetings, etc. all add up. In a tight labour market, relocation fees, signing bonuses or referral fees need to be factored in. Estimated Costs: $28,800
  • Once you have hired a new employee, the costs continue. You most likely end up paying the new worker more than you were paying before. To eliminate problems, you give raises to close co-workers. Productivity issues arise because the new employee is not up to speed and other employees are filling in. You are paying the new employee fully even though their productivity is low. To get them up to speed, you have to train them. That means that managers, supervisors and other employees are pulled away from their jobs, further lowering productivity.
    Estimated Costs: $56,400

By losing that one employee, the bottom line is affected by $110,500. Drop in the bucket? Maybe, but consider the multiplier effect. If you have 100 employees that average $50,000 in salary per year and your turnover rate is 30 percent (not unheard of), turnover just cost you more than $3 million. Is that significant? Wouldn’t that $3 million be better off working for you or in your pocket?

It is a bottom-line expense that doesn’t show up specifically on the books, but costs you plenty in bottom-line dollars. Let’s talk about a few ways to lower your turnover so you can keep more of your hard-earned money.

  1. Hire the Right People: I am sure you have had the experience of hiring someone that interviewed well, looked great on paper, but never performed up to expectations. We hire based on the knowledge and skills (résumé, references) that are presented to us. We hire people we like, or who are like us. We hire through the lens of our own biases. We may see the attitudes that the candidate shows during the interview, but we don’t know what attitudes they will bring with them to the job.

    According to a Michigan State University study done by Dr. Robert Hunter, the traditional résumé/interview hiring process is only 14 percent effective in finding the right people. If you add reference checks, you can increase your efficiency to 26 percent. This is typically how most companies hire. That means that only one in four of your hires is a good one! How can you increase your chances? If you add testing for attitudes and behaviours, your rate of success goes up to 53 percent. And if you add a job benchmark, your success rate climbs to 76 percent.

    Further, if you hire the right person for the job, you will reduce stress on the person you have hired. They will be doing the things they like to do and are suited to do. Doing the job comes more easily, and job satisfaction increases.

  2. Set Clear Expectations: Nobody comes to work wanting to do a bad job. One reason for turnover is a lack of clear expectations that is evidenced by a lack of clear direction about the way success is measured and what outcomes the work will result in. Be sure to develop a clear set of work standards, and allow your employees to interface with customers as often as possible. Don’t forget to celebrate achievements in hitting the standards!

    Now comes the hard part… What are your expectations for the company? Do you have a clear vision for the future? Does everyone in the company understand the vision, the values and the mission? Can they tell you how what they do relates to accomplishing the vision? If not, you need to clarify those things for yourself and for your employees.

  3. Create Opportunities for Growth and Development: If an employee finds work to be challenging with opportunities for personal and professional growth, job satisfaction increases.

    Promote from within when you can. Vary job assignments and offer opportunities to work on special projects beyond the scope of their normal jobs. Split jobs into different levels, thereby offering increasing leadership opportunities. Help them develop their personal and professional leadership abilities through workshops or coaching.

  4. Managers Must be Good Leaders: Employees always work harder for good leaders. Good leaders can be developed, but it must be intentional. Make sure you and your managers are well trained. People respond to managers they can trust and who can inspire them to achieve their goals.

Reducing turnover and creating more productive employees gives you an added bonus. You won’t spend all of your time worrying about where your next hire is going to come from, allowing you to invest more time working on your business, not in your business. Isn’t that where you want to invest your time?

Chip Scholz is head coach of Scholz and Associates, Inc.


June 12, 2015

Shippers, 3PLs Collaborate to Cut Costs, Improve Service
By Shanton Wilcox

There is no doubt that our world has changed drastically in the last 10 years. Shopping now takes place around the clock, technology is streamlining and improving business processes, and customers are demanding more responsiveness from companies. As a result, shippers and logistics service providers alike are responding to and facilitating changes within the industry to enhance customer satisfaction, reduce risks within the supply chain and improve operations. What’s more, many of them are increasing their collaboration and relying on each other to improve the supply chain.

Research for the 2015 Third-Party Logistics Study shows that shipper/3PL relationships are strengthening, and both parties are seeing positive results from their partnerships. A majority of shippers – 92 percent – reported that their relationships with 3PLs generally have been successful. Among 3PLs, that number increased to 98 percent.

When it comes to shipper/3PL relationships, the most frequently outsourced activities tend to be those that are transactional, operational and repetitive, such as domestic and international transportation, warehousing, customs brokerage and freight forwarding. Both parties are also reporting an increase in the amount of collaboration to achieve logistics cost and service improvements.

Cost savings are among the top benefits shippers report. Shippers participating in the study reported an average logistics-cost reduction of 9 percent, an average inventory-cost reduction of 5 percent and an average fixed-logistics cost reduction of 15 percent. Shippers are also experiencing improvements in their order-fill rate and order accuracy. That improved performance within the supply chain results in greater customer service for all of those involved, which is becoming more important in today’s business environment.

Providing an Always-On Experience for Customers
Shoppers are no longer constrained by a store’s hours, and they expect to have an always-on, always-open shopping opportunity. How and how quickly an order is fulfilled is a key factor in customer satisfaction. To succeed in this changing landscape, retailers are investing in new technology, redesigning their supply chain and testing new fulfillment options.

While technology is making it easier for retailers to allow consumers to buy when and where they want and choose how the order is fulfilled, the number of order channels multiplied by the number of delivery options creates a complex operating environment for shippers and logistics providers.

While retailers understand the importance of the omni-channel network and are making strides, omni-channel supply chains are still maturing. Nearly one-third of those participating in the study said they are not prepared to handle omni-channel retailing and only 2 percent of respondents rated themselves as high-performing in the omni-channel space.

Retailers are working to improve their omni-channel offerings and about half of respondents in the logistics study said they are testing new fulfillment strategies. In-home delivery from local stores, Sunday delivery and customer delivery in which an in-store shopper delivers goods to someone’s home are among the most frequently tested options.

  • Walmart is among those looking to tap into shoppers who are already in the store to deliver products to customers who ordered online. In-store shoppers would inform the retailer of their destination and volunteer to deliver packages to shoppers nearby in exchange for a discount on their bill.
  • Amazon has made headlines by testing drones for faster delivery of goods. The drones can carry packages weighing about five pounds to locations within a one-mile radius of an Amazon fulfillment centre.
  • Amazon has also installed delivery lockers in grocery, convenience and drugstore outlets at several locations in the U.S. and the United Kingdom. The lockers hold packages weighing less than 10 pounds and customers can pick up their deliveries at their convenience, eliminating the chance of missing a delivery or theft from their doorsteps. In the Los Angeles and New York metropolitan areas, Amazon is collaborating with the U.S. Postal Service to provide Sunday package delivery. 

One of the biggest challenges companies face is that their existing infrastructure simply cannot support a true omni-channel network. In the past, retailers created dedicated e-commerce distribution centres that were designed to pick, pack and ship partial shipments. The rest of their distribution centres were for full shipments, and, in the past, companies rarely shipped directly to consumers from the store.

While those lines are blurring, companies have to determine how much of their current infrastructure they are willing to take apart to build new delivery channels. Overall, retailers are trying to better utilize space and creating more in-store integration with online channels, using bricks-and-mortar stores as fulfillment centres for Internet shopping sites and to facilitate Web order pickup in which the customer shops online then picks the package up at the store.

Although retailers have the opportunity to provide customers with more options than ever before, they also have to ensure flawless execution. With new opportunities come new challenges, and technology has a greater role to play. It allows retailers to obtain the real-time visibility into their operations that allows for faster fulfillment and deliveries of orders, all in the name of customer service.

The Growing Role of Technology
To improve operations, retailers are gradually moving their platform-based solutions to the cloud. They are also using integrated technologies, such as warehouse management systems, enterprise resource planning software and transportation management systems, and investing in technologies that allow them to personalize and customize the shopping experience, such as mobile apps.

Within the supply chain, there are a number of ways in which technology is improving sales processes and profit margins. Customer relationship management and mobile-cloud technologies can streamline global workflows and processes, provide executive-level visibility to commercial leaders, identify inefficiencies and bottlenecks in commercial operations and provide real-time information into operational performance.

There is also evidence that the use of CRM-mobile-cloud technologies can significantly enhance and streamline 3PL sales executives’ activities. On average, 3PL sales executives spend 45 percent of their time engaged in customer-facing activities, such as phone meetings/ conversations and face-to-face meetings. That means that more than half of their time is spent on other activities that are not directly related to securing new customers or directly serving existing customers. Ultimately, technology can help these executives cut down on noncustomer- facing activities and focus more on relationship building.

Technology is not only helpful; it is starting to become a requirement. In this year’s study, 40 percent of shippers indicated that their bid processes place emphasis on 3PLs utilizing capable CRM technologies. The visibility technology provides can also help retailers and shippers identify and address risks throughout the supply chain.

Risk Management within the Supply Chain
Risk management used to be a back office concern, but that is no longer the case. Today it is garnering the attention of top executives as companies increasingly focus on providing a perfect customer experience. In turn, 3PLs are placing greater emphasis on the risk management services they provide clients, which is enhancing the effective management of supply chains worldwide.

In an effort to minimize supply chain disruptions, a growing number of companies are moving their manufacturing closer to the point of consumption. As a result of these near shoring efforts, manufacturing hubs are shifting and more businesses are moving to Mexico from Asia, driving significant growth within the manufacturing industry in Mexico.
Just under half of study respondents – 40 percent – said they have already moved some of their operations to Mexico, citing reduced freight transport time and closer proximity to sources as the most important factors driving the change. About 80 percent of Mexican exports ship to the United States, and respondents in the U.S. and China are the largest percentage of those that are moving operations to Mexico.

Understandably, the growth in the manufacturing industry in Mexico is creating opportunities for 3PLs – both for freight movement and for ancillary services. The effective movement of goods plays a crucial role in rendering Mexico’s businesses cost competitive. Of the logistics service offerings in Mexico, 68 percent of study respondents said they are currently buying or providing domestic transportation, international transportation and warehousing, and 12 percent said they plan to invest in those areas in the next 12 to 18 months.

However, a lack of quality infrastructure and certain regulatory aspects continue to challenge Mexico’s logistics industry. There is little use of information technologies by small and medium-sized companies, and most companies see technology as an expense, instead of as a tool or investment. Technologies such as warehouse management equipment and software and asset- and vehicle-tracking solutions need to be increasingly adopted to ensure cost effectiveness, but this creates an advantage for 3PLs that have expertise in these areas.

Technology can also help quell concerns about security, crime and corruption. Mexico ranks 106th in the world on the Corruption Perceptions Index, and the country faces a shortage of institutions to keep organized crime and corruption in check. To improve security and visibility, a number of companies utilize track and trace technology, and 3PLs have the opportunity to differentiate themselves by providing such updates to their customers.

The logistics marketplace will continue to evolve, particularly as technology improves, and 3PLs will keep enhancing their ability to drive innovation and create value for their customers and clients. At the same time, those same shipper customers will continue to become more proficient buyers and managers of 3PL services. As the supply chain continues to change, so will the talents and skills needed from the supply chain workforce.

Workforce Management within the Supply Chain
Existing positions within the industry are changing rapidly. By 2015, three out of four jobs within the industry are expected to change. Going forward, simply having hard skills in operations management will not be sufficient. Instead, a mix of soft and hard skills involving leadership qualities and cross-functional competencies will shape the industry.

What’s more, properly managing the workforce will be particularly important for the 3PL industry as it is expected to face a shortage of talent. Nearly 50 percent of those participating in the study said they are already having difficulty in finding or attracting talent, and the average hiring growth rate within the supply chain industry is expected to be higher than the average growth rate across other occupations. Estimates show that 60 million people will exit the industry by 2015, but there are only 40 million people to fill the gap.

There is also an expected shortage of professional truck drivers who actually move products. Although supply chain models and mobile devices are making just-in-time ordering and fulfillment more possible, professional truck drivers remain one of the most critical links within the supply chain. Bob Costello, chief economist for the American Trucking Associations, has said that the trucking industry needs to add nearly 100,000 drivers annually over the next decade to keep pace with freight.

The effect the truck-driver shortage will have on the supply chain is significant. Already manufacturers, distributors and other intermediaries operating private truck fleets are outsourcing their trucking to 3PL providers as a solution. This may be a short-term solution; to truly address their concerns, companies may begin making upstream adjustments, such as shifting distribution patterns, relying on intermodal transportation and shipping larger quantities at a time.

Whether changes are driven by available labour, technology or other factors, the supply chain industry will continue to evolve. No matter how it changes, to remain successful, 3PLs will have to provide value and create trusted solutions. Otherwise, companies will choose not to outsource operations where they feel they can serve their customers better.

Shanton Wilcox is the vice president of supply chain management at Capgemini Consulting in the Greater Atlanta area.


May 29, 2015 

FMA to Host World Shipper Group

By Kelsey Lemieux

The Freight Management Association of Canada (FMA) has the privilege of hosting the 2015 meeting of the Global Shippers’ Forum (GSF) in Toronto on June 2-4, 2015. The world shipper coalition meets annually, alternating between locations in Asia, Europe and North America, to talk about worldwide shipping issues.
At the 2014 meeting in the United States, the GSF accepted the FMA offer to host the 2015 meeting in Toronto. As the group has a strong focus on ocean shipping, the meetings are generally held in a port city. This presented the opportunity to showcase the Port of Hamilton, and to provide a chance to introduce the Welland Canal and Niagara Falls to the influential group of shipper representatives that will be in attendance.
The conference will include approximately 40 delegates with representatives from South Africa, Hong Kong, Thailand, Sri Lanka, Korea, Germany, Switzerland, United Kingdom, U.S.A and Canada.
The two and a half day meeting will include a networking reception, a conference day, a visit to the Port of Hamilton, a day trip to Niagara Falls, which will comprise of a tour of the Welland Canal, along with an opportunity to see the falls and other tourist attractions.
The meetings provide an opportunity for delegates to exchange views on a variety of ocean shipping and airfreight issues of concern to shippers around the globe. The sessions will conclude with a joint declaration that delegates can take back to their respective governments to assist in their advocacy work.
The items on the 2015 agenda include Surcharges and Terminal Handling Charges, Maritime Regulatory Reform, Container Weight Verification, Maritime Emissions, and a GSF “Air Cargo Green Day” session. The major topic of interest will be the GSF/BIMCO Standard Container Contract, the world's first standardised contract terms and conditions for use in container shipping markets worldwide.
Stay tuned for “GSF Takeaways” coming in July.

 

Find us on Twitter and LinkedIn to follow the conference as it happens!

The Global Shippers’ Forum (GSF) was formally incorporated and registered as a non-governmental organisation in the United Kingdom in June 2011. It’s the world’s leading trade association for shippers engaged in international trade moving goods by all modes of transport.


May 4, 2015

Panama Canal, Suez Canal and Big Ships: Their Effects on Global Supply Chains

 

By Curtis D. Spencer
In 2011, I wrote for The Shipper Advocate about the expansion of the Panama Canal in response to the growing use of ultra large ships, and how those developments might affect supply chains. Now, a few years on, I can provide a clearer big-picture view that concentrates on changes in global container shipping and what those changes mean for ports and shippers.
The day of the ultra-large container ships has definitely arrived! The average fleet today includes 8,000-to-9,000-TEU vessels as the “work horses.” I anticipate that sizes in the next five years will increase, and range from 12,000 to 18,000 TEUs per vessel. What does that mean for port calls? At which ports will ocean carriers call? How long will they require for unloading? What off terminal rail and road infrastructure improvements will be required to allow these larger ships to unload? These are the critical things to watch for in order for shippers and service providers alike to understand the “why and how” of modern container shipping during the next five to 10 years.
Changes have already started to show up in ports around the U.S.:

 

  1. Fewer Port Calls: There will be fewer port calls for the bigger ships. Why? Because not all ports will have the necessary facilities to service the bigger ships. Here is what the ports will need to provide:
    1. Extra-deep water, at least 50 feet, to handle ships larger than 8,000 TEUs.
    2. Adequate air draft (height) below the bridges that are high enough to allow the vessels to operate under them. Troublesome ports in this area are NY/NJ, with the Bayonne Bridge, and Baltimore and Philadelphia with their sets of bridges.
    3. Terminals with over-capacity and efficiencies to manage cargo discharge and loading in a manner that does not keep large ships at the dock for many days.
    4. Enhanced rail and road infrastructure in place to support the movement of larger volumes of containers out of their gates, by either truck or rail.
  2. Terminals: Gateway ports that can handle the larger ships must have dual rail, on dock or close in, to provide for faster throughput of containers off the terminal and to their destinations. Say, for example, that 4,000 TEUs of cargo are to be discharged at a port from a ship carrying 9,000 TEUs; that equals 2,000 truckloads or eight fully loaded, double-stacked trains, or some combination of both. This is twice what is currently being off-loaded from ships at some ports. And… that same ship will likely have at least 75 percent of those off-loaded containers replaced with new containers to go back out as “exports” from the same port. So now we have up to 4,000 container moves (off and back onto the ship) that must be accommodated in three to four days. That is a tall order for the size of terminals that currently make up the East Coast ports; West Coast ports, on the other hand, have been dealing with 8,000-to-10,000-TEU vessels for years. In fact, the latest news from Drewry, the ocean liner consulting group out of the UK, is that within months, the southern California ports of Los Angeles and Long Beach will be able to manage 12,000-to-14,000-TEU vessels, thanks to their new automation technology and on-dock rail capacity.
  3. Price: Shipments from Asia to American East Coast population centres are still less expensive made via the West Coast and intermodal rail than fully by water to the East Coast, and 8 to 10 days faster. This truth is the single-largest impediment to the prophecy promulgated by the Panama Canal and others that Asian import cargo will shift to East Coast all-water routing.
  4. Alliances: Since 2010, the steamship carriers have begun elaborate alliances, with Suez routing, to take advantage of the cost-per-container-slot savings that are afforded by using an ultra-large ship. Therefore, the “shift” to larger ships is in its fourth year. The carriers are making alliances work! (An alliance works like this: Picture a 747 airplane going from London to NY. Delta sells 200 seats, United sells 150, British Airways and Virgin Atlantic sell 100 each. Each airline prices at its own rate and, of course, some are more/less expensive than others!) Because of these vessel sharing arrangements, there are fewer vessels and, therefore, fewer port calls. The East Coast ports are jockeying for position, trying to remain viable to vessel calls by the larger ships that are becoming the norm, not the exception. The reality for shippers is that larger ships are here to stay. The carriers are tired of losing money (reported at more than $37 billion over the last five years), and larger ships, alliances to share vessels and fewer port calls are the new reality, regardless of the expansion of the Panama Canal.

Ports must meet all of the requirements I have mentioned above to stay “relevant” and to remain part of the global conveyor belt of finished consumer goods manufactured in Asia and consumed in North America.

Off-loading and loading density is the key to utilization of the larger ships, so carriers will concentrate on port rotations where the off-terminal and on-dock infrastructure can support the increased volumes of large vessels. Only those ports that can expand, deepen and widen berths to accommodate bigger ships, and make required land-side facility enhancements such as adding widerspan cranes, more rail loading space and efficient terminals to move goods from ship to dock and out the gate, will be the recipients of the ultra-large vessels.

  

Curtis D. Spencer is president of IMS Worldwide Inc.


April 30, 2015

Information is Power

By Kelsey Lemieux

In a recent webinar for FMA members, hosted by USrail.desktop, on U.S. rail traffic data flows, we learned that “information is power”. This statement is not only true for the world of transportation but for every aspect of business. Exploiting information within a company, to employees, keeps personnel aware, motivated, productive and efficient. Providing information outside a company, to the public, keeps the community aware of company activities and gives them the opportunity to use a company’s products or services.  This allows the company and the community to have the tools to make timely and effective decisions to develop tactics and strategies in order to better day-to-day actions, corporately and individually.

Within the transportation industry, having knowledge about rates, volume, car loads, per commodity, per railway, etc. is important for day-to-day performance and for the impact of transportation on company success. It is essential for transportation professionals to keep on top of the important statistics within the industry that fuel our businesses. This allows them to improve the company’s overall performance. In a submission to the Canada Transportation Act Review, by U.S. based Escalation Consultants Inc., it was stated that “a shipper’s ability to benchmark its rates against competitors is one of the most important things it can do to help get reasonable rail rates for its captive and competitive rail movements”. That being said, Canadian rail shippers do not have access to feasible options to benchmark their rail rates in the market as most of the data is confidential, including the information kept by regulators.
Now, shouldn’t there be a way to make it easier for transportation professionals to gain access to more timely and complete data in order to fully understand shipper-carrier performance as it affects their respective companies?  Wouldn’t it make sense for us to know what we can do to enhance the Canadian economy through transportation by having access to this valuable knowledge?
In the U.S., the railways provide quarterly and annual reports on commodity statistics, the Public Use Waybill Sample (PUWS) and commodity revenue stratification. The reports analyze volume and revenue by commodity, random railway freight bill samples, and detailed comparisons of individual freight bill revenues to Uniform Rail Costing Systems (URCS). CN and CP give reports for these statistics to the U.S. Surface Transportation Board for their U.S. operations but are not required to provide this information to their Canadian customers. As said by Escalation Consultants Inc., this lack of market rate data could “impact shippers’ ability to use existing Canadian regulations” since there is no data available for comparing rates, levels and volumes.

The inconvenience of supplying this information to Canadian authorities for use by shippers would be minimal since procedures are already in place and the railways are already collecting the data. Making this information available, in aggregated form, to shippers in Canada will give them the tools to determine railway movement margins, comparative rate ranges and the representation of a shipper’s portion of revenue vs. volume for the railways.

Since Canadian railways are already providing this information to the Surface Transportation Board in the U.S., it should not be difficult to assemble the information and provide it to the Canadian Transportation Agency to maintain and aggregate the data. This change will provide transparency for all rail customers with regard to financial and operational data for use in direct negotiations with the railways. The FMA will advocate for the introduction of rail traffic data flows in Canada in order to help shippers gain access to this information through the Canadian Government.


April 7, 2015

Right-Sizing the System: A Larger-Than-Usual Grain Crop Put Storage Pressure on Available Elevators

By Julia Kuzeljevich

A Government Bill designed to address a backlog of grain in Canada’s Prairies this spring has led to a great deal of debate and dissent among shippers, rail and supply chain stakeholders. The Minister of Agriculture and Agri-Food tabled Bill C-30, the Fair Rail for Grain Farmers Act, in the House of Commons on March 26, 2014. This followed an order on March 7, 2014 by the federal government, under emergency powers within the Canada Transportation Act, issued to the railways to improve their performance.

The federal government said the bill would address the backlog of grain and would assist other rail shippers in obtaining a reasonable definition of service from their rail carriers.

Bill C-30 builds, to some extent, on the Fair Rail Service Act passed in June 2013, said the Freight Management Association of Canada (FMA).
Bill C-52’s amendments to the Canada Transportation Act were in some ways seen as a belated response to deficiencies in the system in terms of rail carriage.

That new law was supposed to give every shipper the legal right to have an effective service level agreement with the railways, whether negotiated commercially or imposed by an arbitrator. But on the terms the agreement needed to contain, the law was vague and, as yet, no service level agreements have been signed.

“C-30 provides for the Canadian Transportation Agency to give more specificity to the operational terms that should be included in service level agreements (SLAs). The Fair Rail Service Act gives shippers the right, for the first time in Canadian law, to some reasonable definition of service and provides that, if this cannot be successfully negotiated directly with the railway, the shipper can obtain an SLA through arbitration. The proposed regulations may assist shippers in that process,” said Bob Ballantyne, FMA’s president.

In addition, Bill C-30 provides for a major change to the “regulated interswitching” provisions of the Canada Transportation Act.

This provision is a surrogate for competition by giving shippers served by only one railway access to a competing railway where there is an interchange between two federally regulated railways within 30 km of the origin (or destination) point. Bill C-30 will, if passed, give the Canadian Transportation Agency the right to increase the distance to which interswitching may apply.

The government has signaled its policy will be to extend the regulated interswitching limit to 160 km in the Prairie provinces for all shippers.

Wade Sobkowich, executive director of the Western Grain Elevator Association, provided an update on the grain-handling situation as Canadian Shipper was going to press in mid-April, 2014. At the time, he noted the railcar shortfall to the grain industry stood at 70,000 rail cars.

“Lots of grain that has been ordered to be moved has not yet been moved, resulting in some serious vessel demurrage costs. The industry has paid in the neighbourhood of $50 million on this. There have been contract-extension costs to overseas customers and customers in the U.S.,” he said.

“We’ve had a bad year. We started out with a crop that was a third larger than the previous year, but we got grain shipping that was slightly less than last year and there are about 40 million tonnes that have not yet shipped. The country elevators are full and our terminal facilities are at about 40 percent of capacity for the majority of the year since the order was passed March 7,” Sobkowich added.

He said there could eventually be an issue if capacity is not apportioned appropriately in all of the rail corridors.

“So far, facilities are keeping up as long as the railways step up their programs to the U.S. and to Eastern Canada,” he said.
Part of Bill C-30 includes an oversight provision to the Canadian Grain Commission to look at disputes between grain companies and producers on contracts.
“We think that would happen anyway. We don’t object to the disciplines in place but we need reciprocity in terms of accountability and compensation from the railways. If a grain company can’t take in a farmer’s grain because of rail capacity, we need to be able to get financial compensation, then we can pass on compensation for (the farmers),” said Sobkowich.

Provisions for service level agreements are also not clear, he said.

“Bill C-30 aims to identify what can be arbitrated and ruled on and we need that to include financial penalties,” Sobkowich said.

The Western Canadian Wheat Growers Association is calling on the federal government to bring about more competition in the Western Canadian rail sector, in light of what they are calling “chronic performance failures of CN and CP” and “their cavalier attitude toward the resulting losses suffered by prairie grain farmers.”

Reacting to comments made by CN CEO Claude Mongeau in a speech in Winnipeg on April 9, 2014, when Mongeau spoke out strongly against a provision in Bill C-30 that would give shippers modest improved access to U.S. railways, referring to it as “poaching,” Levi Wood, President of the Wheat Growers, said, “What Mr. Mongeau calls poaching, we call competition. Sadly, Mr. Mongeau seems to think no one else should have the opportunity to haul our grain, no matter how badly his company performs.”
The Wheat Growers note that CN effectively operate side-by-side monopolies in Western Canada. Only seven of the 342 grain elevators on the prairies have direct access to both CN and CP. The expanded interswitching provision, now contemplated in Bill C-30, the Fair Rail for Grain Farmers Act, would give about 40 of those elevators improved ability to access the shipping services of BNSF Railway, the association said. It added that the shipping backlog has resulted in artificially depressed prices to farmers that some market analysts are saying will last into 2015.

The association has recommended several measures that it said would bring about more competition and more shipping capacity in the western rail network. One is to give the Canadian Transportation Agency authorization to call out for more shipping capacity (locomotives, crews, cars or trains) whenever the backlog in grain-shipping orders reaches a predetermined level. This provision would be a means to ensure there is ample “reserve capacity” in the network whenever there is a large crop or heavy customer demand, the association said.

They have also recommended the running rights provisions of the Canada Transportation Act be amended to give other railway operators the right to solicit business from shippers in a running rights application.

Amendments to Bill C-30 that would give the shippers the ability to obtain reciprocal penalties as part of a contractual service agreement with the railways are also part of the recommendations. “Currently the legislation does not explicitly state that penalty provisions are among the terms that can be arbitrated in shipper arbitration applications to the Agency,” said the association.

Federal Transport Minister Lisa Raitt has commented that “forward planning” is a major part of C-30 in terms of the review of the grain-handling system it will afford.
The interswitching provisions will be in place for a period of 24 months while the government analyzes the rates and how well the system works.

Raitt also noted that discussions with other commodities may also emerge.

The federal government will also review what’s been going on since the Fair Rail Service Act passed and its review of the Canada Transportation Act will be pushed up to late 2014 rather than 2015.  Raitt has said that the government’s involvement is “not always about regulations” but about “economic imperatives,” “free trade agreements” and “future investment.”

Rail carriers insisted the legislation amounted to increased regulatory intrusion and oversight. “The legislation does not address the root cause of the current grain situation and will do little to move more grain, now or in the future,” said Claude Mongeau, CN president and chief executive officer.

In a speech to the Winnipeg Chamber of Commerce on grain transportation on April 9, 2014, broadcast live, Mongeau set out to establish CN’s position on the government’s emergency order and accusations that the railway did not adequately respond to shipper demands for the grain harvest. Mongeau stressed that carriage of crude oil constitutes only 1.5 percent of the railway’s overall volume. He also noted that the challenges the grain supply is facing stem from extreme circumstances: a huge, 100-year crop and “the winter of a lifetime.”

“Railroaders know what winter does – it’s not just grain – every one of the commodities we move got impacted. We did better for grain than we did for potash. Fundamentally, the grain situation is about a record crop that produced 22 million more tonnes than in an average year, and 50 percent more grain that we have to export,” said Mongeau.
CN’s share of that harvest is about 10 million tonnes, and “nobody can expect any supply chain in the world to move this surplus of grain without adequate notice. In late August, the CEOs of grain companies were talking about whether the grain would suffer from frost. It’s only fair to ask if the grain elevators should maybe ship earlier in the year to make room for crops,” he said in his address.

Mongeau also suggested that grain companies have a history of “over ordering,” with 30,000 orders placed over their historical best.

“The lack of coordination is exemplified by the grain-elevator companies’ handling of the current crop,” Mongeau said. “They got off to a very slow start in August 2013 while the huge crop was maturing in their own backyard. They unfortunately failed to take advantage of at least 10,000 carloads of rail capacity that was available on CN at the time. Then, as the enormity of the harvest struck home for all stakeholders, the grain-elevator companies began, and continue, to flood the railways with far more orders than what the system is capable of handling, based on even best historical performance benchmarks. With these inflated orders, the grain elevator companies are setting unrealistic expectations, yet they have been vocally trying to single out railways for criticism, as if we were the only party that needs to step up its performance to meet the challenge of this harvest.”

Mongeau said that once the crop has been cleared, “We have a tough issue. We need to have an ‘adult’ discussion on ‘surge’ crop capacity. We need alignment and accountability for results. I believe in commercial agreements. We’re going to have to level the playing field and regulate ‘all the sectors.’ I will make the case we should regulate the grain elevators – and we’ll try the regulated approach,” he said.

But Mongeau warned that the railways “have to protect ourselves against regulatory leverage against us.”

CP Rail president and COO Keith Creel, in his address to the federal Standing Committee on Agriculture hearing on Bill C-30 on April 1, encouraged the Committee to consider the serious capacity constraints within the current grain supply chain and highlighted that interswitching would worsen the situation for the movement of Canadian grain to markets.

“The reality is the current grain supply chain, of which rail is only one component, cannot move these extraordinary volumes over this short period of time,” said Creel. “We need solutions that will increase throughput of grain from farm to ship.”

Creel noted that, with the improved weather, the railway has “regained momentum,” moving 15 percent more Western Canadian grain in February and 20 percent more in March than in the previous year, he said.

With respect to the proposed extended interswitching, Creel expressed concerns with its potentially damaging unintended consequences and how it would slow down the grain supply chain due to increased handlings, further constraining capacity. He noted that allowing grain to be interswitched to U.S. railroads could also potentially lead to a negative impact on the Canadian economy.

“I am proud of the railroaders who continue to work tirelessly 24/7 to move this record Canadian crop for the farming community,” added Creel. “Despite this fact, our efforts need to be matched by other partners in the supply chain. We should not allow railcars to sit, waiting to be loaded or unloaded, when they should be cycling back to the prairies or to the ports.”

A group representing the shippers of more than 60 percent of the goods moved on Canada’s rail system also commented on the situation a week after the federal government introduced its Fair Rail for Grain Farmers Act. Five national trade associations – including the Canadian Fertilizer Institute, the Canadian Steel Producers Association, the Chemistry Industry Association of Canada, the Forest Products Association of Canada, and the Mining Association of Canada – stated their concern that a sector-by-sector approach would not address broader issues faced across the system.

“Shippers, railways and the government need to take a holistic look at the challenges facing Canada’s transportation system, and develop sustainable commercial solutions that are good for all sectors, the railways and the Canadian economy,” said Roger Larson, President of the Canadian Fertilizer Institute. “Canada’s prosperity depends on exports and we will all benefit if we enhance shipping capacity,” said David Lindsay, President and CEO of the Forest Products Association of Canada.”Our long-term goal is to work with our partners to right-size the transportation system,” he said.

Larson said that this winter’s backlog of grain and other rail shipments “does not represent a blip. Canada’s commod-ity export pipeline is hitting the limits of capacity.” He said that Canada stands ready to reap economic benefits from massive investments in key commodity industries and from the new wave of free trade agreements being signed by the federal government, “but only if our commodity export pipeline is up to the task.”

FMA’s Ballantyne said that a statutory review of the Canada Transportation Act, if it were started earlier than the June 2015 date originally proposed, “would be good, as it governs the business side of the industries. It would be very useful if it could be moved ahead,” he said. “Our hope would be that they would take another look at the amendments we suggested under Bill C-52 that would spell out in more detail what would be includ-ed in rail service agreements,” he said.

“I don’t know anybody within the shipper community that has a really good handle on what they anticipate the Canada Transportation Agency would do in that respect. The Rail Freight Service Review Panel did come out with recommenda-tions, so it’s possible the CTA would take something out of those,” he added.

Section 7 of C-30 provides authority for the Agency to extend interswitching limits “for the regions or goods that it specifies.”

The interswitching regulations have been useful to shippers over many decades and are an effective surrogate for real competition. Given the current backlog of grain, this temporary provision may give grain shippers more flexibility in arranging service, Ballantyne noted.

The other significant provision of C-30 relevant to all shippers is Section 8, which authorizes the Agency to make regulations specifying what constitutes “operational terms” to be included in an SLA achieved through arbitration. While it is unclear how the Agency and the government will use this provision, it could be a vehicle for achieving some of the shipper amendments that were rejected by the government during the C-52 debates. FMA will engage with the Agency as the regulations evolve, FMA stated.

“Two basic issues that the statutory review should address are the need to provide appropriate rail capacity for the needs of Canadian industry over the coming decades, and the need to improve the relationship and trust between the railways and significantly large segments of their customers. With regard to shipper/ railway relationships, it will be difficult to overcome the distrust and acrimony that currently exists,” Ballantyne said.

FMA has noted that there are informal discussions under way, under the academic umbrella of the Carleton University School of Public Policy and Administration. They run a process called “Critical Conversation” that involves direct and confidential discussions among stakeholders to start a dialogue to overcome the distrust. While arrangements have not yet been confirmed for Critical Conversations to commence between railways and shippers, the planning discussions with stakeholders continue, FMA said.

Julia Kuzeljevich is Associate Editor of Canadian Shipper magazine. This article is reproduced with permission.


March 27, 2015

The Canada Driver Shortage - What will change their minds?

By Kelsey Lemieux

Over the last decade there has been a rise and fall of truck drivers, from just over 1.5M in 2003 to almost 1.7M in 2007 and back down to 1.5M in 2012. Will we see another rise or will employment of truck drivers continue to fall? 
It has been said that by 2020 there will be a shortage of approximately 30,000 truck drivers. With the average age of truck drivers rapidly increasing, what does that mean for the Canadian economy? A study done by the Conference Board of Canada explains that a shortage in this capacity could “hamper the Canadian supply chain and drive up prices on store shelves.” With prices on store shelves already being fairly high, this could cause a long term supply and demand war. So what can we do to solve the problem?
In my opinion, the problem for truck drivers is not in lack of monetary value or career content, but in the new generation of adults and how they were raised. They were taught that in order to be recognized as somebody important they had to aspire for careers that were considered to have more prestige.

Now, truck drivers are vital to the economy and how our most beloved products are moved from the warehouse to the store to our homes, but when you are looking for prestige and importance, you are striving to be the next great writer, the next marketing guru, the next social media expert or even the next prime minister. Stereotypes deemed truck driver jobs as just another ordinary job. The new generation was not taught to see the importance of this profession and may even be too caught up in life to understand how significant it is that truck driving stays a profession.

Being a person in this generation I too failed to see the importance, until I began working in the industry. It was then that I began to see the issues in freight transportation including the problems caused by driver shortages and the billions of dollars in revenue in Canada that could be lost if the driver shortage persists.

If what I am saying is true, then the only thing that will change the minds of the new generation coming into the workforce will be to increase their knowledge of the freight transportation industry as a whole. Explaining the importance of the role that is being played by truck drivers and freight transportation employees alike could entice them to be a part of a major role in the Canadian Economy. Driving an 18-wheeler requires skill and training and is important to all of us. 


March 09, 2015

Transportation Safety - A Personal Story

By Bob Ballantyne

The recent railway accidents in Lac Mégantic and Ottawa, resulted in significant loss of life, and in the case of Lac Mégantic, resulted in considerable destruction of property.  Both accidents had tragic consequences and the Transportation Safety Board will do a thorough and professional job of investigating both tragedies and will make recommendations to the government and other stakeholders with a view to preventing a repeat of these devastating accidents.

Elsewhere in this issue of the Shipper ADVOCATE, there is an article discussing the Lac Mégantic accident and its aftermath and the implications for carriers in all modes of transportation and for shippers.
  
I've been involved in the transportation industry for over five decades and I hope the readers will humor me while I give a personal experience at the start of my career that burned into my brain the dangers lurking in all transportation modes and the need for continuing vigilance in all transportation operations.
  
It was a cold and rainy May morning in 1960 on the CPR main line north of Lake Superior.  As a new engineering grad, I was out on the line doing quantity surveys to extend passing tracks to accommodate larger trains made possible with the recently completed dieselization of the railway.

We set out from our starting point on a track motorcar, (the open vehicle that the maintenance people used to travel over their maintenance sections).  We were riding toward a curve on single track when all of a sudden there appeared a headlight coming at us.  It was a freight train of about 60 cars and was about half a mile from us.  The next few seconds seemed to play out in slow motion.  I thought the track motorcar operator was frozen, so I jumped off the car going about 15 miles/hr and sprawled in the gravel ballast beside the track.  The operator hadn’t frozen.  At about the instant that I jumped off, he applied the brake.  He and the third man on the car got off safely.  We all ran down the embankment beside the track and we all had to presence of mind to run towards the direction of the train so that we were behind of the point of impact and would not be in the path of any flying debris from the motor car.   We watched in fascinated horror as the locomotive hit the track-motor car, sent debris flying and completely destroyed it.  

We were up to our ankles in water, it was cold and rainy and one of my hands was bleeding badly from my fall in the gravel ballast.  The engineman had applied the emergency brake when he saw us, about a half-mile before the point of impact. Even with that advance distance, about three quarters of the train passed the point of impact before it came to a stop.  We didn’t do any surveying that day, and I had to go to the nearest medical outpost to get my cut stitched up,

I learned several valuable safety lessons that day that have stayed with me through all these years.

  1. Trains take a very long distance to stop.  The mass and momentum are huge.
  2. As long as there is movement, there is potential danger
  3. Learn and always follow the safety rules
  4. Double check that others involved are also following the rules
  5. Never let down your guard and never get complacent 

In that era, radios were not in universal use, but through the dispatchers’ telephone system, the dispatcher (the rail traffic controller) would give out the “line-up” of trains on the territory several times a day to all the maintenance people.  The maintenance people then arranged to “clear” the track knowing approximately when trains would be passing their specific work location.
 
As a new employee, I didn’t worry too much about the line-up as the maintenance people were out on the line every day and were experienced in keeping out of harm’s way.  After that day, I always checked the line-up myself.  The communications technology has improved immensely in the intervening years and maintenance people are much safer now than in that era.
 
I rode trains and track motorcars on many occasions in the following decades, but the safety lesson that I received on the day that I was supposed to get my very first paycheck has stayed with me.  

In transportation, danger is never far away.  


February 27, 2015

Supply Chain Key to Success in China — Outlook 2014/15

By Michael Zakkour

It's no secret that China’s domestic consumption is rising rapidly. Chinese consumers are buying more of everything (from apparel and white goods to luxury items and housewares) and as they buy more, from more channels, including online, at single brand stores and from large specialty chains, domestic and foreign-owned companies have to reassess their supply chain infrastructure in China for both selling and making goods.
Supply chain in China was once an afterthought or was thought of only in terms of the make and ship processes included in manufacturing in China. But as China becomes not only the factory of the world but the “mall of the world,” this can no longer be true, as Suresh Dalai, an expert in operations in the fashion industry in China, told me:

"Superior customs clearance, warehousing and transportation capabilities can be huge competitive advantages and drivers of brand strength in China. For example, in the middle of February, there can a 34-degree Celsius temperature difference between Harbin and Guangzhou. 

It is important to send the right products in the right amounts to both of these places in February – this is what will drive sell-through and reduce inventory. Furthermore, customers trust a brand that has the products available that they want. If not, they will go to the brand next door. Brand equity depends heavily on strong supply chain capabilities.

The best way to start the re-evaluation process in China is to study trends and changes and to conduct a comprehensive supply chain assessment that includes all six “mega-processes” of the supply chain: plan, buy, make, move, distribute, and sell.” 

"Companies need to get China, Asia and their home operations more integrated and have a clear understanding of their China-specific supply chain challenges or risk losing in a hyper-competitive market,” said Jim Tompkins, CEO of Tompkins International. “Conducting an end-to-end supply chain assessment and then rapidly implementing needed changes is a must now.”

Both the public and private sectors in China are taking some bold steps to respond to the challenges of the new consumption-driven economy. Government measures, though stuck at a policy level in many cases, are addressing the right issues. Domestic companies are rising up to meet new demands. In 2014, China will see dramatic developments in its core logistics, retail, e-commerce and manufacturing industries.

Some key trends and issues companies need to plan for in 2014 include:

Transportation Costs and Parcel Providers
In September 2013, China became the world’s largest net importer of petroleum. In recent years, China’s fuel costs have grown at around 20 percent. While that may drop to 15 percent in the coming year, the government has a challenge to get energy costs under control. In the long run, they plan to allow competition by private firms for domestic oil production, but this will take time as the state-owned oil corporations try to maintain control. Cost of energy for transportation must be a part of every company’s supply chain planning for 2014.

Additionally, in the past year, new markets have opened up for foreign parcel service providers like UPS and FedEx, but because of price pressure from local providers, those additional markets did not generate much growth for them. There is some concern, among foreign companies in general, about the new administration’s support of foreign invested enterprises. So for 2014, it appears that growth will be, at best, slow and steady for foreign logistics providers.

Impact of E-Commerce
The number of e-commerce shoppers in China is expected to rise from approximately 350 million to nearly 600 million by 2016. models for distribution are arising out of the flurry of e-commerce development. As online retailers, such as Alibaba, Jindong and Tencent, build out their own delivery networks, third-party-logistics providers are responding by doing the same. These new networks integrate last-mile delivery, fulfillment and warehousing. Shunfeng, Deppon, and Best Logistics are examples of 3PLs aggressively developing such integrated networks that compete with the online retailers.

China's warehouse sector has traditionally been hyper-local and extremely fragmented, with thousands of providers. Also, warehouses in China have always been low-tech affairs with little automation, little climate control and little attention paid to e-fulfillment specific operations. That is changing. E-commerce is the number-one driver of new and technologically advanced warehouse spaces being built. One company that is emerging as an important player is Singapore-listed Global Logistics Properties Ltd., which has a network of warehouses across 33 cities, a rarity in scale in China.

Another trend is that the big e-commerce players are setting up their own warehouse and logistics networks. For example, Tencent announced in January an investment of $193 million for a 10-percent stake in China South City Holdings, a company that operates warehouses and factory-outlet malls and provides several other logistics services to retailers.

Distribution
For everyone developing distribution networks, land availability will continue to be a problem. The national government recognizes the importance of encouraging logistics infrastructure growth, but is limited in the support it can garner at local levels, where land is allocated. With extremely low vacancy rates – as low as 3 percent in some markets like Beijing – warehouse rents are likely to continue their growth of 5 percent to 10 percent per year.

One thing that will not change much in 2014 is the need to engage with third-party distributors to move products to and sell in department stores, big-box retailers, grocery stores and specialty shops.

For brands, new forms of franchise, licensing and joint-venture models will require hyper-specialized supply chain infrastructure to protect brand equity, ensure product availability and maximize sell-through.

Free Trade Zone
The new Shanghai Free Trade Zone, which was launched September 29, 2013, will present new opportunities for both inbound and outbound trade, such as: Shanghai, rather than having to go to Incheon or other ports for transfer. 

Foreign vessels will be able to ship domestically from Shanghai to other China ports.

The administration process for customs is being greatly simplified by allowing batch clearing of waybills, for example. centres in the new zone will be allowed to fill both domestic and international orders. This privilege is currently reserved for domestic companies, but could open up to foreign companies in the future.

Sourcing
As costs increase, some sourcing will probably move to lower-cost countries and non-coastal regions in China, but not in significant volume. Chinese manufacturers are now looking to offer more than low-cost production as they seek to move up the value chain. They will do so by offering design and make on-demand services, and venturing into higher-technology components in the developed Pearl River Delta, Jiangsu and Fujian Provinces while shifting lower-end manufacturing to the interior.

Outlook
China is struggling, but making progress, to morph into an economy that is driven by domestic consumption, but the logistics infrastructure to enable this transformation is a major challenge. The government recognizes the issues and is expected to continue taking measures such as controlling fuel cost, encouraging logistics development, and opening up trade. Domestic companies will no doubt continue to take aggressive steps such as building their own integrated logistics networks and moving up the value chain. Global companies making and selling products in China must reassess their approach to supply chain in China and understand that supply chain excellence saves on cost, creates new revenue and has a direct effect on brand equity.

Zakkour is a principal at Tompkins International, where he leads the China/APAC practice. He is author of author of the new book, China’s Super Consumer, released September 22 by Wiley and September 22 by Wiley and is a contributing writer at Forbes.


February 03, 2015

The Canada Transportation Act Review - Why it's important

Bob Ballantyne

The Canada Transportation Act is the federal law governing the commercial aspects of the airline and railway industries. There are, of course, other federal laws that impact all modes of transportation from a safety and environmental perspective, and laws that address other issues such as airport and marine port management and operations and coastal marine and Great Lakes/Seaway activities.  These laws provide authorization for many rules, regulations, and technical standards, all of which are designed to provide an effective, efficient, safe and competitive multi-modaltransportation system in support of the Canadian economy.  

To add to the complexity of the governance of transportation, the provincial governments play a major role in overseeing highway and road transport, in overseeing provincially regulated railways, and along with municipal governments, in providing the road and highway infrastructure.  There are some overlaps,and some gaps, in responsibility between various levels of government that can also impact the effectiveness of the system.

On June 25, 2014, the Minister of Transport announced a Statutory Review of the Canada Transportation Act, as authorized by Section 53 of the Act. Such reviews are required to take place no later than eight years following changes to the Act from the previous review.  This review was not required to start until 2015, but with the problems with railmovement of grain earlier in the year, the government moved the review ahead to start in 2014.  The Hon. David Emerson, P.C., has been appointed as the Chair of the review and will be supported by a panel of independent advisors and a secretariat from the federal Public Service. The Review Panel is required to submit its final report to the Minister within 18 months of the official announcement.  It is due, therefore, on December 24, 2015.  

The mandate is very broad and the review will consider matters well beyond the specifics of the Canada Transportation Act.  Section 53 (1) states that the review will be “…. a comprehensive review of the Act and any other Act of Parliament for which the Minister (of Transport) is responsible that pertains to the economic regulation of a mode of transportation or to transportation activities under the legislative authority of Parliament”.
 
The government’s June 25 announcement states that the review will consider the following. 

  • Transportation capacity to respond effectively to evolving international and domestic conditions and markets and the need for, and sources of investment to ensure there is capacity to meet the projected demands.
  • Following from the urgency created by the significant backlog in grain deliveries from the 2013-2014 crop-year, grain transportation will be given priority consideration. 
  • The review will consider provisions of the Act that are relevant to the transportation of grain by rail, some of which could apply more broadly to the rail-based supply chain for all commodities.
  • The mandate then identifies ten specific issues that the Panel is required to consider that address safety, transportation of dangerous goods, transportation in the far north, rail passenger services, airline services, and current federal governance structures such as the Canadian Transportation Agency, port authorities, etc.  

The Panel issued its 30-page Discussion Paper in late September and is “encouraging” written submissions from stakeholders by December 30, 2014.  

These periodic reviews are important to shippers and to other supply-chain partners.  The role of government in transportation is significant from the provision of, and investment in transport infrastructure, to provision of laws and regulations, to negotiating international transportation treaties.  While the Discussion Paper notes that “Today the transportation system is substantially more market-based, deregulated, competitive”, the government influence and impact on transportation  remains large.  Where competition is limited, it also remains necessary.  

Important considerations for shippers during the review will be:

  • capacity and investment considerations all modes to meet projected demand,
  • the impacts of security programs on international air cargo,
  • review of the effectiveness of the shipper protection provisions of the Act, especially as related to rail transportation, where competition is limited,
  • the availability of data needed by shippers to make informed decisions,
  • the role and mandate of the Canadian Transportation Agency to provide an effective dispute resolution service, and 
  • the need to balance safety, environmental, and economic considerations by the Review Panel in arriving at its conclusions and recommendations.

FMA has begun its analysis and will be working with it members to identify issues that are of particular concern and where proposed changes to policy, law and regulations are identified.  In addition to submissions by FMA, we would encourage direct input by individual member companies.
        
This is an important exercise and FMA and its member companies look forward to working with the Review Panel and to the dialogue and debate on these
important issues.


January 30, 2015

The Fragile Supply Chain

Bob Ballantyne

The term “supply chain” came into the language in 1982 to describe the total process of getting the right stuff from origin to destination, at the right time, and in the right quantities.

A supply chain is a series of complex links, from purchasing decision to delivery; where a supply chain starts and ends is open to some debate. There is a supply chain for moving Canadian coal to steel manufacturers in Japan and a supply chain for moving finished automobiles from Japan, made from that steel, to consumers in Canada. Are these separate supply chains, or all part of one supply chain?

The old adage that “a chain is only as strong as its weakest link” is relevant here. The Journal of Commerce reports that Zurich Insurance Group found that 73 percent of companies surveyed suffered a supply chain interruption in 2012. In the past few months, we’ve seen two significant examples of the fragility of the links in Canada that interrupted important supply chains.

The western Canadian grain industry has experienced a weak link in the supply chain serving its overseas customers. The inability of the railways to move the record grain crop to export positions and to the U.S. since the end of the last crop year has caused major problems for grain farmers and the western Canadian economy, and has damaged Canada’s reputation as a reliable supplier on world markets. This has resulted in an unprecedented intervention by the Canadian government, which has ordered CN and CPR to each move 5,500 cars per week, with
penalties of up to $100,000 a day for non-compliance.

While this band-aid fix may help the grain industry in the short run, it is not clear what the implications may be for other major Canadian industries that depend on an effective rail link in their respective supply chains. There are a number of factors in play in the failure of this “link.” It was a record crop; sales were strong; and  the winter was long and particularly harsh. These factors and others had an impact on the ability of the railways to meet the demand. Long-term solutions are needed to ensure that rail is not the weakest link. This will require detailed analysis and research to determine demand, the capacity limits of the rail network and system, the investment needs, the communication links between supply chain partners, and how to integrate the overlapping supply chains of various industries that depend on a robust and reliable rail “link.”

The other recent example was the withdrawal of drayage service at Port Metro Vancouver (PMV) by independent owner-operator truckers, followed by a strike by the unionized drivers. This had a major impact on the handling of containers, both import and export, through PMV and exposed the impact of that local link on complex international supply chains. It took about a month of negotiations between the truckers, the port, and the federal and BC governments to reach a conclusion that saw drayage service finally restored.

While the immediate problem has been solved, this “link” also needs long-term strengthening. Recent reports indicate that drayage is a major problem at many North American ports on both the east and west coasts. Services such as drayage evolve over time and what was effective at an earlier time may no longer be working. Moving from the status quo becomes difficult, as the various players’ initial response is to protect their respective positions. There are many players involved in the PMV drayage situation and there may now be enough pain for all participants that they will come together to strengthen this link for the long term.

Both of these examples point out the fragility of our complex global supply chains, the widespread damage that can result from the failure of one link in the chain, and the need for greater collaboration by supply chain partners. How is the best way to study, analyze and improve complex supply chains to the benefit of all stakeholders? Should the government lead, or shippers, and where would the funding come from? Is there one or more of our universities that could play a major role in bringing all stakeholders together?
I don’t have the answers, but I see a need that, if tackled properly, will improve supply chain reliability, lower costs for all participants, and result in improved customer service.


January 5, 2015

Top 10 Articles of 2014

1. Composite shipping containers could transform global trade

Cargo Business
From April 10: The shipping container has remained pretty much unchanged since American Malcolm McLean invented it in 1956. But carbon fiber composites could transform this staple of global trade, according to Stephan Lechner of the European Commission's Joint Research Centre. The composite container is more expensive than the typical steel container, but its lighter weight would make it more effective in the long run by saving fuel costs. A composite container could cost about $8,300 versus $3,050 for the steel version.

READ MORE

2. TransForce to take over Contrans in mega-merger

Truck News
From July 31: Canada's largest trucking firm, TransForce, has made a friendly, board-approved takeover bid for Contrans, another of Canada's largest, publicly traded trucking firms. The proposed deal was for $14.60 per share, totaling an equity purchase price of about $495 million. The deal has the support of Contrans' board of directors. "I have admired the progress of Contrans for some time," said TransForce Chairman, President and CEO Alain Bedard. "Contrans has a culture similar to that of TransForce, strategically acquiring companies that add value for its shareholders."

READ MORE

3. Transport Canada takes action in response to TSB's initial Lac-Mégantic recommendations
Government of Canada

From April 24: The Honourable Lisa Raitt, Minister of Transport, announced decisive actions to address the Transportation Safety Board of Canada's initial recommendations regarding the ongoing investigation into the Lac-Mégantic train derailment. Following the tragic accident last summer, Transport Canada took immediate steps to protect Canadians and the communities along our country's railway lines. The Government of Canada is building upon this work by introducing concrete measures to further strengthen Canada's regulation and oversight of rail safety and the transportation of dangerous goods.

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4. Truckers serving Canada's largest port go on strike

NASDAQ
From March 13: Hundreds of container-truck drivers serving Canada's largest port walked off the job, threatening to stall the movement of resources and consumer goods between Canada and Asia. More than 300 unionized container-truck drivers and hundreds more nonunionized drivers working at Port Metro Vancouver went on strike after rejecting a tentative deal with the port.

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5. Canola Growers file Level of Service Complaint with Canadian Transportation Agency
Canadian Canola Growers Association

From June 5: The Canadian Canola Growers Association has filed a Level of Service Complaint with the Canadian Transportation Agency, contending that Canadian National Railway and Canadian Pacific Railway did not fulfill their common carrier obligations for the movement of Western Canadian grains and oilseeds this crop year. "The breakdown of the Western Canadian rail transportation system this year is completely unacceptable for grain producers," says Brett Halstead, president of CCGA and a farmer from Nokomis, Saskatchewan. "Ultimately, it is farmers who are bearing the cost of this supply chain failure."

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6. Manitoba trucker lucky to be alive after 10 rounds fired into his truck

Truck News
From Aug. 14: Sidhil Kumar was driving a 2012 Peterbilt east along a Wisconsin highway. Kumar had entered the U.S. at the Pembina/Emerson border crossing and had refueled in St. Cloud, Minnesota. The day was rapidly drawing to a close, as the clock was just about to come up on midnight. Until that point, the trip from Trappers Transport in Winnipeg had been uneventful. He was planning on stopping for the night in either Menomonie — about 40 miles up the road — or Black River Falls, depending on where he could find space, but he didn't get that far.

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7. Explosion on the highway teaches an emotional lesson

By Matt Chase
From Sept. 11: This is an actual event that occurred in December 1995. There is no mention of the trucking company I was working for at the time, and I changed the name of the person in the story. All other information is as accurate as I could be, both in the narrative as well as the news stories or clippings. I have kept this story buried in my mind for years, with several attempts to write it down, only to scrap it later. This story changed forever the way I would do my job. It has almost been 20 years since the sad event, and here it is for the first time.

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8. Canada's railways face increased risk from regulations

The Globe and Mail
From April 24: The harsh winter that slowed freight trains and laid bare the tensions between the rail companies and their customers has spawned a new risk for Canada's two major railways — more regulations. The federal government has ordered the railways to meet minimum weekly grain targets, and followed that with legislation intended to help farmers and grain companies move last year's record crop. For the railways, the most controversial of these measures is the expansion of a prairie rail customer's right to ship with another railway, known in the industry as interswitching.

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9. Canadian Pacific CEO defends railway's handling of Western grain backlog

CTV News
From March 13: Hunter Harrison, the head of Canadian Pacific Railway is taking on critics who say his company hasn't done enough to move a record Western Canadian grain crop to market. In full-page ads in the Globe and Mail and National Post newspapers, Harrison said he wants to "set the record straight" on how the railway has managed shipments during a particularly nasty winter. Canada's two major railways — CP and Montreal-based Canadian National Railway — have been accused of making oil and other products a higher priority than grain.

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10. CN Rail to Ottawa: New rules unnecessary as grain shipments reach 'unprecedented' level

Financial Post via Reuters
From June 5: Canadian National Railway Co., Canada's largest rail carrier, said it is exceeding grain-shipment levels mandated earlier this year by the Canadian government despite a record crop that has squeezed available transportation and infrastructure. The company said in a statement that May hopper-car deliveries to Western Canadian elevators are expected to average 5,500 per week, or 50 percent above the eight-year average and 38 percent higher than the prior record for the month.

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Freight Management Association of Canada
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