Canadian Transportation & Logistics Magazine Volume 116 Issue Nº 4 May 2013
32
SPECIAL INSIDE: Our annual report on Award Winning Suppliers pg. 20 PROCUREMENT How to avoid seven common RFP mistakes AIRFREIGHT Are airships a viable transport option for Canada’s North? SUPPLY CHAIN Complying with pharmaceutical industry’s stricter guidelines MAY 2013 Published Since 1898 TURBULENT TRANSITION The old paradigms of doing business in airfreight no longer seem to work. But a new normal has yet to take shape.
-
Upload
jose-augusto-dantas -
Category
Documents
-
view
98 -
download
5
description
Canadian Transportation & Logistics Magazine Volume 116 Issue Nº 4 May 2013
Transcript of Canadian Transportation & Logistics Magazine Volume 116 Issue Nº 4 May 2013
SPECIAL INSIDE: Our annual report on Award Winning Suppliers pg. 20
PROCUREMENTHow to avoid seven common RFP mistakes
AIRFREIGHTAre airships a viable transportoption for Canada’s North?
SUPPLY CHAINComplying with pharmaceuticalindustry’s stricter guidelines
MAY 2013
Published Since 1898
TURBULENTT R A N S I T I O NThe old paradigms of doing business in airfreight no longer
seem to work. But a new normal has yet to take shape.
peligram
Typewritten Text
“There’s always going to be risk. The issue is how to manage it.”
Seiter&Miller 001039 Pub. CTNL Size 8.125 x 10.875 Issue May ‘13Art Director: sd/lg Copywriter: ms Account Executive: em Date: 04/30/13
People who know Distribution, know BDO.
The Consumer Business Practice at BDO
The logistics business has never been simple. And with recent emphasis on supply chain sustainability, higher safety standards, and an evolving regulatory climate, it’s getting more complex. BDO’s dedicated professionals provide an exceptional array of partner-led services to help you keep up with key issues and maximize profi tability, even in challenging times.
Assurance | Accounting | Tax | Advisory
www.bdo.ca/consumer-business
BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member � rms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.
ct&l may 2013 3
VOLUME 116 ISSUE NO. 4 MAY 2013
Published Since 1898
The old paradigms of doing business in airfreight no longer seem to work. But a new normal has yet to take shape. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
COVER
Features 14. . . OH, THE ACCESSIBILITY!Are plans to employ airships for freight transport in northern Canada a viable option or just hot air?
16. . . GOOD, BETTER, BESTThe pharmaceutical supply chain is facing stricter guidelines on Good Distribution Practices. Here’s how to comply.
26. . . RFP PITFALLSMake the most of your transportation Request For Proposal by avoiding these seven common mistakes.
4 THE VIEW WITH LOUTransportation costs are creating a no-win scenario for Canadian e-commerce.
6 IN THE NEWS Ports of Montreal and Antwerp create first-of-its-kind strategic alliance. Plus: the 3PL sector is working towards food safety best practices. But can the government ramp up its understanding of supply chain?
28 DASHBOARDTransCore’s Canadian Freight Index surges in March; cross-border truckload freight costs drive increase; and domestic business drives railway freight increase as US freight drops.
29 INSIDE THE NUMBERSWhat drives job satisfaction for Canada’s supply chain professionals?
30 THE BIGGER PICTUREWhy major truckload carriers are shifting their focus to dedicated and intermodal.
Departments
www.ctl.ca
Let your voice be heard!Our Annual Shipper’s Choice Awards Survey rating the performance of carriers in all modes is out. Your response will make it a success!
TURBULENTT R A N S I T I O N
SPECIAL INSIDE: Our annual report on Award Winning Suppliers pg. 20
44 ct&l may 2013
E-commerce has emerged from its “more hype than substance beginnings” in the ’90s to grow into a critical segment of
the Canadian economy. Our digital economy accounts for more than $50 billion, or about 3.0% of the Canadian economy.
An international study, conducted for Google by Boston Consulting Group, forecast the digital economy would account for 3.6% of GDP by 2016.
Logistics is a key enabler for many e-commerce businesses and can be used as a competi-tive weapon. The appearance of free delivery and free returns or expedited delivery are ex-amples of recent trends that can capture new customers. But they can also place consid-erable pressure on profit mar-gins and growth potential if lo-gistics costs prove too high.
As impressive as Canada’s e-commerce growth may sound, a new study commissioned by Industry Canada shows evidence we are actually falling be-hind other G20 nations in our e-commerce efforts and considers whether logistics ser-vices are a main contributor to Canada’s e-commerce gap.
The study, entitled The Impact of Logis-tics Services on E-Commerce in Canada, is authored by Dr. Alan Saipe of Supply Chain Surveys. (You will remember Dr. Saipe from his work on the CITA-CT&L Shipper Pulse Survey, the Nulogx General Freight Index, and his many years with the KPMG and BearingPoint supply chain practices.)
The study presents some sobering com-parisons:
• Our digital economy’s 3.0% share of Ca-nadian GDP is lower than the G20 average of about 4.1% and ranks Canada an unexciting 9th among the G20 pack.
• The growth forecast to 3.6% of GDP by 2016 for Canadian e-commerce pales in com-parison to the 5.4% of US GDP and the 12.4% of UK GDP.
Another study by Google found that in 2010, e-commerce retail sales in Canada were 1% of total retail sales. In the US, e-commerce sales were 8.6% of total retail sales.
A 2011 survey of 2,000 Canadian SMEs
found that only 18% of small businesses and 30% of medium-sized businesses reported having online sales. That is of particular sig-nificance considering SMEs account for more than 60% of private sector employees, more than 50% of private sector GDP and more than 95% of exports in Canada.
The study reveals transportation costs are placing Canadian e-commerce at a disadvan-tage. The study compared the cost of ship-ping a 6-lb., medium-sized box from Toron-to to Vancouver, a distance of 4,370 km, using Canada Post’s Expresspost service with the cost of shipping the same parcel from New York to Los Angeles, a distance of 4,443 km, using the United States Postal Service’s (USPS) priority mail service. Both provide delivery on the second business day after the shipment. The Canada Post deliv-ery is guaranteed, the USPS delivery is not. The US shipment costs $11.30; the Canadi-an shipment $40.63 – 3.6 times more.
“Ignoring the currency exchange, for the same money one can ship 36 boxes from New York to Los Angeles and only 10 boxes from Toronto to Vancouver,” Dr. Saipe comments.
The study also considered shorter route comparisons; again there was a clear differ-ence in costs in favour of the US. It looked at UPS and FedEx rates on both sides of the border; they were 35-38% lower in the US. It considered best rates either side of the border; the best US rates were 16% lower.
The economies of scale provided by a country that is about the same size as ours geographically, but enjoys a population nine times ours and an economy 11 times ours, do have a large impact on price, as does the higher intensity of business competitiveness. And, to be fair, Canadian logistics service pro-viders are trying to target their e-commerce customers with specialized services.
Still, the numbers are the numbers. Consider the plight of a Canadian e-tailer
trying to make a $50 or $75 sale to a price-sensitive customer. As Dr. Saipe points out, if they try to pass the full delivery cost on to their customers, it’s unlikely they would make the sale. If they don’t charge for delivery, their profit margin would suffer significantly.
It’s a classic lose-lose situation. CT&L
Lou Smyrlis, MCILT
We acknowledge the financial support of the Government of Canada through the Canada Periodical
Fund (CPF) for our publishing activities.
MEMBER CANADIAN BUSINESS PRESSCANADIAN CIRCULATIONS AUDIT BOARD
Volume 116 Issue No. 4 May 2013
EDITORIAL DIRECTORLou Smyrlis (416) 510-6881
MANAGING EDITORAdam Ledlow (416) 510-6890 [email protected]
FEATURES EDITORJulia Kuzeljevich (416) 510-6880
PUBLISHERNick Krukowski (416) 510-5108
ACCOUNT MANAGERJoelle Glasroth (416) 510-5104
ART DIRECTORMary Peligra
CONTRIBUTING EDITORSCarroll McCormick, Leo Ryan, James Menzies,
John G. Smith, Ian Putzger, Ken Mark
MARKET PRODUCTION MANAGERGary White (416) 510-6760
VIDEO PRODUCTION MANAGERBrad Ling
RESEARCH MANAGERLaura Moffatt
CIRCULATION MANAGERBarbara Adelt (416) 442-5600 Ext. 3546
EXECUTIVE PUBLISHERTim Dimopoulos
VICE-PRESIDENT PUBLISHINGAlex Papanou
PRESIDENTBruce Creighton
HEAD OFFICE:
80ValleybrookDrive,Toronto,ONM3B2S9
CANADIAN TRANSPORTATION & LOGISTICSiswrittenforCanadiantransportationandlogistics
professionalswhomanageproductflowfrommanufacturertopoint-of-sale.Editorialisfocused
onreporting,analysisandinterpretationofCanadianlogisticstrendsandissues.Itispublishedby
BIGMagazinesLP,adivisionofGlacierBIGHoldingsCompanyLtd.
SUBSCRIPTIONS: Contactusat:[email protected]
Tel:4164425600ext.3548.Fax:4165106875.Website:ctl.ca(clickonsubscriptionbutton)
SUBSCRIPTION RATES: Canada:$64.95+applicabletaxes,peryear;$105.95+applicabletaxes,fortwoyears.U.S.A.:US$105.95peryear.Allotherforeign:US$105.95peryear.Singlecopies$8exceptfortheannualLogisticsBuyers’Guide(Aug)$59.95+applicabletaxes,(notincludingHST)plus$2.00forpostage.USA:US$107.95,Foreign:US$107.95ISSN1187-4295(print),ISSN1923-368X(Digital),(CanadianTransportation&Logistics.)IndexedbyCanadianBusinessPeriodicalsIndex.PrintedinCanada.Allrightsreserved.Thecontentsofthispublicationmaynotbereproducedeitherinpartorinfullwithouttheconsentofthecopyrightowner.
POSTMASTER: Pleaseforwardforms29Band67Bto:80ValleybrookDrive,Toronto,Ontario,M3B2S9SecondClassMailRegistrationNumber0721.
PUBLICATIONS MAIL AGREEMENT 40069240
a lose-lose situationTransportation costs are creating a no-win scenario
for Canadian e-commerce
the view with Lou
Angelo SarraciniPresident, Bailey Metal
Products Limited
Keith ReardonV. P. Intermodal Services,
CN Rail
Charles W. Clowdis, Jr.Managing Director, North American Markets, IHS
Global Insight (USA), Inc.
Grace TomaszunManager, N.A. Transportation
McCormick & Company
Mike OwensV. P. Physical Logistics,
Nestlé Canada Inc.
Doug MunroPresident and Owner,
Maritime-Ontario Freight Lines Limited
Carlos M. GomesSenior Economist,
Scotiabank
Douglas NixVice Chairman, Corporate Finance
Associates (CFA) Chairman of CFA’s Transportation and Logistics
Industry Practice Group
Michelle ArseneauManaging Partner,
GX organization
Neil McKennaV. P. Transportation,
Canadian Tire Corporation
Anna PetrovaSenior Supply Chain
Leader, Ferrero
Ron TepperExecutive Chairman & CEO, Consolidated
Fastfrate
Tibor Shanto Principal, Renbor Sales Solutions
Tom CoatesVP and COO,
Lakeside Logistics
Jonathan WahbaV. P. & General Manager,
Canada, Schneider National Inc.
Jeff PriesV. P. Sales & Marketing,
Bison Transport
Jeff LindsayPresident and CEO,
Canada Cartage
Oryst DydynskyPrincipal, DAP
International Trade Consulting
Mike McCarronConsolidation
Consultant, Wheels Group
On October 16th 2013, please plan on joining Canada’s top
Transportation Executives for a day of education & networking.
Introducing the 2013 team of presenters...
FREIGHT BIDS: IS THERE A BETTER WAy FOR CARRIERS AND SHIPPERS TO WORk TOGETHER?
CARRIER PERFORMANCE MANAGEMENT: METRICS THAT DELIVER RESULTS
INTERMODAL TRANSPORTATION: EXPANDING BEyOND ITS NICHE
THE VIEW FROM THE TOP: THE CEO’S PERSPECTIVE ON MAjOR TRANSPORTATION TRENDS
DEDICATED TRANSPORTATION: OUTSOURCING FLEET MANAGEMENT TO A THIRD PARTy
CROSS-BORDER FREIGHT TRANSPORTATION: BEST PRACTICES
TRANSPORTATION SALES: CAN yOU ADAPT TO THE NEW NORMAL?
MERGERS & ACQUISITIONS IN TRANSPORTATION: HOW BIG ARE THE OPPORTUNITIES?
LOOKING AHEAD: ECONOMIC FORECASTS FOR 2014
We have created an agenda that truly addresses the many challenges facing both Shipper and Carrier executives.
2013 Surface TranSporTaTion SummiT agenda
Registration: 7:30 am • Presentations: 8:30 am sharp
For more information and to register, please visitwww.SurfaceTransportationSummit.com
Jacquie MeyersPresident, Meyers
Transportation Services
2013 Summit SponsorWes ArmourPresident & CEO,
Armour Transportation Systems
Mississauga Convention Centre,
75 Derry Road West,
Mississauga, ON
Barry O’Neill Executive Vice President,
Hub Group
Trans Summit 2013 MT.indd 1 13-04-18 10:41 AM
www.ctl.ca
Lou Smyrlis,MCILT
We acknowledge the financial support of the Government of Canada through the Canada Periodical
Fund (CPF) for our publishing activities.
MEMBER CANADIAN BUSINESS PRESSCANADIAN CIRCULATIONS AUDIT BOARD
Volume 116 Issue No. 4 May 2013
EDITORIAL DIRECTORLou Smyrlis (416) 510-6881
MANAGING EDITORAdam Ledlow (416) 510-6890 [email protected]
FEATURES EDITORJulia Kuzeljevich (416) 510-6880
PUBLISHERNick Krukowski (416) 510-5108
ACCOUNT MANAGERJoelle Glasroth (416) 510-5104
ART DIRECTORMary Peligra
CONTRIBUTING EDITORSCarroll McCormick, Leo Ryan, James Menzies,
John G. Smith, Ian Putzger, Ken Mark
MARKET PRODUCTION MANAGERGary White (416) 510-6760
VIDEO PRODUCTION MANAGERBrad Ling
RESEARCH MANAGERLaura Moffatt
CIRCULATION MANAGERBarbara Adelt (416) 442-5600 Ext. 3546
EXECUTIVE PUBLISHERTim Dimopoulos
VICE-PRESIDENT PUBLISHINGAlex Papanou
PRESIDENTBruce Creighton
HEAD OFFICE:
80ValleybrookDrive,Toronto,ONM3B2S9
CANADIAN TRANSPORTATION & LOGISTICSiswrittenforCanadiantransportationandlogistics
professionalswhomanageproductflowfrommanufacturertopoint-of-sale.Editorialisfocused
onreporting,analysisandinterpretationofCanadianlogisticstrendsandissues.Itispublishedby
BIGMagazinesLP,adivisionofGlacierBIGHoldingsCompanyLtd.
SUBSCRIPTIONS: Contactusat:[email protected]
Tel:4164425600ext.3548.Fax:4165106875.Website:ctl.ca(clickonsubscriptionbutton)
SUBSCRIPTION RATES: Canada:$64.95+applicabletaxes,peryear;$105.95+applicabletaxes,fortwoyears.U.S.A.:US$105.95peryear.Allotherforeign:US$105.95peryear.Singlecopies$8exceptfortheannualLogisticsBuyers’Guide(Aug)$59.95+applicabletaxes,(notincludingHST)plus$2.00forpostage.USA:US$107.95,Foreign:US$107.95ISSN1187-4295(print),ISSN1923-368X(Digital),(CanadianTransportation&Logistics.)IndexedbyCanadianBusinessPeriodicalsIndex.PrintedinCanada.Allrightsreserved.Thecontentsofthispublicationmaynotbereproducedeitherinpartorinfullwithouttheconsentofthecopyrightowner.
POSTMASTER: Pleaseforwardforms29Band67Bto:80ValleybrookDrive,Toronto,Ontario,M3B2S9SecondClassMailRegistrationNumber0721.
PUBLICATIONS MAIL AGREEMENT 40069240
Angelo SarraciniPresident, Bailey Metal
Products Limited
Keith ReardonV. P. Intermodal Services,
CN Rail
Charles W. Clowdis, Jr.Managing Director, North American Markets, IHS
Global Insight (USA), Inc.
Grace TomaszunManager, N.A. Transportation
McCormick & Company
Mike OwensV. P. Physical Logistics,
Nestlé Canada Inc.
Doug MunroPresident and Owner,
Maritime-Ontario Freight Lines Limited
Carlos M. GomesSenior Economist,
Scotiabank
Douglas NixVice Chairman, Corporate Finance
Associates (CFA) Chairman of CFA’s Transportation and Logistics
Industry Practice Group
Michelle ArseneauManaging Partner,
GX organization
Neil McKennaV. P. Transportation,
Canadian Tire Corporation
Anna PetrovaSenior Supply Chain
Leader, Ferrero
Ron TepperExecutive Chairman & CEO, Consolidated
Fastfrate
Tibor Shanto Principal, Renbor Sales Solutions
Tom CoatesVP and COO,
Lakeside Logistics
Jonathan WahbaV. P. & General Manager,
Canada, Schneider National Inc.
Jeff PriesV. P. Sales & Marketing,
Bison Transport
Jeff LindsayPresident and CEO,
Canada Cartage
Oryst DydynskyPrincipal, DAP
International Trade Consulting
Mike McCarronConsolidation
Consultant, Wheels Group
On October 16th 2013, please plan on joining Canada’s top
Transportation Executives for a day of education & networking.
Introducing the 2013 team of presenters...
FREIGHT BIDS: IS THERE A BETTER WAy FOR CARRIERS AND SHIPPERS TO WORk TOGETHER?
CARRIER PERFORMANCE MANAGEMENT: METRICS THAT DELIVER RESULTS
INTERMODAL TRANSPORTATION: EXPANDING BEyOND ITS NICHE
THE VIEW FROM THE TOP: THE CEO’S PERSPECTIVE ON MAjOR TRANSPORTATION TRENDS
DEDICATED TRANSPORTATION: OUTSOURCING FLEET MANAGEMENT TO A THIRD PARTy
CROSS-BORDER FREIGHT TRANSPORTATION: BEST PRACTICES
TRANSPORTATION SALES: CAN yOU ADAPT TO THE NEW NORMAL?
MERGERS & ACQUISITIONS IN TRANSPORTATION: HOW BIG ARE THE OPPORTUNITIES?
LOOKING AHEAD: ECONOMIC FORECASTS FOR 2014
We have created an agenda that truly addresses the many challenges facing both Shipper and Carrier executives.
2013 Surface TranSporTaTion SummiT agenda
Registration: 7:30 am • Presentations: 8:30 am sharp
For more information and to register, please visitwww.SurfaceTransportationSummit.com
Jacquie MeyersPresident, Meyers
Transportation Services
2013 Summit SponsorWes ArmourPresident & CEO,
Armour Transportation Systems
Mississauga Convention Centre,
75 Derry Road West,
Mississauga, ON
Barry O’Neill Executive Vice President,
Hub Group
Trans Summit 2013 MT.indd 1 13-04-18 10:41 AM
in thenews
6 ct&l may 2013 www.ctl.ca6
Ports of Montreal and Antwerp form virtual strategic alliance By Leo Ryan
The Montreal Port Authority and the Ant-werp Port Authority have signed a Memo-randum of Understanding (MOU) aimed at fostering mutually-beneficial co-operation
in marketing and business de-velopment. It is the first agree-ment of this kind between a Canadian port and a European port, and coincides with Euro-pean Union-Canada free trade negotiations currently at an advanced stage.
The MOU will further bolster the already substantial maritime trade relations across the Atlantic between two ports positioned as strate-gic continental gateways.
Taking part in the signature ceremony in Montreal on March 18 were Sylvie Vachon, president and CEO of the Montreal Port Authority, Chris Hoornaert, ambassador of the Port of Antwerp, and Kris Peeters, minister-president of Flanders.
Vachon noted that Antwerp constitutes Montreal’s largest overseas maritime trad-
ing partner. “One in every five containers handled by the Port of Montreal comes from or goes to Antwerp.”
In 2012, this bilateral box volume amounted to nearly 291,000 TEUs, and was evenly divided in eastbound and west-bound directions.
The second biggest European port after Rotterdam, Antwerp is the leading Euro-pean gateway in the North Atlantic con-tainer trade with the US and Canada, hold-ing an estimated 36% market share versus 36% for Bremen and 21% for Rotterdam.
While major global container lines con-nect Montreal and Antwerp, the Belgian port is also the European hub for the break-bulk operations of FALLine, Montreal-based Fednav’s service between Europe and the Great Lakes/St. Lawrence waterway.
As inland ports, Montreal and Antwerp have much in common, and there is a con-stant need to reinvent themslves to meet
in thenews
Montreal’s MOU with Antwerp is the first agreement of its kind between a Canadian and European port.
7ct&l may 2013www.ctl.ca
Cargo service to and from Dublin, Madrid, Barcelona, Rome and Athens is back!We’re also expanding our reach in Europe this summer by introducing cargo service to and from Istanbul, Venice and Edinburgh.
Thanks to our network, interline and trucking agreements, shipping to multiple points beyond all these gateways is fast and convenient.
Visit aircanadacargo.com for details.
aircanadacargo.com
AC Expedair | AC Live | AC Secure | AC DGR | AC General Cargo
AC Compassion | AC Cool chain | AC Post
More Europe!
Air Canada Cargo | Going further.
AC_CTL_More_Europe_4.5x7.5.indd 1 2013-04-25 1:48 PM
infrastructure, commercial and other de-mands, commented Hoornaert.
Antwerp ports officials have said they are impressed by the strong links of the Port of Montreal with the key US Midwest market through excellent intermodal con-nections with Chicago.
In an interview, Hoornaert suggested that the MOU reflected “a natural evolu-tion that would have happened with or without free trade negotiations. All ports stand to benefit from freer trade.”
The MOU seeks “to develop partnerships between the Parties in the fields of branding, operational best practices, compliance and business development cooperation.”
Among other things, the MOU calls for the organization of a joint commercial event once a year alternatively in Antwerp and Montreal. Such an event is scheduled to take place in Antwerp in mid-Septem-ber of this year. It also provides for an ex-change of non-confidential information on port operations, customs, safety and sus-tainability matters.
3PL sector working towards food safety best practicesBy Julia Kuzeljevich, with files from Carolyn Gruske
The warehousing industry and providers of 3PL services will be greatly affected by regulations such as those coming under the US Food Safety and Modernization Act, according to Peter Wilson, president and CEO of Sunwill Distribution Center, in Buffalo, N.Y., and a member of the In-ternational Warehouse Logistics Associa-tion (IWLA).
The IWLA’s Canadian chapter held its 5th annual spring conference in Wood-bridge, Ont., in April and much of the fo-cus was on the current regulatory climate covering foods and chemicals, and implica-tions for warehousing and 3PLs.
In the US, Wilson noted the Food and Drug Administration is committing more staff over the next several years to roll out the requirements of the Act, which was signed into law in 2011. But, he said, the wording in these regulations “is not very precise” and, in his opinion, the FDA does not yet have a good idea of how the whole supply chain works and how to implement these laws so they make sense.
Stakeholders such as 3PLS, warehous-es, and the various food associations are currently working with the FDA on the verbiage of the compliance requirements, said Wilson.
“The IWLA started its Food Security Council as a platform for promoting the 3PL value proposition: the safe, secure, and responsible handling of food,” Wilson said.
The new law gives the FDA mandatory
in thenews
8 ct&l may 2013 www.ctl.ca
in thenews
recall authority if the responsible party will not voluntarily recall the food product. The FDA is empowered to issue a mandatory recall order to the responsible party to cease distribution and no-tify all parties in the distribution chain to cease distribution.
Increasingly, he said, the large food processors expect 3PLs to work with them on policy solutions.
“The primary objective of this program is to offer first and best knowledge to our membership and to enable our membership to be represented at the table as a full partner with supply chain part-ners when US and Canadian regulatory policies are considered that address the storage, handling and distribution of food products. Although certification is not in the initial stages, it is highly prob-able that as we gain experience and practice, IWLA will develop a ‘best practices’ document as we have with respect to C-TPAT and the warehousing of chemical products,” said Wilson.
One wording issue has been to define what is meant by “solely” engaged in the storage of packaged food, noted Wilson, as those who are “solely engaged” in this are generally exempt from preven-tive controls requirements.
Certain packaged food for which refrigeration is required for safety must have temperature controls, monitoring, verification and records.
The FDA has tentatively concluded “it would be rare for a facil-ity solely engaged in the storage of unexposed packaged food to not have information regarding whether a food requires time/tem-perature control for safety, and if so, what specific temperature controls are necessary for the safe storage of the food,” he said.
But at the FDA’s discretion, the agency may exempt warehous-es where the food does not come into direct contact with the en-vironment. IWLA has joined in a petition to the FDA for a ware-house exemption, said Wilson.
Wilson said the 3PL and warehousing industry, along with food suppliers, are banding together to help the FDA to create more exemptions.
“Six months ago, there were few exemptions,” he said.“We are also working with the FDA to figure out what temper-
ature-controlled storage is. The verbiage on ‘solely’ has been put through, but the comment is still open on the refrigerated pro-cesses,” said Wilson.
Another issue under consideration is the determination of when product is considered to be “transferred” in a warehouse.
The FDA position is that a transfer occurs when transfer of physical possession takes place, but the IWLA has submitted com-ments to the FDA that transfer occurs upon change of ownership, not a change in physical possession or control.
Dave Saucier, manager of regulatory government affairs with the Canadian Association of Chemical Distributors, stressed the importance of food safety in both Canada and the US.
“We hope to see responsible warehousing implemented at least on the chemical side. Responsible warehousing should be adapt-able to all your products,” he said, pointing out that even chemical cleaners used in a facility would be affected.
Canada’s Food and Drug Act, at almost 100 years old, is out-dated and has undergone “lots of patchups,” said Saucier.
New iterations of IWLA’s code elements are now underway, with security adopted as a new and eighth code element requiring members to conduct risk assessment, develop or implement a se-curity plan, train employees, and complete audits on continuous basis, he said.
In the US, meanwhile, the CFAT or Chemical Facility Against Terrorism regulations are now under development.
“Transport Canada will have their version of this. We will have Transport of Dangerous Goods regulations as early as this year and enacted within a couple of years,” said Saucier. “In Canada, we are 46 members importing up to 10,000 products going out to 100,000 customers. It’s very important to maintain the safety of our people, and the environment,” he said.
Securing product through 3PL channels is currently “very challenging.”
“You don’t own that product, your customer doesn’t own the facility,” said Saucier.
So getting a unified safety standard is another one of the major challenges industry faces.
“From a lobbying perspective, we’re starting to work toward getting regulatory harmonization in the chemical sector, in nano-technology and in food,” said Saucier.
Shipping and receiving are critical control points, he added, and weather is one of the top factors affecting the warehousing industry.
Contact airtransatcargo.com
TOLL FREE 1-877-633-2594
- General Cargo- Dangerous Goods- Perishable Cargo- Live Animals- Human Remains- Outsized and Heavy Cargo- Diplomatic Cargo
CanadaCaribbean
EuropeCentral America
BEYOND BORDERS, BEYOND EXPECTATIONS.
CAR-13-0481 Canada - ¼ de page Publication - Air Freight - May Issue - BtoC.indd 1 2013-04-15 2:59 PM
Over the next few years, Saucier said industry can expect that there will be a lot of regulatory activity coming from various levels of government that will directly or indirectly affect warehousing and 3PL, in-cluding federal legislation such as the Transport of Dangerous Goods Security Regulations (SIMS), which is expected in Canada Gazette I, possibly by this year.
A Globally Harmonized System, tar-geted for June 2015, will replace Health Canada’s Workplace Hazardous Materials Information System, and comprise new safety data sheets and product labels, as well as employee training.
Good Manufacturing Practices for ac-tive pharmaceutical agreements (API) and Emergency Response Assistance Plans for public warehousing are other federal initia-tives underway.
Ontario-based warehouse operators should also take notice to ensure their fa-cilities are fully compliant with health and safety regulations, noted Saucier, or risk government-imposed penalties as the province of Ontario will perform safety blitzes in the warehousing sector over February and March.
“You may know this, but everybody in 3PL and warehousing, you’re going to be blitzed. They [the Ontario Ministry of Labour] do publish this. They’re coming after you. They’re looking for trips, spills, falls, that’s a big thing. Also skeletal dis-eases, that’s vibration [from equipment] and standing if you’re not on a proper mat and you’re at a workstation,” Saucier told attendees at the IWLA spring con-ference.
“For anybody in industrial warehousing, racking is a big thing; they’re going after racking this year. If it’s your customer, edu-cate them. I know once you install a rack, there’s not much you can do if they want to run over it with a forklift or bump into it and play ping-pong with their forklift, but you tell your customer they’re coming and they’re going to give you an order. Be-cause every facility they’re coming into, they’re averaging 2.4.”
The 2.4 figure Saucier cites is the aver-age number of health and safety infractions government inspectors are issuing at every facility they visit.
“Those are the latest results from the province of Ontario. And they’re quite
frightening. They inspected 6,000 sites and issued 2.4 orders per site. That means every site they’re going into – it doesn’t matter what the industry is – they’re finding in-fractions,” said Saucier.
He said the CACD continues to lobby for efficient and effective regulations.
“We are looking forward to a fully inte-grated Responsible Warehouse code of practice,” said Saucier.
9ct&l may 2013www.ctl.ca
The One. The Only. The Original Terminal Tractor.There are lots of reasons that people ask for an “Ottawa” when shopping for a terminal tractor: productivity, safety, driver comfort, reliability, model options...the list goes on. But, the biggest reason is because it’s the original terminal tractor. Anything else is a knock-off.
We’ve built more than 50,000 terminal tractors and the majority are still in service today—that’s more than all other North American OEMscombined. Why ask for anything other than an Ottawa?
To locate your Ottawa Terminal Tractor dealer, go to www.ottawatrucksna.comOttawa Truck Headquarters | 415 E. Dundee StreetOttawa, KS 66067 | Telephone: 785.242.2200
Ottawa_CTL_0413__Layout 1 4/24/2013 1:08 PM Page 1
10 www.ctl.ca10 ct&l may 2013
storycover
The old paradigms of doing business
in airfreight no longer seem to work.
But a new normal has yet to take shape.
B y I a n P u t z g e r
turbulenttransition
Last November, supply chain research and consult-ing firm Drewry reflected in its monthly industry briefing on the merits of eschewing one-year con-
tracts for short-term deals. By splitting contracts into two or three periods, with rates in the final segment lower than in the first one or two periods, shippers should be able to reduce freight costs in a market characterized by overcapacity and little sign of a marked increase in de-mand on the horizon.
Drewry’s analysts had trained their sights on the con-tainer shipping sector, but they might just as well have been scrutinizing airfreight. If anything, capacity providers in this segment have fared even worse than their maritime counterparts, and many responded to the decline in vol-umes and yields with aggressive pricing. This trend has continued through the first quarter of 2013, notes Dirk Steiger, managing director of airfreight research and con-sulting firm Aviainform.
On the inbound sector from Asia, forwarder Bellville Rodair International (BRI) has been receiving weekly up-dates on rate changes from air carriers. “We see a lot more special offers from airlines,” says Jeff Cullen, CEO for North America.
Increasingly, BRI finds itself wedged between shippers and carriers who both push for ad hoc pricing deals. “Cli-ents are shopping bigger individual shipments. They con-tact five or six forwarders. We see a lot more of that going on,” Cullen remarks.
Paul Nugent, senior director and general manager of cargo at Air Transat, observes that spot pricing has intensi-fied in the run up to the spring schedule. Traditionally, this would not get underway until the capacity was fully de-ployed, but this year carriers have moved early, he says.
Like Cullen, he is aware of strong pricing pressure from the shipper side. “Forwarders tell me they lose business on three or four pennies,” he says.
The uncertainty that hangs over the market has created a vicious circle. At a time when even large, well-established freighter operators are bleeding red ink, routings and sched-ules for cargo aircraft have lost much of their erstwhile so-lidity. Airlines increase or slash frequency in quick response to market developments and bail out of routes altogether at relatively short notice to avoid further financial hemorrhag-ing. They have also taken older freighters out of service al-together as the operating economics no longer worked in an environment of high fuel costs and low yields. Among for-warders, this creates doubts about how reliable a particular freighter service is going to be.
“We try to see where capacity is going. We have seen a number of carriers cut planes and fleets,” says Cullen.
Ram Menen, senior vice-president of cargo at Emirates Airlines, points out that the air cargo sector is an industry in transition, where the old paradigms of doing business no longer work, but a new normal has yet to take shape. What used to be reliable cornerstones – such as seasonal patterns dominated by a strong peak season out of Asia that brought airlines juicy yields as forwarders scrambled for lift to get their traffic to retail shelves before Christmas – have lost their erstwhile impact on the market.
In order to secure sufficient capacity out of Asia, larger freight forwarders used to line up freighter charters well in advance of the busy season, while smaller cargo agents tried to sign block space agreements (BSAs), whereby airlines guaranteed them space on their flights on major routes in return for firm commitments to move freight on those flights. Last year, following a disappointing peak season in 2011, no forwarder signed a freighter charter for the period between September and early December. In the event, their caution was well justified.
“The peak did not happen. Things just seemed to drop off late last year,” recalls Cullen.
Thomas Reuter, managing director of air and sea logis-tics at logistics firm Dachser, is not holding out for a return to the traditional pattern when business eventually recov-ers. “There has been no more peak season for the past three years. We have to adjust our allocation planning,” he says.
Freighter operators have not only been hit by diminish-ing volumes of freight in the downturn, they also struggle with shrinking dimensions and density of shipments, which make it more challenging to fill their planes. “The comput-ing power that you get in one iPhone today would take a large computer 10 years ago. There has been a drastic re-duction in size and weight of electronics,” says Steiger.
He adds that some of these shipments could be flown in the bellyholds of narrowbody passenger plans that cannot take containers or pallets. “Do I still need a freighter for this?” he asks.
Given the price differential between air and ocean cargo, airfreight has also been hit hard by shippers’ efforts to rein in transportation costs, often by shifting to less expensive, slower alternatives. This has spread to com-modities that had seemed to be firmly welded to air-freight. Even shippers of pharmaceuticals have experi-mented with ocean transportation or sea-air options. Other traditional airfreight commodities, like auto parts and consumer electronics, have seen large-scale migration to surface transportation.
“A lot of products that used to be a mainstay of air cargo are no longer a given for air cargo,” confirms Bill Gottlieb, president of David Kirsch Forwarders.
11ct&l may 2013www.ctl.ca
storycover
turbulenttransition
12 www.ctl.ca12 ct&l may 2013
storycover
In many cases, shippers hesitate to replace existing supply chain pipelines with lower cost alternatives out of concern over possible disruptions, but their emerging pipelines consider airfreight less than before, remarks Steiger.
He warns that this could lead to a polarization of airfreight that can be shifted to ocean carriers and urgent traffic where the cycle times do not allow for slower alternatives. The latter could end up in the arms of the integrated express carriers, further undermining the viability of pure cargo airlines. Such a development would erode the basis for consolidations that normally fly as deferred products between large gateways.
Such a development would affect some established distribu-tion models. “Moving consolidations to feed into North Ameri-can distribution networks is a model under a big question mark,” Steiger reflects.
While such trends and the ongoing uncertainty and volatility in the market favour a short-term approach to capacity and pricing agreements, Drewry nevertheless concludes that this tactic could be counterproductive and warns against it.
In essence, Drewry’s reservations come down to three aspects: service quality and reliability, future pricing movement, and a de-sire for predictability. On the first point, Drewry’s publication warns that “a short-term contractual approach using many tempo-rary carriers does not encourage good customer service and support when shippers need it.” As for future pricing developments, Dre-wry sees no indication that ocean rates will definitely continue their downward trend – and most projections for global air cargo development envisage an improvement in market conditions as the year progresses.
Finally, there is the danger of all the effort of shopping for advantageous short-term rates bearing little or no fruit, Drewry finds. “The tender process is still a very time-consuming exercise and your buyers and merchandisers generally prefer to know what the freight cost is going to be for the whole year. Predict-ability is often more important than opportunistic but uncertain cost reductions,” it argues.
Reuter would welcome a more stable pricing environment. “It would be better if we had two rate changes per year,” he commented.
Dachser has reduced its allocations with airlines in line with market decline, but Reuter makes a point of meeting the commit-ments that the forwarder has made to airlines. “We are known for our steady course. We do not view ourselves having to optimize our yields in every situation, we see ourselves as partners of the airlines. We need the carriers as much as they need us,” he declares.
Nugent finds that the relationship with forwarders has actually intensified in recent years. “We are in the same boat. We try to work together to develop solutions for shippers together,” he says.
To him, BSAs are of little attraction, as he serves mostly smaller and mid-sized forwarders and he has less capacity to fill on the transatlantic routes than Air Transat’s larger competitors. On the routes to sunshine destinations, where Air Transat has the most widebody capacity, space commitments do come into play, though. This side has been largely unchanged.
Charles Kaufmann, head of airfreight Asia Pacific at DHL Global Forwarding (DGF), raises another reason for volume com-mitments with airlines. He points to a trend towards more stabil-ity in terms of traffic volumes over the course of the year. Sea-sonal spikes are less pronounced than they used to be, and new patterns are emerging, notably a “mini peak” towards the end of the first quarter, he says. That’s an assessment shared by Steiger and Reuter.
“The traditional slump that we used to see in the summer does not exist anymore. Volumes are more level throughout the year,” Reuter says.
Hence, DGF has actually stepped up its BSAs with airlines. Menen finds their use varies by commodity and by trade lane. BSAs are still important on routes out of China and also come into play on some sectors out of Europe and the US, he notes.
Cullen says that BRI uses long-term commitments on certain sectors, but he has reservations about the concept in general in to-day’s market. “BSAs are a dangerous thing to lock into because people don’t manage to fill those agreements,” he warns.
“At the end of the day, BSAs hold more risk for the airlines – although they are designed to give them planning security. This is because failure by the forwarder to meet his commitments seldom entails serious consequences. Forwarders can sign and then break BSAs with impunity, because they face no penalties,” Steiger remarks.
Nevertheless, many forwarders seem to value their airline part-nerships and try to live up to their promises. “Our customers are holding to their commitments on high-demand routes. On routes where demand is weaker or where there is overcapacity, the re-quests tend to be for seasonal allocations,” remarks Lise-Marie Turpin, vice-president of cargo at Air Canada.
“BSAs are viewed positively as they provide us with a good base from which we can build our business. We closely monitor the utilization of this capacity to ensure that our assets are fully optimized,” she continues.
Menen says that some customers have tried to bend BSAs, for instance asking for some rate flexibility or a mechanism that takes market pricing into account. Like the overall air cargo business model, which is in flux at this point, he does not believe that pric-ing mechanisms will remain where they are today.
“Rates have got to be more transparent, and we have got to charge for services rendered. It is part of the evolution of this busi-ness,” he says, adding that he views the e-freight initiative, which aims to drive paper out of the airfreight processes, as a catalyst toward more transparency and improved data flow.
“I would like to see what happens on the net when you buy an airline ticket. Cargo is not as easy as passenger (booking), but this is a desirable way to go. Everybody benefits,” he continues. CT&L
Ian Putzger is an award-winning journalist with more than 20 years experience covering transportation and logistics is-sues. He is a former writer and editor with the Hong Kong-based Asian Sources Media Group, and Airtrade, a British magazine covering the global air cargo industry.
turbulenttransition
THE WORLD IS WAITINGFOR A DIFFERENT KIND OF CARGO BUSINESS.It’s time for a cargo business who recognises how the world is changing, and how important it is to evolve with it. A business that’s committed to delivering more connections, more capacity and more opportunities. By expanding our network, developing specialised products and listening to what our customers need, we’re helping the global economy grow, one business at a time.
To find out more about what makes IAG Cargo different, visit iagcargo.com/differentworld
turbulent
THE WORLD IS WAITINGFOR A DIFFERENT KIND OF CARGO BUSINESS.It’s time for a cargo business who recognises how the world is changing, and how important it is to evolve with it. A business that’s committed to delivering more connections, more capacity and more opportunities. By expanding our network, developing specialised products and listening to what our customers need, we’re helping the global economy grow, one business at a time.
To find out more about what makes IAG Cargo different, visit iagcargo.com/differentworld
14 www.ctl.ca14 ct&l may 2013
freightair
Are airships a viable solution for northern Canada’s unique transportation challenges? Supporters and critics of this fledgling mode shared their views at
the recent Northern Exposure 2 conference hosted by the University of Manitoba’s Transport Institute.
The use of airships for transporting goods to Canada’s remote northern communities may be a relatively new idea, but the concept of airships or LTA (lighter than air) craft, which stay aloft by having a large envelope filled with a gas less dense than the surrounding atmosphere and can be pro-pelled and steered through the air using a rudder, propellers and other thrust mechanisms, is more than 300 years old. In 1670, the Jesuit Father Francesco Lana de Terzi published a description of an “Aerial Ship” supported by four copper spheres from which the air was evacuated. More than 100 years later, in 1785, Jean-Pierre Blanchard crossed the Eng-lish Channel in a balloon equipped with flapping wings for propulsion and a bird-like tail for steering.
Airships were widely used before the 1940s, but their use decreased over time as their capabilities were surpassed
by those of airplanes and a series of high-profile accidents – the 1937 burning of the hydrogen-filled Hindenburg being the most memorable – raised safety concerns. They are still used today in niche applications such as advertising and as camera platforms for sporting events, aerial observation and geological surveys, but as a mode of transport, their use is minimal. There may be just 12-15 such ships flying around the world – with none in Africa or Australia – according to Fred Edworthy, vice-president business development for Worldwide Aeros, a company building a prototype cargo airship. Aeros is one of only two US companies with an FAA type airship production certificate.
So why are airships now being considered as an option in helping boost development of Canada’s north? Northern all-weather roads are expensive to build – they can cost about twice as much to construct and maintain as roads in south-ern parts of Canada (See “Can challenges of our northern roads keep up with opportunities for development?” in the April issue of CT&L). Fixed-wing aircraft require landing strips and the building of fueling stations nearby. Global
Are plans to employ airships for freight transport in northern Canada a viable option or just hot air?B y L o u S m y r l i s
Oh, theaccessibility!
15ct&l may 2013www.ctl.ca
warming is also starting to affect the solidity of the soil on those airstrips. Sea lift serves the most remote northern communities if they are close to water, but can’t reach them year round due to ice formation (although the ice-free season is getting longer).
Dale Uskoski, operations manager for BBE, a Yellowknife-based 3PL specializing in orchestrating transportation moves in remote areas, believes that although sea lift will remain the most cost-effec-tive option for servicing northern communities, airships would help keep freight moving during the winter months when ice keeps the ships at dock.
The size of the ground crew operation required to keep an air-ship steady while it unloaded cargo has until recently proven a ma-jor limitation. Ballast control, which provides the capability to offload cargo even when the airship is in hover mode, has been a critical issue. The need to conduct maintenance and repairs in hang-ers, which can be expensive and difficult to build in remote regions, was another limiting factor. But recent innovations have even the US Department of Defense thinking seriously about airships. Gen-eral Raymond Johns, who headed up the US Air Mobility Com-mand, is on record as saying the promise of airships is something that needs to be explored.
Current airship prototypes, such as the Aeroscraft and the Varialift, the vision of an English company, are able to take off and land vertically at maximum operational payload. Built-in ballast control allows for the delivery of cargo with no local infrastructure necessary, according to Edworthy.
Edworthy’s prototype airship has a rigid aeroshell with an in-ternal skeleton structure which maintains the shape of the airship without the need for internal pressure. It has a 66-tonne payload capacity and a range of 3,100 nautical miles at maximum payload. It cruises at 100 kts with a top speed of 120 kts. It cruises at an altitude of 12,000 feet.
The Varialift is an all aluminium airship design, which, accord-ing to president Alan Handley, has a 40-year work life. His compa-ny is looking to mass-produce an airship with 50-metric-tonne pay-load capacity with a 250-metric-tonne capacity model to follow.
Edworthy says airships can provide transport at one-third the cost of fixed-wing aircraft. Handley claims that airships burn 80-90% less fuel than equivalent fixed-wing aircraft. He envisions airships being used to cost-effectively deliver cargo ranging from low-density goods to large prefabricated structures up to 500 metric tonnes.
Mike Sorobey, vice-president of logistics at The North West Company, was similarly enthusiastic about how airships could be put to use in serving remote communities.
“We could potentially ship all our fresh commodities with air-
ships. I see that as a very viable option when the technology of these airships comes to fruition.”
Edworthy had a different view of how airships were most likely to be used.
“I don’t believe carrying fresh fruits to remote communities will be the main driver for airships. It will be a big event such as main-taining northern sovereignty or a mining project that needs to be developed,” he said.
But Joe Barnsley, a partner in Pitblado LLP, a Winnipeg law firm advising aviation clients, does not see airships as a magic bullet to reducing the high freight costs in northern supply chains and wor-ries their use could upset the delicate balance necessary to keep the transport companies serving remote communities profitable.
“If we think there is a magic bullet with airships, there isn’t…When you’re talking about remote supply, you’re talking about freight and people. You can’t separate the two,” he said in pointing out that these airships (so far) are not designed to carry passenger traffic. He explained that fixed winged craft rely on both passenger and freight traffic to generate enough revenue to remain profitable. The revenues from one operation must subsidize the other because northern transport is wracked with so many unpredictable situa-tions. For example, there are volatile swings in passenger traffic from one flight to another – on a good day there aren’t enough seats to handle all the passengers and on others the plane could have no passengers at all. There is also the reality that there is little backhaul out of northern communities.
“That’s why aggressive competition won’t work in these markets. It’s, in fact, going to tip the boat and upset the balance that we have,” Barnsley worried.
He did, however, believe there is case to be made for airships being used to service mines and other project work in the north.
If there is such consensus on the viability of airships, what can the Canadian government do to speed up commercialization? Ed-worthy suggested that while he is under no illusion that govern-ment would be willing to sign a blank cheque, help with financial guarantees to reduce the investment risk would be helpful. Air-ships cost upwards of $30 million to construct. Barnsley suggested the government can assist on the regulatory front with legislation that eases manufacturing and operation of airships. Traditionally, new aircraft designs take years of testing before they are given the go-ahead from regulators. The University of Manitoba’s Dr. Barry Prentice, who co-moderated the conference with the Transport Institute’s Al Phillips, suggested the government could borrow from the past and help out the airship industry by granting it land along its flight path in the same way it did with the railways back in the 1800s. CT&L
photos: copyright worldwide aeros
16 www.ctl.ca16 ct&l may 2013
pharmaceuticalsupply chain:
As the guidelines for product distribution get strict-er, pharmaceutical supply chains are trending to-ward total supply chain integrity, from manufac-
turer to patient.“There are growing requirements for monitoring to as-
sist in the proof of chain of custody, and increasing ques-tions from regulators related to the monitoring methodol-ogy, as well as more global regulations to monitor temperature and humidity,” explains Rich Ellinger, princi-pal at Temperature Assurance Group. Health Canada has proposed several revisions to its Good Distributions Prac-tices document ‘GUI 0069 Version 2’ (Guidelines for Temperature Control of Drug Products during Storage and Transportation).
Government agencies, pharmaceutical shippers and their supply chain partners discussed the impact of “Guide 69” and other related pharmaceutical supply chain issues during the 11th annual IQPC Cold Chain and Temperature Summit Canada, held recently in Toronto.
“Guide 69 seems to get a lot of attention,” says Sarah Skuce, compliance specialist with Health Canada. “It’s in-clusive of all drug products, all pharmaceuticals, veteri-nary and human, and all regulated parties. Transport pro-viders are not covered, but are expected to follow it.”
Guide 69 represents Health Canada’s attempt to ad-dress the need for additional guidance on procedures, with more detail and clarity, and more emphasis on training in warehousing and storage. Guidelines will also be more in line with the World Health Organization’s Global Distri-bution Practices document. The guidelines aim to ensure
drug products in Canada are transported, handled and stored to mitigate any risk of exposure. Drugs should be stored “according to the label requirements” as the mini-mum default. Shipping containers, shipping procedures and packaging configurations should be qualified. Ideally, the guidelines will advise that labels should also be on the shipping containers, as well as on the actual boxes being shipped. If there are special handling requirements, these should also be on the shipping container.
“There must always be quality control sign-off for ac-tions taken after an excursion,” notes Skuce.
“With new GDP guidance documents and regulations emerging rapidly, our industry becomes progressively more complex and subject to global scrutiny,” says Mary Ann Gribbin, director of quality assurance at Johnson & Johnson, and a speaker at the IQPC conference. There is a need to go beyond establishing quality agreements “to make sure the supply chain understands and meets the requirements,” she adds.
“I find that through audit programs, I do have to take it a step further than the quality agreement, because what I see in the rollout of processes isn’t always exactly what I would expect, and I train different parts of the supply chain. Having a change management system in place en-ables you to evaluate, approve and implement changes to processes and procedures, such as during construction. The regulatory and industry focus has expanded from the cold chain to controlled room temperature (CRT), requir-ing temperature control for any temperature sensitive products,” says Gribbin.
The pharmaceutical supply chain is facing stricter guidelines on Good Distribution Practices. Here’s how to comply.
B y J u l i a K u z e l j e v i c h
17ct&l may 2013www.ctl.ca
Key to this is the temperature map-ping of storage facilities, the proper handling of any temperature excur-sions, and ensuring regulatory and filing commitments are maintained when us-ing stability data to support excursions outside of a drug’s label claim.
LTL transport has presented a significant challenge here, said Gribbin.
“We’ve had to look long and hard at companies that can sup-port our supply chain. Maybe for 75 of 100 products I have stabil-ity data for a wide range of temperatures. But for the rest, maybe I don’t. Our current challenge is to expand the stability data for our products. Eventually, do we expand the temperature require-ments that we allow for transport, or do we change the label re-quirements? For now, we’re going to be going with temperature control,” she says, by establishing timeframes for the time a prod-uct is out of refrigeration.
A new challenge in pharmaceutical supply chains comes from the returns side.
“When we have drug shortages, we have requirements to re-port these to our drug agencies. We have also put controls in place to document the traceability of rejected goods up to their point of destruction,” said Gribbin.
When it comes to product returns, Health Canada’s default position is destruction.
“We will look very heavily at what your actions are after a re-turn to a facility. If (a product shipment) never actually leaves your possession or control, it can be released as resaleable stock. If you are asked for any verbal attestations, don’t do it, throw it out,” she says.
On quality control sign-offs, the expectation of Health Canada inspectors is that standard operating procedures are “qualified, up-dated and modified.”
“Many people are dinged for not signing off on their SOPs. Be up and current with personnel and employees on training,” Skuce said.
Industry should also expect inspectors to be looking for lists of products that have storage or transportation requirements. They will want to see procedures on incoming, outgoing and re-turned goods.
“We expect you to have a contingency plan and consider-ations when at the border for feasible corrective actions and timelines, and for supply interruptions of medically necessary products,” says Skuce.
While many pharmaceutical companies are proactive about alerting border officials and educating their carriers and drivers, at the end of the day, product integrity remains the responsibil-ity of the company.
“We see a lot of procedures lacking, including improper tem-perature ranges for a selected device; no assurance of product
quality as well,” says Skuce.Among wholesalers and importers,
transport and storage excursions are the most typical deviations. Sometimes this is a result of creating benchmarks that can’t possibly be adhered to.
“Some companies will create their own stringent guidelines or SOPs and
when it comes down to it, they can’t sign off on all of them,” says Skuce.
In warehousing and wholesaling, temperature mapping defi-ciencies are also common.
“We look at this quite heavily during the course of an inspec-tion. You need to map your fridge empty and loaded. You need a separate power source for probes and alarms,” says Skuce.
Other lessons learned? Manufacturers do not want to share their stability data with wholesalers and warehouse providers, she said.
“Some are developing their own data, but in the absence there always needs to be a Plan B, as in, there shouldn’t be ‘excursions’ at all or, you must hold the shipments to the label requirements as a default practice.”
How did industry react to the Health Canada Guidelines?“When the ‘0069’ Guidelines were first implemented, it
pushed the industry to improve its distribution network and effi-cacy. I think it is moving in the right direction,” says Eric Malouin, distribution and operations supervisor at Abbott Laboratories.
“If you are a supplier in the temperature-controlled market, the key is to understand the market better than your customers,” said Ellinger, who noted that for commercial drugs, stability data, tem-perature range and excursion information is frequently available through lists such as Rxlist.com as public information.
But as a rule, most stability data is not shared by pharmaceuti-cal companies.
“It’s against our policy. There are a number of reasons for it, but primarily we do not want decisions made on our products,” says John Collins, director of quality assurance at Novartis Phar-maceuticals Canada.
“Sharing stability data is not done. You may have a tempera-ture excursion with two different batches and the causes are dif-ferent. The temperature range we can use is product dependent,” adds Malouin.
“We do ship outside label. It is a defendable approach, when speaking primarily of ambient products (those which must be kept at a temperature range of 2-8 degrees). So stability data is an easy solution for these, but not for vaccines, for example. If there is an issue with efficacy and stability, it’s our name on the label, even though we sell it to the wholesaler,” says Collins.
“We’re not looking for stability data; we’re just looking for allowable excursions. You need to be careful on what people are doing with the information,” says Claude Jolicoeur, director of regulatory affairs, Corporate GMP office, McKesson Canada.
“When the ‘0069’
Guidelines were first
implemented, it pushed
the industry to improve
its distribution network and
efficacy. I think it is moving
in the right direction.”
– Eric Malouin, distribution and operations supervisor,
Abbott Laboratories.
18 www.ctl.ca18 ct&l may 2013
“We have to work as an industry towards a solution. How will we reduce the excursions and communicate around them?” he adds.
“When we are aware of an excursions we would contact our quality people, they will look at the batch and the stability data and assess based on the information. We use quality carriers, and we have quality agreements with them. They do know the allow-able excursions and we audit them on this requirement,” says Malouin.
“From a manufacturer perspective there is much more certain-ty and clarity – we get a lot more communication regarding any excursions. We believe the system is working effectively. We do share some data in the quality agreement, that (carriers, custom-
ers) commit to contacting us. We ship to customers and the in-structions are very clear. The basic requirement is that if you know of an excursion you contact us,” says Collins.
The next steps for the GUI 0069 version 2 guidelines will be a Q & A document for Health Canada’s Web site, and a guide on written agreements with transport companies. The Active Phar-maceutical Ingredients (API) regulations will also be appearing in Canada Gazette Part II this spring. CT&L
Transportation can’t be allowed to become the weak link in the chainBy Jul ia Kuzel jevich
Guide 69 is a fairly wide-ranging re-vision to Health Canada’s Good
Distribution Practices, but one thing that will not be changing is the require-ment for a written agreement between regulated parties and transportation companies. While there has been a no-ticeable increase in knowledge in the in-dustry, according to government offi-cials, transportation providers are still reluctant to sign quality agreements, and this is not going unnoticed.
“It is still your responsibility as shippers to get these signed. If the 3PLs or transport providers will not sign, think of alterna-tives. If the quality agreement is not in place there need to be additional controls to transporting your products safely,” says Sarah Skuce, compliance specialist with Health Canada.
When it comes to transporting prod-uct, there are many risks to consider, whether from a mechanical or technologi-cal standpoint.
“In my 44 years of experience with Johnson & Johnson in temperature control, I’ve seen many different improvements in strategy. We’ve continued to raise the bar along with our knowledge of the processes. There may be certain levels of risk that are unacceptable for your product, but also, patient safety is at the forefront,” says Alan J. Davis, supply chain temperature control leader at Johnson & Johnson.
“It would be nice to monitor the ship-ment the whole way through depending on the product, company, and practices. The (0069) Guidelines allow for lane pro-filing, qualified packouts, for anything that
you would like to propose. It’s up to the regulated party to prove that it would suit the product being shipped and its require-ments. The value of the product also dic-tates the practices in place. It’s our job to find areas where there could be challeng-es,” says Skuce.
One challenging area is carrier quali-fication, an important element of risk management in the transportation of pharmaceuticals.
“We insist on working with all provid-ers, in terms of having face-to-face discus-sions with them. We don’t let products travel otherwise,” says Jim Bacon, senior director of global demand planning and customer operations with global health-care company Grifols, a manufacturer of protein therapies and products from plas-ma collected in Canada and the US.
Grifols has partnered with Newmar-ket, Ont.-based Skelton Truck Lines for the delivery of their products.
“We have a direct relationship with the carrier in order to manage and control. But although you are partners, you don’t run each other’s business,” says Bacon.
A master service agreement formalizes the relationship between the two parties, plus the rate structure, while a quality agreement defines the roles and responsi-bilities and the escalation process for issue resolution, record retention, and compli-ance auditing.
“We audit, validate, train, control, re-port, and create a validated process. We’re learning from issues that arise, cor-recting, and modifying these processes, making use of KPI’s and a vendor qualifi-
cation process looking at the company’s availability of equipment and how well it is monitored.”
The validation process is a three-year program for requalifying trailers, opera-tions, and performance, mapping data with full load, empty, and minimum loads. Skelton Truck Lines owns the vali-dation, but Grifols reviews it.
“We have standard operating proce-dures in our facility for those trailers vali-dated for 2-8 degree and for 30-degree service. We’ve done extensive mapping of the trailers, in terms of where are the touches, the hand-offs? At any point, a weak hand-off or insecure situation can break the chain or worse,” says Bacon. “We created a shipping guideline that can be used with all providers, and we have learned to provide extra information, for example a letter on every shipment list-ing all the products licensed in Canada with the associated DIN (drug identifica-tion) numbers, and step-by-step instruc-tions to the driver. If the border (agent) wants to go in and look at the product we have provided a checklist about the prod-uct, and what creates an excursion. Our main objective internally and externally is product integrity.”
Skuce stresses that industry should be aware that inspectors will follow products from the receiving end through the entire process, and that documentation will be considered paramount.
“When it comes to records of in-bound/outbound shipments, if you do not record it or document it, it never hap-pened,” he says.
pharmaceuticalsupply chain:
TAPA Certified • Overnight, Air, Courier, LTL and Truckload • Temperature Monitoring & Tracking • Ambient • Cold Chain • Chain of Signature • Health Canada
Compliant • ISO Certified • Nation-Wide Canadian Coverage
For more information, please contact Bryan McMahon 416-744-4993 or visit atshealthcare.ca
ATS HeAlTHcAre iS THe induSTry leAder in TemperATure conTrolled HeAlTHcAre
TrAnSporTATion
ATS Healthcare is focused on providing a comprehensive array of transportation services required by the healthcare, pharmaceutical and cosmetic industries.
ATS Healthcare provides shippers a clean, efficient and committed healthcare focused solution for all their transportation needs
Features editor Julia Kuzeljevich has been writing about trans-portation issues for more than a decade. Her meticulously re-searched articles have garnered several transportation and Canadian Business Press writing awards.
TAPA Certified • Overnight, Air, Courier, LTL and Truckload • Temperature Monitoring & Tracking • Ambient • Cold Chain • Chain of Signature • Health Canada
Compliant • ISO Certified • Nation-Wide Canadian Coverage
For more information, please contact Bryan McMahon 416-744-4993 or visit atshealthcare.ca
ATS HeAlTHcAre iS THe induSTry leAder in TemperATure conTrolled HeAlTHcAre
TrAnSporTATion
ATS Healthcare is focused on providing a comprehensive array of transportation services required by the healthcare, pharmaceutical and cosmetic industries.
ATS Healthcare provides shippers a clean, efficient and committed healthcare focused solution for all their transportation needs
Armour Transportation Systems is honoured to receive the prestigious Canada’s Best Managed Companies Award for the 10th consecutive year. Thank you to our valued people, customers and suppliers for your
contributions to the success of our company.
At Armour Transportation Systems our driving force is people – people working together to provide our
customers with excellent service.
ct&l may 2013 www.ctl.ca20
CT&L: With the recession a few years behind us, a slow but hopefully durable recovery is placing the emphasis once again on growth. What are the most important steps Armour Transportation Systems has undertaken the last couple of years to enhance its services and network?Armour: Over the past couple of years, our focus has been on three key areas: cost reduction, developing a more effective rate structure, and strategic acquisitions. On our freight rate structure, we adjusted our rates to ensure we are getting paid for what we do. The rates became depressed during the recession and we had to work hard to get them back in line with today’s economy. In the area of cost reduction, we reviewed all of the departments within our company and made significant changes so we could become more efficient. We were able to move people to different departments within our company that better suited their skill set, resulting in a more productive and enthusiastic employee. Getting the right people in the right jobs was a key focus for 2012. Our on-time delivery improved and we reduced line-haul costs by using short-sea shipping, intermodal and LCVs. We continued to upgrade our fleet with more new fuel efficient and reliable trucks. During the recession, we continued to grow through strategic acquisitions and purchased O’Meara’s Transport in P.E.I. and Hillman’s Transfer of Sydney, N.S. and Way’s Transport Limited of Corner Brook, Nfld. We also continued to heavily invest in technology to better improve in our ability to mine data out of our current system. This new technology allows us to dig deep and know our exact costs in all areas of our operation, which has allowed us to make better decisions by knowing where our costs really are.
CT&L: Armour Transportation Systems provides a very wide range of services. How do you ensure these services are well integrated and complement each other so that customers are provided with a seamless solution to their logistics and transportation needs?Armour: We started offering logistics and transportation services over 15 years ago. It is a seamless solution, which complements all of the services we offer. Although we have separate divisions, all of our
divisions work together as a team and support one another. Our logistics division has been extremely successful for us. All of our people, regardless of the division they work in, have a role to play in the big picture of Armour Transportation Systems, which is the umbrella company of all of our companies.
CT&L: Armour is one of the large carriers who has an impressive footprint in warehousing. Your Moncton facility offers both cross-dock and rail side capabilities. What kind of savings can be realized by employing a cross-docking strategy? Are you finding shippers receptive to such innovation?Armour: Absolutely – shippers are very receptive
to these innovations. In many cases today, we are seeing such things as the box car being reintroduced for heavy, dense products that are being shipped long distances to be distributed in Atlantic Canada. The box car is coming back in some industries as the transportation costs are reduced by rail (a box car can transport 180,000 lbs of freight, which is the equivalent of four tractor-trailer loads). At our Moncton and Halifax facilities, we have rail sidings where we not only do box cars, but tank cars as well for distribution throughout the Maritimes. We also do a great deal of ocean-going container stuffing and de-stuffing and warehousing.
CT&L: Your LTL division provides service throughout Canada, the US and Mexico through strategic alliances with interline partners. Why have you chosen this route as opposed to doing it on your own and how do you ensure your partners meet your standards of quality?Armour: Forming strategic alliances with other major carriers has allowed us, as a regional carrier, to participate in longhaul shipping. It gives us the flexibility for our customers to provide services throughout North America and beyond. These partnerships allow us an opportunity to grow our LTL freight business both to and from Atlantic Canada. We only do business with the companies who meet our service and quality standards. These partnerships have been built on trust and mutual respect. CT&L
For more with Wes Armour, go to www.ctl.ca.
beyond truckingWes Armour on the evolution of Armour Transportation Systems
and the importance of being a total supplier of supply chain services
AWARD WINNING SUPPLIERS AWARD WINNING SUPPLIERS AWARD WINNING SUPPLIERS
Armour Transportation Systems
Armour Transportation Systems is honoured to receive the prestigious Canada’s Best Managed Companies Award for the 10th consecutive year. Thank you to our valued people, customers and suppliers for your
contributions to the success of our company.
At Armour Transportation Systems our driving force is people – people working together to provide our
customers with excellent service.
AWARD WINNING SUPPLIERS AWARD WINNING SUPPLIERS AWARD WINNING SUPPLIERS
22 ct&l may 2013 www.ctl.ca
CT&L: Congratulations on once again being named to the list of the Best Managed Companies. Bison has been very active over the past couple of years acquiring other businesses, opening new terminals, experimenting with new fuel sources and growing to more than 2,000 staff. Companies may lose their corporate focus when experiencing such transition. How is Bison retaining its focus on the corporate strategies that have made it successful?Penner: We’ve made the list of the Best Managed Companies every year since 1994. One of the best things about Bison is that we are a learning organization. Our core truckload business is important and it generates the capability for us to expand into other opportunities. We are really using this approach to grow our people. We have the right number of eyes on the total picture and we are mentoring and developing people to take a more active role in building new opportunities.
CT&L: Bison recently purchased Searcy Trucking of Winnipeg, a carrier specializing in flatdeck services, and its distribution division, Universal Reload, which offers 12 acres of outdoor storage and 24,000-sq.-ft. of indoor space, specializing in open deck freight handling logistics. Why was this the right move for Bison?Penner: Customers routinely asked us if we had flatbed service and our logistics team has helped some of our key clients move flatdeck freight for years, so it is not completely foreign to us. As we look to acquire companies, our strategy is to find a strong business with a solid platform that we can leverage. We will look at how we can better manage their cost base, add value or inject horsepower in terms of money, strategy and, of course, people to help grow what is already a successful business. Searcy is a well-run company that did well through the recession, did what needed to be done to protect their business and has looked after their customers and employees.
CT&L: What is the strategic thinking behind this move to expand your service offerings?Penner: Although we are certainly not a trucking giant in terms of the scope of North America, in Canada we run a very large van fleet and we are very conscious of what our overall growth capabilities and limitations might be. We don’t want to be too heavily concentrated on a particular set of customers. We certainly
don’t expect we could have 2,500 tractors doing exactly what we do now in Canada. But we do understand there are many industry segments we are not a part of and so we can leverage our strengths – strategy, purchasing, safety, training, people development – in different segments of the marketplace. And we feel we can do that without being distracted. We have good people in our organization who can do bigger and better and more things. Trucking is about people. If you have good people and you can leverage good people, you can grow your business.
CT&L: How do you see Bison evolving over the next five years in response to market trends and demands?Penner: We will have maintained our culture of doing the right thing for our customers, our employees, our business and those we share the roads with. We will continue to build on our successes and expand our reach into market segments that require a higher level of expertise, complexity or risk management. We are an organization built to provide full-service transportation solutions. Truckload van, heated, refrigerated and flatbed, expedited, hazmat and LTL services, LCV and Asset Based Logistics, intermodal, trailer on flatcar, boxcar, warehousing and distribution. What have I missed? Stay tuned! CT&L
For more with Rob Penner, go to www.ctl.ca.
expansion mindedRob Penner on how Bison Transport is leveraging its people
and expertise to expand into new areas
Bison Transport
AWARD WINNING SUPPLIERS AWARD WINNING SUPPLIERS AWARD WINNING SUPPLIERS
AWARD WINNING SUPPLIERS AWARD WINNING SUPPLIERS AWARD WINNING SUPPLIERS
24 ct&l may 2013 www.ctl.ca
CT&L: What are the most important factors driving your customers in 2013?Laurin: We have noticed an increase in volume shipping to big box stores this year. Accounts are becoming more complex despite a decreased demand for individual case picking. Larger distributors have the capacity in their systems to support full-pallet and truckload orders. At the same time, advanced shipping notices, customized labels, maximum pallet heights, fixed appointment times and fines if anything goes wrong, are increasing the complexity of shipping to these customers. We are also seeing greater load consolidation for shipments going to larger distributers wherein multiple customers share the same truck to transport products to the same location. Higher food inflation and a high dollar haven’t seemed to slow down the growing volume for some of our most aggressive customers. The best manufacturers continue to find new ways to improve efficiencies and increase volumes, often by investing in new product categories and exporting to the US. The expected softening of the Canadian dollar should help to spur more food exports to the US in the coming year.
CT&L: How is Conestoga responding to be in line with meeting customer needs?Laurin: The major players are continuing to consolidate in the Canadian market. Loblaws, Sobeys, Metro, as well as non-traditional players like Walmart, Costco and Target are driving higher volumes to fewer large players. The economy of scale and the ability to order in full pallets or even full-trailer load quantities is increasing turns and reducing the amount of case picking that has been required in the past. As mentioned, some customers have found success in shipping to large distributers in the US and have been able to grow rapidly by tapping the much larger US market. We help our customers achieve their business goals by providing a specialized yet customized service. We understand how market demands change as the economy changes and we are able to help our customers navigate new
territories and find efficiencies in their distribution chain that will save them money.
CT&L: Last time we spoke, about a year ago, you were proceeding with a 12,000-pallet, fully automated warehouse in Ontario. What can you tell us about the new facility and how does it enhance your existing network? Laurin: We are continuing to expand our facilities in Ontario. In December, we completed a fully automated building in Mississauga and are well underway on another expansion that will be
operating later this summer. We are also expanding our Kitchener facility, bringing our capacity in Ontario to over 100,000 pallet positions. Both of our expansions are extensions of our current building and will allow us to expand without the additional costs of loading docks. We have also been able to grow with our customers and have picked up new business that has provided more opportunity to consolidate multiple customers on each outbound load. We are also working on a project to automate our facility in Montreal. We will be retrofitting the building with two aisle-changing stacker cranes from Germany that will eliminate the man-up narrow aisle forklifts that we have been using.
CT&L: Any future plans for more expansion?Laurin: Ontario continues to be a growth market for us and remains the hub of food manufacturing in Canada. We have purchased a 92,000-sq.-ft. manufacturing building adjacent to our Mississauga facility and are actively looking for a food manufacturer who requires additional space. Being directly attached to our warehouse would eliminate a costly handling transaction and eliminate the capital investment and headaches involved with running a cold storage. With nearly 40 years of experience in the industry, we continue to explore and develop new technologies and research emerging markets in order to build upon our past successes. CT&L
For more with Greg Laurin, go to www.ctl.ca.
specialized and customizedConestoga’s Greg Laurin on keeping up with the demands of
a customer base focused on efficiency and consolidation
Conestoga Cold Storage
AWARD WINNING SUPPLIERS AWARD WINNING SUPPLIERS AWARD WINNING SUPPLIERS
26 www.ctl.ca26 ct&l may 2013
procurementtransportation
Arecent industry conference was punctuated with heated comments on the increasing frequency of transportation RFP’s. Many know this three-letter acronym to mean Re-
quest for Proposal, although one carrier had another definition: “Really Friggin’ Pathetic.”
Having worked both with shippers to create and conduct RFPs, and as a carrier responding to many, I have seen first-hand how these exercises can fail; not only wasting huge amounts of time for transportation managers, but also for carriers who are asked to re-spond. Beyond the lost hours there is also the strain this causes on an important vendor relationship. Sometimes these costs are diffi-cult to identify, however, if you have used the services of a third party, you may be out tens of thousands of dollars, too.
The reality, though, is that RFPs will become increasingly com-mon as they are widely considered an important best practice in transportation management and the only true way to know if you are paying fair market rates. On top of this, carrier management is becoming more centralized and globalized making this the most practical way to manage carrier negotiations on a wide scale.
Given this inevitable trend, the pragmatic approach is to simply get better at conducting RFPs. Many would agree that the best re-sults will be achieved not by the proverbial bashing a carrier over the head, but rather when a carrier is able to showcase its most competitive proposal, and a shipper is able to match this with their
Avoid these 7 common mistakes
B y S c o t t I r v i n e
make the most of your transportation RFP
needs. The chance of achieving this can be increased by simply avoiding seven common mistakes.
> > 1. Over-SimplifyingAsking a truckload carrier for one rate from Texas to Ontario will definitely get you a roll of the eyes. There is a big difference be-tween a Dallas-Toronto rate and one for Laredo-Thunder Bay. This kind of pricing request puts your RFP on the backburner. Ensuring you understand how your carriers define their territories and price their services when constructing your bid templates will increase your chance of getting their best response.
> > 2. Not Considering the “Uncertainty-Cost”Incumbent carriers: know your freight. They know that you call at 2 p.m. for a 4 p.m. pick-up. That at Christmas you need an extra five trailers spotted. That your freight really is 20 lbs per cu. ft. All this knowledge allows them to price your service properly. New carriers don’t know this – so they either price it too high (just to make sure), or too low. Without investing time to fully educate potential carriers, shippers can either get uncompetitive pricing, or unprofitable freight – both undesirable outcomes.
> > 3. Providing Carriers with Bad or Insufficient DataIf a carrier receives an RFP that shows 250 loads per year, they
Scott Irvine is the principal of Ashcroft Management and creator of the Canadian General Freight Index, a key industry bench-marking tool. Contact Irvine at 416-577-4358 or [email protected].
27ct&l may 2013www.ctl.ca
might logically assume that this would be, on average, 0-2 loads per day. If, in fact, it turns out to be 10-12 loads per day when the plant runs a certain product line, there is a good chance that the carrier that is awarded this lane will not be able to meet demand, creating service issues, increased cost and an unhappy shipper. As much as possible, shippers need to provide carriers with data that accurate-ly reflects day-to-day operations.
> > 4. Underestimating the ChallengePerhaps one of the biggest mistakes a shipper can make is underes-timating the difficulty associated with preparing and conducting a comprehensive RFP. It may sound like a project you can give the new person, or the summer intern. But given the multitude of po-tential modes, lanes, carriers, weight breaks, service levels and so on, the analysis can easily grow to contain tens of thousands of data points. Adding to the complexity is the common need to “package” service points. A carrier is not going to take all of your “bad points.” You may need to package these with areas where they are less competitive to keep them interested. Managing these trade-offs and arriving at an optimized solution can be quite challenging. It takes a trained and experienced transportation manager equipped with suitable analytical tools to effectively conduct even a medi-um-scale RFP. Without this, your three-month project can easily stretch to a point where the rates submitted by carriers are no lon-ger valid, forcing you to cancel or restart the project.
> > 5. Not Leveraging RFP TechnologyAnyone contemplating a medium- to large-scale RFP armed with only spreadsheets is in for a rough ride. The requirement to man-age high volumes of data and then generate multiple award scenarios is a daunting task to take on with a manual solution. Thankfully, there are a number of technology-based op-tions available that can streamline and simplify the entire process. Not only does it make it easier to manage and manipulate all of the data, your carriers will thank you if it simplifies the process for submitting rates and reviewing results. However, be careful to only use tools built for transportation bids. Using generic bid management tools can force you into common mistake Number 1 above.
> > 6. Not Knowing If You Actually Saved MoneyImagine this scenario: You complete your RFP, and your analysis says you saved 10% on trans-portation costs, a fact your CFO is delighted to hear. Six months later your CFO informs you that transportation costs have actually risen 5% and he wants to know why. Without automat-ed tools able to perform a “what-if” analysis (e.g., What if we kept rates and carriers the same as before), answering this question will be difficult, time consuming and, of course, somewhat uncomfortable.
> > 7. Long RFIsMany RFPs also have an RFI (Request For In-formation) section, where they ask carriers to provide qualitative information on their opera-tions. Some of this is important fact-checking,
like DOT authorities, Certificates of Insurance, and so on. How-ever, many contain a lot of questions that can really test a carrier’s patience. Does the answer to “What is your five-year strategic plan?” really come into play when awarding freight? With some RFIs, it seems like a team of people brainstormed every conceiv-able question to ask a carrier. Ultimately, shippers are looking for a carrier’s most competitive proposal, and they are more likely to provide this when they receive RFPs asking for relevant informa-tion in a concise and easy to answer format. With a lot of RFPs re-quiring attention, a shipper will want theirs at the top of the pile. Focusing RFIs on the truly pertinent information required to make a yes/no decision on awarding freight will help make this happen.
The common theme through all of these points is simple: Good transportation RFPs are respectful of carriers’ needs for accurate and relevant information, while understanding that a significant amount of time goes into generating a response. A quick, efficient and accurate RFP process will pay dividends for the shipper and strengthen carrier relations, not strain them. Furthermore, to gen-erate additional value for the shipper, transportation managers need to be well informed about both the industry and the carrier base they are working with, as well as equipped with the right tools and processes to deliver a successful result. CT&L
OUR PROMISES GET DELIVEREDHAVE A PROMISE THAT JUST HAS TO GET DELIVERED SOMEWHERE IN NORTH AMERICA?
WE CAN HELP.Operating from seven terminals in Canada and the USA, we offer swift and reliable truckload service to most of North America. That, combined with our no nonsense commitment to customer service has helped Penner become the transportation provider of choice for Manitoba companies who need to keep their promises, wherever they need to ship in North America.
North America wide Truckload serviceOne time and multiple shipment contractsSatellite trackingWeb trackingImagingCSA, PIP, C-TPAT, FAST, ACE, ACI
n
n
n
n
n
n
28 ct&l may 2013 www.ctl.ca
dash board
TransCore’s Canadian Freight Index surges in MarchTransCore’s Link Logistics Canadian Freight Index for the spot market rebounded from low levels in February with a 24% in-crease in month-over-month volume. Year-over-year volume remained behind March 2012 levels by 11%.
First quarter of 2013 volume surpassed the previous quarter by 10%, and was well above the recessionary levels seen for the first quarter of 2009 by 73%. Volume was 6% lower, however, compared to the first quarter of 2012.
Overall load volumes for cross-border postings and intra-Canada postings averaged at 69% and 27%, respectively, of the data submitted by Loadlink’s Canadian-based customers. Cross-border loads destined for provinces within Canada were down 20% year-over-year compared to March 2012. However, cross-border loads from Canada to the US revealed a 7% increase year-over-year.
The month-over-month and year-over-year equipment post-ings equally displayed a 2% increase for the month of March. Although load volumes showed double-digit quarter-over-quar-ter improvement, equipment postings dropped by 4% compared to the previous quarter. The equipment-to-load ratio for March improved substantially to 2.08 from 2.52 of the previous month.
TransCore’s Loadlink freight matching database constitutes the largest Canadian network of carriers, owner/operators, freight brokers and intermediaries. More than 13 million full loads, LTL shipments and trucks are posted to the Loadlink net-work annually. As a result of this high volume,TransCore be-lieves the Index is representative of the ups and downs in spot market freight movement.
The first six columns include monthly index values for years 2008 through 2013. The seventh column indicates the percent-age change from 2012 to 2013. The last column indicates the percentage change from the previous month to the current month. For the purpose of establishing a baseline for the index, January 2002 (index value of 100) has been used.
Cross-border truckload freight costs drive increase Total cost of ground transportation for Canadian shippers in-creased by 2.4% in February when compared with January re-sults, results published by the Canadian General Freight Index (CGFI) indicate. The Base Rate Index, which excludes the im-pact of accessorial charges assessed by carriers, increased by 1.9% when compared to January. Average fuel surcharges assessed by carriers have seen an increase from 20.36% of base rates in January to 21.53% in February.
“Cross-border truckload continued to drive the increase com-bined with fuel being at the highest level since May 2012,” said Doug Payne, president and COO of Nulogx.
The CGFI is sponsored by Nulogx, a transportation manage-
ment solutions provider, and is used by shippers and carriers to bench-mark performance, develop business plans, and secure competitive agreements. It was developed with the assistance of Dr. Alan Saipe. The most recent results are available at the CGFI Web site: www.cgfi.ca.
Domestic business drives railway freight increase as US freight drops Freight carried by Canadian railways reached 25.7 million tonnes in February, a 1.0% rise over the same month last year. The gain was en-tirely due to increased rail traffic within Canada as shipments from the US fell during the month. Within Canada, combined loadings of non-intermodal freight (i.e., cargo moved via box cars or loaded in bulk) and intermodal freight (i.e., cargo moved via containers and trailers on flat cars) rose 1.5% to 22.7 million tonnes.
Non-intermodal loadings rose 1.3% to 20.4 million tonnes in February. Strong freight volumes related to potash; fuel oils and crude petroleum; and fresh, chilled or dried vegetables were key factors behind this growth as less than half of the 64 commodity classifications loaded by the railways rose during the month.
The increase in fuel oils and crude petroleum loadings represents both the highest volume of shipments and the rate of growth the commodity has seen for the month of February since 1999.
On the other side of the spectrum, the largest declines in loadings were observed for shipments of wheat, colza seeds (canola) and iron ores and concentrates. The decline in these commodities alone was greater than the drop in tonnage from the remaining commodities that fell dur-ing the month. Intermodal loadings advanced 3.1% to 2.3 million tonnes in February. The gain reflected increased loadings of both containerized cargo shipments and trailers loaded on flat cars.
The Western Division accounted for 60.6% of the domestic freight loadings, up 1.3% from the same month in 2012 to 13.7 million tonnes. The remainder was loaded in the Eastern Division, which saw a slightly stronger rate of growth than its counterpart, increasing 1.8% to 8.9 mil-lion tonnes.
Rail shipments from the US fell during the month of February, de-clining 2.9% to 3.0 million tonnes. The drop was solely attributable to non-intermodal loadings, which decreased 4.0% to 2.8 million tonnes.
TransCore Canadian Spot Market Freight Index 2008-2013
2008 2009 2010 2011 2012 2013 % % Change Change
Y-O-Y M-O-M
Jan 214 140 171 222 220 228 4% 25%
Feb 217 117 182 248 222 198 -11% -13%
Mar 264 131 249 337 276 245 -11% 24%
Apr 296 142 261 300 266
May 316 164 283 307 301
Jun 307 185 294 315 295
Jul 264 156 238 245 233
Aug 219 160 240 270 235
Sep 203 180 234 263 200
Oct 186 168 211 251 215
Nov 143 157 215 252 215
Dec 139 168 225 217 182
TransCore Canadian Spot Market Freight Index 2008-2013
inside the numbers
HAPPYCAMPERSWHAT DRIVES JOB SATISFACTION FOR CANADA’S SUPPLY CHAIN PROFESSIONALS?
Canada’s supply chain professionals are growing happier in their jobs, our annual research indicates. Almost 9 in 10 (87%) indicated they are satisfied in their jobs A growing number are indicating they are “very satisfied” in their jobs. In last year’s survey, 31% put themselves down as “very satisfied” compared to 27% back in 2011 and 24% in 2010. With such positive job satisfaction, it comes as no surprise that 78% see themselves staying with the same company for the next two years – 40% in the same job and 38% in a higher position.
Our Annual Survey of the Canadian Supply Chain Professional, conducted in partnership for the first time last year with our sister publications MM&D and purchasingB2B and sponsored by PMAC, also takes a more granular view of job satisfaction, examining different aspects of employment and their importance to job satisfaction. A gap analysis contrasting the importance supply chain professionals place on the top 10 aspects to job satisfaction with how well they perceive their companies to be performing in those areas, however, does reveal some challenges. For example, there is a 27% gap between how important performance recognition is deemed to be and how satisfied respondents were with their companies efforts on this aspect. The gap is 24% when it comes to salary.
Look for an invite to this year’s Annual Survey of the Canadian Supply Chain Professional in your mailbox in the second half of June.
29ct&l may 2013www.ctl.ca
JOB SATISFACTION
SOMEWHAT SATISFIED56%
VERY SATISFIED31%
NOT VERY SATISFIED10%
NOT AT ALL SATISFIED2%
PLANS FOR NEXT TWO YEARS
WORKING IN SAME JOB40%
GETTING PROMOTED (SAME ORG.)38%
CHANGING CAREERS6%
RETIRING5%
WORKING IN ANOTHER ORG.26%
SELF- EMPLOYED/ CONSULTING
6%
Competitive salary 97% of respondents
Healthy work/life balance 96%
Support for professional development 91%
Comprehensive benefits 94%
Vacation time 93%
Job security 92%
Performance recognition 94%
Relationship with co-workers 95%
Influence you have on the job 95%
Relationship with superiors 95%
ASPECTS OF EMPLOYMENT MOST IMPORTANT TO JOB SATISFACTION
Total Satisfaction-Total ImportanceGAP 2012
Competitive salary/Your salary -24%
Performance recognition/ Performance recognition you receive
-27%
Support for career/ professional development/Support for Career/
professional development
-20%
Influence you have on the job/ Your influence on the job
-16%
Healthy work/life balance/ Your work/life balance
-14%
Relationship with superiors/ Your relationship with your superiors
-10%
Comprehensive benefits package/ Your benefits
-13%
Vacation time -10%
Job security -7%
Relationship with co-workers/ Your relationship with co-workers
-1%
GAP analysis – total satisfaction vs total importance
TOTAL SATISFACTION – TOTAL IMPORTANCE
GAP 2012
30 ct&l may 2013 www.ctl.ca
the bigger picture
The fourth quarter 2012 financial results for America’s leading truckload carriers tell a story of an industry going through transformation
and change. The most dramatic poster boy of this change can be seen at the largest carrier in the group, J.B. Hunt. Basic point-to-point truckload carriage has fallen so far that it is almost irrelevant in its overall business results.
In Q4, Hunt generated about $1.33 billion in rev-enue (including fuel surcharges), but only about $112 million of that came from regular truckload carriage (not including fuel surcharge). That’s just about 9% of revenue, down from 12% the previous year. Basic truckload’s percentage of total profit at Hunt is even smaller, at just 4%.
But Hunt’s strategy of focusing on intermodal and dedicated transportation seems to be working. Its in-termodal business, which now accounts for 73% of total profits, saw revenue grow another 12.7% in Q4 and over 14% for the year.
Other carriers in the sector have taken notice. Werner’s trucking revenue declined 0.1% for the full year while its Value Added Services business, which includes dedicated and intermodal, rose 10%, as it has followed in the footsteps of J.B. Hunt. Werner’s Specialized Services unit, primarily dedicated, ended the quarter with 3,295 trucks – equal to 46% of its total fleet.
While the major truckload carriers reported growth in these two business sectors, growth in their core business was restrained by several key factors. Werner reported that, “There are several truckload capacity constraints including an older industry truck fleet, the higher cost of new trucks and trailers, significant safety regulatory changes and a challenging driver market.”
In fourth quarter 2012, Werner averaged 7,156 trucks in service and ended the quarter with 7,150 trucks. In a statement, Werner commented that “from 2007 to 2010, the number of new class 8 trucks built was well below historical replacement levels for our industry. This led to the oldest average industry truck age in 40 years. Carriers were compelled to begin up-grading their aging truck fleets, which led to increased
replacement purchases of new and later-model used trucks during 2011. Orders for new class 8 trucks slowed during 2012. We believe these orders slowed as current freight rate relief is not keeping pace with the increased costs and capital requirements for new and much more expensive EPA-compliant trucks.”
Swift, another large US truckload carrier, reduced its total tractor capacity by 4.2% year-over-year in the fourth quarter. It increased its capacity in its dedicated and intermodal divisions by adding 2,500 intermodal containers to its fleet last year. Swift saw dedicated and intermodal revenues jump 14.9% and 40.2%, respectively.
Are these trends likely to continue for the rest of the year? The major railroads are counting on it. The recent FMCSA ruling will result in the new Hours-of-Service (HOS) regulations moving forward without the three-month delay requested by the American Trucking Associations. This will likely cost the motor carrier industry 3-5% in productivity. Truckload ca-pacity is not increasing, as evidenced by the fact that only two of seven truckload carriers tracked increased their fleets during the prior quarter. Truck drivers are not becoming more plentiful. If the construction in-dustry continues to gain momentum, this may place more demand on the trucking industry to find trucks and drivers.
Higher operating costs are encouraging truck-ing companies to focus on shorter lengths of haul, less than 700 miles versus lanes that are over 1,000 miles. Truckers are shifting to intermodal service on the longer lanes. Another factor that is support-ing growth in intermodal volumes is transloading. This process involves the transfer of the contents of 20- and 40-foot containers at ports into 53-foot intermodal containers.
Dedicated transportation is also attractive since it allows carriers to secure consistent, contractual rev-enue streams. Truckers can invest in new equipment knowing they have a secure revenue flow to pay for their equipment. If the economy continues its slow pace of growth, look for large and mid-size truckers to focus on these faster growth sectors. CT&L
transformation in truckingWhy major truckload carriers are shifting their focus
to dedicated and intermodal
Dan Goodwill, president of Dan Goodwill and Associateshas more than 20 years
of experience in
the logistics and
transportation industries in
both Canada and the US.
He has held executive
level positions in the
industry, including
president of Yellow
Transportation’s Canada
division, president of
Clarke Logistics, general
manager of the Railfast
division of TNT, and
vice-president of sales
and marketing at TNT
Overland Express.
Goodwill is currently
a consultant to
manufacturers and
distributors, helping
them improve their
transportation processes
and save millions of
dollars in freight spend.
He can be reached at
Who are you reaching out to?
Coming to your rescue. It’s what we do best.
No other Canadian carrier has the resources we do on both sides of the border. We enlist the people, technology and processes to speed things up, not slow them down.
We take a proactive approach to enhancing the efficiency of your supply chain on both a day to day basis and when you need action now. Who are you reaching out to? Take another look at Vitran!
TF : 1.800.263.0791 E : [email protected]
Who are you reaching out to?
Coming to your rescue. It’s what we do best.
No other Canadian carrier has the resources we do on both sides of the border. We enlist the people, technology and processes to speed things up, not slow them down.
We take a proactive approach to enhancing the efficiency of your supply chain on both a day to day basis and when you need action now. Who are you reaching out to? Take another look at Vitran!
TF : 1.800.263.0791 E : [email protected]
BILLION$77
Small businesses account for
in exports each year.
CANADIAN SMALL BUSINESS
are small businesses.
JOBS in the last decade.
98%of Canadian companies
559,000have created
Visit ups.com/mybusiness to get started.
*See ups.com/mybusiness for offer Terms and Conditions.
20% off UPS services.
Save
Cut here to display the above sign in your business.
UPS is proud to support the Canadian small business community with fl exible delivery options and technology designed just for you.And now Canadian small businesses can
