Published Since 1898

SEPTEMBER 2012

LOGISTICSEDUCATIONCILTNA head charts new course

RAIL REVIEWHow to resolve painpoints with customers

OUTSOURCINGNew Era puts cap in freight invoice costs

THE CROPCream of

Our 11th Annual Shipper’s Choice Awards Survey sets industry benchmarks for performance excellence and identifies the carriers who surpass them

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ct&l september 2012 3

VOLUME 115 ISSUE NO. 8 SEPTEMBER 2012

Published Since 1898

Our 11th Annual Shipper’s Choice Awards Survey sets industry benchmarks for performance excellence and identifies the carriers who surpass them. . . . . . . . . . . . 17

COVER

Features 16. . . CHARTING NEW COURSEThe Chartered Institute of Logistics and Transport in North America’s high profile president and chair is seeking to boost membership and push into the US.

34. . . THE RIGHT TRACKAs Ottawa prepares legislation to remedy rail service concerns, CN argues its commercially negotiated efforts to reduce customer pain points are the better way to go.

40. . . MAJOR LEAGUE SAVINGSHow New Era put a cap on freight invoice processing costs.

4 THE VIEW WITH LOUEditorial director Lou Smyrlis gives a detailed rundown of the upcoming educational event of the year: Surface Transportation Summit 2012.

6 IN THE NEWSFMC issues controversial report on US traffic ‘diversion’; prospective marine services fee increase stirs inland carriers; and U.S. Xpress, Maritime-Ontario announce North American shipping partnership.

42 DASHBOARDTransCore’s Canadian Freight Index volume posts second-best month in 2012; ground transportation costs drop in May; Canada’s rail freight traffic drops slightly in May; US for-hire truck tonnage bounces back in June; and more.

45 INSIDE THE NUMBERSHow confident are supply chain professionals about the future? Plus: is trucking capacity poised to become an issue for shippers?

46 THE BIGGER PICTUREWith manufacturers bringing their operations back to North America, what impact will ‘reshoring’ have for supply chain strategies?

Departments

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!

Cream ofthe crop

44 ct&l september 2012

While I’ve been enjoying the sunny summer weather at my home in the beautiful Kawarthas, I must admit to

thinking ahead to the fall and the 2012 Surface Transportation Summit.

Why? To put it simply, be-cause this is the most ambitious conference we have ever put to-gether for transportation profes-sionals and we can’t wait to share it with you this Oct. 17 at the Capitol Banquet Centre in Missis-sauga. As with past years, we have joined forces with Dan Goodwill and Associates and our sister pub-lication Fleet Executive to pull the event together. What’s differ-

ent this year is that we will be bringing both sides of the transportation equation together under the same roof.

Transportation and logistics practices are becoming increasingly complex and an effec-tive supply chain is becoming recognized as a competitive differentiator. At the same time, there are lingering questions about capacity, pricing and service standards. By bringing shippers and carriers together in an education-al setting, we are looking to foster productive dialogue and networking.

In addition, the timing for the conference is different. In previous years, we held our confer-ences in the spring. We have moved it to the fall to provide attendees with strong knowledge of trends and issues in transportation just as they become involved in the critical budget season. Of course, Carlos Gomes, senior economist at Scotiabank, will again kick off the conference with his insights on where the economy in gen-eral and transportation in particular are headed. We will also be exclusively unveiling the results from our latest national annual Transportation Buying Trends and Equipment Buying Trends research at the event.

Great speakers make for a great conference and I believe this is the strongest lineup of speakers we have ever put together.

This year’s Summit will feature a new track that will provide CEO perspectives on some of the major modes of surface transpor-tation. Douglas J. Harrison, CEO of Day and

Ross General Freight, will address the LTL freight market; Greg Hewitt, president of DHL (Canada), will focus on where the cou-rier business is going; and Mark Seymour, CEO of Kriska, will provide his perspective on the truckload market.

This will be followed by a panel discussion on perhaps the most crucial issue for shippers and carriers: freight rate negotiations. Repre-sentatives from two of Canada’s largest ship-pers, Brian Springer, vice-president of trans-portation at Loblaw Companies, and Michael Tan, divisional vice-president of supply chain and transportation at Hudson’s Bay Company, will engage in a dialogue with representatives of two of Canada’s largest motor carriers, Dan Einwechter, CEO of Challenger Motor Freight, and Wes Armour, president and CEO of Ar-mour Transportation Systems.

The afternoon will feature parallel tracks focused on shipper and carrier issues. The first shipper track session will address how major corporate transformations have been driven by changes in transportation strategy. Mark Gal-lant, director of supply chain transportation for Home Depot, Jack Ampuja, president and CEO of Supply Chain Optimizers, and Jim McKay, director of transportation at Wal-Mart Canada, will each address a major transporta-tion initiative that they undertook to trans-form their companies or client operations.

Business intelligence in transportation has become a new buzz word over the past couple of years and it’s the focus of the second ship-per track session. Steve Morandi, analytics so-lutions leader at Deloitte Managed Services and Rick Tucker, senior vice-president of glob-al technologies at Lean Logistics will speak to how business intelligence in transportation is helping improve the performance of transpor-tation operations.

In addition to the excellent educational content, there will be opportunities through-out the day and at the end of the day to meet new carriers and shippers and to expand your personal network.

To find out more and to register, go to www.surfacetransportationsummit.com. And also check the #Tsptnsummit hashtag on Twitter for important updates. CT&L

Lou Smyrlis, MCILT

­

Audit Bureau of Circulations

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 115 Issue No. 8 September 2012

EDITORIAL DIRECTORLou Smyrlis (416) 510-6881

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Surface Transportation Summit 2012Don’t miss the educational event of the year

the view with Lou

Surface Transportation Summit 2012Don’t miss the educational event of the year

Find us on Twit ter at :@ C T L M a g@ L o u S m y r l i s@ A d a m L e d l o w@ J u l i a K u z e l j e v i c@ J a m e s M e n z i e s

Web TV: Transportation Matters

• GET YOUR GAME ON: The scoop on CITT’s upcoming Reposition 2012 conference.

• TRANSPORTATION PLAYS UP INTERMODAL STRENGTHS: In many countries intermodal networks seen as key to future transport growth.

• ADDRESSING NEW BUSINESS NEEDS: Inside FedEx’s new Markham sorting facility.

5ct&l september 2012

ONLINE

What’s on CTL.ca?

• DEATH COMES TO BLOODMOBILE:

Brian Death of JD Smith and Sons makes his 100th blood donation to Canadian Blood Services, talks about why he does it – and why you should, too.

Blog bits Search our blog archives at ctl.ca • Dan Goodwill of Dan Goodwill and Associates branches out with the launch of his daily news feed, “Dan’s Transportation Newspaper.”

• Cole Group’s Laurie Turnbull ponders transportation’s role in the value chain.

Salary calculator: Discover your occupation’s average salary range with the PMAC/Purchasingb2b salary calculator.

Event: CAMSC event at Woodbine racetrack offers tips on sourcing from diverse suppliers.

Feature: Searching for the most ethical route in procurement.

3PL Finder: A comprehensive directory of Canadian third-party logistics providers.

Light Load: Freeze-drying a supply ship.

Webinar: Cross-border trade, wooden pallets and changing regulations.

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Blog bitsBlog bitsSearch our blog archives at ctl.caSearch our blog archives at ctl.ca

• Dan Goodwill of Dan Goodwill and Associates branches out with the launch of his daily news feed, “Dan’s Transportation Newspaper.”

• Cole Group’s Laurie Turnbull ponders transportation’s role in the value chain.

6 ct&l september 2012 www.ctl.ca6

FMC issues controversial report on US traffic ‘diversion’By Lou Smyrlis

The Federal Maritime Commission’s (FMC) study on factors that drive cargo shifts from US ports to Canadian and Mex-ican ports is drawing sharp reaction from marine industry stakeholders in both Can-ada and the US.

The “Study of U.S. Inland Container-ized Cargo Moving Through Canadian and Mexican Seaports” examined the competi-tiveness of North American ports; re-viewed the history and theories of cargo diversion and the harbour tax; analyzed ocean freight rates, transit times and rail charges; and identified other potential rel-evant factors influencing cargo movements.

The study concluded that there are

many factors that come into play when shippers decide to use one port over an-other. These include overall cost savings in their shipments, mitigating risk by not rely-ing too heavily on a particular port, transit-time advantages, avoidance of the harbour tax and rail rate disparities.

The study claims a significant amount of containerized imports moving through West Coast ports in Oakland, Calif.; Port-land, Ore.; and Seattle and Tacoma, Wash., could be vulnerable to Canadian routing. The Canadian government meanwhile counters out that over a 10-year period, only 2.5% of US-bound cargo was import-ed via Canadian ports.

Numbers aside, the important question – and what is creating heated debate on both sides of the border – is whether Ca-nadian ports on the West Coast are deliber-

ately diverting US import containers from Asia through Port Metro Vancouver and Prince Rupert through “unfair” practices.

“This study provides facts US policy-makers can rely upon as they make the im-portant choices affecting this country’s ability to compete in a global transporta-tion marketplace,” said FMC chairman Richard Lidinsky, Jr.

Lidinsky had previously been quoted in US media reports as referring, among other things, to the “possible subsidy of cargo rail moves through Canada” and to “weaker container inspections” – singling out Prince Rupert.

Over the past five years, the share of Port Metro Vancouver and Prince Rupert in total North American West Coast box cargo has risen from 9% to about 13%, and both ports have announced capacity expansion plans..

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CN operates a rapid, double-stack ser-vice between Prince Rupert, Chicago, Memphis and the Gulf of Mexico. Jean-Jacques Ruest, executive vice-president and chief marketing officer of CN, rejected as unfounded any suggestion that the com-pany is subsidizing rates for ocean carriers and their customers using the Prince Ru-pert gateway in order to establish that port as a competitor North American gateway.

“CN is a market-driven company that operates in highly-competitive commercial markets, and customers are making choices in those markets. Sometimes they choose Canadian gateways for US customers and sometimes the reverse.

“Prince Rupert is up to 58 hours closer to Asia than other West Coast ports. This saves the ocean liners time and money each way, not to mention the benefits de-rived by cargo owners through reduced inventory carrying costs,” he told Canadi-an Transportation and Logistics’ marine ex-pert Leo Ryan when we first wrote about this issue last year.

If the US Congress is influenced by Li-dinsky and the report it could decide to launch retaliatory trade actions with pun-ishing new fees imposed on containers from overseas entering the US after first being unloaded in Canada’s West Coast. Such action would be detrimental to our West Coast ports.

The report is the result of a study re-quested by Washington State senators Patty Murray and Maria Cantwell. The senators pointed out that a growing num-ber of containerized US imports from Asia have been moving through the ports of Vancouver and Prince Rupert en route to the US Midwest through cross-border rail. They affirm that the Harbor Mainte-nance Tax (HMT), a levy imposed since 1986 on shippers based on value of goods to help finance maintenance dredging, “may be a key factor causing US ports to lose a growing share of imported contain-er cargo from Asia.”

They further argue that “non-US ports are able to claim a substantial per-contain-er cost advantage over US seaports based on the HMT alone” and that this amounts to “unfair disparity,” provoking lost US jobs.

The HMT is not collected at US bor-der crossings when cargo enters the

country on trains from Canada after be-ing unloaded at Canadian ports and Sen-ators Murray and Cantwell suggested that should change. Some US lawmakers were considering attaching a US$140

per-container levy on cargo entering the US after coming through B.C. ports. The FMC report itself does include in its sug-gestions on how Congress could proceed, mention of a proposal from a former

8 ct&l september 2012 www.ctl.ca

in thenews

commission chairwoman, Helen Bentley. Earlier this year, Bentley said the Harbor Maintenance Tax should be replaced with a US$100 fee imposed on every cargo container entering the US from a

Canadian port.Canadian authorities point out there is

minimal to no dredging required in Cana-da’s natural deep water West Coast ports and such a levy amounts to an unfair im-

pediment on the efficient movement of cargo between the two countries.

“Canadian port authorities operate as financially independent entities that com-pete effectively with ports across North America. While US ports fund harbour maintenance through a nationally im-posed fee, Canadian ports fund harbour maintenance, like dredging, through har-bour dues set by each port authority and dependent on cost,” pointed out Robin Silvester, chair of the Association of Cana-dian Port Authorities (ACPA).

Don Krusel, president and CEO of the Prince Rupert Port Authority, stressed: “The advantages shippers are realizing through utilizing the Port of Prince Ru-pert and the Northern Trade Corridor (in British Columbia) are not the result of subsidy or lax security, but rather the speed and reliability in service attributed to efficient operations.”

When FMC late last year in a Notice of Inquiry solicited views and information from stakeholders on both sides “concern-ing factors that may cause or contribute to the shift of containerized cargo destined for US inland points from US to Canadian and Mexican seaports” it received about 75 responses, most from American interests.

The overwhelming majority of the re-sponses indicated Canada wasn’t doing anything underhanded. The FMC report itself found that carriers shipping cargo through Canadian and Mexican ports vio-late no US law, treaty, agreement, or FMC regulation. The US ambassador to Canada, David Jacobson, downplayed the report as “good news” for Canada.

“It emphasizes the need for competition ... from where I’m sitting, I read this as good news for Canadian ports,” he said in a Canadian Press interview.

Two of the five members on the FMC, however, disagree. In fact, the report, like much else in US politics these days, split the commission along party lines. Those in favour of the report are Democrats; those opposed are Republicans.

Rebecca Dye and Michael Khouri re-leased statements that sharply criticized the agency’s study into allegations that Canada was luring lucrative cargo away from US West Coast ports.

“I believe the study fails to assist or

10 ct&l september 2012 www.ctl.ca

in thenews

advance meaningful discussion or debate concerning either the federal HMT or the broader subject of a national transportation policy,” Khouri said in his statement.

Of particular concern to Dye was the

suggestion that the port of Prince Rupert, B.C., lacks the type of security available at other destinations, including American ones, because it is not part of the Contain-er Security Initiative, a program imple-

mented 11 years ago by US Customs and Border Control to pre-screen US-bound container cargo.

Dye said the point was a silly one to raise, while a Canada-US trade expert called it a potentially dangerous “red herring.”

“While the Container Security Initiative was begun in the fall of 2001, the Port of Prince Rupert did not begin operations un-til 2007,” Dye said in her statement. “Ports were selected for the Container Security Initiative according to greatest volume of cargo destined for the United States.”

Canadian port security practices are air-tight, she said, with all US-bound cargo ar-riving in Canada screened via radiation at the port, and then screened again when it crosses the border via Canadian railways.

Prince Rupert, Dye also noted, is a key player in the Canada-US Beyond The Bor-der initiative.

“The Beyond the Border Action Plan ... selected Prince Rupert for a pilot project for a Cargo Targeting Initiative, which will involve perimeter vetting and examination of inbound marine cargo at the port and destined for Chicago by rail.”

In its official response to the US con-cerns, Ottawa pointed out that a key fea-ture of Canadian port authorities is that they must be financially self-sufficient. CPAs finance their operations from their revenues and borrow from commercial banks for capital projects. They do not re-ceive appropriations or funding from the government to meet operating costs or deficits. They do not receive federal gov-ernment loans or any federal government guarantees of commercial loans. Nor can they pledge federal real property as securi-ty for any borrowing, benefit from any in-terest free loan or bond issue status. And they don’t have taxing powers.

Prospective marine services fee increase stirs inland carriersBy Leo Ryan

Held in late June at the Mont Tremblant resort, the 76th Annual International Joint Conference of the Canadian Shipowners Association and the US Lake Carriers As-sociation reviewed current economic and regulatory trends and challenges, as in the

On October 17th 2012, please plan on joining the country’s top Transportation Executives

for a day of education and networking.

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11ct&l september 2012www.ctl.ca

past. But a surprise plan (trial balloon?) unveiled by Marc Grégoire, commissoner of the Canadian Coast Guard to substan-tially increase Marine Services Fees (MSFs) sent shock waves through Cana-da’s marine industry.

The MSFs are charged for such services as aids to navigation and icebreaking.The fee increases would reportedly add up to tens of millions of dollars a year versus about $2 million at present, thereby dra-matically adding to the operating costs of Canadian carriers on the waterway.

Stephen Brooks, vice-president of gov-ernment affairs at the Ottawa-based Chamber of Marine Commerce, questions whether the Coast Guard will be able to implement such a measure if MSF fee in-creases are considered “user fees” per se un-der the federal User Fees Act of 2004.

In an interview, Brooks noted that among other requirements the government must conduct an impact study, carry out consulta-tion with industry and establish standards comparable with other countries. He points out “it would be hard to justify the differ-ence, for instance, with the US that provides icebreaking at no cost to industry in virtual-ly the same Great Lakes waters.”

A highlight of the event was the speech of a well-known figure in international shipping circles: Peter Hinchliffe, Secretary General of the International Chamber of Shipping (ICS). He did not disappoint his audience by taking to task an ever-growing landscape of regulations that further add to the costs of running a ship.

Hinchliffe had some pointed comments on a recent statement by Christine La-garde, head of the International Monetary Fund, on ways to finance the Green Fund of the UN Framework Convention on Cli-mate Change (UNFCCC).

“Shipping should not lie back and ac-cept the role of cash cow in this debate,” Hinchliffe said before citing this statement from Lagarde: “Charges on international aviation and maritime emissions would raise about a quarter of the $100 billion needed for climate adaptation and mitiga-tion in developing countries – resources that developed countries have committed to mobilize by 2020.”

According to Hinchliffe, “Such bland statements seem to pay no regard to the

wider impact of increased charges on mari-time transport and on developing countries whose trade cost is likely to be dispropor-tionately affected.”

Perhaps even more telling, in his view, the main focus appears “entirely focused on delivering hard cash rather than actually reducing CO2 emissions.”

Terence Bowles, president and CEO of the St. Lawrence Seaway Management Corporation, said he was “cautiously opti-mistic” in forecasting a 3% growth in cargo volume this year. This would bring it to about 38.6 million tonnes, or close to the pre-recession level.

Bob Sarvela, from Midwest Energy Re-sources Company (MERC), spoke glow-ingly about “the Northern Route” to Eu-rope through the Great Lakes and Seaway, asserting it offered faster transit times by six days than the traditional Gulf Coast

shipping route. In partnership, notably with Canada Steamship Lines, this big Wis-consin-based enterprise shipped 370,000 tonnes of coal from the Powder River Basin last year to Rotterdam. This year, thanks to a new contract, MERC predicts a signifi-cant increase to 1.5 million tonnes.

U.S. Xpress, Maritime-Ontario announce North American shipping partnershipU.S. Xpress Enterprises and Maritime-On-tario Freight Lines Limited are partnering to launch a cross-border North American shipping solution.

Through the partnership, each compa-ny will leverage its dominant national net-work to move freight across the border and throughout each country, creating one seamless North American network, cover-ing the US, Canada and Mexico.

12 ct&l september 2012 www.ctl.ca

CITT Grad Insert for CTL - 2012 - FINAL - OUTLINES.indd 1 8/15/2012 11:35:21 AM

in thenews

This unique partnership comes as a re-sponse to customer demand for a one-stop direct carrier option with the geographic footprint, ease of access and capacity they need to take their freight safely across the

border and to its final destination without the need for third-party vendors.

Under terms of the agreement, M-O will carry the freight across the Canada- US border crossing and U.S. Xpress will

be responsible for Mexico-US border crossings. The border crossings served through the partnership are Buffalo-Niag-ara and Detroit-Windsor. To ensure the security of the freight and facilities, M-O has completed the requirements and test-ing necessary to earn its C-TPAT certifica-tion in Canada and PIPS certification in the US, and U.S. Xpress has been recog-nized as C-TPAT compliant.

“The bottom line here is that cross-bor-der shipping is not easy, and there are not many good options available to carriers who want one point of contact,” said John White, executive vice-president of sales and mar-keting, U.S. Xpress. “This service brings to-gether two like-minded, high performing companies to give shippers the convenience and peace of mind that comes from dealing with one trusted carrier who can get their goods where they need to go safely and on time, effectively erasing the border and the issues associated with crossing it.”

The service has been designed to cover the widest possible range of needs and price points and will employ truckload, re-frigerated, dedicated and some limited LTL options through team and solo arrange-ments. To take advantage of each compa-ny’s strong rail presence, intermodal ser-vices will also be used as appropriate.

While U.S. Xpress and M-O believe that the retail sector will generate the greatest demand for this service, it is suited to everything from pharmaceuticals to gro-cery to manufacturing.

“While many companies on both sides of the border claim to have an internation-al presence, the extent of their reach is lim-ited,” said Maritime-Ontario chief operat-ing officer, Bill Henderson. “With our partnership, we will have more than just a few trucks over the border. Both compa-nies offer best-in-class transportation solu-tions and are recognized premium brands in their respective countries. Needless to say, we believe this is a true game-changer for North American freight hauling.”

For all your daily news from the transportation and logistics industry, visit our Headline News section online at www.ctl.ca or follow us on Twitter at @CTLMag.

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16 www.ctl.ca16 ct&l september 2012

The Chartered Institute of Logistics and Transport in North America (CILTNA), which promotes the recognition of excellence in transportation and logistics through confer-

ences, public forums, education, and liaison throughout the sec-tor, is charting a new course for itself. It’s aiming to increase mem-bership in the chapter and develop more Memoranda of Understanding with educational institutions, to spread the word about careers in logistics and transport.

Bob Armstrong, who was recently appointed president of the chapter following the June retirement of Ed Cuylits, FCILT, RPP as executive director, told Canadian Transportation and Logistics he has plans to build the chapter.

“I’ve had an awful lot of phone calls from people who have the CILT designation, but who haven’t been active. A lot of people have moved here from other countries and have the designation, but have not been involved in the chapter. It’s a global designation; I’m a global person and it’s a global world,” he said.

The honourable David Collenette, PC, FCILT, chair of CILT-NA, told CT&L he has always been a supporter of CILTNA in his former role as minister of transport (1997-2003). He came on board as chair in November for a two-year term.

“The great thing is it’s extremely well run, it’s under royal char-ter, and very well known in the commonwealth countries. But it’s not well known in North America. The United States is very tough to break into and that’s one of the goals that we want. One of the things that I spearheaded is developing MOUs with educational institutions,” said Collenette.

“We wanted to take the organization onto a different path. We want it to grow and have the same relevance that our sister organi-zations have had in the UK, Hong Kong and India. We want to re-ally increase the membership and grow the organization, develop chapters, develop MOUs with universities in Canada over the next 18 months, then move into the US.”

“It’s about education. The key is to convince young people to come into transportation and logistics as a career. While the num-ber of the (chapter members) is small, I think that we could in-crease those numbers. I just want to make sure there is a lot of education and awareness of transportation and logistics as a pro-fession,” said Armstrong.

So far, CILTNA has signed Memoranda of Understanding with Dalhousie University in Halifax and Ryerson University in Toronto, focused on promoting research in transportation and on defining a program of courses that can qualify for credit to a CILT professional designation. Interest is high in developing a program promoting students with an accreditation recognized

around the world.A memorandum with University of British Columbia’s Institute

of Technology is also in the works.“The great thing about CILT is it does offer a professional des-

ignation that is highly coveted in many parts of the world. With so many of our young people coming from immigrant families, it’s important to offer them an international designation. I think we’re doing our part for Canadian industry by trying to enhance the education of logistics and transport professionals in the country,” said Collenette.

He also commented on CILTNA’s 11th Annual Transportation Situation and Outlook Conference, held April 30 in Ottawa, which examined the challenges that exist for the North American trans-portation and logistics industries in a slow growth economy.

“We really haven’t recovered from the slump in 2008. It has been a challenging environment. The high degree of uncertainty, and slow-down in China, means a slowing down of our exports, reducing con-tainer throughput. We’re holding our breath on what happens with Europe, the biggest market for Chinese goods,” he said.

Collenette said that the Canadian government should be putting more efforts into certain markets, such as Brazil, China and India.

“There’s no question that we’ve always had the challenge of living next to the US and being a big seller into the US. The ups and downs of the US market affect us, and I think that the government, going back to the Chretien government and 9/11, has done its best to keep border flow operating. I think there have been best efforts made. My experience is that the Americans’ attitude (on perimeter security) is ‘We will accept an equivalent level of safety from Canada.”

Evident in many of the CILTNA annual conference presenta-tions this year was a focus on Gateway initiatives in the Canadian trade environment.

On infrastructure and the issue of public-private initiatives, Collenette said that financing should be structured so that there is payback.

“Everyone is talking about P3s and the private sector. You have to plan 50 years ahead and build structures off the government books with user charges that will pay back over time.

“On the roads, I think you’ve really got a problem. If you look at the amount of trade coming into the Port of Montreal and going to US markets, a high proportion of the utility of the 401 is dedicated to that, making it difficult for citizens in the Toronto area. It’s become a massive transit way right through the middle of the region. This will require a more enhanced rail network – I don’t think the widening of highways is the long-term answer. I think an underused corridor (such as the Great Lakes) needs government’s attention.” CT&L

logistics

CILTNA CHARTING NEW COURSE

High profile president and chair seeking to boost membership

and push into the US

B y J u l i a K u z e l j e v i c h

education

An impressive field of 57 carriers rose to the top of the heap as part of our annual Shipper’s Choice Awards Survey. Read on to discover

how their performance last year set them apart.

THE CROPCream of

An impressive field of 57 carriers rose to the top of the heap as part of our annual Shipper’s Choice Awards Survey. Read on to discover how their performance last year set them apart.

18 www.ctl.ca

Manufacturing48%

Other Industries

23%

Retail13%

3PL 10%

Freight Forwarding

6%

Eastern Canada

39%

Western Canada

26%

Geographic Distribution of Respondents

Cream of THE CROP

Our 11th Annual Shipper’s Choice Awards Survey sets industry benchmarks for performance excellence

and identifies the 57 carriers that surpass them

In this 11th year of our Shipper’s Choice Survey, we find transportation at an im-portant crossroads. A slow and uncertain recovery from the deepest recession of the post-War era has left both shippers and carriers scrambling to define new paths.The Shippers’ Pulse survey, which we conducted in partnership with the Canadian

Industrial Transportation Association (CITA) earlier this year, found that almost two-thirds of shippers see their customer requirements as becoming more demanding. As a result, they expect more from the carriers they hire to meet those service require-ments. More than half see transportation complexity increasing.

Yet the same survey found that for shippers the focus remains on maximizing prof-itability and keeping costs in line. The survey clearly showed those are the two areas shippers remain focused on rather than boosting growth or improving customer ser-vice. As a result, downward pressure on rates remains an important staple of shipper-carrier negotiations. In fact, the Canadian General Freight Index for Canadian motor carrier base rates has been showing a marginal decrease in recent months. Although significant over-capacity no longer haunts most modes, freight volumes are not as high in 2012 as expected, which also places downward pressure on rates.

For carriers, their recession focus on shedding equipment to reduce excess capacity and begrudgingly accommodating rate cuts to retain long-term customers has given way to trying to refresh their now aging fleets and a harder stance on raising rates.

How are these conflicting dynamics shaping transportation procurement practices? A slow and uneven recovery seems certain to keep the pressure on being able to provide low-cost transportation solutions. It’s interesting to note that for buyers of transporta-tion services, every mode except air ranked competitive pricing ahead of every other key performance indicator (KPI) with the exception of on-time performance. Just like last year, buyers of transportation services remain steadfast in their resistance to the size of rate increases many carriers are arguing are necessary for them to make investments in new capacity, continue to improve service and make long-term partnerships viable.

It makes for quite the challenge, but the history of our survey shows clearly that no matter what the challenge, some carriers are able to rise to it.

It is these carriers – 57 in all this year, plus one honourable mention – whom shippers have deemed worthy of surpassing the Benchmark of Excellence in our 11th Shipper’s Choice Awards Survey, although, as with past years, some familiar names fell short of the mark while new ones make their first appearance. The research is our annual attempt to provide buyers of transportation services with consistent, national and scientifically derived Benchmarks of Excellence for carrier performance in each mode.

Particularly impressive are the carriers who have scored above the Benchmark of Excellence for five years in a row to be awarded our special “Carrier of Choice” desig-nation. To see these winners, turn to the final page of this report.

Our survey provides shippers, 3PL service providers and freight forwarders across Canada with the opportunity to set benchmarks for carrier performance on eight KPIs and to rate their top carriers against those benchmarks. Aside from identifying the best carriers across all modes through this process, survey respondents also provide clear indications of the different values Canadian buyers of transportation services place on

Mode On-time Equipment Information Competitive Customer Problem Value-added Sustainable performance andoperations technology pricing service solving services practices

LTL Trucking 4.762 4.246 3.995 4.688 4.678 4.360 3.513 4.041TL Trucking 4.837 4.448 4.091 4.708 4.643 4.375 3.803 4.167Ocean Carriers 4.585 4.397 4.254 4.754 4.608 4.386 3.952 4.155Couriers 4.872 4.324 4.548 4.730 4.674 4.366 3.769 4.134Air Carriers 4.902 4.461 4.536 4.634 4.702 4.490 3.965 4.155Rail Carriers 4.488 4.308 4.188 4.683 4.494 4.222 3.693 4.067

IMPORTANCE OF PERFORMANCE CRITERIA

Central Canada

35%

ct&l september 2012

E F F E C T I V E S O L U T I O N S :

STRONG PARTNERSLINK THE U.S . AND CANADA

Shipping between Canada and the U.S. promises potential for new worlds of

industry expansion and increased pro�tability. But mobilizing freight on “the other

side” has consistently been a challenge for shippers in both countries. Until now.

Two leading national carriers, U.S. Xpress and Maritime-Ontario (M-O), are

partnering together to provide what you need to easily get your shipment across

the border — no matter if your freight is headed north or south.

Now you can cross the border with con�dence, knowing that you’ll have the

access, capacity and convenience to move your freight easily into either country.

U.S. XpressDave Dulaney

VP | International

423.510.3425

ddulaney@usxpress.com

Maritime-OntarioSteve Snow

VP | Sales & Customer Service

905.792.6154

ssnow@m-o.com

Contact Us...............................................................................................................................

E F F E C T I V E S O L U T I O N S :

STRONG PARTNERSLINK THE U.S . AND CANADA

Shipping between Canada and the U.S. promises potential for new worlds of

industry expansion and increased pro�tability. But mobilizing freight on “the other

side” has consistently been a challenge for shippers in both countries. Until now.

Two leading national carriers, U.S. Xpress and Maritime-Ontario (M-O), are

partnering together to provide what you need to easily get your shipment across

the border — no matter if your freight is headed north or south.

Now you can cross the border with con�dence, knowing that you’ll have the

access, capacity and convenience to move your freight easily into either country.

U.S. XpressDave Dulaney

VP | International

423.510.3425

ddulaney@usxpress.com

Maritime-OntarioSteve Snow

VP | Sales & Customer Service

905.792.6154

ssnow@m-o.com

Contact Us...............................................................................................................................

20 www.ctl.ca

each KPI based on mode as well as a comparison of how high these standards are set for each mode. (For example, transportation buyers set their highest standard on information technology for couriers while expecting TL carriers to live up to the highest standard for competitive pricing – see table on the previous page.)

The importance survey participants place on the KPIs for each mode (based on a five-point scale) is used as a weight in calculating carrier evalua-tions. Survey participants then rate up to three of their main carriers in each mode (again on a five-point scale). The final weighted score for each carrier is derived by multiplying the carrier’s average performance score by the average importance rating for each key performance indicator for that mode.

Because survey participants are first asked to rate the importance they place on each of the eight KPIs when making their carrier selections, and that data is used as a weight on their carrier evaluations, we feel that the benchmarks set are truly standards of excellence. In other words, carrier performance is judged against an ideal of what shippers expect and the areas given the most weight are the ones that matter most to buyers of transporta-tion services. As a result, of the hundreds of carriers rated in our survey, only a very few are deemed by participants’evaluations as providing a service so superior that it warrants a Shipper’s Choice Award.

Carriers receive the Shipper’s Choice Award when their total score meets or surpasses the total benchmark of excellence for their mode. Only those carriers who exceed this benchmark have their names and scores included in the following tables.

Average shipper satisfaction ratings for each KPI are shown in the table below by mode. The final column on the right shows the total benchmark of excellence set for each mode. The benchmarks for each of the eight KPIs per mode are indicated with each modal table on the following pages.

Invitations were sent to more than 6,000 of our readers who are buyers of transportation services in the manufacturing, retail and other sectors as well as to individuals responsible for managing shipments within the freight forwarding and 3PL sectors.

Carriers must receive a minimum number of evaluations in order to qualify for the award. It should be noted that this year, winning was made all the more difficult because we once again raised the number of evalua-tions necessary to qualify for the award for almost every mode. In order to boost response, carriers were given the opportunity to forward the survey to SHIPPER SATISFACTION

RATINGS BY MODE

Mode On-time Equipmentand Information Competitive Customer Problem Value-added Sustainable Totalsatisfaction performance operations technology pricing service solving services practices ScoreLTL Trucking 20.24 17.54 15.60 19.58 19.66 17.21 13.70 16.05 139.579TL Trucking 21.33 19.10 15.97 20.03 20.08 17.85 14.93 17.00 146.283Ocean Carriers 19.07 18.06 16.81 19.36 18.65 16.61 14.34 15.89 138.792Couriers 20.64 17.92 18.60 18.94 18.19 15.99 13.56 15.87 139.707Air Carriers 20.84 18.70 18.01 18.65 19.04 17.37 15.19 15.98 143.779Rail 18.67 17.70 16.55 19.07 18.19 15.98 13.40 15.56 135.114

Annual Supply Chain Budget

% of respondents

Less than $100,000 15% of respondents$100,000 to $500,000 25%$501,000 to $1M 11%$1 million to $5M 19%$5M to $10M 10%$10M to $20M 7%More than $25M 14%

ct&l september 2012

to all our customers for choosing us again this year.

We are proud to receive a Shipper’s Choice Award for the fourth consecutive year.

2010 2011 2012

www.itstruck.ca

ITS CT&L 0712.indd 2 12-08-15 5:10 PM

The Company You Thought You Knew.

LTL Intra Canada, USA and Mexico

Truckload, North America

Small Package

Airfreight and Ocean

Retail Home Delivery

Freight Brokerage

Oversize and Project movements

Supply Chain Solutions

4 PL Non asset based services

Warehousing and flow through

Dedicated Contract Carriage

3PL Asset based services

Oversize and Project movements

Supply Chain Solutions

4 PL Non asset based services

Warehousing and flow through

Dedicated Contract Carriage

3PL Asset based services

Known for leading the industry in on-time service, total coverage and customer satisfaction, Day & Ross is dedicated to providing its customers with high quality transportation and logistics services throughout North America. Day & Ross has had a proud history for over 60 years as one of Canada’s leading national carriers.

With terminals in all provinces, Day & Ross is a comprehensive carrier with unmatched LTL & TL coverage within Canada, and between Canada, the US and Mexico. Our Fastrax Truckload Services provides TL and special commodities services across North America.

Today we have grown to meet our customers expanding logistics requirements. From 3PL; 4PL; warehousing; flow-through facilities; customized Dedicated Contract Carriage; and express overnight and expedited ground small package delivery services we can tailor a solution to meet your unique needs. Call us to learn more about how we can help your organization in today’s challenging business world!

www.dayross.ca1-866-DAY-ROSS

SUPPLY CHAIN SOLUTIONS

22 www.ctl.ca

their own customer lists. Not all carriers chose to do so, however. To prevent tampering, we check for multiple cases submitted by known respondents. If there is more than one case, then only the newest one is considered. Likewise, we check for similar IP addresses. As a final check on tampering, we separate and check the evaluations submitted by participants from our own e-mail list versus the e-mail lists of carrier customers. Winners must have evaluations submitted by transportation buyers from our own e-mail list to qualify for the award.

More than 2,000 buyers of transportation services participated in our survey, which makes Shipper’s Choice the largest of the several surveys we conduct annually. We thank all those of you who took the time to complete our survey. (Participants receive an advance electronic copy of the results.) More than 10,000 evaluations of carriers from all modes providing services in the Canadian market were cast.

As with past years, survey participants represent every region across Canada and buy transportation services for companies with annual sales ranging from less than $5 million up to more than $2 billion. Their annual supply chain budgets range from less than $100,000 up to more than $25 million. More than a third spends over 70% of their supply chain budgets on transportation.

The Shipper’s Choice Awards Survey was undertaken once again in part-nership with CITT and the Canadian Industrial Transportation Association (CITA), two associations whose members responsible for the purchase of transportation number in the thousands. And, as in previous years, the re-search was conducted by independent research firm G Bramm & Associates (the same research firm that conducts our industry-leading Annual Survey of the Logistics Professional).

Winning carriers are listed alphabetically, and not by their total score. Those wanting to compare the scores among the winners should keep in mind the high probability that these carriers, although they are being com-pared to an industry benchmark, have been evaluated by different shippers. This survey is intended as a measure of which carriers exceed industry expectations and not a ranking of the carriers involved.

Total no. of shippers evaluating carriers this mode: 2428 Total carrier evaluations: 3873 Benchmark of excellence: 139.579

Carriers On-time Equipmentand Information Competitive Customer Problem Value-added Sustainable performance operations technology pricing service solving services practicesAll Connect Logistical Services 22.87 19.61 17.98 22.79 22.93 20.73 16.50 18.30Armbro Transport 21.50 18.39 16.19 20.13 21.31 18.95 15.36 17.99Big Freight 19.97 17.80 16.92 19.08 19.82 17.99 13.32 16.54Bourret Transportation 19.89 18.48 15.63 19.44 18.58 16.42 14.99 16.41Cavalier 21.73 18.58 15.45 20.81 22.22 18.89 16.86 17.24CCT Logistics 21.43 18.26 16.91 20.00 21.36 18.75 13.77 16.84Challenger Motor Freight 20.80 17.31 16.90 20.63 20.90 17.63 15.97 17.17GO JIT 19.60 17.80 16.48 21.10 19.25 17.62 15.01 16.16Guilbault Transport 21.07 17.51 16.18 20.51 20.00 17.55 13.17 16.05GX Transportation 21.99 19.36 18.48 20.92 22.07 20.42 16.44 18.42Hercules Transport 21.89 18.45 17.03 21.28 22.28 19.28 15.30 17.32Kurtz Trucking 19.52 18.47 14.78 20.63 21.05 17.66 12.51 15.96Maritime-Ontario 21.19 19.52 16.40 19.67 20.36 18.41 15.87 17.60Meyers Transport 20.95 18.05 15.95 19.94 19.98 17.29 13.48 15.93Mimimax Express Transp. Inc. 21.96 18.87 15.76 20.83 20.53 18.53 15.31 17.93MSM Transportation 22.01 19.13 16.93 20.38 22.12 19.61 15.61 17.75Normandin Transport 20.72 19.38 17.24 18.54 20.88 19.23 14.80 17.70Polaris 22.17 18.38 17.04 20.00 20.91 18.26 14.22 17.47Robert Transport 20.33 18.53 16.40 19.23 19.49 17.72 14.40 16.86Rosedale Transport 20.87 17.36 15.86 19.44 20.50 17.95 13.03 16.92TransPro Freight Systems 22.29 19.59 17.62 21.67 22.61 20.47 16.38 18.30Western Canada Express 20.72 18.12 15.68 19.84 19.88 17.28 14.33 16.25

BenchmarkofExcellence 20.24 17.54 15.60 19.58 19.66 17.21 13.70 16.05

LTL MOTOR CARRIER AWARD WINNERS

% Spent on Transportation

1-10% of Supply Chain Budget11-20%21-30%31-40%41-50%51-60%61-70%71-80%81-90%91-100%

% of respondents

ct&l september 2012

1.800.822.4512 Canada1.800.621.8723 USA

herculesfreight.com

THE NEW STANDARD FOR YOURCROSS-BORDER LTL SHIPMENTS

We reduce transit times, damage, and misrouting through our 24 “no break-bulk” terminals.

Hercules warehouse Ad-8.125x10.875:Layout 1 12-04-24 9:06 AM Page 1

1.800.822.4512 Canada1.800.621.8723 USA

herculesfreight.com

THE NEW STANDARD FOR YOURCROSS-BORDER LTL SHIPMENTS

We reduce transit times, damage, and misrouting through our 24 “no break-bulk” terminals.

Hercules warehouse Ad-8.125x10.875:Layout 1 12-04-24 9:06 AM Page 1

24 www.ctl.ca

Total no. of shippers evaluating carriers this mode: 1730 Total carrier evaluations: 2436 Benchmark of excellence: 146.283

TL MOTOR CARRIER AWARD WINNERS

Carriers On-time Equipmentand Information Competitive Customer Problem Value-added Sustainable performance operations technology pricing service solving services practicesAll Connect Logistical Services 23.58 21.42 18.73 22.45 22.63 20.89 17.52 19.48Big Freight Systems 21.32 19.81 17.66 19.33 20.52 17.96 15.57 17.52Clarke Transport 21.84 19.41 16.61 19.97 20.54 18.56 16.07 16.80Day & Ross 21.20 18.19 16.44 19.74 20.02 18.04 15.81 16.95Hercules Transport 23.17 20.76 18.49 22.96 22.81 20.98 17.36 18.88Highland Transport 21.23 19.64 17.96 20.90 20.61 18.78 15.87 17.78International Truckload Service 22.32 21.03 17.29 21.72 19.52 17.50 14.07 17.90Kriska Transportation 22.69 20.05 17.18 21.08 21.19 18.59 15.55 17.54MacKinnon Transport 23.49 19.70 16.07 18.83 21.22 18.44 15.85 18.16Manitoulin Transport 22.94 20.46 18.29 19.37 20.89 19.13 16.69 18.95Meyers Transport 21.56 18.90 17.05 20.89 20.22 18.26 15.49 17.20MSM Transportation 22.68 20.09 17.23 20.59 21.92 19.64 16.95 18.38Penner Truck Lines 23.59 21.70 18.76 21.47 21.97 21.21 15.93 20.16Robert Transport 20.76 20.26 17.99 18.69 20.22 18.31 15.69 17.44Rosedale Transport 21.86 19.93 15.38 21.49 20.61 19.43 15.76 17.26Tenold Transportation 20.78 19.11 15.91 20.40 19.77 18.47 16.95 17.28Traffic Tech Inc. 21.13 18.96 18.05 21.31 19.79 18.65 12.60 16.67TransPro Freight Systems 23.53 21.17 18.39 22.47 22.82 20.76 17.40 18.89BenchmarkofExcellence 21.33 19.10 15.97 20.03 20.08 17.85 14.93 17.00

Motoring ahead

What do buyers of truck transportation services really care about? Primarily, on-time performance, which is always ranked as the top priority. That is followed by competitive pricing, but it only slightly edges out customer

service. This poses a significant hurdle for motor carriers who saw their pricing drop 18-25% during the recession and are eager to improve their financial performance with solid rate increases. However, continued shipper pressure on pricing, combined with softer than expected freight volumes, are so far keeping rates in check.

Every year of our survey, buyers of truck transportation services have cast the most ballots. This year was no different with more than 6,300 evaluations of LTL and TL service providers, once again the most for any of the modal categories. About 40% are spending more than a million dollars annually on truck transportation; 11% are spending $10 million or more.

TL carriers have a particularly tough task in meeting the expectations of buyers of their services. The Benchmark of Excellence is set highest for TL carriers in six of the eight KPIs tracked by our survey. For years now, the combined Benchmark of Excellence for TL carriers has been higher than any other mode by several points. Consider that TL carriers have higher benchmarks to surpass for on-time performance and customer service than couriers and a higher standard for quality of equipment than airfreight carriers. They are also held to a highest standard for sustainable transportation practices (LTL is held to the second highest standard for sustainable transportation practices.) Yet, buyers of TL services also expect competitive pricing, as noted, and the Benchmark of Excellence for TL when it comes to competitive pricing is the highest for all modes, even now surpassing what is expected from ocean carriers. (Again, LTL has the second highest Benchmark of Excellence for competitive pricing.)

The winners for both LTL and TL, along with their scores for each of our eight KPIs, are shown in alphabetical order and only those scoring above the total Benchmark of excellence are included. The bottom row of the table shows this mode’s Benchmark of Excellence for each KPI. The total Benchmark of Excellence is indicated on the top right.

In all 22 LTL and 18 TL carriers surpassed the Benchmark of Excellence for 2012.

ct&l september 2012

We continue to diversify and provide customized solutions for our valued customers’ specific requirements.

Ontario : 905.564.9999 / 800.268.0840Quebec : 514.521.1011 / 800.361.8281

WE GREATLY APPRECIATE

BEING RECOGNIZED FOR

PERFORMING ABOVE THE

INDUSTRY BENCHMARK

IN BOTH LTL AND

TRUCKLOAD SERVICE.

THANK YOU!

26 www.ctl.ca

Total no. of shippers evaluating carriers in this mode: 1559 Total carrier evaluations: 3137 Benchmark of excellence: 139.707

*Honorable mention

Carriers On-time Equipmentand Information Competitive Customer Problem Value-added Sustainable performance operations technology pricing service solving services practicesCardinal Courier 22.31 17.46 16.99 21.37 18.82 17.55 15.74 17.36 DB Schenker 21.01 18.37 18.45 19.41 19.92 17.98 15.60 16.96Dicom 20.79 17.40 17.64 21.11 19.27 16.40 14.45 16.64FedEx 21.53 18.69 19.99 18.72 18.98 16.59 13.89 16.27Midland Courier 21.19 18.70 17.97 19.78 19.49 17.78 14.23 16.43 Sameday Worldwide 21.78 18.32 18.42 19.63 19.40 17.42 15.36 16.63 Tiger Courier 21.92 17.55 17.38 20.61 20.36 17.98 15.29 16.44Purolator (HM) 20.71 18.14 19.07 18.60 17.96 15.89 13.12 15.88*BenchmarkofExcellence 20.64 17.92 18.60 18.94 18.19 15.99 13.56 15.87

COURIER AWARD WINNERS

MASTERS OF FASTER

On-time performance remains the top pri-ority for buyers of courier services, but in recent years competitive pricing edged out

customer service as the second highest priority. This trend continued with this year’s survey. Also continuing is shipper expectations for leading edge information from their courier service providers. In fact, the Benchmark of Excellence for informa-tion technology is set highest for couriers. As noted with past surveys, the cost of meeting that demand makes it challenging for couriers to keep pricing in line. Courier winners and their scores for each of our eight KPIs are shown in the table below. The bottom row of the table shows this mode’s Benchmark of Excellence for each KPI. The total Benchmark of Excellence is indicated on the top right. The winners are shown in alphabetical order and only those scoring above the total Benchmark of Excellence are included.

ct&l september 2012

ExperienceExperienceExperienceExperienceExperience what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about. what our customers are talking about.

Superior Quality Service

Flexible Solutions

Value for your transportation spend

1-800-561-7121www.midlandcourier.com

Everytime you ship with Meyers Transportation Services, you get over 85 years of experience, four generations of Meyers family management and a dedicated team of transportation professionals working for you. Thank you again for shipping MTS.

We’re proud of our heritage and 100% dedicated to serving the shipping communities located throughout Southern Ontario, Western Quebec and the USA. We provide a premium level of LTL, truckload, freight management and distribution services.

Thank you for naming us your Carrier of Choice

for five consecutive years!

REGIONAL TRUCKLOAD SERVICES IN CANADA AND USA

OVERNIGHT LTL SERVICE FOR ONTARIO & QUEBEC

FREIGHT MANAGEMENT LOGISTICS

INTERNATIONALDISTRIBUTION

Everytime you ship with Meyers Transportation Services, you get over 85 years of experience, four generations of Meyers family management and a dedicated team of transportation professionals working for you. Thank you again for shipping MTS.

We’re proud of our heritage and 100% dedicated to serving the shipping communities located throughout Southern Ontario, Western Quebec and the USA. We provide a premium level of LTL, truckload, freight management and distribution services.

Thank you for naming us your Carrier of Choice

for five consecutive years!

REGIONAL TRUCKLOAD SERVICES IN CANADA AND USA

OVERNIGHT LTL SERVICE FOR ONTARIO & QUEBEC

FREIGHT MANAGEMENT LOGISTICS

INTERNATIONALDISTRIBUTION

28 www.ctl.ca

Total no. of shippers evaluating carriers in this mode: 487 Total carrier evaluations: 812 Benchmark of excellence: 143.779

Carriers On-time Equipmentand Information Competitive Customer Problem Value-added Sustainable performance operations technology pricing service solving services practicesBritish Airways 20.79 18.97 18.66 20.32 20.22 17.96 15.92 17.70Cargo Jet 23.43 20.49 17.30 19.17 20.80 19.02 15.53 16.77KLM Cargo 21.08 19.18 19.05 18.69 20.37 18.28 14.18 16.46

BenchmarkofExcellence 20.84 18.70 18.01 18.65 19.04 17.37 15.19 15.98

AIR CARRIER AWARD WINNERS

CHALLENGING FLIGHT PLAN

It should come as no great surprise that on-time performance is of para-mount importance for shippers using airfreight services, followed by customer service. However, and this is where it gets challenging, com-

petitive pricing rounds out the top three priorities for buyers of airfreight services. This combination is very challenging for air carriers who have emerged from the recession with weak balance sheets and must find ways to maintain the high service standards expected while keeping costs in line. Air carrier winners and their scores for each of our eight KPIs are shown in the table below. The bottom row of the table shows this mode’s Benchmark of Excellence for each KPI. The total Benchmark of Excellence is indicated on the top right. The winners are shown in alphabetical order and only those scoring above the total Benchmark of Excellence are included.

ct&l september 2012

1.800.388.7947www .a l l connec t . ca

Thank You!

All-Connect Logistical Services would like to convey our appreciation to allof our customers who have again recognized us for not only exceeding

but setting the industry standard in both Truckload & LTL service.

NORTHAMERICA

Carriers On-time Equipmentand Information Competitive Customer Problem Value-added Sustainable performance operations technology pricing service solving services practicesBritish Airways 20.79 18.97 18.66 20.32 20.22 17.96 15.92 17.70Cargo Jet 23.43 20.49 17.30 19.17 20.80 19.02 15.53 16.77KLM Cargo 21.08 19.18 19.05 18.69 20.37 18.28 14.18 16.46

BenchmarkofExcellence 20.84 18.70 18.01 18.65 19.04 17.37 15.19 15.98

1.800.388.7947www .a l l connec t . ca

Thank You!

All-Connect Logistical Services would like to convey our appreciation to allof our customers who have again recognized us for not only exceeding

but setting the industry standard in both Truckload & LTL service.

NORTHAMERICA

30 www.ctl.ca

Total no. of shippers evaluating carriers in this mode: 487 Total carrier evaluations: 812 Benchmark of excellence: 138.792

OCEAN CARRIER AWARD WINNERS

Carriers On-time Equipmentand Information Competitive Customer Problem Value-added Sustainable performance operations technology pricing service solving services practicesAtlantic Container Line 20.48 20.37 17.02 19.02 19.97 18.42 16.02 17.48COSCO 19.11 19.05 16.88 21.71 19.35 17.40 13.34 16.48Evergreen 18.56 17.78 18.98 20.07 22.22 19.20 17.50 19.09Hanjin 20.75 19.67 18.81 19.52 19.16 17.78 13.04 15.79K Line 19.51 18.83 17.78 21.14 18.31 16.28 12.31 17.63NYK 20.63 19.45 19.62 21.03 20.21 18.54 14.93 16.23OOCL 20.22 18.49 17.42 18.75 18.37 17.08 13.26 15.21

BenchmarkofExcellence 19.07 18.06 16.81 19.36 18.65 16.61 14.34 15.89

MANAGING STORMY SEAS

Of all the modes, ocean carriers are perhaps the most challenged when it comes to on-time performance. One recent study concluded that only 56% of marine containers are delivered on time globally. Some containership lines have tried

to make a competitive issue of on-time performance and customer service, looking to make significant improvements and being open to shipper feedback. However, global ocean carriers are reported to have lost more than US$5 billion last year – a veritable financial bloodbath. Even mighty Maersk Line, the world’s number one container op-erator, reported a loss of US$537million in 2011. And that makes service improvements that much more difficult. Marine winners and their scores for each of our eight KPIs are shown in the table below. The bottom row of the table shows this mode’s Benchmark of Excellence for each KPI. The total Benchmark of Excellence is indicated on the top right. The winners are shown in alphabetical order and only those scoring above the total Benchmark of Excellence are included.

ct&l september 2012

The Difference is in Our People...

Transportation • Logistics • Warehousing

Kriska Surpasses Benchmark of Excellence Again.We thank our customers who made this possible.We consistently exceed expectations in: • Customer Service • On-time Performance • Competitive Pricing

Phone: (800) 461-8000 Email: sales@kriska.com

BEST FleetsBEST FleetsBESTTO DRIVE FOR

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2012

Kriska Surpasses Benchmark

We thank our customers who made this possible.

1 800.263.2394

CAVALIER OWNS THE GREAT LAKES

YOUR NORTH AMERICAN FREIGHT EXPERTS

DISTRIBUTION ON BOTH SIDES OF THE BORDER

AS SPECIALIZED ASSPECIALIZED GETS

Find out more

For over three decades Cavalier has provided a vital link between Canada’s busiest traffic lane, Ontario-Quebec and Canada’s largest trading partner, the USA. Today this family owned and operated business provides a full array of transportation services and strives daily to accomplish its vision of expanding customer service through innovation, creativity and teamwork!

Thank you for naming Cavalier your 2012 LTL Shipper’s Choice!

1 800.263.2394

CAVALIER OWNS THE GREAT LAKES

YOUR NORTH AMERICAN FREIGHT EXPERTS

DISTRIBUTION ON BOTH SIDES OF THE BORDER

AS SPECIALIZED ASSPECIALIZED GETS

Find out more

For over three decades Cavalier has provided a vital link between Canada’s busiest traffic lane, Ontario-Quebec and Canada’s largest trading partner, the USA. Today this family owned and operated business provides a full array of transportation services and strives daily to accomplish its vision of expanding customer service through innovation, creativity and teamwork!

Thank you for naming Cavalier your 2012 LTL Shipper’s Choice!

32 www.ctl.ca

Introducing the

Carriers of ChoiceConsistency of performance deserves a special award

Carriers are presented with this particularly prestigious award if they have demonstrated the consistency necessary to attain the highest levels of service by surpassing the industry benchmarks of excellence set in the

Shipper’s Choice Awards Survey for a minimum of five consecutive years. This is a particularly difficult task because aside from having to maintain consistent excel-lence in their operations, carriers will have to meet a likely rising standard set by shippers from year to year while also responding to changing priorities. The carriers named to this elite club this year include:

This award will continue to be presented every year. To remain part of this exclusive fraternity, carriers must requalify each year by having surpassed the Shipper’s Choice Awards benchmark of excellence for five consecutive years.

Armbro Transport

DB Schenker

Bourret Transportation

Cargojet

FedEx

Hercules Transport

Highland Transport

‘K’ Line

Kriska Transport

MacKinnon Transport

Meyers Transport

MSM Transportation

OOCL

Polaris Transport

Sameday Worldwide

ct&l september 2012

As Ottawa prepares legislation to remedy rail service concerns, CN argues its commercially negotiated efforts to reduce customer pain points are the better way to go.

B y C a r r o l l M c C o r m i c k

what’s the right track?

34 www.ctl.ca34 ct&l september 2012

In the past two years or so, CN has been making improvements to resolve pain points with its customers and stakeholders. While the Conser-

vative government prepares a bill for the fall of this year to give shippers the right to service agreements with the railways and a process to establish such agreements should commercial negotiations fail, CN strongly opposes regulatory intervention. It be-lieves the improvements it has already put in place demonstrate that commercial, negotiated solutions to problems in the provision of service are possible.

“We believe that the issue is ‘What is the prob-lem?’ and ‘What is the pain?’ We will make improve-ments question by question, year by year,” says Jean-Jacques Ruest, executive vice-president and chief marketing officer at CN. “The overall point about the Review is that for those who want to get on the page and be proactive and improve service, both CN and CP have the appetite to do this and both are in-terested in improving their reputations.”

To this end, CN has introduced a number of measures since 2010, some of which speak di-rectly to points noted in the Rail Freight Service Review, the final report of which was released earlier this year and proposed five commercially-oriented recommendations to build on recent ser-vice improvements.

Take order fulfillment. “This is a key value. Customers need their orders filled to get their product to market. On the carload side, order ful-fillment is still an issue, but our order performance

in 2011 was 95%. An order is placed on Wednes-day and we confirm on Thursday what we can do. Now you know what order we can meet by day of the week,” Ruest says.

CN took yet another step in improving its atti-tude that recognizes that customers need more flex-ibility in order to do timely business with their own customers. It also recognizes that the concept of “late” is not only relative, but that the word itself caused problems.

“Occasionally, people were placing orders after the Wednesday cutoff,” Ruest says. “We used to call these late orders and less effort went into filling them. Looking at this from the customers’ point of view, this was a major pain point. We now qualify them as extra orders. The reality of the railway is that if we don’t have at least three or four days lead time, we can’t fill the order. But if extra orders are placed with that lead-time, we might be able to fill them. We track Key Performance Indicators [KPI] for extra orders, so we know we are able to do 60-65% fulfillment for them.”

CN introduced another option, called intermo-dal flex. It speaks to another issue in the Review: a lack of empty containers. “Intermodal flex is a truck service. For example, 95% of the pulp shipped from Alberta to Wisconsin is in boxcars. But we can also send containers to your pulp mill on truck chassis,” Ruest says.

Intermodal flex also, in effect, increases the availability of containers at inland terminals. “We

reviewrail

35ct&l september 2012www.ctl.ca

can load containers inland instead of at ports; for example, pulp in Edmonton, Saskatoon or Prince George, rather than Vancouver, to increase capacity,” Ruest says. This also takes some of the loading pressure off of ports.

The Review notes a “reduction in the hours of operation for in-land terminals, which affects the number of daily truck hauls a ship-per can make to deliver loaded containers.” Ruest asks: “If you are looking for containers or easier access to a CN terminal, how do you get in afterhours? We used to have two shifts at our terminals in the Maritimes, for example. If trucks missed the open hours, they would have to unhook their trailers at the truck terminals, then re-turn the next day to pick up the trailers and bring them to us. The pain we were causing the trucking firms was real. We realized we could create value.

“In order to minimize this double handling, we had to find ways to be open 24/7, but without adding too much staff. In the smaller terminals, we do the work remotely; for example, the gate operator for our Moncton terminal is in Toronto. Now the truckers can enter and drop their trailers off afterhours. Now most of our terminals are open 24/7.”

CN also realized that the time from in-gate to out-gate for trucks was too long. “In Toronto, the worst time was in August 2010. We had to beef up capacity and processes to make this work. We had KPIs for Toronto before, but we really had to get religious after 2010 and put more focus on it. We have KPIs for in-gating and out-gating. We have time stamps. The objective is to go from in-gate to out-gate in 45 minutes,” Ruest says.

Service changes is another pain point brought up in the Review, which writes: “The railways’ failure to provide notice and consult with shippers and receivers on significant service changes, such as changes in switching service, is a major issue.”

Ruest discusses what CN has done: “What people care about is service change at their plants; for example, changing arrival time from three in the afternoon to nighttime. People have employees set up at the dock. This is why it matters to them. We were and still do change service rather regularly, but we were not providing much notice. We initiated a policy in 2010 that if we change start-time frequency, we alert the customer electronically. They will get an alert a week in advance of a pending change.”

Some changes can happen at the last minute. “When the train operator gets to your plant depends on how much time he spends in the yard putting the car together. With snow, the switch might not be clear, so he can’t get into the plant. So he keeps going. He can have a missed switch due to a storm, or he can run out of overtime. An-other possibility is an incomplete switch, where the customer asks for 15 cars and the train operator brings 10,” Ruest explains.

Understanding that some customers do not want electronic no-tification of last-minute changes in service, CN began calling them in. “We want the train master to call the large stakeholders with the when and why. We don’t give the customer a veto on the change, but we can give them a head’s up. This is something we have gotten better at,” Ruest says.

Demurrage, the charge for using rail cars beyond a specified time, also came up in the Review. In 2010, CN made a change in how it calculates demurrage that serves CN and its customers. Ru-est explains: “We recognized that demurrage caused a pain point. We have addressed bunching directly in our demurrage tariff. We call the person at the loading company who is responsible for load-ing the car. When we place more rail cars earlier, CN gives a credit.

“Say I bring you 20 cars on Friday instead of the 10 you request, because I know that you need 10 for Friday and 10 more for Monday. We regard only 10 as real orders, and the other 10 as Monday orders.

reviewrail

3636 ct&l september 2012

The final report of the facilitator of the Rail Freight Service Review, released

earlier this summer, proposed five com-mercially-oriented recommendations to build on recent service improvements.

Independent facilitator Jim Dinning was appointed Oct. 31 by Ottawa to lead a six-month process aimed at developing a template service agreement and a stream-lined commercial dispute resolution pro-cess between railways and stakeholders. The process was considered a key part of the government’s response to the Rail Freight Service Review, which was launched in 2008 to address ongoing is-sues with rail freight service.

Dinning’s recommendations are:Recommendation 1: Transport Cana-

da should make the service agreement template (included in the report) avail-able to rail freight stakeholders as a guide to all parties (including small shippers), as they negotiate a service agreement.

Recommendation 2: Transport Cana-da should make the commercial dispute resolution process publicly available for stakeholders to use.

Recommendation 3: Railways should be encouraged to revise their current dis-pute resolution processes to address rail service issues, to make them consistent with the process described in the report.

Recommendation 4: Industry should be encouraged to review and update the service agreement template and commer-cial dispute resolution process as business conditions warrant. These updated tools should be available from industry or gov-ernment sources.

Recommendation 5: Transport Cana-da should monitor the use of the service agreement template and commercial dis-pute resolution process. Transport Cana-da should encourage all parties to improve the process as required.

Dinning’s simple but direct advice to industry stakeholders: Try these tools; they just might work.

The Stakeholder Facilitation Commit-tee, comprising of 15 industry members, devoted five months working towards a so-lution that would result in deeper relation-ships to establish rail service parameters and to deal more effectively with disputes. While some progress was made, the Com-mittee ultimately could not agree on a commercial package and there were clear differences of opinion evident in the re-marks of shippers and railway executives.

Claude Mongeau, president and CEO of CN, said that although CN actively supported the facilitation process, shipper representatives, or the associations they represent, chose to advocate a regulatory agenda rather than work within the com-mercial approached encouraged by Din-ning to reach for the next level in supply chain collaboration and service agree-ments.

“They continually demanded new, in-trusive, regulatory intervention,” Mongeau said in a company release shortly after the facilitator’s report was made public. “Ship-pers’ demands for greater government in-tervention in rail service are clearly mis-guided. This regulatory stance represents a missed opportunity to take supply chain collaboration to the next level.”

In response, Bob Ballantyne, head of the Canadian Industrial Transportation As-sociation, countered that the Stakeholder Facilitation Committee could not reach agreement because “essentially what the railways offered was the status quo.” Bal-lantyne called Mongeau’s comments “very strident and very aggressive.” He also ac-cused Mongeau of needlessly adopting a “sky is falling” approach in his opposition to legislation and added that any shipper rec-ommendations would “only affect railway revenues at the margins.”

Denis Lebel, minister of transport, in-frastructure and communities, said the fa-cilitation process served its intended scope and purpose: to bring the parties to the ne-gotiating table in a common pursuit of commercial solutions. He added that the report provides “clear direction for both shippers and rail companies moving for-ward” and he urged the parties involved to use these additional tools in their commer-cial negotiations.

The facilitation and Dinning’s recom-mendations are distinct from the bill which the Conservative government is planning to introduce this fall, Lebel pointed out.

“The bill will be another component of our response to the Rail Freight Service Review’s recommendations. I will be en-gaging with stakeholders before the gov-ernment introduces (the bill),” Lebel said.

The government is looking to place the final piece of this legislative process on the fast track.

“By working together, we can accom-plish our shared goal – to improve rail freight service in Canada, which ultimate-ly benefits the entire economy in the long term,” Lebel said.

By Lou Smyrl is

Facilitator issues final report on Rail Freight Service Review

Voted TopsCanadian shippers

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Whether your way is the highway or the railway,Hub Group Canada is the solution. We are literallyeverywhere you turn and offer one of the most capacityrich transportation networks in North America.

With Hub Group Canada, you’ll have instant 24/7access to the services, carriers and centralizedcontrols you need to smoothly manage thetransportation needs of your business. Our highwayand intermodal specialists are standing by to respondimmediately to your next LTL, full load or specializedtransportation requirement.

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Whether your way is the highway or the railway,Hub Group Canada is the solution. We are literallyeverywhere you turn and offer one of the most capacityrich transportation networks in North America.

With Hub Group Canada, you’ll have instant 24/7access to the services, carriers and centralizedcontrols you need to smoothly manage thetransportation needs of your business. Our highwayand intermodal specialists are standing by to respondimmediately to your next LTL, full load or specializedtransportation requirement.

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Please contact : Barry O’Neill, Vice PresidentHub Group Canada, L.P.boneill@hubgroup.com1.800.829.0466 www.hubgroup.com

38 www.ctl.ca38 ct&l september 2012

Challenge Accepted!

canada

CHALLENGER.com

usa international

looking for one transportation partner with truckloads of solutions and a reach that extends from sacramento to singapore, to saskatoon? consider the professional team at challenger.

regardless of the difficulty, the destination or the deadline, you can count on one consistent and unanimous response to your supply chain requirements…challenge accepted!

“I need fewer carriers at my door and

more comprehensive service & coverage”

Your demurrage clock starts on your want date. That was not the way it was calculated in the past. Some people still don’t under-stand that.”

A kind of one-stop way of addressing pain points is the service agreement, also called the service level agreement (SLA). Negotiated between railways and their cus-tomers and supply chain partners, they can cover services and obligations, communica-tions protocols, consequences of non-per-

formance and dispute resolution.In the Review, railways are encouraged

to negotiate them. CN has entered into SLAs with shippers, terminal operators and other supply chain partners and has a stand-ing offer to negotiate SLAs with others. Yet, says Ruest, “Not that many small customers have raised their hands.” In any case, he adds, “I don’t think more than 20% of cus-tomers will want SLAs. Most will get what they need with tight KPIs and without for-

mal documents.”Winnipeg-based Agri-Food Central

signed an SLA with CN last October and is pleased with the result. Canada’s largest shipper of US Food and Drug Administra-tion-monitored food products from Cana-da into Mexico, Agri-Food has found that the SLA has given it new confidence in its shipping relationship with CN.

“In the past, we would never have made certain contracts, because you wouldn’t want to rely on CN. You would do your work back on a worst-case scenario. In the past, the risk of failure would have been too high. Now, with the SLA, we are more con-fident of CN’s attention to us, so we run more rail and less truck. It also encourages us to ship more with CN than with other Class 1 railways,” explains David Nyznyk, president of Agri-Food.

Nyznyk describes a service that CN is now extending to his company that has led directly to more contracts for Agri-Food: “When we have a contract and plan to ship ‘X’ units, we don’t want to be sitting here for railcars to show up. CN asks us what our forecast is … and gives us a pool of cars – a buffer of a few units. This is not a [triv-ial] favour. It’s all about accountability and cooperation.

“Some big companies are taking a ‘go big or go home’ attitude. We are going the small shipments way (back to the sacks) and are looking for small to medium-sized buy-ers that can access their total logistics costs – a customer say, that wants a 25-tonne shipment of 50% lentils and 50% bird food, or a wheat miller who sees value in receiv-ing 800 tonnes per week instead of 8,000 tonnes every four months. We can use CN to offer customers a shorter delivery time and smaller, more consolidated shipments more frequently.”

Nyznyk acknowledges that because of his company’s desire to be more dynamic with its customers, it is difficult to manage business with CN. Yet with the SLA, equip-ment supply issues have been resolved, CN is accountable to him and containers are moving much more quickly from Canada to Mexico, to name some of the improve-ments following the signing of the SLA.

“In the past, we wouldn’t ask for things we are asking for now,” Nyznyk says. “It is a different CN. It is doing things you wouldn’t think a big railway would do. It is getting creative and that excites us. This motivates us to pioneer things we wouldn’t have dreamed of doing before. We are do-ing this together.” CT&L

reviewrail

How New Era put a capon freight invoice processing costs

B y G a r r y O s w a l d

40 www.ctl.ca40 ct&l september 2012

auditingfreight

New Era sells a lot of caps. Thirty million of them each year, actually. The

company has been making caps for Major League Baseball since the 1930s. Last year, it became the official supplier of caps for the National Football League. In fact, New Era has more than 200 licenses to produce headwear for the National Hockey League, the National Basketball Associa-tion, and numerous other sport franchises and organizations.

But its business goes way beyond sports. Its products have be-come the symbol of a generation. The company’s motto is “Fly Your Own Flag” – encouraging people to express their personal style and individuality through its products. You can’t walk down the street without seeing its products in full glory. They’re on display in hun-dreds of MTV videos. And they’ve even been spotted on fashion runways in Paris.

With vendors located globally and facilities throughout North America, South America, Europe and Japan, an efficient supply chain system has been an integral part of New Era’s success. The company currently sells its products in 40 countries. Sales have doubled in the past five years and are expected to double again in the next five.

However, processing and auditing the ever increasing number of freight invoices for all the modes of freight the company handles had become a problem. According to Michelle Seifert, New Era’s logistics coordinator, the processing of freight invoices was a time-consuming and costly process. The company received hard copies of invoices from the international and domestic carriers it uses and processed them manually. The manual process included the logis-tics team placing the appropriate general ledger code on the freight bills based on the invoice accounts, ship-to and ship-from locations, and description.

After this was concluded, the invoices would be sent to their fi-nance team for processing and payment to their carriers. Two peo-ple within the logistics team would be responsible for reviewing the bills and applying appropriate general ledger codes to them, which

took a total of 40 hours a week to complete.

New Era decided to out-source the handling of its freight invoices to National Traffic Service, a freight au-diting and payment company

headquartered in Amherst, N.Y. The company hoped to re-

duce its processing costs while saving additional money by having the bills

audited before payment. Forwarding its invoices to National Traffic Service has taken the 40 hours a week total spent inter-nally down to about 15-20 hours a week. The time saved allows New Era to apply its efforts to urgent shipping matters.

Independent studies have shown that it costs companies about $13 to process a freight invoice internally. Freight auditing and payment companies typically do it for under $1.

Besides the reduction in the amount of time spent on processing invoices, the outsourcing has been beneficial to New Era in other ways as well. The company is now able to track its logistics ex-penses from the database that resulted from the audit and data cap-ture process. According to Seifert, the company is able to run cus-tom reports based on anything it may be looking for, such as an exact distribution code, a specific carrier, individual costs, and ori-gins or destinations. New Era is able to track if an invoice was paid on National Traffic Services’ Web site.

The final benefit to outsourcing the freight audit process is the savings that result from bills being audited before the carriers are paid. National Traffic Service checks to make sure that all aspects of the invoices are correct, including liability, base rates, discounts, and accessorial and fuel surcharges. The average savings across their cli-ent base is more than $4 for every invoice audited.

With less time spent on processing freight invoices, New Era can now focus on its core business – encouraging as many people as they can to fly their own flag! CT&L

Garry Oswald is vice-president of sales and marketing for National Traffic Service. He can be reached at goswald@natraf.com.

LTL Truckload Logistics

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we’ve accomplished in the areas of service that matter most to our

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THANK YOU FOR VOTING US YOUR #1CARRIER FOR TRANSBORDER LTL & TL SHIPPING

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we’ve accomplished in the areas of service that matter most to our

customers is phenomenal.”

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THANK YOU FOR VOTING US YOUR #1CARRIER FOR TRANSBORDER LTL & TL SHIPPING

42 ct&l september 2012 www.ctl.ca

dash board

TransCore’s Canadian Freight Index June volume posts second-best month in 2012 TransCore’s Canadian spot market freight index had the sec-ond highest freight volume this year, although it was 2% lower than May and 6% lower than in June 2011.

The second quarter saw substantial gains of 20% over the first quarter of 2012, but finished 6% below the highs of second quarter 2011.

Cross-border postings increased slightly, accounting for 75% of overall load postings, up 2% from the previous month. Intra-Canada postings contributed 22% of the total load vol-umes and differed only 1% from May.

Equipment postings dropped 7% month-over-month, and were up 5% year-over-year. While load volumes saw a signifi-cant quarter-over-quarter gain, equipment availability only increased by a modest 4%, resulting in a much lower equip-ment-to-loads ratio than the previous quarter. The equipment-to-loads ratio dropped in June reaching the lowest levels in

2007 2008 2009 2010 2011 2012 % % Change Change

Y-O-Y m-O-m

Jan 173 214 140 171 222 220 -1% 1%

Feb 174 217 117 182 248 222 -10% 1%

mar 228 264 131 249 337 276 -18% 24%

Apr 212 296 142 261 300 266 -11% -3%

may 280 316 164 283 307 301 -2% 13%

Jun 288 307 185 294 315 295 -6% -2%

Jul 219 264 156 238 245

Aug 235 219 160 240 270

Sep 206 203 180 234 263

Oct 238 186 168 211 251

Nov 227 143 157 215 252

Dec 214 139 168 225 217

TransCore Canadian Spot Market Freight Index 2007-2012

301 -2% 13%307283164316280may

295 -6% -2%315294185307288 Jun

245 238156264219 Jul

270 240160219235 Aug

263 234180203206 Sep

251 211168186238 Oct

252 215157143227 Nov

217 225168139214 Dec

TransCore Canadian Spot Market Freight Index 2007-2012

280

288

219

235

206

238

227

214

316

307

264

219

203

186

143

139

164

185

156

160

180

168

157

168

283

294

238

240

234

211

215

225

TransCore Canadian Spot Market Freight Index 2007-2012

307

315

245

270

263

251

252

217

TransCore Canadian Spot Market Freight Index 2007-2012

301

295

TransCore Canadian Spot Market Freight Index 2007-2012

TransCore Canadian Spot market Freight Index 2007-2012

Change Y-O-Y

-2%

-6%

TransCore Canadian Spot Market Freight Index 2007-2012

% %2007 2008 2009 2010 2011 20122007 2008 2009 2010 2011 2012

1% -1% Jan 173 214 140 171 222 220173 214 140 171 222 220

1%-10% Feb 174 217 117 182 248 222174 217 117 182 248 222 -10%

24%-18%mar 228 264 131 249 337 276228 264 131 249 337 276 -18%

-3%-11% Apr 212 296 142 261 300 266212 296 142 261 300 266 -11%

Changem-

13%

-2%

TransCore Canadian Spot Market Freight Index 2007-2012

1%

1%

24%

-3%

2012 – and the lowest level since June 2011.The top destinations for loads imported into Canada were: Ontario

(54%), Quebec (23%), Western (20%), and Atlantic (3%). Quebec increased 1% from May; the remaining re-gions remained unchanged.

The regions for import equipment into Canada were: Ontario (53%), Western (24%), Quebec (20%), and Atlantic (3%). Ontario increased 2% from the previous month. Western Canada and Quebec had slight decreases.

The regions of origins for loads within Canada were: Western (44%), Ontario (26%), Quebec (22%), and Atlantic (8%). Western Canada had a slight decrease month-over-month, with Quebec and Atlantic Canada increasing 1%.

The top states of origin for loads des-tined to Canada in order of most loads were Pennsylvania, Ohio, Illinois, California and Texas. The top US destina-tions for freight originating in Canada were New York, Pennsylvania, Texas, California and Washington.

TransCore’s Canadian-based Loadlink freight matching database constitutes the largest Canadian network of carriers, owner operators, freight brokers and inter-mediaries. More than 13 million full loads, less-than-truckload (LTL) shipments and trucks are posted to the Loadlink network annually.

The first six columns include monthly index values for years 2007 through 2012. The seventh column indicates the percent-age change from 2011 to 2012. The last column indicates the percentage change

43ct&l september 2012www.ctl.ca

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.

Ground transportation costs drop in May, CGFI indicatesThe cost of ground transportation for Canadian shippers decreased 0.29% in May when compared with April results, according to the latest results from the Canadian General Freight Index (CGFI).

The Base Rate Index, which excludes the impact of accesso-rial charges assessed by carriers, decreased by 0.3% when com-pared to April.

Average fuel surcharges assessed by carriers have seen a decrease from 22.4% of base rates in April to 22.1% in May.

“We are experiencing a marginal decrease in base rates and a slight increase in accessorials, while fuel remained relatively flat,” said Doug Payne, president and COO of Nulogx, which facilitates the CGFI. “It appears that marginal base rate gains in the domestic LTL and truckload markets were offset by marginal decreases in the cross-border LTL and truckload markets.”

For more information, visit www.cgfi.ca.

Canada rail freight traffic drops slightly in MayCanadian railways carried 26.0 million tonnes of freight in May, down 0.9% from May 2011, according to a report from Statistics Canada. The drop was solely the result of decreases in domestic freight shipments, as international cargo loadings rose.

On the domestic front, freight loadings, composed of non-inter-modal traffic (i.e., carried in bulk or loaded in box cars) and inter-

modal traffic (i.e., containers and trailers on flat cars), fell 3.5% to 22.5 million tonnes over the same 12-month period.

Non-intermodal cargo loadings declined 4.2% to 20.1 million tonnes. The decrease was the result of reduced traffic in more than half of the commodity classifications carried by the railways. The commodity groups with the largest declines in tonnage were wheat, coal and potash.

In contrast, several commodity groups registered increases. Loadings of fuel oils and crude petroleum increased the most, followed by sand, gravel and crushed stone, and iron ores and concentrates.

Intermodal freight loadings grew 2.3% to 2.4 million tonnes. The increase occurred solely on the strength of containerized cargo shipments, as trailers loaded onto flat cars declined.

Internationally, total rail traffic received from the US advanced 20.3% to 3.5 million tonnes. The increase was driven by both non-intermodal and intermodal traffic.

Geographically, 57.3% of the freight traffic originating in Canada was in the Western Division of Canada, with the remainder loaded in the Eastern Division. For statistical purposes, cargo load-ings from Thunder Bay, Ont., to the Pacific Coast are classified to the Western Division while loadings from Armstrong, Ont., to the Atlantic Coast are classified to the Eastern Division.

US for-hire truck tonnage bounces back in JuneUS for-hire truck tonnage increased 1.2% in June after falling 1.0% in May, according to a report from the American Trucking Associations. (May’s loss was larger than the 0.7% drop ATA ini-tially reported on June 19.)

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44 ct&l september 2012 www.ctl.ca

June’s increase was the largest month-to-month gain in 2012. However, the sea-sonally-adjusted index contracted a total of 2.1% in April and May. Compared with June 2011, the index was 3.2% higher, the smallest year-over-year increase since March. Year-to-date, compared with the same period last year, tonnage was up 3.7%.

The not seasonally adjusted index, which represents the change in tonnage ac-tually hauled by the fleets before any sea-sonal adjustment, was 0.9% below the previous month.

For the second quarter, the seasonally-adjusted index was off 0.8% from the previ-ous quarter, which was the first decrease in a year. Compared with the second quarter in 2011, the index was up 3.5%.

“June’s increase was a pleasant surprise, but the lower year-over-year gain fits with an economy that has slowed,” said ATA chief economist Bob Costello. “Manufacturing output was strong in June, which helped tonnage levels.”

Costello said he’s still concerned about businesses sitting on cash instead of hiring more workers or spending it on capital, both of which would give the economy and ton-nage a shot in the arm, as they are worried about Europe and the so-called US “fiscal cliff” at the end of the year. Costello lowered his tonnage outlook for 2012 to the 3-3.5% range due to recent economic weakness.

RBC Purchasing Managers Index shows slower manufacturing growth rate in JulyAfter registering strong growth in May and June, Canada’s manufacturing sector slowed to a four-month low in July, according to the RBC Canadian Manufacturing Purchasing Managers Index, a monthly survey which provides early indication of trends in the Canadian manufacturing sector.

The headline RBC PMI – a composite indicator designed to provide a single-figure snapshot of the health of the manufacturing sector – signalled a solid improvement in Canadian manufacturing business condi-tions during July. However, at 53.1, down from 54.8 in June and below the series aver-age of 54.2, the headline index indicated the weakest improvement since March.

The Index is conducted in association with Markit, a global financial information services company, and the Purchasing Management Association of Canada (PMAC).

The RBC PMI found that the volume of new orders received by Canadian manufac-turers rose in July, with this generally linked to greater client demand. However, new or-ders, as well as output, grew at sharply re-duced rates compared to June. Employment

increased at the slowest pace since April, though the rate of job creation remained solid overall, while the average price paid for inputs fell for the first time since October 2010.

“Canada’s manufacturing sector contin-ued to grow in July, albeit at a slower pace, suggesting global growth worries are weigh-ing on the economy. Employment improved for the sixth consecutive month in the sec-tor, with 21% of firms hiring additional staff, largely driven by increased production,” said Craig Wright, senior vice-president and chief economist at RBC. “As manufacturing con-ditions remain positive overall, we anticipate that further gains in employment and a pick-up in exports will support Canada’s GDP growth in 2012.”

Key findings from the July survey include:

• The volume of new orders received by Canadian manufacturers increased in July, continuing the trend that has been recorded in each month since the inception of the survey. Approximately 32% of firms re-ported an increase in new work, with this generally linked to greater client demand. However, new export orders rose only mar-ginally, partly reflecting weakness in the global economy. Subsequently, total new work intakes grew at a sharply reduced rate during the latest survey period.

• Reflective of the rise in new orders, production increased further during July. Although moderate, output growth was the slowest in four months. Meanwhile, firms depleted their stocks of finished goods, with a number of companies using existing in-ventories to fulfill some new order require-ments. Concurrently, backlogs of work fell for the second month running and to a greater extent than in June.

• Manufacturers raised their purchases and increased their input inventories in July. Firms have accumulated stocks of pur-chases for four months running, but the lat-est increase was the weakest in this sequence. Suppliers’ delivery times mean-while lengthened further during July. Panellists suggested that vendors struggled with capacity issues. The latest increase in lead times was moderate, but to a lesser ex-tent than in the previous survey period.

“Although the survey data pointed to a slower manufacturing expansion in July, with new export orders rising only margin-ally over the month, this can partly be at-tributed to weakness in the global economy,” said Cheryl Paradowski, presi-dent and CEO of PMAC. “Average input prices, meanwhile, fell for the first time in the 22-month series history, as surveyed firms reported lower prices for raw materi-als such as steel, aluminum, resin and packaging.” CT&L

We

exce

lat

wh

atw

ese

ll“s

ervi

ce”

The Armbro team

would like to thank its

customers for once

again acknowledging

our commitment to

excellence in the 2012

Shipper’s Choice

Awards.

www.armbrotransport.com

6050 Dixie Rd.Mississauga, Ontario

L5T 1A61(800)268-0940

Fax: (905) 670-2692

45ct&l september 2012

inside the numbers

Will trucking capacity be an issue? Why the ansWer is not a simple one.Concern from shippers over the likelihood of a shortage of capacity among both LTL and TL service providers has wavered over the past year. Initial concern has dwindled as a less than robust economy has meant shipment volumes have not reached expectations and so there has not been strain on trucking capacity. And it’s difficult to gauge at this point how the capacity issue will evolve. There are many conflicting statistics to consider. One thing is certain, Canadian motor carriers have changed their previous equipment buying habits. Our Equipment Buying Trends research, conducted annually among the nation’s motor carriers, reveals less than 40% are still on buying cycles that call for replacing their vehicles at least every five years. Yet Class 8 truck sales data from the Canadian Vehicle Manufacturers Association shows that YTD to May has been the third best year of the past decade. Clearly carriers are replacing their oldest iron, but are they adding to their existing capacity? Most Canadian trucking CEOs say they are being very tight on capacity. Yet our research shows only 15% don’t plan any truck purchases in 2013. Class 8 sales south of the border have weakened over the summer as motor carriers respond to a sluggish economy and weakening volumes. It remains to be seen if the same trend will occur here as well.

YTD Comparison Class 8 Sales to May 20121999 12,2802000 13,1252001 8,3132002 7,2382003 8,2032004 10,8712005 13,7592006 15,4642007 11,9102008 10,7022009 5,9532010 7,3592011 8,7222012 12,9625-Year Avg 8,929

10 years: 22% of for-hire fleet respondents

8-9 years: 11% of for-hire fleet respondents

6-7 years: 29% of for-hire fleet respondents

4-5 years: 35% of for-hire fleet respondents

3-2 years: 3% of for-hire fleet respondents

Current trade-in cycles

respondents

66

%66%

That’s the share

of supply chain

professionals, polled by

Honeywell, who said

they feel confident

projecting their supply

chain’s operation less

than one year out.

And 12% claimed zero

confidence to look

beyond the day-to-day.

% of HD fleet expect to replace remainder of 2012

% of HD fleet expect to replace in 2013

No replacements planned: 36% of for-hire fleet respondents 20% of fleet

replaced: 30%

10% of fleet replaced: 33%

20% of fleet replaced: 19%

30% or more of fleet replaced: 12% respondents

30% or more of fleet replaced: 12% respondents

No replacements planned: 15% of for-hire fleet respondents

10% of fleet replaced: 43% of for-hire fleet respondents

46 ct&l september 2012 www.ctl.ca

the bigger picture

Over the past several decades, offshoring has become a very popular supply chain strategy. The low costs of production in many Asian

countries, combined with enhanced ocean shipping and improved North American intermodal services, have made this sourcing option very attractive to many manufacturers and retailers. The offshoring movement accelerated as companies in a variety of in-dustries followed their competitors abroad and moved manufacturing jobs to other countries. The Great Recession was a further tipping point in the reduc-tion of North American manufacturing jobs. Recent economic data suggest that manufacturing is slumping in the US and Canada, pulled down by drops in new orders and shipments.

The Asia outsourcing curve may be about to reach an inflection point, however. Labour costs in China have been doubling every three years. Changes in cur-rency levels and energy prices have also altered the equation. If one factors in labour costs, freight costs and the Total Cost of Ownership (TCO) in bringing goods from China to North America, as compared to manu-facturing them here, the TCO’s are expected to con-verge in 2015, according to Harry Moser, Initiative Founder at the Reshoring Initiative (www.reshorenow.org), a non-profit organization based in Chicago, Ill.

Moser argues that about 60% of cost studies are flawed. They do not reflect the full set of variables and the full range of costs involved in offshoring.

The Reshoring Institute offers a free software tool (TCO Estimator) and a manual to perform detailed calculations and allow users to make informed deci-sions. The cost model includes 29 cost factors. Using a set of pull-down menus, freight costs from 17 countries, duty costs and various risk elements, the TCO tool al-lows companies to make accurate comparisons. Moser indicated that the model is based on moving goods from China to Chicago and the calculations use US dollars. Upon questioning, he indicated that Canadian compa-nies should be able to use the model and make the ap-propriate adjustments for moving freight to a major Canadian city (e.g. Toronto, Montreal).

Results from a recent survey indicate that 61% of larger companies are considering bringing manufactur-ing back to American soil. He listed a number of major corporations that are reshoring at least some of their

manufacturing back to the US, including Caterpillar, General Electric, Ford, NCR and Master Lock.

Each company that manufactures some of its goods offshore has a range of strategic options that are avail-able. They include:

1. Shift some offshoring back to North America2. Maintain a domestic sourcing option3. Shift some offshoring to nearshoring

(e.g. Mexico, Central America, South America)4. Move some offshoring in incremental steps

to North America5. Shut down offshore operation (as a last priority)

In Canada, the “Take Back Manufacturing” initia-tive was started by the Society of Manufacturing Engineers (SME) in Toronto, but is now supported by many other management associations, technical soci-eties and trade organizations in Ontario. Nigel Southway, chair of the SME, has been leading the charge in Canada. Like Harry, Nigel spent a great deal of his business career either in the manufacturing in-dustry as a technical operating manager or as a practi-tioner of productivity and continuous improvement. He has been an architect of change for many major manufacturing companies and is the author of a text-book on productivity improvement.

The Canadian initiative takes a broader perspective on reshoring than its American counterpart. It looks beyond the costing methodology at government pro-grams, education and training. It takes the view that we need a balanced economy in Canada that has strong resource industries, strong service industries and strong manufacturing. In a recent interview, Southway high-lighted that reshoring is particularly important in Ontario since this is the province that has suffered the largest loss of manufacturing jobs.

Certainly, the Canadian government has been very focused on supporting the development of the Western Canada oil and gas industries. Southway argues that government policies and incentives that support local manufacturing, coupled with education programs and apprenticeship training programs to help people per-form trades jobs in the manufacturing sector would take the reshoring movement to a whole new level and contribute to increased prosperity and higher employment levels. CT&L

From offshoring to reshoringBringing manufacturing back to North America

and the impact on supply chain strategies

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

dan@dantranscon.com.

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 : ltl.cda.sales@vitran.com

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 : ltl.cda.sales@vitran.com

http://www.cn.ca