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SUMMIT SUMMARY

Great minds meet on


transportation management

DECEMBER 2013

NEW HORIZONS

Announcing the launch


of Canadian Shipper

Published Since 1898

OUTLOOK 2014:

The climate ahead for


transportation purchasers

.., CT&L, Slug Cubed

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Published Since 1898


VOLUME 116

ISSUE NO. 11

DECEMBER 2013

C O V ER

Outlook
22. . .

MARINE CARRIERS:
EXPANSION PLANS

Canadian shipping firms boast fleet renewal,


increased investments

25. . .

AIR CARRIERS:
TOUGH CLIMATE

Rate and yield pressures continue as


cargo volumes show modest gains

28. . .

RAIL CARRIERS:
HEIGHTENED SAFETY

OUTLOOK

The rail industry faces stricter climate


on safety, process and service

32. . .

COURIER AND EXPRESS:


NO SHAKE-UPS

The biggest players increase their market


share, but otherwise the field is unchanged

Our annual report features the latest industry trends and


topics affecting your business, expert analysis of economic
factors shaping the year ahead, by mode, along with the most
up to date research on transportation buying trends.. . . . 21

35. . .

MOTOR CARRIERS:
MARGIN PRESSURE

Volumes are up but not rates

Special Inside
6 CITT REPOSITION 2013 REPORT

Exclusive coverage from CITTs AGM features in-depth


discussion of the CITT designation name change, and the
debate around fuel surcharges and affected stakeholders.

4 THE VIEW WITH LOU


Inside our rebranding to

www.ctl.ca

12 SURFACE TRANSPORTATION SUMMIT

Transportation Media and Dan Goodwill & Associates brought


together some 300 participants in this years Surface
Transportation Summit, which provided the opportunity for
shippers and carriers to air their differences, in a spirit of
collaboration, and sparing no sacred cows.
ct&l december 2013

the view with Lou


Volume 116 Issue No. 11 December 2013
EDITORIAL DIRECTOR

Lou Smyrlis (416) 510-6881


Lou@TransportationMedia.ca

whats in a name?

ASSOCIATE EDITOR

We are changing our title to Canadian Shipper. But we are keeping,


and growing, our commitment to supplying you with the
comprehensive information you need to manage transportation.

PUBLISHER

Nick Krukowski (416) 510-5108


nick@ctl.ca
ART DIRECTOR

Mary Peligra
mpeligra@bizinfogroup.ca

ince our publisher Nick Krukowski first


mentioned it in this space in the August
issue, youve seen our promotional ads
and youve been introduced to the upcoming
change in our title if you attended our most
recent Surface Transportation Summit. This is
the last issue we will be publishing under the
title of Canadian Transportation & Logistics.
Starting in 2014 we are adopting a new title:
Canadian Shipper.
As much as I had grown
used to the Canadian Transportation & Logistics title and the
familiarity it enjoyed in industry
circles, truth is that it was a
mouthful to say and its overly
long logo difficult to market.
The new Canadian Shipper title
is much shorter and easier to
promote but also better reflects
Lou Smyrlis, exactly whom our editorial
MCILT scope and mandate is meant to
serve: proven buyers of transportation services, both inbound and outbound.
Our publication is 115 years old and has
changed its title many times over the past
dozen decades to better reflect the changes in
the industry. But one thing has remained constant: Our focus has been on the transportation link of the supply chain. Our editorial is
geared towards providing the information you
need to get your product to where it needs to
be, when it needs to be there, in the most efficient, secure and cost effective manner.
The focus on transportation will not
change under the Canadian Shipper title but
it will be expanded. One of the most important changes weve witnessed over the past
two decades is the lengthening of Canadian
supply chains as Canadian companies set their
sights beyond the domestic or the US market
towards global markets. Of course, longer supply chains are more complex supply chains.
Over the past couple of years we have tried to
address the resulting need for more information about managing transportation in such
global supply chains by sending our editors
further afield to report directly on transporta4
4

Julia Kuzeljevich (416) 510-6880


Julia@TransportationMedia.ca

ct&l december 2013

tion and customs challenges. Expect more of


the same next year with every issue of Canadian Shipper having a focus on a key global
market: Europe, Asia, South America and, of
course, our largest export market, the US.
More global supply chains also mean an
expanding mix of transportation modes.
While we have attempted to include information about every mode in our issues, the
reality is we are constrained by the amount
of space available in our printed product.
Another key change for 2014 is a sizeable
increase in our frequency and an important
change in our delivery method. We will publish 18 issues next year six in the traditional features-based print format, and
twelve digital modal updates, each of them
focusing on key metrics for a specific mode,
and providing you with the latest industry
data, analysis, and insight affecting your
transportation purchasing decision.
The move to digital editions continues our
efforts to provide information to you in a
variety of platforms. Our award-winning
WebTV show, TMTV, is not only a favourite
on our website but is approaching half a
million views on our YouTube channel. Our
twice weekly e-newsletter keeps you up to
date on the latest news happenings. Its safe
to say we have conducted more research on
the transportation industry over the past 10
years than any other industry organization by
a long stretch. Our own Surface Transportation Summit is becoming recognized as one
of the best educational and networking opportunities in transportation today. And our
social media presence on Twitter and LinkedIn is second to none in the industry.
It all amounts to having the tools and flexibility necessary to tell a story in the best way
for that story to be told. We are committed to
engaging with our readers in whichever way
they prefer to engage with us. Expect to see us
reach out to you in even more new ways in
the years to come.
As excited as we are about the new title,
we are working to ensure there is real subCT&L
stance behind it.
www.ctl.ca

CONTRIBUTING EDITORS

Carroll McCormick, Leo Ryan, James Menzies,


John G. Smith, Ian Putzger, Ken Mark
MARKET PRODUCTION MANAGER

Gary White (416) 510-6760


gwhite@bizinfogroup.ca

VIDEO PRODUCTION MANAGER

Brad Ling

RESEARCH MANAGER

Laura Moffatt

CIRCULATION MANAGER

Barbara Adelt (416) 442-5600 Ext. 3546


badelt@bizinfogroup.ca
EXECUTIVE PUBLISHER

Tim Dimopoulos

VICE-PRESIDENT PUBLISHING

Alex Papanou
PRESIDENT

Bruce Creighton
HEAD OFFICE:
80ValleybrookDrive,Toronto,ONM3B2S9

CANADIAN TRANSPORTATION & LOGISTICSis


writtenforCanadiantransportationandlogistics
professionalswhomanageproductflowfrom
manufacturertopoint-of-sale.Editorialisfocused
onreporting,analysisandinterpretationofCanadian
logisticstrendsandissues.Itispublishedby
BIGMagazinesLP,adivisionofGlacier
BIGHoldingsCompanyLtd.
SUBSCRIPTIONS:
Contactusat:mmarasigan@bizinfogroup.ca
Tel:4164425600ext.3548.Fax:4165106875.
Website:ctl.ca(clickonsubscriptionbutton)
SUBSCRIPTION RATES: Canada:$64.95+applicabletaxes,
peryear;$105.95+applicabletaxes,fortwoyears.U.S.A.:
US$105.95peryear.Allotherforeign:US$105.95peryear.
Singlecopies$8exceptfortheannualLogisticsBuyersGuide
(Aug)$59.95+applicabletaxes,(notincludingHST)plus$2.00
forpostage.USA:US$107.95,Foreign:US$107.95ISSN
1187-4295(print),ISSN1923-368X(Digital),(Canadian
Transportation&Logistics.)IndexedbyCanadianBusiness
PeriodicalsIndex.PrintedinCanada.Allrightsreserved.The
contentsofthispublicationmaynotbereproducedeitherin
Lou Smyrlis,
partorinfullwithouttheconsentofthecopyrightowner.

MCILT

POSTMASTER: Pleaseforwardforms29Band67Bto:
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Department of Canadian Heritage

MEMBER CANADIAN BUSINESS PRESS


CANADIAN CIRCULATIONS AUDIT BOARD

r 2013

Menzies,
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3546

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Who could possibly keep up


with all the new trucking regs?
Good thing Northbridge
keeps me current.
Brian Kurtz, President, Kurtz Trucking, Breslau, Ontario
Im old school, says

at renewal time, but

Brian Kurtz. When I

these guys are in touch

started my trucking

to keep us up-to-date,

company over 30

says Mr. Kurtz.

years ago, you didnt

No other insurer

worry too much about

works as hard to

the rules. Now there

maintain relationships

are so many rules and

with customers. We

regulations.

provide ongoing,

Nobody under-

customized support,

stands the challenges

training and materials

facing transportation

to assist with your

companies more than

specific needs.

we do at Northbridge

Ask your broker

Insurance*. With over

how Northbridge lets

60 years in the sector,

you focus on whats

we get trucking. We

importantyour cus-

know how difficult it

tomers and your profits.

is to stay current on safety and

competition. Our tools enable

compliance requirements in vari-

you to improve your operations

were 10 years ago, says Mr. Kurtz.

ous jurisdictions. We can even

and lower costs, boosting your

But I know Northbridge will always

benchmark your performance

bottom line.

be there. Heck, theyve been around

versus your industry and

Some insurers you only see

Margins are half of what they

even longer than me.

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the

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Policies are underwritten by Northbridge Commercial Insurance Corporation. Registered trademark of Northbridge Financial Corporation (Northbridge). Used under license from Northbridge.

reposition 2013 report

CITT approves change to


designation name at AGM
Change will be
discipline-specific,
and aims to better
communicate expertise
and experience
By Lou Smyrlis

In an exclusive interview
with Warren Sarafinchan,
CITT, and vice president
of Supply Chain at
Sun-Rype Products Ltd.,
Canadian Transportation &
Logistics discusses CITTs
designation name change
and certification.

CTL: Is it true that CITT has decided to change


its designation name after over 50 years?
CITT: Absolutely, 100% true. And we think
this is really fantastic news. The CITT membership approved it at our AGM with overwhelming support. This is a long-overdue,
value-adding move for our designation holders and the companies they represent and
work with.
CTL: Why did CITT decide to make this change?
CITT: The simple answer is that CITT certified members and business leaders have been
asking for a discipline specific description of
the designation holder to better communicate
their area of expertise and high level of experience, integrity and professionalism.
CTL: What is the new designation name?
CITT: CITT-Certified Logistics Professional
(CCLP). CCLP was the most accurate, descriptive and appropriate designation name
we could adopt. It also is the way we informally describe CITTs fully certified pros and
designation holders now. Each part of it provides important information about the credential holder.
CTL: What was the reaction among your members to the change?
CITT: Most members are thrilled. And we had
tremendous participation from a huge portion
of our membership base in the decision-mak-

ct&l december 2013

ing process. Some of our most enthusiastic


CITT champions wanted to be sure that CITT
would still have a prominent profile. And
theyll be happy and confident that CITT is
prominent in the new designation name.
CTL: How can companies identify people who
are CITT-Certified Logistics Professionals?
CITT: Companies have a wide range of practices on how industry, and other, credentials
are shown with their staffs signatures and on
their business cards. For instance, some only
allow job titles. So someone might have a credential but it isnt shown. Of course, smart
employers and customers will always ask if
someone holds an industry credential.
That said, all CITT-Certified Logistics Professionals are entitled and encouraged to
show the initials CCLP after their names
and/or write out their full designation name.
And only those pros that are fully certified by
CITT and are in good standing as members
will be able to call themselves CCLPs. This
really distinguishes them from CITTs program of study graduates and articling students
as people who have met our academic requirements in logistics and business AND have
logged a minimum of 8,500 sector-specific
professional hours, have committed to continuing professional development and have
pledged themselves to ethical conduct.
The other way that CCLPs can be identified is if theyre showing our optional-use,
www.ctl.ca

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Capacity as a competitive advantage.

reposition 2013 report

CCLP trust-mark. Since not all forms of


communication will support or allow this
kind of graphic, this is a value-added
support for members and isnt required
for display.
CTL: Why did CITT pick logistics and not a
wider description, such as supply chain?
CITT: CITT-Certified Logistics Professionals (CCLPs) play lynchpin roles in the glob-

al supply chain ecosystem. Yet we felt it was


really important to avoid the faulty thinking
that says theres only ONE, definitive supply chain professional. In truth, there are
several complementary skillsets that need
to come together for someone to be a
completely well-rounded supply chain
professional. If people really want to be
recognized as all-round supply chain professionals, they really need cross-functional

certification from more than one expert


certifying body.
So CCLP is a LOGISTICS management
certification, providing industrys deepest
and more comprehensive coverage of the
technical discipline combined with operation-critical management abilities. The
other big skill-set for supply chain is procurement, and well leave this with our colleagues at SCMA since thats their focus.
CTL: Who is the CCLP Designation for?
CITT: Its for anyone who buys, sells or
manages logistics, or is impacted by the
transportation of raw materials or goods.
This is for people who work in businesses
where logistics or ancillary services is the
companys core business or for people who
work in supply chain and logistics roles on
the client side such as resources, manufacturing, retailing, or import-exporting.
CTL: Why is certification good for people working in supply chain and logistics roles today?
CITT: When you know more, and have a
third-party validation of that from a respected industry body youre worth more
professionally. And when times are tougher,
or uncertain like they are now, companies
really lean on and value people with proven
supply chain logistics expertise. In all, its a
proven investment that pays off with higher
earning power, better advancement prospects and improved overall employability
no matter whats happening with the cyclical economy or job market.

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CTL: Why is having a credentialed logistics professional (such as CCLPs) good


for business?
CITT: There are quite a few reasons actually.
Industry certification makes it completely
clear what someone knows by applying a
credible third-party standard of proficiency.
For the CCLP designation, CITTs standard
is objectively-measured based on the participants performance results in the program (not just showing up to a course).
CITTs standard is national and its recognized right across Canada as well as by international markets.
A professional designation really distinguishes the people whove made the effort
to earn one. Unlike some other professional
disciplines that require certification to practice, logistics credentials are entirely voluntary although more and more people are
becoming certified. Nevertheless, employers and customers can use credentials as a
measure to identify credential holders as
www.ctl.ca

ct&l december 2013

ACC_CTL_4.5x7.5-SouthAmerica.indd 1

13-10-15 3:18 PM

Shen
h

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to

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ToKyo
ToK

dalian

yoKohama

b uSan

S hang hai

S h e nz h e n
hong
h
ong Kong
Kaoh S i u ng

closer

is better.
Port Metro Vancouver is already close to
Asian markets. And with unprecedented
infrastructure investment in our gateway,
were getting even closer.
Were building land-side projects that
boost rail and road efficiency. Were
increasing our container terminal
capacity and reducing on-dock dwell
through collaboration with supply chain
partners. And were operating with
longshore labour certainty to 2018.
as a result, weve taken up to 3 days
out of your supply chain. That brings
your goods closer to market and you
closer to your customers.

Fold

to

reposition 2013 report

people who are committed to doing their jobs well and are serious
about their careers and the business of logistics. And that will be
more and more important with the coming wave of retirements.
Lastly, most professional groups have Codes of Ethics for their
credential holders. CCLPs definitely have one, as did our CITTs.
While this isnt a great differentiator with other professions or other
sector credentials who also have Codes of Ethics, having a code for
CCLPs definitely sets them apart from those people or companies
in business who are not interested in operating with integrity.
CTL: Did any of the requirements change for someone to earn a
CCLP designation (vs. a CITT Designation)?
CITT: No change at all.

CTL: Are there plans to change the name of the organization?


CITT: Absolutely not. CITT is CITT and will remain CITT;
although, like IBM, we dont spell out our full legal name
very often anymore. Well keep CITT since CITT has a
well-established and well-respected industry profile and is
an iconic brand. CITT has been known, trusted and respected
for 55 years and were not going to change that.
CTL: Where can someone learn more about becoming a CITTCertified Logistic Professional?
CITT: They can call CITT at 416.363.5696 or visit CITTs
CT&L
website at www.citt.ca

Hitting the moving target on fuel surcharges


Conversation is critical for shippers and carriers
By Julia Kuzeljevich

n a panel discussion on fuel surcharges at the CITTs National


Conference on Supply Chain & Logistics, Lou Smyrlis, Editorial
Director of the Transportation Media group, asked shippers, carriers, and oil industry experts to weigh in on the discussion about
types of fuel surcharges and the need to re-examine the processes
around them.
Smyrlis also said he hoped the discussion would spark an understanding of the different points of view and also the desire to continue the conversation.
CITTs National Conference, Reposition 2013, took place in
Toronto this November.
Roger McKnight, senior petroleum analyst, with En-Pro International Inc., said there are many factors affecting the price of crude,
whether its a low inventory in diesel as a factor of weather, a refinery or pipeline issue that immediately translates into a crude price
hit, and even the perception of a political crisis that affects trading
on currencies like the US dollar.
Six to twelve months out, he said, its expected that US shale oil
and oil sands production will steadily increase and there will be
some relief in terms of pipeline availability.
In the meantime fuel price volatility wreaks havoc on the transportation industry which must try to recoup some of that instability
via fuel surcharges.
Ginnie Venslovaitis, director, Transportation Operations, for
Hudsons Bay Company, said that while she wouldnt want to take
money out of the carriers pockets, fuel surcharges should be based
on fuel consumption and not on second drops, waiting time and
other accessorials that are more driver-labour related.
Panelists also discussed the merits of both percentage based and
invoice based fuel surcharges.
Mark Lerner, assistant vice president, Intermodal Sales, with CN
Rail, said the railway uses mileage-based surcharges for carload but
for intermodal, invoice based is easier for the customer to compare.
Invoicing is more efficient for intermodal when the complexities are built in, he said.
Jeff Bryan, president and CEO, Jeff Bryan Transport Ltd., noted
that carriers have to keep on top of the changes every time theres a
10

ct&l december 2013

different version out for a mileage program.


The process needs to stay as simple as possible, i.e. invoice
based, said Venslovaitis, which would essentially keep the potential for arguments out of the process.
If someone did want to move to mileage based, theres no easy
way to do it other than grabbing on to something that already exists
within the data, noted Richard Patenaude, vice president, Wheels
International Inc.
Are shippers and carriers willing to consider a revamp and a reset
of fuel surcharge rates as they stand?
Many of us as a group need to come up with whats the new
base rate and how much of getting from A to B is fuel these days.
As long as its simple, we should raise the bar up and make fuel the
right component of a freight bill, said Venslovaitis.
Were open to looking at how its calculated. The issue happens
when there is a wide swing in oil prices that may lead to the need
for recalculation or recalibration, said Lerner.
Considering the wide range of variability in fuel pricing, if carriers are hedging to that speculation, I would make sure I overstated
my base rates to compensate, said Patenaude.
Why hasnt someone come up with a new benchmark? Smyrlis
asked.
Because it costs money, said Bryan. The shipper has to come to
us and say we want to adjust our base rates to reflect X. Everybody
has their own program-it cant be whitewashed across the board. If
a shipper wants to change their benchmark they could probably do
that today, he said.
The reality is that we probably wont take the initiative to
change it. Everyone needs to be in alignment on the elements of
what make up the charges. We also dont need to get government
involved in the process, said Venslovaitis.
Are FCA fuel surcharge tables non-negotiable or can they be
considered a starting point for shipper-carrier negotiations?
Its a guidepost to where the true negotiation and conversation
should start. It protects your agreement with the carriers to volatility-when we look at the various reasons for why fuel prices jump
CT&L
around-someone has to have protection, said Venslovaitis.
www.ctl.ca

Coming
in 2014!

Shipper
CANADIAN
canadian

Formerly Canadian Transportation & Logistics

In 2014, Canadian Transportation & Logistics is adopting


a new title - Canadian Shipper.

Shipper
CANADIAN

The new title is more reflective of our editorial scope


and mandate: a business journal written for Canadian
Supply Chain professionals, in the context of their
transportation needs and responsibilities.
The new title also lends itself more
easily to the wide array of media
platforms through which we are
now able to serve you - not just our
print magazine, but our
eNewsletter CANADIAN
Canadian Shipper News - and online
portal as well - CanadianShipper.com.

Shipper
Canadian Shipper will continue to publish
the award-winning features and articles
that youve come to expect from Canadian
Transportation & Logistics - just with a fresh
new look! Watch for us in 2014!

Canadian
Shipper News

CanadianShipper.com

Surface
TranSporTaTion
2012

ummit

transportation management

Surface
TranSporTaTion
2013

ummit

OUR SPONSORS

hippers and carriers work better when they work together, in a spirit of cooperation and
collaboration rather than confrontation. These are more than fancy words; they are the heart of
what drives both Transportation Media and Dan Goodwill & Associates, two organizations which have
made a concerted effort over the years to bring shippers and carriers together to discuss issues of
importance, in an atmosphere that is both respectful of each others needs and yet spares no sacred cows.
And its what drove us to again bring shippers and carriers together for our second annual Surface Transportation
Summit this Oct. 16th. More than 300 top level transportation and logistics professionals heeded our call for a full day
of education and networking at our new venue, the Mississauga Convention Centre.
Our blue-chip lineup of more than 20 speakers dug deep into key subjects such as the economic outlook for
transportation, the CEOs view of the coming year, the future of intermodalism, the growth of dedicated transportation;
retail supply chains; carrier performance management; effective transportation sales strategies; opportunities in
mergers and acquisitions, and a frank debate on freight bids.
We were rewarded with a very insightful exchange of ideas.
But this conversation is too important to allow it to end there. So with this issue we are providing a comprehensive report on the major themes from the conference across all
Transportation Media properties Truck News, Truck West, Fleet Executive and Canadian Shipper, reaching more than 150,000 providers and buyers of transportation services
across the country. Look also for our Inside the Numbers and HookedUp e-newsletters for more information as well as future episodes of our award-winning WebTV show, TMTV.
We have already provided considerable coverage of the event on www.trucknews.com, www.ctl.ca, Twitter and on our Facebook page and will continue to provide more. This dialogue
between shippers and carriers must continue beyond the Summit and we will be doing our best to ensure that it does.
Finally, we would like to thank our growing group of industry sponsors, whose support allowed us to bring the Surface Transportation Summit to a higher level. And dont forget to
book Oct. 15, 2014 into your calendar for our next Surface Transportation Summit.

Surface
TranSporTaTion
2012

Lou Smyrlis, Publisher & Editorial Director


Trucking Group, Transportation Media

ummit

Nick Krukowski, Publisher


Canadian Shipper, Transportation Media

Dan Goodwill, President


Dan Goodwill & Associates

Most economic indicators in positive territory


Cautious optimism remains, even with US debt ceiling impasse

By James Menzies

espite all the negativity on the news, and the uncertainty involving the US debt ceiling, most trends are pointing to a
steadily growing economy that bodes well for truckings future.
That was the synopsis from leading economists and industry
analysts speaking at the 2013 Surface Transportation Summit. Carlos Gomes, senior economist with Scotiabank, has earned a reputation for being more upbeat than many of his peers.
I generally have been very positive over the past several years
and I still remain positive with respect to the outlook, Gomes said.
Globally, Gomes said the economy has been improving throughout the year, led by emerging markets in China, India and Brazil.
They have moderated as well, but they continue to grow in excess
of 5%, while the global economy is closer to 3%, Gomes said.
Even Europe, which has been an economic anchor in recent years,
returned to positive growth in the second quarter, Gomes noted.
China saw some moderation in economic growth last year, but it
has enjoyed double-digit growth in late 2012 and into 2013, which
is telling us the slowdown in China that was expected to last several
years is coming to an end.
Job growth is improving in the US, by about 2% year-over-year.
Thats a leading indicator Gomes watches closely.
Employment growth went negative a full year before the recession began, he pointed out.
Here in Canada, Gomes characterized the economic picture as
more mixed.
Coming out of the downturn, we had a significant improvement both in manufacturing shipments as well as building permits,
12

ct&l december 2013

Gomes said, noting growth has since moderated. Canada still relies
heavily on the US for 70% of its exports.
Gomes acknowledged Canadian household debt is a valid concern, but that it may not be as dire as it seems. Canadians now carry
a debt-to-household income ratio of nearly 160%, which is higher
than in the US today, and about equal to where US debt loads sat
before the recession.
However, thanks to low interest rates, debt charges account for
just 7% of disposable income in Canada, a figure that was in excess
of 9% in 2008 and as high as 12% in the 1990s. Interest rates would
have to climb by 100 basis points to bring the debt charges as a
percentage of disposable income to its average rate of 8.5%. So
while Canadian household debt is high, Gomes said its manageable
as long as interest rates remain low.
Charles Clowdis Jr., managing director, North American
markets with IHS Global Insights, said he was embarrassed by
what the impasse in Congress over the debt ceiling threatens to
do to the economy. He said a quick resolution should prevent
any lasting damage, but that it could interrupt some positive
momentum with leading indicators such as housing and consumer confidence.
Until two weeks ago, we were cautiously optimistic, about the
economy, Clowdis said. Were still cautiously optimistic.
Focusing on transportation, Clowdis said hes seeing evidence of
near-shoring, with as much as 5% of manufacturing that was moved
to Asia, returning to North America, usually to Mexico. This bodes
CT&L
well for trucking and rail providers, he noted.
www.ctl.ca

transportation management

Going intermodal:

Wheres the demand and are


service levels improving?
By Julia Kuzeljevich

panel of intermodal experts attending the 2013 Surface


Transportation Summit, held by Transportation Media with
Dan Goodwill & Associates, shed light on where this mode of
transport is headed going into 2014.
The panel, moderated by Dan Goodwill, was asked to elaborate on some of the common perceptions about intermodal use.
Neil McKenna, vice president, transportation, with Canadian Tire Corporation, indicated that intermodal is a strategic
part of the Canadian Tire network, and that this mode is used
to handle some 30% of the companys 4 billion pounds/year of
freight, and specifically 36% of the inbound freight coming in
from Vancouver.
Its (for) freight that doesnt move over the road. Where the
infrastructure is conducive to it is an indication of where its
used, he said.
I agree the driver shortage has some impact on moving containers to the intermodal mode, but I dont think the shortage is
as serious as its being portrayed-I think its a capacity thing,
added McKenna.
Ron Tepper, executive chairman and CEO, Consolidated
Fastfrate, said the company is engaged in lots of intermodal activity through its recent trucking company acquisition and also
through Canada Drayage which has offered up a lot of opportunities for us. We have to find ways that are competitive, or better,
to move LTL shipments. Because our freight is portable we can
load it as cost per cubic foot. We have a real value to the railway
in terms of repositioning shipments out west again, said Tepper.
The companys trucking business is a little more diversified
while the intermodal business is 100% LTL, he said.
Barry ONeil, executive vice president, Hub Group Canada, said that out of some $3.1 billion in total business, $2 billion is from intermodal.
Weve grown our drayage operations to become one of
the largest in North America. The growth of HUB is driven
by our asset management and control. We continue to grow
our asset program as assets are depleted in the intermodal
business, he said.
Mark Lerner, CNs AVP, domestic intermodal, said the CN
vision for intermodal is not to change it.
We want to build on it in terms of investing in our infrastructure and giving our customers more value, and more options. Weve invested in infrastructure, in more track, and more
sidings. We have a $200 million facility in Calgary that will give
us the capacity to grow in key western markets, with faster
ramping and deramping of trains and co-location opportunities.
Were also looking at capacity in terms of domestic and international, he said.
The railway also just purchased 100 reefers that its starting to
offer in the transborder market.

www.ctl.ca

In terms of length of haul, and where intermodal fits best,


Goodwill noted times have changed.
I recall 1500 miles was kind of a benchmark back when.
Now, were talking about lengths of haul as short as 600, 700
miles, with 80% of truck movements in the 500 mile or less
space. Whats the impact on cross-border, and on Canadian
freight? he asked the panel.
A lot of the trucking companies we deal with are happy that
we can move in the shorthaul corridors. In order for railway to
compete theres a lot of fixed costs. You need a truck-like service,
dependable and fast. You need a good low cost infrastructure in
terms of being able to doublestack, said Lerner.
The Chicago-Toronto corridor is showing incredible growth,
he said, both from freight transloaded out of LA-Long Beach or
originating from the Midwest interior.
It is quite doable-we may even see this accelerate, he said.
Shippers continue to have questions about rail service levels
and according to Lerner, a lot has changed in intermodal products
over the last decade.
When people experience something once its hard to shake it.
I understand that if there was a bad experience there would be the
fear it would happen again. But with the reservation process we
put in back in 2003, 2004 we are able to understand shipper
demand and size our cars accordingly. If we dont understand
whats coming at us we cant plan for it, he said.
CNs intermodal-focused customer service department is in
charge of looking at service issues 24/7.
The team sits with every new customer on delivery windows,
expectations, contacts, targets. We have the KPIs against it. Now
we buy ahead of the cycle-we have a little bit more than we actually need, said lerner.
McKenna said that reservations have improved fourfold, and
80% of time were getting what we need.
Intermodal is the cheapest mode of transport next to water,
and the lowest in emissions per tonne/km. Its a no brainer as a
sustainable part of your strategy, he said.
With the Panama canal expansion and targeted opening for
2015, questions abound about whether the larger vessels will increasingly call on east coast ports, and how this will play out on
the use of intermodal.
Shippers are increasingly procuring sophisticated technology
that is allowing them to determine where intermodal fits optimally.
Were in the process of implementing a TMS-its necessary
because of the complexity of the intermodal system and for
keeping track of freight, bills and for reconciliation purposes,
said McKenna.
Rail costs are lower than trucking costs so when it can move
by rail, then it should, and other than that it should move by
CT&L
road, said Tepper.
ct&l december 2013

13

Surface
TranSporTaTion
2012

transportation management

The right fit

ummit

Surface
TranSporTaTion
2013

ummit

Surface
TranSporTaTion

ummit
Carrier metrics, performance,2012
feedback
key
to solid shipper relationship
By Julia Kuzeljevich

14

ct&l december 2013

or shippers charged with managing the


transportation equation of their business, creating an optimized transportation
solution that results in efficiencies is the
goal to strive for.
But what are the steps it takes to get
there?
This years Surface Transportation Summit offered a comprehensive carrier performance management seminar featuring
guest speakers Tom Coates, senior vice
president and COO, Lakeside Logistics Inc.
and Anna Petrova, senior manager, customer service & transportation, with Ferrero
Canada Ltd.
Lakeside Logistics, noted Coates, handles a wide variety of transportation requirements in infrastructure products, floral distribution, food, and consumer goods.
After 27 years, were more focused on
the transportation management service.
About five years ago we decided to move
away from the transactional business and
more into strategic alignment with customers, dealing at the C-level, and offering
more of a transportation management solution where we would do network optimization, activity costing, business analytics and
benchmarking, said Coates.
When selecting carriers, as part of the
agreement with customers, said Coates,
we always like to look at the incumbent
carriers as part of the new stable of providers that were going to use. We have a database of approximately 4000 carriers that
we do business with or have done business
with and we would look at those companies too, to figure out something that fits
the needs of the customer.
Petrova said that Ferreros carrier selection process is very much about looking for
the right fit.
The right fit to me is service and capacity. Capacity is an important matter because were a seasonal company and we still
spike around Christmas time, with the second biggest spike (in volumes) around Easter, said Petrova, adding that ten years ago
over 60% of the companys inventory was
sold during the Christmas season alone.
When discussing future relations with a
potential carrier, Ferrero uses a very selective process, relying a great deal on carrier
reputation and background.
We make sure we are dealing with reputable service providers, said Petrova.
For Lakeside Logistics, which has a full
safety and compliance group in the company, what were looking for when we
have an opportunity to look at new carriers
www.ctl.ca

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Surface
TranSporTaTion
2012

transportation management
is predominantly Canadian based carriers.
They are very familiar with crossborder requirements, said Coates, adding that carrier safety records, CVORs, and insurance
coverage are key considerations.
We have insurance minimums they
must obtain-$250,000 worth of cargo.
Were also looking for WSIB coverage, and
the carriers physical location in relation to
our clients. We work with companies with
four or five trucks and we work with some

16

ct&l december 2013

ummit

Hercules D

Surface
TranSporTaTion
2013

ummit

of the biggest carriers in Canada. We focus


on value added services too, and credentials
Surface
like CSA
for the northbound, FAST, and
TranSporTaTion
C-TPAT.
ummit
2012
I would be a hypocrite if I said that cost
was not a consideration,said Petrova of the
carrier selection process at Ferrero. We do
RFPs, but these are not a way for shippers
to intimidate carriers, said Petrova.
RFPs were a hot topic of discussion at
the summit this year. Jacquie Meyers, pres-

ident of Meyers Transportation Systems,


issued a plea to shippers and carriers attending the Summit to re-evaulate the tender process, which she says has commoditized the trucking business.
There are lot of challenges inherent to
these tenders, Meyers said. Number one,
it reduces the decision making down to
priceoften times when we win these tenders, you are not really winning. Its not a
long-term win. It means you were the
cheapest or close to the cheapest. You have
to give something up to be cheap. If youre
the cheapest, what are you leaving out?
Driver training? Safety? Security? Meyers
said in a presentation during the summit.
For the shipper, RFPs act more along
the lines of a quality control tool, Petrova
stressed.
In a lot of global organizations you have
to watch for multiple audit reports, governance policies, and risk minmization, and
RFP is a tool were expected to use in a lot
of cases and quite frankly they can end up
costing us more money. All it does is it
gives you a reality check. It compares your
business requirements to what the market
has to offer. Sometimes prices go up and
you end up paying more, said Petrova.
As a buyer, I should not be overpaying
for the service, so that is sort of part of my
personal exercise. Do we have to run RFP
every time we want that reality check? I
would say no, because RFP is a very highmaintenance process on everybodys part,
not just on the transportation companys
part. Imagine all the data you have to gather-imagine all the analytical support you
have to go through. Its the responsibility of
every freight buyer to understand what the
market has to offer. Anyone who has the
skill of creating a simple Excel spreadsheet
can and should do it, she said.
The measurement of carriers, and the
key variables inherent to that process, is another important process in selection and
retention.
Before we measure them we have to be
clear about what our expectation is. People
need to know when they are not performing to our expectations and this will make
them better. With regard to specific KPIs
we have them we collect one-time delivery reports from our carriers. Its a self evaluation report-they send us the 214 EDI information they put into a nice spreadsheet
with the reason codes as to why they were
late, said Petrova.
The other thing I look at are carrier
claims-how much Nutella did they freeze
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Surface
TranSporTaTion
2012

transportation management
for me, and how much Rocher did they
melt? The bottom line is its important they
execute to our expectations and to their
commitment. Because this is what went
into their regional agreement and we have
to hold each other responsible because its a
partnership, she said.
When we start a relationship with a
company we need to understand what our
client needs are-and we bring that back and
put a plan together on how we can get that

ummit

Surface
TranSporTaTion
2013

ummit

out to carriers. Sometimes we would issue


an RFP, and we create a scope document so
Surface
carriers can
understand what it is theyre
quotingTranSporTaTion
on. Were measuring the carriers
ummit
2012
on compliance issues. In retail a lot of fines
can happen. If someone levies a fine on a
late delivery we have to get in the middle of
that and find out were the goods picked up
on time, did they have enough time in transit-well push back and fight off a fine based
on what our records indicate, said Coates.

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18

ct&l december 2013

We have been somewhat mild in managing our carrier base, but we have to be
very transparent and very clear. If there are
examples of poor service, by all means they
will be brought up at the moment of rate
renegotiations, by all means they will be discussed, and I will want to know what will be
the corrective and preventive actions to
make sure that the next year of our partnership we see less of those, Petrova said.
Coates said Lakeside Logistics has created an operations person to work on the operational side and liaise with the customer.
We have strategic account managers
who manage our major accounts who are
not salespeople but when there is an issue
they would help solve it or bring it back to
us, said Coates.
Petrova said she aims for a short-lived
relationship with salespeople.
I talk to the salespeople at the point of
rate discussions, and then I try to terminate
that relationship. In some transportation
companies there is that belief that salespeople should be the mediators between
me and the rest of their organization. Quite
frankly, salespeople should be out there
bringing the owners more sales and new accounts, they shouldnt be buried with operational issues, and I shouldnt have to go
through the sales rep to talk about operational issues that I have. Moving forward I
would like to have a solid operations contact with whom I can speak the same language as ops person to ops person. And I
would probably not settle for less than a VP
level on the transportation side, because I
do want to make sure that I speak with the
people who make decisions, she said.
Adding that the fish stinks from the
head, Petrova noted that the exceptional
carriers are those where the owners are invested in, and interested in, each aspect of
the jobs their company is awarded.
In terms of a company that stood out
for her in this regard, Petrova said Ferrero
signed a contract three years ago with a
new carrier.
One of the first trucks shipped out was
driven by the owner-the whole atmosphere
around that was very interesting. He
showed up in his work boots and jeans with
a big notepad. He wrote everything down.
He asked me to take him to the warehouse.
He asked me to take him on the factory
tour and looked into every wastebin. He
asked for a copy of the bill of lading and
mentioned a few things he wanted to see
differently. It made an incredible impression and tells you the value and the stanCT&L
dards of the organization, she said.
www.ctl.ca

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OUTLOOK 2014
The road ahead for transportation purchasers

OUTLOOK 2014

21

KLA_2013

OUTLOOK 2014

marine carriers
Canadian shipping lines pursue expansion
amidst challenging cargo trends
By Leo Ryan

CSLs Trillium
Class self-unloader.

n looking at developments in 2013 and the outlook for 2014,


certainly the financial results of some global carriers merit mention for showing improvement despite mounting capacity and
still volatile ocean freight issues. However, closer to home, the limelight justifiably belongs to Canadian shipping firms accelerating
their biggest fleet renewal in three decades to compete not only in
international trades and the domestic trades on the Great Lakes/St.
Lawrence waterway but also to bolster the coastal trades in the
Arctic region.
As an example of a leap of faith and taking the long-term approach, total investments well exceeding $1 billion are all the more
striking in light of lacklustre cargo activity in recent years on the St.
Lawrence Seaway. Throughput has fallen to below 40 million
tonnes as opposed to 45mt in 1992, 50 million mt in 1989 and 68
mt in 1982 the main contributing factors involving a combination
of increased competition from the Mississippi route, strengthened
rail services to US east coast ports, and a historic shift in large volume grain exports from Europe to Asia via the West Coast.
Up to the end of September, total traffic on the Seaway was
down over 10% at 22.8 mt. A record grain crop was expected to
generate a strong surge in shipments in the closing weeks of the
2013 season.
We expect to finish 2013 at or slightly below our forecast of
39mt, states Bruce Hodgson, director, market development, St.
Lawrence Seaway Management Corporation.
Europe has started to show some signs of recovery, although
this is being offset by weaker than anticipated performance within
the Canadian and US economies.
With a similar economic outlook foreseen in 2014, Hodgson sees
22 OUTLOOK 2014

Seaway volume hovering between 38mt and 39mt in 2014.


Iron ore cargo in 2014 is expected to remain steady, while
grain cargo through the Seaway should increase somewhat.
In the project cargo sector, Hodgson says wind turbine volumes should rebound from the low levels experienced in
2013 as a result of the US tax credit for renewable energy now
being in place.
In the Great Lakes region, project cargo has become a growing area of business for such ports as Thunder Bay on the tip of
Lake Superior, thanks in part to rapid direct CN rail service to
Fort McMurray and the Alberta oil sands. In this regard, Tim
Heney, president and CEO of the Thunder Bay Port Authority,
forecasts a resurgence with recent inquiries pointing to a
pick-up in wind farms and oil sands-related activity.
Among the shipping lines, Wayne Smith, senior vp, commercial for Algoma Central Corporation, which operates the
largest Canadian-flag fleet of dry-bulk carriers and product
tankers, sees encouraging trends in grain, construction materials
as well as steel products thanks to a more robust North American auto industry.
Greener and more capacity
Otherwise, Algomas management is looking forward to reaping the
benefits of its Equinox Class ships being built in China as part of a
new era of shipping in Canada. The latter was kick-started for Canadian-flag vessel operators in particular by the federal government
removal in October 2010 of a longstanding, controversial 25% import duty on ships built outside Canada.
A gearless bulker, the Algoma Equinox, was the first in a series
of eight Equinox Class fuel-efficient green vessels to arrive in Canada in the late fall of this year. The other seven are slated to be delivered in approximate three-month intervals starting in 2014. All
told, the fleet expansion comprises four gearless bulk carriers and
four self-unloaders.
These ships have been designed to optimize fuel efficiency and
operating performance. They offer additional cargo space and a
45% improvement in energy efficiency from the current fleet.
And regarded as a game-changer by industry observers is the fact
they are fitted with exhaust gas scrubbers that remove 97% of all
suphur oxides from shipboard emissions. They represent the first
application of such scrubbers on a Great Lakes vessel approved
by the International Maritime Organization (IMO), a UN agency
based in London.
When CSLs Trillium Class self-unloader Baie St. Paul arrived in
Montreal in December 2012, it marked the beginning of the biggest
ship renewal in the history of Canada Steamship Lines. Then, over
the next 11 months, six other vessels built in China joined her,
totaling more than 350,000 DWT.
Marine continued on page 24

KLA_2013_All-Around_CanadianTransport

3/21/13

4:57 PM

Page 1

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OUTLOOK 2014

CSLs Thunder Bay in Montreal.


Marine continued from page 22

Today, four Trillium Class Lakers ply the Great Lakes/St. Lawrence waterway and three Trillium Panamaxes are in operation on
ocean routes for CSL Americas.
Along with a more efficient hull shape, propeller design and
anti-fouling paint, the Trillium Class vessels use variable frequency
drives so that fewer generators need to be on line to start machinery,
thereby reducing fuel consumption. Other environmental features
include emissions-reducing technology and the replacement of
stern tube oil with a water-based lubricant.
For its part, Montreal-based Fednav Ltd., the largest ocean-going
user of the Seaway, currently has16 vessels on order from a Japanese shipyard for delivery in 2015-2016 as part of a major renewal
program entailing investments surpassing $500 million. Twelve of
these ships will be Great Lakes-suitable Handysize bulkers that are
highly flexible for international trades and specially equipped for
navigating in ice. They are built with box holds ideally suited for
breakbulk and project cargo. They will also use 28% less fuel and

Inside the numbers

transportation
buying trends survey

Changes in use of mode 2014

marine freight shippers

produce 33% fewer nitrogen oxide emissions than an earlier generation of ships purchased a decade ago from the Oshima shipyard.
A pioneer in Arctic shipping for more than five decades, participating in every major mining project in the region, Fednav will be
marking a new chapter in its Arctic operations in Q1 2014 when a
new Polar Class bulk carrier, the MV Nunavik, is scheduled to make
its first winter voyage transporting nickel and copper concentrates
from northern Quebec to customers in Europe. The MV Nunavik
will thus be joining the Umiak I and MV Arctic long in service in
Fednavs Arctic operations.
Last July, the MV Mitiq was added to the Arctic sealift operations during the summer months of Nunavut Eastern Arctic Shipping. Montreals Logistec Corporation is a shareholder in the Inuitcontrolled company.
Meanwhile, the Oceanex Connaigra, the largest Canadian-flag
container/roro ship, built in Germany at a cost of more than $100
million, began its regular service for the Oceanex group in late NoCT&L
vember between Montreal and St. Johns.

EXPECTED RATE INCREASES 2014

Not sure
11%

Size of Increase

% of Respondents

Down 5%+

0%

Down 2-5%

5%

Down 0-2%

Increase
35%
Stay
the same
50%
Decrease
4%

0%

Flat

28%

Up 0-2%

19%

Up 2-5%

19%

Up 5%+

5%

Not sure

26%

% expect this mode to have


highest pricing power 2014

SURCHARGES

% RESPONDENTS PAYING

Fuel
Currency

7%

Detention
3%
Border Delay
9%

CAPACITY CONCERN

Border Security

95%
3%
20%
3%
20%

4.44
0
excess capacity

24 OUTLOOK 2014

5
balanced capacity

10
very tight capacity

air carriers

OUTLOOK 2014

Pressure on yields, rates, continues


By Ian Putzger

arked freighter aircraft and failed all-cargo airlines were the


starkest manifestations of a tough business climate for operators in the air cargo industry in 2013. After two years of
negative growth, global volumes appeared to show some modest
gains, but the pressure on yield remained strong.
Since 2008 we have been fumbling along as an industry, comments Lise-Marie Turpin, vice president of cargo at Air Canada.
We have been in the doldrums for the past five years. We have
had no growth, but capacity has increased.
Howard Jones, president of airline general sales agent Network
Cargo Systems, whose client list includes Etihad Cargo, United
Cargo and Thai Cargo, likens the past year to 2009, when the
global crisis began to bite. 2009 was worse, as demand dropped
sharply, but the rates were not too bad then. Now the rates are
bad, he remarks.
Airlines have been struggling with a toxic combination of slow
demand, overcapacity and high operating costs with high fuel
prices, which has crippled yields. Freighter operators have been
Air continued on page 26

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Dominion
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are the intellectual
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OUTLOOK 2014

25

Air continued from page 25

particularly hard hit. Unlike passenger airlines,


they had to shoulder the full brunt of this perfect
storm, unable to mitigate some of it with revenues from passenger operations. Older, fuelOUTLOOK 2014
thirsty freighters have been taken out of service,
but the arrival of large new freighters with significantly more capacity and the steep growth in
bellyhold capacity from passenger carriers have
ensured that on most sectors the available lift exceeds demand. The situation has been exacerbated by shippers efforts to curb logistics costs by shifting as
much traffic as possible to slower, less expensive alternative modes
of transportation, especially ocean cargo.
Bob Imbriani, vice president of corporate development at forwarder Team Worldwide, reckons that this shift has largely run its
course. Companies are still looking to shift some traffic from air
to ocean, but it is not as large a shift as before. Most of this has
already been done, he says.
Freighters may have been hurt the most by the situation, but
passenger carriers also feel the pain. Low-cost airline Frontier
announced earlier in the year that it would abandon the cargo
business. Jones reckons that larger carriers are unlikely to follow
suit, though.
No mainline carrier has done that yet. Cargo is 7-15 percent
of the total revenue for belly carriers. You cant throw away 15
percent of your bottom line, he comments.
He adds that more airlines are interested in using sales agents
like Network Cargo Systems. GSAs are more cost-effective for
airlines in a tight market. We are getting more enquiries and have
meetings with airlines that are interested, he says.
Like several other passenger airlines, Air Canada has added

Inside the numbers

capacity on the strength of its passenger business. Three Boeing


777s joined its fleet in 2013, with two more to follow in the first
quarter of 2014. These can carry up to 40 tons, the equivalent of
a mid-sized freighter. Halfway through the coming year Air Canada will take delivery of its first B787 Dreamliner, an aircraft
that offers 15 percent more cargo capacity than the B767-300
that it replaces.
The 777s and 787s are mostly for international routes with
good cargo demand. Despite the challenge of having to find
more freight, Turpin welcomes them, as they enable Air Canada to offer steady lift on routes where the 767s have faced payload restrictions.
In Air Canadas case the new aircraft joining the fleet do not
mean incremental capacity increases over the planes they replace,
as the latter continue in service, just in different colours. They are
shifted over to offshoot low-cost carrier Rouge, which took off this
past summer with two B767s. Some of the tourist destinations
served by the new carrier, such as Edinburgh, have little cargo
demand, but others work well for freight, says Turpin. She points
to the Venice route, which has allowed Air Canada Cargo to tap
into traffic from northern Italy.
With Rouge we can tap into new markets. It helps us build
our network out of Canada, she remarks. Jones agrees that airlines with larger route networks have an advantage in the existing
market conditions.
The market has not been entirely grim for freighter operators.
Cargojet, which makes most of its money hauling traffic for the
express industry overnight on trunk routes across Canada, has enjoyed 5-7 percent growth in the domestic arena in 2013, according
to Jamie Porteous, executive vice president of sales and service.
The freighter airline is about to boost its capacity, as manage-

transportation
buying trends survey

Changes in use of mode 2014


EXPECTED RATE INCREASES 2014

air freight shippers

Not sure
10%

Size of Increase

Increase
23%

Stay
the same
60%

% of Respondents

Down 5%+

0%

Down 2-5%

2%

Down 0-2%

Decrease
8%

7%

Flat

27%

Up 0-2%

16%

Up 2-5%

11%

Up 5%+

11%

Not sure

25%

% expect this mode to have


highest pricing power 2014

SURCHARGES

% RESPONDENTS PAYING

Fuel

1%

Currency
Detention
3%
Border Delay
9%

CAPACITY CONCERN

Border Security

93%
10%
7%
7%
31%

3.47
0
excess capacity

26 OUTLOOK 2014

5
balanced capacity

10
very tight capacity

ment has decided to start replacing its B727 fleet with larger B757
cargo planes. Such a step was on the horizon for some time but
gained stronger momentum after FedEx retired the last 727 from
its fleet. With the largest operator of the type out of the picture,
most maintenance firms will scale down their service program for
the aircraft, making it harder and more expensive to keep the
planes in good shape.
The 757 fits all our routes. It also gives us some room for
growth, says Porteous.
Besides the integrator traffic, Cargojet has enjoyed growth in
interline business with Asian carriers hauling in freight across the
Pacific. Its departures from Vancouver are usually full, so some of
this cargo is trucked to Calgary or Edmonton for lift from these
points, says Porteous.
Flights between Canada and China stand to increase as a result
of the new bilateral aviation agreement between the two nations
that was signed in July. It allows for a threefold increase in passenger and cargo flights. Turpin is delighted with this, even more
so because westbound loads have grown well and are now almost
level with eastbound traffic, she reports.
Across the Atlantic airlines and forwarders look forward to the
free trade agreement with the European Union to come into effect. I am not sure where exactly this stands at the moment, but
it should boost some commodity flows, remarks Bill Gottlieb,
president of David Kirsch Forwarders and a director of the Canadian International Freight Forwarders Association (CIFFA).
While operators anticipate some improvement in demand in
2014, cost containment will remain a major focus for most of
them. The overcapacity forces us to be very disciplined in our
approach to the market, comments Turpin.
Automation plays a key role in this space, with the data flow

between forwarders and airlines one prime target. The establishment of a multilateral electronic air waybill last summer should be a major catalyst in pushing this effort forward. Finally we
OUTLOOK 2014
start to see some traction with the e-air waybill.
The absence of a multilateral agreement has been
one of the roadblocks. This will allow us to move
forward, says Jeff Cullen, CEO of the Rodair
Group and president of CIFFA.
Security requirements, notably the push for
transmission of manifest information ahead of departure, has been
a major catalyst for the advance of e-freight. Gottlieb points out
that more developments are afoot in that area but it remains unclear when they will materialise.
Weve got people in Canada who have invested in expensive
equipment for scanning and find they dont use it much because
the implementation keeps being pushed back, he notes.
Security is still a moving target. This has been one of the
frustrations. What is needed is clear directions and a mandate,
agrees Cullen.
Gottlieb adds that customs had intended to roll out the e-manifest in June. Are we going to see another 6-month or 12-month
delay in implementation? he wonders.
The commercial outlook for the year ahead seems similarly
hazy. I cant predict anything for 2014. I think about next week,
net year I cant even take a guess at, says Jones, adding that the oil
price will have a huge bearing on how the market develops.
I dont think were back on terra firma. That seems to be the
new normal with demand and capacity. There does not seem to be
predictability any more, reflects Cullen. Its still very much a
CT&L
spot price market. Its the grand bazaar.

If youre in the pizza


andfeed
pasta
business,
are
we.
seed and
business,
soso
are
we.
We may be in shipping, but your business is our business. From Europe, Asia, Canada, Mexico, Alaska, Hawaii
and beyond, our LCL/FCL services and global logistics experience ensure your imports and exports get
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Freight Line,
Line, the
the Old
Old Dominion
Dominion logo
logo and
and Helping
Helping The
The World
World Keep
Keep Promises
Promises are
are service
service marks
marks or
or registered
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service marks
marks of
of Old
Old Dominion
Dominion Freight
Freight Line,
Line, Inc.
Inc.
All
othertrademarks
trademarks
and
service
marks
identifi
ed herein
the intellectual
of their respective
owners.
2013 Old
Dominion
Freight
Line, Inc.,
N.C. All rights reserved.
All other
and
service
marks
identifi
ed herein
are theare
intellectual
propertyproperty
of their respective
owners. 2013
Old Dominion
Freight
Line, Inc.,
Thomasville,
N.C.Thomasville,
All rights reserved.

OUTLOOK 2014

27

rail carriers

OUTLOOK 2014

Rail industry faces heightened safety,


regulatory activity
By Carroll McCormick

ith a horrific blast, the downtown core of Lac Mgantic,


Quebec was flattened and 47
people died after a runaway Montreal
Maine & Atlantic (MMA) rail car carrying
crude oil crashed and burned last July.
MMA declared bankruptcy and its Canadian operating licence hangs by a thread
even as the Canadian Transportation Agency (CTA) has thrice extended the suspension of its licence, most recently to February 1, 2014.
The downtown track is being repaired
and service to the citys industrial park may
be restored by the end of 2013. When rail
service will otherwise return to its pre-acci-

dent levels is an open question. The city is


pushing to have a track go around the city.
But this is a huge project, a long-term project, says Christine Couture, supply chain
manager, Tafisa. Tafisa is North Americas
largest manufacturer of particleboard and a
Lac Mgantic industrial park tenant.
The tragedy will have enduring consequences for rail companies and suppliers.
For instance, the Transportation Safety
Board of Canada (TSB) wants Transport
Canada and the United States Pipeline and
Hazardous Materials Safety Administration (PHMSA) to review the processes for
suppliers and companies transporting or
importing dangerous goods to ensure the

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properties of the goods are accurately determined and documented


for safe transportation.
The TSB discovered that crude oil in nine intact tank cars in that
MMA train was inaccurately labeled as Class 3, PG III hazardous
product instead of what it actually was a Class 3, PG II dangerous
good. So are such tank cars adequate for transporting crude oil?
In 2012 the U.S. National Transportation Safety Board put forward recommendations regarding the safety of DOT-111 tank cars.
PHMSA is currently considering amendments to regulations to enhance tank cars and rail safety.
There are approximately 250,000 DOT-111 tank cars in North
America, says Michael Bourque, president and CEO, Railway Association of Canada. The United States government issued an advance notice of regulation, aimed at taking legacy tank cars out of
service over an accelerated period. A related issue is the supply of
tank cars. I believe there is a two-year waiting list for them. This will
be a big story for customers going into next year. It will have a significant impact on them. We dont want to see business curtailed in
any way. There is a great deal of urgency to it. While we dont know
exactly when regulations would come into effect, it is an area of focus for all parties.
This issue has come under the microscope as the movement of
crude by rail skyrockets. Canadian railways carried less than 10,000
barrels per day (bpd) of crude oil in 2009. By October 2013 this had
risen to 175,000 bpd carried by the mainlines and a dozen short line
railways. This is expected to top 200,000 bpd by years end, according to the Canadian Association of Petroleum Producers.
The Lac Mgantic explosion has also drawn attention to liability
coverage after it became clear that MMAs insurance would barely
begin to cover the costs that will come out of the disaster. In its

October 16 speech from the throne, the Federal


Conservative government announced, railway
companies must be able to bear the cost of their
actions. Our Government will require shippers
OUTLOOK 2014
and railways to carry additional insurance so they
are held accountable.
It remains to be seen how this will play out.
There are significant concerns about what changes
to safety regulations will impact shippers, and
[the] third-party liability insurance that will be
borne by the shipping community, says Bob Ballantyne, chairman,
Coalition of Rail Shippers.
On another regulatory front, the rail and shipping communities may have the opportunity next year to test the strength of Bill
C-52, the Fair Rail Freight Service Act, which received Royal Assent on June 26, 2013. This addition to the Canada Transportation Act governs the commercial activities of airlines and federally
regulated railways.
It legally entitles shippers to a service agreement and an arbitration process to obtain one, if necessary, and fines for railways that
breach service agreements. CN is on record as not seeing the need
for Bill C-52. Ballantyne sees it as a coup for shippers, but with caveats: For the first time in Canadian law, shippers have the right to
some definition of the service railways will provide. But there is a
gap in how precise and specific that definition will be.
Going to arbitration to obtain a service agreement will be breaking new ground. No one knows how this will turn out; for example,
how expensive it will be, the outcome, how will the [CTA] monitor service agreements in place and when rail lines will pay fines for
non-performance.
Rail continued on page 30

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OUTLOOK 2014

29

frac sand terminal north of Grande Prairie, Alberta.


The Hudson Bay Railway (HBRY), owned by OmniTRAX, expects to move some 600,000 tonnes of wheat to the Port of
Churchill this season up 100,000 tonnes from last season. But
with no more Canada Wheat Board monopoly and the resulting
implications for shipping schedules and export routes, OmniTRAX
is pursuing a Port Storage Program.
To maintain long-term sustainability for both the Port and the
railroad we must diversify to maximize the shipping season, says
Darcy Brede, president and chief operating officer, OmniTRAX.
Sinclair Harrison, president, Hudson Bay Route Association
adds, There was talk of OmniTRAX setting up a grain company to
collect grain, that they say that in 2014 they will put in a transloading facility in Le Pas.
There is also a desire to extend Churchills shipping season, which
currently ends on October 31. With climate change the Bay has
been ice-free into November. We are trying to get that season extended. If we could extend it three weeks into November, we could
ship another 100,000 150,000 tonnes of wheat, Harrison says.
OmniTRAX also wants to moving crude through the Port and
around 25 potential customers have expressed interest in the plan.
OmniTRAX had planned a test run of crude on the HBRY this
year, but delayed it to 2014.
We anticipate that the test shipment would involve approximately 330,000 barrels of light sweet crude shipped in unit trains
of 80 railcars. It will take approximately six trains for the vessel,
Brede says. Following our test shipment, we will be able to provide more definitive information on plans to run regular shipments of light sweet crude along the Hudson Bay Railway and
CT&L
through the Port of Churchill.

intermodal freight shippers

On the capital-spending front, CP had planned


to spend some $1.1 billion in 2013. However,
higher than expected cash flow projections inspired CP to add up to $100 million to its 2013
OUTLOOK 2014
capital investments, advancing some projects originally scheduled for 2014.
Shippers will benefit from the new intermodal terminal CP opened in Regina this year.
Other projects include renewing its track infrastructure on its Winnipeg-Edmonton main line and otherwise
spending around $865 million replacing or renewing older assets.
One of CPs key investments combing through its schedules
for improvements - will improve services with its suppliers in 2014.
CP says, In white-boarding sessions, we found key efficiencies.
For example, this summer we were able to remove 20 hours from
our Toronto-Calgary intermodal schedules, giving us a 64-hour total run time. We are providing increased reliability and the most
efficient route to get from Toronto to Calgary by offering faster
transits, later cut-offs and more capacity.
CN budgeted $1.9 billion in spending this year. Among the projects planned is work on its extended siding program in northern
Ontario, Alberta and northern British Columbia, double tracking
some of its mainline in Saskatchewan and investments that will increase the efficiency of transferring freight between rail and truck.
Its $200 million in planned equipment purchases include intermodal equipment, car refurbishments and the acquisition of 77 new
and used locomotives by roughly the end of 2014.
CN is also investing in its frac sand business; e.g., a US$33 million upgrade of a 74-mile rail line between Wisconsin Rapids and
Blair, Wisconsin. This November it expected to begin serving a new

rail freight shippers

Rail continued from page 29

30 OUTLOOK 2014

Inside the numbers

transportation
buying trends survey

Changes in use of mode 2014


EXPECTED RATE INCREASES 2014

rail freight shippers

Not sure
11%

Size of Increase

Decrease
3%

Increase
16%

% of Respondents

Down 5%+

0%

Down 2-5%

0%

Down 0-2%

Stay
the same
69%

2%

Flat

30%

Up 0-2%

15%

Up 2-5%

15%

Up 5%+

6%

Not sure

32%

% expect this mode to have


highest pricing power 2014

SURCHARGES

% RESPONDENTS PAYING

Fuel
Currency

8%

83%
9%

Detention
3%
Border Delay
9%

CAPACITY CONCERN

30%
17%

Border Security

26%

4.26
0
excess capacity

Inside the numbers

5
balanced capacity

10
very tight capacity

transportation
buying trends survey

intermodal freight shippers

Changes in use of mode 2014


EXPECTED RATE INCREASES 2014

Not sure
11%

Size of Increase

Increase
26%
Stay
the same
58%

% of Respondents

Down 5%+

0%

Down 2-5%

0%

Down 0-2%

Decrease
5%

0%

Flat

32%

Up 0-2%

22%

Up 2-5%

12%

Up 5%+

6%

Not sure

28%

% expect this mode to have


highest pricing power 2014

SURCHARGES

% RESPONDENTS PAYING

Fuel
Currency

8%

Detention
3%
Border Delay
9%

CAPACITY CONCERN

Border Security

92%
5%
16%
5%
14%

3.71
0
excess capacity

5
balanced capacity

10
very tight capacity

OUTLOOK 2014

31

OUTLOOK 2014

courier & express


The bigger get bigger, with service expansions

he big bang never happened. The past year


was supposed to witness the merger of global
powerhouses UPS and TNT,
but the deal got derailed by
the European Commission.
TNT has never had a large
footprint in Canada, so the
ruling from Brussels had scant
impact on this market, although it would have given
the US company a stronger
hand in the Canada-Europe
sector, says Mike Tierney,
president of UPS Canada. He
sees no significant change in
the competitive landscape in
Canada but raises a question
over Canada Posts growing
push into the B2C market.
With a government-granted
monopoly, there is concern that costs and revenues are allocated
appropriately, he remarks.
Gary Breininger, president of BGR Coaching & Strategic Solutions, agrees that there has not been a major change on the provider scene recently. The seven largest players together commanded 86 percent of the market in 2012, unchanged from 2007, he
notes. However, the picture does look different at the top of the
field. FedEx, UPS and Purolator have increased their combined
market share from 55.9 percent in 2007 to 58.1 percent in 2012.
The bigger are getting bigger, he remarks, a trend reinforced
by several developments that characterised 2013, notably the rise
in e-commerce and a growing focus on the healthcare market
among the leading players. They also stand to benefit the most
from growth in international shipping.
One big aspect this past year has been service expansion, with
new service offerings coming on, and the cold chain has been a
particular focus, observes Breininger. Last year DHL, FedEx and
UPS all launched temperature-controlled products, which aim at
the healthcare industry.
UPS added 200,000 sq ft of healthcare space in Canada over
the past year and now runs 11 dedicated facilities in this countries.
We are going to position ourselves as a global leader in healthcare, says Tierney, adding that Canada is one of five key markets
in this segment for UPS.
Purolator also has this business in its sights, confirms compa32 OUTLOOK 2014

ny president and CEO Patrick Nangle. Healthcare as a sector for


us continues to grow. We see an evolution at the end point.
There is a trend to administer it at home as opposed to at the
clinic, he remarks.
Cold chain services require adequate infrastructure. Historically the integrated express carriers have steered clear of markets
with such requirements. Airlines and forwarders that were
watching how these rivals wrested the lucrative express parcel
business from them used to console themselves that the integrators systems were inflexible and could not accommodate cargo
with special handling requirements, but developments like the
push into the healthcare sector show that this assumption no
longer holds true.
We see companies move more and more beyond small packages, notes Breininger. I dont think there are any barriers that
would prevent them from going after new segments. This industry has a well established track record of being quite adaptable
at innovation.
Some of the impetus there will likely come from the e-commerce sector, with goods like high-end food becoming available to
consumers to order over the internet. Besides the focus on healthcare traffic, e-commerce has been the other main driver of growth
in the express sector over the past year, Breininger points out. As
retailers experiment with on-line sales and delivery channels,
many new opportunities are opening up for the express industry,
agrees Nangle.
A growing number of retailers are trumpeting free delivery for
their wares ordered on-line. The notion of free shipping for internet shopping is a good marketing tool. It is going to be part of our
world going forward, says Tierney.
This brings or reinforces particular pressures on logistics providers. On the one hand, it weighs on margins, which are already
stretched by the characteristics of this market - lower traffic density than in the B2B segment and the need to offer multiple delivery channels as well as reverse logistics options. On the other
hand, the delivery is a key element in the customer experience,
which has elevated the logistics aspect on the radar of retailers.
We become a proxy for the retailer, remarks Nangle.
The customer experience is first and foremost with clients,
more than cheap rates, says Tierney. The need to balance good
customer experience and cost reduction is still there. You have got
to be productive, not spend a penny more than needed. If you are
a high cost provider in this space, you are not competitive.
Mindful of the rising tide of e-commerce shipments flowing
from the US into Canada, Purolator has boosted its footprint south
of the border to a total of 30 stations (up from four offices in 2005)
and launched its PuroPost product in the summer. According to

courier freight shippers

By Ian Putzger

OUTLOOK 2014

Nangle, this has been met with much interest in the US.
Beyond the increasing flows between Canada and the US, the
international arena offers good chances for growth, remarks
Breininger. The global market offers a strong opportunity, he
says. International growth is stronger than in the domestic business. It is not going to be 10 percent growth a year the rate of
growth is slowing but it is faster than domestic growth.
Overall, BGR projects 2-3 percent growth in volume in 2014
- probably a bit better than the overall economy, Breininger says.
In light of signs of economic improvement, Nangle reckons that
the manufacturing sector will see better fortunes in the coming
year, which should lead to a rise in volume.
Neither he nor Tierney equate growth in traffic with a corresponding rise in margins. Shippers remain focused on trying to
keep costs down, they note. On the other hand, they are unlikely
to lurch violently in that direction, according to Breininger. He
thinks that most of this trend to de-speeding played out as the
recession unfolded. It will still happen incrementally, but the big
shifts are over, he says.
The market outlook, combined with no let-up in competitive

Inside the numbers

pressure, will continue to foster innovation and drive efficiency,


Nangle remarks. Purolator is about to launch a significant investment program aimed at making operating processes more efficient and producing benefits for customers, he says. For his part,
Tierney says that UPSs investment in the coming year will be
higher than average.
Both UPS and Purolator are intent on developing their footprint in the SME market. We will continue to help small businesses grow both within Canada and globally, Tierney says.
Breininger notes that over the past year DHL put a fair bit of
emphasis on its employer of choice program, an indicator of
managements concern about available manpower in years to
come. Nangle agrees that over the mid-term, the availability of
skilled office staff and truck drivers will be a challenge for the industry. One avenue that Purolator is pursuing on this front is exploring the possibility of partnering with educational institutions.
Another concern going forward that requires help from outside
the industry is traffic congestion, which affects operators ability
to deliver on time, Nangle says. We look to government at all
CT&L
levels to come up with steps to deal with this.

transportation
buying trends survey

courier freight shippers

Changes in use of mode 2014


EXPECTED RATE INCREASES 2014

Not sure
3%

Stay
the same
57%

Size of Increase

2%

Down 2-5%

3%

Down 0-2%

Increase
37%

% expect this mode to have


highest pricing power 2014

% of Respondents

Down 5%+

Decrease
3%

5%

Flat

28%

Up 0-2%

20%

Up 2-5%

21%

Up 5%+

8%

Not sure

13%

SURCHARGES

% RESPONDENTS PAYING

Fuel
Currency 2%
Detention
3%

11%

95%
23%

Border Delay
9% 0%

CAPACITY CONCERN

Border Security 0%

3.25
0
excess capacity

5
balanced capacity

10
very tight capacity

OUTLOOK 2014

33

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motor carriers

OUTLOOK 2014

Will an economic uptick


lead to higher trucking rates?
By Lou Smyrlis

he flurry of mergers and acquisitions


activity in the final quarter of the
year Celadon Canada acquiring N.
Yanke Transfer and Hyndman Transport;
Kenan Advantage Group purchasing RTL
Westcan, one of Canadas largest niche
bulk commodity haulers; Clarke selling its
freight transportation business to TransForce; to name the largest deals is indicative of a North American trucking industry
still struggling to regain the financial footing it enjoyed prior to the recession.
It points to the desire of the larger players to consolidate the industry as a way to
place greater pressure on pricing and to expand into new markets.
I think trucking companies realize that without scale and technology, its going to be impossible to survive, Mike McCarron,
M&A consultant with Wheels Group, and the former managing

partner of MSM Transportation, said at


our recent Surface Transportation Summit, citing that as one reason he and his
partner opted to sell MSM when they did.
We knew we were too big to be small
and too small to be big. We had to decide, do we want to risk everything at
this stage in our lives? Do we want to go
to ground zero and raise money? The
people Ive talked to in the business are
thinking the same thing, What am I going to do to get out? I think that is going
to drive a lot of acquisitions, that state of
mind in the industry.
Our annual Transportation Buying Trends Survey, conducted in
partnership with CITT and CITA, has shown for the last three years
that shippers believe that of all the modes truckload and less-thantruckload hold the greatest pricing power.

14

OUTLOOK 2014

35

Motor continued from page 35

immediate increase in freight volumes and make equipment capacity an issue.


The large motor carriers have been careful to only replace their
older vehicles rather than grow their capacity during the recovery
while smaller carriers are held back from purchasing new trucks by
three bitter truths: the price tag for new trucks has increased by
about $25,000 since prior to the Great Recession thanks to mandated changes to engine emissions; their used truck trade-in values
are down considerably; and lenders are less willing to help finance
new truck purchases. As a result, new Class 8 truck purchases in
Canada this year will come in considerably short of the 2012 total.
Truckers are counting on the eventual capacity crisis this will
cause to provide them with the market opportunity to re-frame the
way they price. But in the meantime they are having to live with
one of the side effects of an economy not quite firing on all cylinders: uneven and uncertain freight growth, which places a damper
on their plans to raise rates.
As Doug Munro president of Maritime-Ontario Freight Lines
told our Surface Transportation Summit earlier this fall, freight demand isnt yet translating into stronger rates.
Though theres been an improvement in freight volumes, its
very hard to get rate increases, Munro said. Margins are under
pressure. We see that on a lot of freight quotes.
Which brings us to another flashpoint between shippers and motor carriers: RFPs and their impact on truck prices.
Jacquie Meyers, president of Meyers Transportation Systems,
decries the commoditization of trucking services experienced in recent years, with many shippers issuing RFPs and making decisions
based solely on price.
There are a lot of challenges inherent to these tenders, Meyers
said at our Surface Transportation Summit.
She added that shippers relying on a tender
process to select transportation providers often
focus on the line item transportation represents
on their financial statements, but not all the
other areas of the business that transportation
affects. Lost loads, missed deliveries, unprofessional interactions with a shippers customers
and other possible repercussions of choosing a
carrier based on price can cost more to a business than what it saved in transportation costs.
Michelle Arseneau, managing partner with
GX Transportation Solutions, was just as frustrated with the RFP process.
We are always happy to have the opportunity to quote on new business. That being said,
we are not fans of the bid process that has been
rolling out over the past 5 to 10 years. It seems
to us that its very price driven, she said during
a special session on RFPs at the Surface Transportation Summit. There are shippers out
there who are doing it in a proactive way that is
HAVE A PROMISE THAT JUST HAS TO GET DELIVERED SOMEWHERE IN NORTH AMERICA?
managed well but there is a whole lot of other
shippers who are making it very difficult for carWE CAN HELP.
riers to participate effectively in the process.
n North America wide Truckload service
Operating from seven terminals in Canada and the USA, we
Arseneau and Meyers are among a growing
n One time and multiple shipment contracts
offer swift and reliable truckload service to most of North
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n Satellite tracking
America. That, combined with our no nonsense commitment
to participate in RFPs they feel have the sole
n Web tracking
to customer service has helped Penner become the
n Imaging
transportation provider of choice for Manitoba companies
purpose of clawing back rates.
who need to keep their promises, wherever they need to ship
n CSA, PIP, C-TPAT, FAST,
If I cant get a human to speak to me, Im
in North America.
ACE, ACI
not going to be participating, Meyers said.
Were asking to be a strategic partner, not just
a line item on your financial statements. CT&L

Trucking conventions these days are full of talk


about the radical need for a pricing renaissance.
There was a unanimous nodding of heads at
OUTLOOK 2014
the recent Ontario Trucking Association annual
conference when Noel Perry of research firm FTR
Associates said: The pricing culture in our industry is based on fifty years of falling costs. And
therefore we didnt have to learn the art of price
increase in this industry. Well them days is over.
Yet the stark reality is that despite tightening capacity our
Transportation Buying Trends research shows Canadian shippers
feel TL and LTL capacity are close to balanced with market demand price has been near zero for the last year and a half, as
Perry himself conceded, and carriers have so far remained shy to
place a great push on pricing. In 2013 only 51% of Canadian motor
carrier executives were planning to raise rates and the vast majority
were planning modest increases of 4% or less to their core pricing.
Considering that TL pricing dropped around 18-23% during the
recession, its clear motor carriers have a long way to go to regain
their former financial footing.
The Nulogx Canadian General Freight Index from 2008 to August 2013 shows that pricing has only increased marginally, points
out Doug Payne, president of Nulogx. And we are still three points
behind where pricing was a year ago.
That, of course, is good news for purchasers of trucking services,
particularly since many remain focused on cost control. The situation may change quickly, however, if the economic recovery kicks
into a higher gear with GDP growing at better than 3%. Inventories
are at low-enough levels that an economic uptick will result in an

OUR PROMISES
GET DELIVERED

36 OUTLOOK 2014

CTLAug13M

1. No more cubing
2. No more linear foot rule
3. No more breaking down pallets
The traditional way of shipping palletized
freight costs you too much in lost and
damaged shipments and complicated
LTL pricing. So M-O FreightWORKS
changed the rules.
Our unique logistic loading system
lets you safely stack multiple levels of
palletized freight within each unit. Up to four
pallets high. So you pay less per pallet.
As you can see, each pallet, no matter
its size or weight, occupies its own space
without touching other freight. This
eliminates the need to break-down pallets,
and prevents someone elses heavy
freight from crushing yours.

4. No more freight piled on top of yours


5. No more per CWT calculations
6. No more weight breaks
This also means you virtually
eliminate damaged shipments. Yet
move the same volume of product with
fewer loads.
Plus, our simplified FreightWORKS
Pallet Pricing eliminates the complicated
calculations and guessworkand billing
surprisesof traditional LTL pricing.

Pay less per pallet, ship more


pallets per load and reduce
damaged shipments with our
unique logistic loading system.

Free demo and consultation.


See for yourself how our unique logistic
loading system reduces your cost per pallet.
Call 1-888-748-4388 or 905-792-6100
and ask for Linda Chylinski.
www.m-o.com

CTLAug13MOad.indd 1

13-08-02 10:48 AM

Inside the numbers

transportation
buying trends survey

Changes in use of mode 2014

EXPECTED RATE INCREASES 2014

TL freight shippers

Not sure
6%

Size of Increase

1%

Down 2-5%

1%

Down 0-2%

Increase
30%
Stay
the same
58%

Decrease
5%

3%

Flat

22%

Up 0-2%

29%

Up 2-5%

26%

Up 5%+

12%

Not sure

12%

% expect this mode to have


highest pricing power 2014

SURCHARGES

% RESPONDENTS PAYING

Fuel
Currency
Detention
3%
Border Delay
9%

35%

CAPACITY CONCERN

Border Security

94%
8%
26%
15%
11%

4.66
0
excess capacity

Inside the numbers

5
balanced capacity

10
very tight capacity

transportation
buying trends survey

Changes in use of mode 2014

EXPECTED RATE INCREASES 2014

Not sure
4%

LTL freight shippers

% of Respondents

Down 5%+

Size of Increase

3%

Down 2-5%

1%

Down 0-2%

Increase
39%
Stay
the same
53%

% expect this mode to have


highest pricing power 2014

% of Respondents

Down 5%+

4%

Flat

18%

Up 0-2%

30%

Up 2-5%

28%

Up 5%+

7%

Not sure

8%

Decrease
4%

SURCHARGES

% RESPONDENTS PAYING

Fuel
Currency
Detention
3%
Border Delay
9%

11%

Border Security

13%

29%

CAPACITY CONCERN

95%
8%
19%

4.76
0
excess capacity

38 OUTLOOK 2014

5
balanced capacity

10
very tight capacity

OUR CUSTOMERS
NEW WINTER TIRES.
Long haul transport doesnt have to be a long road this winter. At CP, we know our customers want
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With the power of rail, our customers now have access to more reliable service and greater capacity
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