Insights on the Canadian Transportation Market

There are many companies that have transportation operations in both the United States and Canada. As you might expect, the transportation market in Canada is a bit different than in the U.S.. “Geographically, Canada is the second largest country in the world and it has the tenth largest economy in the world,” said Brian Ware, VP of Marketing & Business Development at Transplace Canada in a recent episode of Talking Logistics. “The challenge is that we have a small population — only 36.5 million people in Canada with very little density across the country.”

Ware added: “The U.S. has a wonderful infrastructure of interstates and highways, whereas in Canada we have one long flat highway across the bottom of the country and about 85 percent of our population lives within 150 miles of the U.S. border. So, it’s a difficult market to serve, especially the rural areas, and most of our urban density is spread across five major cities — Toronto, Montreal, Vancouver, Calgary, and Edmonton.”

Although it’s difficult to get Canada-specific data, Ware shared these interesting stats about the Canadian transportation market:

  • $45-$55 billion in transportation spend (2015 data).
  • In 2016, the transportation industry grew by 3.1 percent, which is faster than virtually all other industries in Canada, including Oil & Gas and Health & Pharma.
  • 90 percent of consumer packaged goods are transported by truck
  • 900,000 people work in supply chain in Canada and about 1.5 percent of them (13,500) are truck drivers.
  • In 2016, inter-provincial trade was $170 billion and the value of transportation traffic between the U.S. and Canada exceeded $380 billion.

When it comes to transporting goods across Canada, and between Canada and the US, what are some of the main challenges companies face?

“The challenges wouldn’t be much different than your less-densely populated areas of the U.S.,” said Ware. “Shipment sizes are smaller, which means we’re relying heavily on less-than-truckload (LTL) transportation. Obviously, LTL is more expensive than truckload and can be unreliable from a service standpoint, so managing costs and service levels are a challenge.”

Production volatility is another factor that creates some challenges, which Ware explains in the short clip below:

So, what actions can shippers take to improve costs? Where are the savings opportunities? Ware shares some examples in the clip below, including collaborative shipping.

“We’ve had a lot of success eliminating distribution centers,” explained Ware. “As we build multi-stop truckloads to the west, there isn’t a need to have a distribution center in Calgary, Vancouver, or Edmonton to support customers in those areas when we’ve demonstrated that we can deliver to the same schedules at a lower cost by dynamically load building.”

I encourage you to watch the rest of my conversation with Brian for additional insights and advice on this topic, including the impact of regulations on driver productivity in Canada. Then post a question or comment and keep the conversation going!

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