OFF TRACK PIPELINE PROTESTS SHUT DOWN RAIL CORRIDORS - Inside Logistics

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OFF TRACK PIPELINE PROTESTS SHUT DOWN RAIL CORRIDORS - Inside Logistics
MARCH 2020

                     PUBLISHED SINCE 1898 | WRITTEN FOR BUYERS OF TRANSPORTATION SERVICES

                     OFF TRACK     PIPELINE PROTESTS
                               SHUT DOWN RAIL CORRIDORS

                                                                                   EASTERN
                                                                                   PROMISE
                                                                                   Shifting trade patterns
                                                                                   spark massive eastern
                                                                                   port investments

                                                                                   REVERSING
                                                                                   COURSE
                                                                                   Soaring returns leave
                                                                                   integrators scrambling
                                                                                   to cope
AGREEMENT 40063170

                                                                      www.canadianshipper.com

                            SPONSORED: SUPPLY CHAIN LEADERSHIP ROUNDTABLE
OFF TRACK PIPELINE PROTESTS SHUT DOWN RAIL CORRIDORS - Inside Logistics
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OFF TRACK PIPELINE PROTESTS SHUT DOWN RAIL CORRIDORS - Inside Logistics
CONTENTS

                                                                                                                                                 MARCH 2020

DEPARTMENTS

5 | Editor’s Foreword
A path forward
                                                                                                                                            6
                                                                                                                          COVER STORY
6 | In the news
Railway blockades interrupt supply
chains; SUPPLY STATS; Industry
Q&A: Cross-Border Institute; Air                                                                                         OFF
Canada Cargo and DDC join forces

41 | Inside the Numbers
                                                                                                                       TRACK
                                                                                                                 Pipeline protests shut
The price of uncertainty                                                                                            down rail corridors
43 | Coaching Corner
Everyone is in sales

46 | The Bigger Picture
Shipper strategies

31

                                                                                                                                                                    Photo: THE CANADIAN PRESS/Lars Hagberg
EAST COAST
GATEWAYS
Shifting trade patterns
spark massive eastern
port investments                                A First Nations protester stands in front of a transport in Tyendinaga Mohawk Territory near Belleville, Ontario,
                                                      on Tuesday Feb. 11, 2020, in support of Wet’suwet’en’s blockade of a natural gas pipeline in northern B.C.

                                     FEATURES

21                                   CHEMICAL LOGISTICS                         | 12
                                     Safety is critical to the shipment of dangerous
                                     and non-dangerous substances
                                                                                                                                                 12
                                     CRUDE-BY-RAIL                  | 16
                                     Technology offers safer ways of shipping
                                     oilsands bitumen
SPONSORED
Supply Chain                         REVERSE LOGISTICS                       | 18
Leadership Roundtable                E-commerce is pushing returns to record levels

                                                                                                            www.canadianshipper.comMarch 20203
OFF TRACK PIPELINE PROTESTS SHUT DOWN RAIL CORRIDORS - Inside Logistics
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OFF TRACK PIPELINE PROTESTS SHUT DOWN RAIL CORRIDORS - Inside Logistics
EDITOR'S FOREWORD
                                                                                                                                       John Tenpenny

                        March 2020
                 Volume 123 Issue No. 2

                      EDITOR
            John Tenpenny (416) 510-6880
                  john@newcom.ca

               EDITORIAL DIRECTOR
             John G. Smith (416) 614-5812
                 johng@newcom.ca

           MANAGING DIRECTOR,
                                                                   No easy
     TRUCKING AND SUPPLY CHAIN GROUP
                Lou Smyrlis
                                                                   answers
              lou@newcom.ca

                                                                   T
                     ART DIRECTOR
                     Anita Balgobin
                                                                            he rule of law versus the right to protest. Those are the two sides of the coin that
                                                                            is the stalemate over blockades that have stalled Canada’s railway system and
                CONTRIBUTORS
       Carolina M. Billings, Mark Cardwell,
                                                                            the enforcement of court orders aimed at ending the protests.
           Dan Goodwill, Lars Hagberg,                                  It began when the RCMP enforced an injunction that prevented interference with
   Carroll McCormick, Tom Peters, Ian Putzger                       construction of the natural gas pipeline in northern B.C. Soon after, protestors—in-
              PRODUCTION MANAGER                                    cluding Indigenous people and their supporters—began to set up railway blockades
              Jwad Khan (416) 510-6779                              beginning near Belleville, Ont. and New Hazelton, B.C. They supported the
                 jwad@newcom.ca                                     Wet’suwet’en hereditary chiefs, who oppose the $6.6 billion Coastal GasLink pipeline.
                 SALES MANAGER                                          Railways in the country’s most populous area soon became gridlocked. Shortly af-
           Anthony Buttino (514) 292-2297
                                                                    ter the blockades appeared, Canadian National Railway announced it would be forced
               anthonyb@newcom.ca
                                                                    to shut down “significant parts” of its network. Trains hauling everything from chem-
              CIRCULATION MANAGER
                                                                    icals to wood products and food were soon sitting idle. More than 400 trains were
              Mary Garufi (416) 614-5831
                 mary@newcom.ca
                                                                    cancelled before the shutdown commenced.
                                                                        Rightfully, many Canadians and the shippers among them have called for an end
                        PRESIDENT
                        Joe Glionna                                 to the disruptions. But the issues at the root of the protests go much deeper than the
                                                                    route of one pipeline. Long-term solutions will need to look beyond a single blockade.
               CHAIRMAN & FOUNDER
                    Jim Glionna                                         A heavy hand in removing the blockades would only serve to inflame tensions, lead
                                                                    to further protests, and further disrupt the supply chain that is vital to the state of the
                                                                    national economy.
                                                                        But there’s no denying the stalemate that exists. Both sides of the debate need to be
                                                                    encouraged to participate in meaningful dialogue that goes beyond a single pipeline
           5353 Dundas Street West, Suite 400,                      or single Indigenous group.
                  Toronto, ON M9B 6H9                                   Rather than siding with one group or the other, we are better served by encourag-
  Canadian Shipper is written for Canadian transportation
  and logistics professionals who manage product flow
                                                                    ing governments and protestors alike to deescalate the situation and extricate Cana-
  from manufacturer to point-of-sale. Editorial is focused on       da’s supply chain and economic well-being from the equation. Everyone will need to
  reporting, analysis and interpretation of Canadian logistics
  trends and issues. It is published by NEWCOM MEDIA INC.           find some common ground or the disruptions will continue, pop up, repeat.
                    SUBSCRIPTIONS:
                                                                        No, we can’t leave the blockades to continue, but neither can we afford to ignore
            Contact us at: mary@newcom.ca                           the concerns that brought them here in the first place.
                    Tel: (416) 614-5831                                 In the words of Buffalo Springfield, “Nobody’s right if everybody’s wrong.” CS
                    Fax: (416) 614-8861
             Website: canadianshipper.com
              (click on subscription button)

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  ISSN 2292-2490 (print), ISSN 2292-2504 (Digital), (Canadian
  Shipper.) Indexed by Canadian Business Periodicals Index.
  Printed in Canada. All rights reserved. The contents of this     John Tenpenny,                                                   www.canadianshipper.com
  publication may not be reproduced either in part or in full
  without the consent of the copyright owner.                      Editor
                                                                   john@newcom.ca
  POSTMASTER: Please forward forms 29B and 67B to:
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  Second Class Mail Registration Number 0721.                                                                                       @CanadianShipper
                                                                                                                                    @
                                                                   CORRECTION
  PUBLICATIONS MAIL AGREEMENT 40063170                             The article “Loaded for Bear” which appeared in our
                                                                   January 2020 issue mistakenly referenced a survey
                                                                   that was attributed to TransCore Link Logistics. As
                                                                   well, David Schrader was quoted and identified as                Canadian-Shipper
                                                                   being an employee of the company, which he is not.
                                                                   Canadian Shipper regrets the errors.

© iStock                                                                                                                 www.canadianshipper.com   March 2020   5
OFF TRACK PIPELINE PROTESTS SHUT DOWN RAIL CORRIDORS - Inside Logistics
IN THE NEWS

Off Track
Pipeline protests shut down rail corridors                                                                                              By John Tenpenny

Transporting goods via rail has never
been an easy proposition, what with Ca-
nadian winters and a dearth of competi-
tion, and the events of February 6 made
doing so that much harder for the rail-
ways and by extension shippers who rely
on them to conduct business. Having al-
ready endured an eight-day shutdown of
Canadian National Railway’s system due
to a strike by 3,200 workers, a wide array of
Canadian industries woke up to a double-
dose of bad news that effectively closed
large parts of the nation’s railway network
and left those sections still in operation
constrained by a government order man-
dating slower speeds for many trains.
    The days ahead would make clear to all
interested parties that there were to be no
easy answers and no quick fixes for the is-
sues facing both the railways, its custom-
ers and the effects on average Canadians.
    The day began with news that protes-
tors, including Indigenous people and
their supporters, had set up railway
blockades beginning near Belleville, Ont.
and New Hazelton, B.C. in support of the
Wet’suwet’en hereditary chiefs, who op-         People arrive at the train track blockade in Tyendinaga Mohawk Territory near Belleville, Ontario, on Feb. 11,
pose the $6.6 billion Coastal GasLink           2020, in support of Wet’suwet’en’s blockade of a natural gas pipeline in northern B.C.
pipeline in northern B.C. Weeks earlier
the RCMP began enforcing an injunction              Within a week of the blockades being                   ing their products, the disruptions
that prevented interference with con-           set up, Canadian National Railway an-                      across Canada’s freight rail supply chain
struction of the natural gas pipeline.          nounced that it was forced “to shut                        have been devasting.
    The New Hazelton blockade that              down significant parts” of its network                         “Given that 80 per cent of our mem-
halted train traffic to and from the Port       because of the blockades.                                  bers’ operations are served by only one
of Prince Rupert ended a week later,                “It’s not just passenger trains that are               railway, any disruption to service will
though other temporary disruptions oc-          impacted by these blockades, it’s all Ca-                  have a major impact on everyday opera-
curred in Winnipeg and also at CN’s             nadian supply chains,” said JJ Ruest, CEO                  tions,” Derek Nighbor, CEO of the Forest
MacMillan yard north of Toronto South           of Montreal-based CN. “We are currently                    Products Association of Canada, told
of Montreal. Canadian Pacific Railway           parking trains across or network, but due                  Canadian Shipper.
saw one of its lines blocked by members         to limited available space for such, CN                        “We’re already hearing reports from
of the Kahnawake Mohawk community,              will have no choice but to temporarily                     some members who say they aren’t able
but CP largely escaped the disruption           discontinue service in key corridors un-                   to guarantee delivery dates to custom-
faced by its larger rival.                      less the blockades come to an end.”                        ers, which creates an issue in terms of
    Hours after the blockades were erect-           CN also temporarily laid off about                     retaining business. The bigger issue here
ed, the federal government announced            450 workers in Montreal, Halifax, Monc-                    is the overall reputation of Canada as be-
that it had ordered lower speed limits for      ton and Charny, Que. According to a                        ing a reliable trading partner and being
all trains carrying large amounts of dan-       spokesperson, Canada’s largest freight                     open for business. That’s the overarching
gerous goods after a pair of derailments        carrier had cancelled 400 trains since                     black cloud in all this.”
in Saskatchewan involving Canadian              the blockades began.                                           Bob Ballantyne, head of the Freight
Pacific freight trains carrying crude oil.          For shippers who rely on rail for mov-                 Management Association of Canada,

6   March 2020   www.canadianshipper.com                                                                                          Photo: THE CANADIAN PRESS/Lars Hagberg
OFF TRACK PIPELINE PROTESTS SHUT DOWN RAIL CORRIDORS - Inside Logistics
IN THE NEWS

                                                                                                           cording to the Association of Canadian
                                                                                                           Port Authorities.
                                                                                                               “This continued disruption to Cana-
                                                                                                           da’s supply chain is having a significant
                                                                                                           impact on our economy,” noted associa-
                                                                                                           tion president Wendy Zatylny.
                                                                                                               “In addition to its effect on the econo-
                                                                                                           my and on people, this service disruption
                                                                                                           has the potential for long-lasting reputa-
                                                                                                           tional damage to Canada’s ports and our
                                                                                                           transportation system as a reliable and
                                                                                                           efficient means of moving cargo.”
                                                                                                               Atlantic Container Line (ACL), which
                                                                                                           typically berths two ships a week an-
                                                                                                           nounced it was now docking in New
                                                                                                           York and Baltimore instead to run cargo
                                                                                                           inland on American railroads.
                                                                                                               In Halifax, officials say they’re running
                                                                                                           out of space to stack shipping containers,
                                                                                                           but the bigger concern is that vessels
                                                                                                           may begin to avoid the port altogether.
                                                                                                           “The longer this drags on, the more this
                                                                                                           hurts our reputation as an efficient and
                                                                                                           reliable gateway port,” said Halifax Port
                                                                                                           Authority spokesman Lane Farguson.
Within a week of blockades being set up, Canadian National Railway announced that it was forced “to shut       “We are working closely with CN Rail
down significant parts” of its network because of the blockades.                                           and terminal operators to minimize the
                                                                                                           impact on port operations, but it’s too
which represents large companies in a                   tin Trudeau, calling on him to “work ur-           early to say what it will be.
range of sectors—including Canadian                     gently” with First Nations and police to               “Without rail, import cargo destined
Tire, The Bay, food processors and min-                 bring the blockade to a peaceful end.              for inland markets cannot move from the
ers—said the rail-freight situation is                      “The damage inflicted on the Cana-             terminals and eventually, yard storage
having a “serious effect” on companies’                 dian economy and on the welfare of all             space will be used up. When the Port of
ability to stock their shelves, reach mar-              our citizens mounts with each hour that            Halifax is no longer able to accept import
kets and keep production going. He said                 these illegal disruptions are allowed to           cargo destined for inland markets, carri-
the injunctions against the protesters                  continue,” the coalition said, which rep-          ers may stop calling and this will impact
should be enforced.                                     resents automotive, mining and numer-              the majority of local cargo bound for in-
    “The laws of the land have to be up-                ous other industries.                              ternational import and export markets.
held. The native people have rights, and                    While the members said they share              Simply put, if the ships aren’t calling, car-
peaceful protest is something that                      the government’s commitment to rec-                go isn’t moving, and vice-versa.”
should be allowed. But the blockage of                  onciliation with Indigenous groups, the                Farguson added that a partial or
private property, the blockages of the                  blockades “inflict serious damage on               complete port shutdown would be
rail system and some of the port facili-                the economy, leaving countless middle-             devastating to the reputation of the
ties are really having a serious impact on              class jobs at risk, many of them in in-            port as an efficient and reliable inter-
individual citizens as well as compa-                   dustries that must get their goods to              national gateway.
nies,” said Ballantyne.                                 and from market by rail.”                              In Montreal, some 4,000 containers
    He indicated that members have told                     “In addition to disrupting domestic            sit immobilized on the docks.
FMA of a number of containers stuck in                  and global supply chains, the blockades                “We are obviously concerned about
various parts of the rail system. “One of               undermine Canada’s reputation as a de-             this situation, which has significant im-
our grocery retail members said some of                 pendable partner in international                  pacts on the economy and the trans-
their containers that are stuck on the                  trade,” they said in the letter.                   port logistics chain serving the port,”
railway have got commodities that have a                    Canadian ports have also felt the ef-          spokeswoman Melanie Nadeau said in
limited lifespan and that could go bad.”                fects of the blockades, with reports that          an email.
    A coalition of 39 industry associations             some ships were being turned away and                  On the West Coast, at least 66 ship-
also wrote a letter to Prime Minister Jus-              cargo re-routed to ports in the U.S., ac-          ping vessels are stalled according to
                                                                                                                                            continued
Photo: CN Rail                                                                                               www.canadianshipper.com     March 2020     7
OFF TRACK PIPELINE PROTESTS SHUT DOWN RAIL CORRIDORS - Inside Logistics
IN THE NEWS

                                                     21 companies
SUPPLY                                               So far, 21 companies that either ship goods

STATS                                                internationally or carry those goods have
                                                     signed the Arctic Shipping Corporate
                                                     Pledge. That means signatories that
                                                     produce consumer goods—including Nike,
                                                     Puma, Columbia and Ralph Lauren—will
                                                     ensure their products aren’t shipped along
                                                     routes that go through Arctic waters.
                                                     Shippers, which include global giants such
                                                     as Kuehne + Nagel and Hapag-Lloyd, won’t send their own vessels along
                                                     those lanes or arrange for others to ply them.

                                                                                                     15.4MT of
1.2 million TEUs                                                                                     grain
The Prince Rupert Port Authority (PRPA)                                                          Canada’s two largest
announced another record year in volume,                                                         railways moved a record
with a total of 29.9 million tonnes of cargo                                                     15.4 million tonnes (MT)
moved through the Port of Prince Rupert in                                                       of grain in the final
2019—12% more than the 26.7 million tonnes                                                       three months of 2019.
handled the previous year and the highest                                                        Canadian Pacific set a
total volume to date for the port. DP World’s        new quarterly record by moving 7.9MT of grain and grain products.
Fairview Container Terminal handled over 1.2         Canadian National says it moved 7.5MT over the last three months.
million TEUs, an increase of 17% over 2018.          For the 2019 calendar year, which includes two crop years, CP moved
                                                     a record 27MT of grain, while CN moved 26.6MT.

                                                     Lift 91 kgs
                                                     without strain
                                                     Delta Air Lines is partnering with Sarcos
                                                     Robotics to explore new employee
$55 million equity                                   technology, which includes a mobile and

investment                                           dexterous exoskeleton—Guardian XO—
                                                     designed to boost employees’ physical
Ontario logistics and transportation company         capabilities and bolster their safety. This
Hightlight Motor Group received a $55 million        robotic suit, designed for employees to
capital investment from Crédit Mutuel Equity,        wear, does the heavy lifting. By bearing
the North American private equity arm of Crédit      the weight of the suit and the payload, the
Mutuel Alliance Fédérale, a major banking            exoskeleton may enable an employee to lift
group in France. Crédit Mutuel Equity will           up to 91 kilograms repeatedly for up to eight
become a minority shareholder of the company.        hours at a time without strain or fatigue.

                                                  125,000 kgs of vehicle weight
                                                  The B.C. provincial government announced that permits for its Project
                                                  Cargo Corridor are now available. The permits pre-approve travel for
                                                  commercial trucks between two major Lower Mainland ports (Fraser Surrey
                                                  Docks and Lynnterm East Gate) and the Alberta border via Highway 16. The
                                                  trucks are no longer required to complete the traditional extraordinary-load
                                                  approval process. Commercial vehicles with a gross combined weight up to
                                                  125,000 kilograms, with eight to 13-axle superloads are eligible to apply.

8   March 2020   www.canadianshipper.com
OFF TRACK PIPELINE PROTESTS SHUT DOWN RAIL CORRIDORS - Inside Logistics
continued from p. 7                                                                                                         IN THE NEWS

Robert Lewis-Manning, president of
the Chamber of Shipping, who says at
one point there were 48 vessels an-
chored in Vancouver and 18 in Prince
                                               A timeline on rail disruptions
Rupert waiting to get into those ports         by anti pipeline protesters
to either unload or pick up goods.
    He says Canadians will eventually          Dec. 31, 2019 — The B.C. Supreme Court grants Coastal GasLink an injunction
notice consequences from the backlog.          calling for the removal of any obstructions including cabins and gates on any
    “It will hit in the pocket book, it will   roads, bridges or work sites the company has been authorized to use.
hit in necessary supplies for key indus-       Jan. 1, 2020 — The Wet’suwet’en First Nation serves Coastal GasLink with an
tries and it will take a long time to re-      eviction notice, telling the company workers are “currently trespassing” on their
cover,” he said.                               unceded territory.
    “Those line-ups are only going to in-
                                               Jan. 30 — The hereditary chiefs of the Wet’suwet’en agree to seven days of
crease, of course ships are continuing
                                               meetings with the province.
to arrive,” he added. “Eventually there
will be no space and they’ll be waiting        Feb. 5 — The talks that were intended to de-escalate the dispute fail after just two days.
off the coast of Canada, which is a situ-      Feb. 6 — Protesters in Belleville, Ont., start holding up railway traffic.
ation we’d like to avoid.
                                               Feb. 7 — Via Rail halts service along one of its busiest routes because of the
    “Canadian businesses rely on a pre-
                                               Belleville blockade. All travel between Toronto, Ottawa and Montreal is cancelled.
dictable, efficient and productive supply      Canadian National Railway obtains a court injunction to end a demonstration
chain to move products globally. This          by members of the Tyendinaga Mohawk Territory near Belleville. Protesters also
action is harming the reputation of Ca-        begin disruptions at ports in Vancouver and Delta, B.C.
nadian ports and the Canadian supply
chain. Even a resumption of service at         Feb. 8 — Protesters in Toronto disrupt Canadian Pacific Railway traffic moving
                                               through the downtown.
this stage will take weeks to resolve and
impacts the markets that Canadian              Feb. 9 — Kahnawake Mohawk community members south of Montreal erect a
shippers serve.”                               blockade on a CP rail line.
    The high value of cargo and the            Feb. 10 — Demonstrators in the Montreal area disrupt commuter train service on
costs of delaying ships mean container         the Exo Candiac line. A shuttle bus service is in effect for affected rail stations.
ship schedules are of particular impor-
                                               Feb. 11 — CN stops transport between Prince George, B.C., and Prince Rupert,
tance, says Barry Prentice, a professor
                                               B.C., because of a blockade near Hazelton, B.C. The company says it has halted
of supply chain management at the
                                               more than 150 freight trains since blockades started on Feb. 6.
University of Manitoba.
    “Transportation is a service. It can’t     Feb. 12 — The Manitoba government says it may seek a court injunction to end a
be stockpiled. Some blocks of time are         blockade on a rail line west of Winnipeg, but CN obtains its own court order.
more valuable than others. Meeting con-        Feb. 13 — CN shuts down its operations in Eastern Canada. The railway says blockades
tainer ship schedules is particularly im-      have ended in Manitoba and may come down soon in British Columbia, but the orders
portant because of the high value of the       of a court in Ontario have yet to be enforced and continue to be ignored.
cargo and the costs of delaying a ship.        Feb. 14 — A rail blockade that halted train traffic to and from the Port of Prince
Any time lost when the trains are not          Rupert is lifted as First Nations leaders agree to meet with federal and provincial
moving is lost forever. Even when the          politicians. A date for that sit-down is to be arranged. CN spokesman Jonathan
blockades are finally removed, the pain        Abecassis says the blockade was removed overnight.
of this event will take a long time to go
                                               Feb. 15 — Indigenous Services Minister Marc Miller says “modest progress” was
away. Delayed shipments will have to be
                                               made in talks with the Mohawk First Nation over the rail blockade. But Miller
feathered-in with newly arriving traffic.      declined to say what progress was made after nine hours of meetings on
It might seem simple. It’s anything but.”      Tyendinaga Mohawk territory near Belleville, Ont., saying he would deliver that
    A return to full operating capacity will   message to Prime Minister Justin Trudeau directly.
take longer than most people realize, he
                                               Feb. 19 — A group called Cuzzins for Wet’suwet’en set up a blockade on a
adds—months, not weeks. “The start-up
                                               Canadian National Railway line on the western edge of Edmonton
of operations of any complicated net-
work, including railways, has to be fi-        Feb. 24 — Ontario Provincial Police move to enforce injunction aimed at clearing
nessed with the utmost skill. Yards, crews     Belleville-area rail blockade.
and trains need to be synchronized
                                               Source: The Canadian Press
across the whole Canadian network to
avoid bottlenecks and congestion.” CS

                                                                                                  www.canadianshipper.comMarch 20209
OFF TRACK PIPELINE PROTESTS SHUT DOWN RAIL CORRIDORS - Inside Logistics
INDUSTRY Q&A

Tech key to cross-border supply chain integration
Dr. William Anderson, director, Cross-Border Institute

The Cross-Border Institute (CBI) at the                                                 How can technology help
University of Windsor is dedicated to                                                   improve cross-border travel?
research, education and public out-                                                     There needs to be a push with technol-
reach related to the movement of peo-                                                   ogy to get to the next level because
ple, goods and services across the Can-                                                 most of the trucks crossing the border
ada-U.S.    border.    It    takes    a                                                 are the same trucks crossing with the
multi-disciplinary perspective, incor-                                                  same goods day after day, meaning
porating engineering, economics, the                                                    the risk associated with those trucks
social sciences, management and law.                                                    are low, though not zero. The question
                                                                                        is how do you use technology to mini-
What impact did NAFTA nego-                                                             mize the small amount risks associat-
tiations have on cross-border                                                           ed with those trucks? Currently there
traffic?                                                                                is a pilot project at the Ambassador
The essence of Canada-U.S. trade is the                                                 Bridge with an unstaffed lane, which
integration of supply chains across the                                                 means that the truck driver interacts
border. It wasn’t just NAFTA. Over the                                                  with technology like facial recogni-
past five years there have been a number                                                tion rather than a human officer. The
of things that have created uncertainty                                                 ideal thing in the long run would be a
around cross-border supply chains, in-                                                  “green lane” where certain trucks can
cluding whether there was going to be a      “I don’t think there is                    roll through without stopping at all.
new bridge, as well as around things like                                                   We are headed towards a techno-
the tariffs on steel and aluminum. The       anyplace in the world where                logical transformation already. If you
main impact from those uncertainties is      you have such complex                      can harness the technology then
that it has had a dampening effect on in-                                               you’re going to have a different border,
vestment. In particular, if you wanted to    supply chains integrated                   where being in a queue is the excep-
make investments in production facili-       across an international                    tion rather than the rule.
ties where a substantial amount of your                                                     This has to do with communicating
market is going to be in the United States   border as you do between                   in a wireless fashion, ensuring that all
or you’re going to be plugged-in to a sup-   Canada and the U.S.”                       of the information about a truck that
ply chain that crosses the border, there                                                might have any bearing on risk or
was some uncertainty if that was going       Dr. William Anderson, director,            compliance is received in advance in
to work. The USMCA agreement is a posi-      Cross-Border Institute                     time for the border agency to make a
tive thing for most Ontario industries.                                                 decision before they get to the border.
One would hope to see over the next few
years an uptick in investment and capital    rithm and then identify those situa-       How do our border crossings
expenditures, which have been slow in        tions under which you would expect         compare to others?
the overall North American economy,          to have to big border delays.              I don’t think there is anyplace in the
but particularly in southern Ontario.            Presently, you can find out the wait   world where you have such complex
                                             time at the border using a website, but    supply chains integrated across an in-
What is CBI currently working                what we’d like to do is predict a couple   ternational border as you do between
on in the area of cross-border               of hours in advance, so that if you’re     Canada and the United States. By in-
traffic?                                     moving in a supply chain across the        ternational standards the Canada-
We are looking into methods of artifi-       border that you would be able to pre-      U.S. border is one of the best, most-ef-
cial intelligence (AI) that might be         dict whether there is going to be a de-    ficient ones in the world.
able to give trucks a heads-up to know       lay and then act accordingly, either           When I travel and I talk about how
when to expect a long delay at the bor-      changing the route or notifying others     we have this problem because some-
der. The idea is to gather a lot of infor-   in the supply chain that there is going    times it takes 45 minutes for trucks to
mation, including data on weather            to be a delay.                             get across the border people will laugh
and traffic congestion, and put it               We are hoping to commercialize it      because in their local experience it
through a machine-learning algo-             down the road.                             sometimes takes days. CS

10   March 2020   www.canadianshipper.com                                                              Photo: Cross-Border Institute/University of Windsor
IN THE NEWS

Sky’s the Limit
With Air Canada behind them, Drone Delivery
Canada is proving its concept works                                                                                             By John Tenpenny

When he made his first visit to the of-
fices of Drone Delivery Canada (DDC)
in the summer of 2017, Tim Strauss ad-
mits he was skeptical.
    The vice president cargo at Air Can-
ada described himself as agnostic when
it come to vehicles.
    “What can it carry and what can it
do within the regulated environment?
What I’d seen up to that point with
drones was lots of cool equipment, but
not an intersection with the regula-
tors,” he explained during an interview
with Canadian Shipper.
    What saw turned him from a skeptic
into a fan of the company.
    “[DDC] were building their equip-
ment in tandem with Transport Cana-
da and Nav Canada so that it was ready
to launch inside controlled airspace,
which was and is the right approach to
take, but something I had not seen that
                                              Drone Delivery Canada’s ‘Sparrow’ drones, which can carry loads of up to 4.5kgs, operate between
anyplace else.”                               customer sites, remotely monitored by the drone operator’s commercial operations centre.
    That was a launching pad for the
signing of a sales agency agreement des-
ignates AC Cargo as the exclusive sales       ry loads of up to 4.5kgs, to operate be-                expect these will be the first of many to
channel for DDC’s first 150,000 lanes.        tween the manufacturer’s sites, re-                     come globally.”
    Last fall, DDC signed up a pair of cli-   motely monitored by the drone                               According to Strauss, interest has
ents in the Greater Toronto Area that         operator’s commercial operations cen-                   been steady. Many visits by interested
will showcase its operations on the sites     tre. The customer pays DDC a monthly                    parties have been followed by second
to promote the drone delivery concept.        fee for each drone route.                               visits with senior management person-
    The drone operator has completed              “There are revenues involved, but at                nel and top management in a third
the proof of concept activities required      this point we’re less interested in mak-                round, he reported.
by Transport Canada. As a final step          ing money with this. A lot of potential                     He sees several areas of promise for
before giving it free rein, the regulator     customers want to see it,” remarked                     DDC’s operations, from closed–loop
has agreed to the suburban operations         Strauss, who is also a member of DDC’s                  type supply chain service like the Vision
to see how it intersects with other           advisory board.                                         and DSV agreements, to distribution ac-
modes of traffic in the region.                   The second commercial agreement                     tivities and the carriage of supplies and
    While not the unfettered start of         was with DSV Air & Sea Inc. Canada, the                 medications to remote communities.
commercial operations for DDC yet,            Canadian arm of the global transport                        Recently, DDC signed a $2.5 million
Strass expects that activities will ramp      and logistics company DSV Panalpina                     contract to deliver parcels within the
up quickly once these operations are up       A/S, to deploy drones at its new head of-               Moose Cree First Nation communities
and running.                                  fice and warehouse in Milton, Ontario.                  in Northern Ontario.
    The first agreement was with Vision           “We are pleased to roll out our first                   The project is the first stage in the
Profile Extrusions Limited to deploy a        paid commercial projects using our                      “remote communities” market segment
drone delivery platform for the use of        proven Sparrow drone, patented FLYTE                    DDC aims to grow over the next few
Vision between its properties in              system, and newly built commercial                      years. The company aims to utilize its
Vaughan, Ontario.                             operations centre,” said Michael Zahra,                 Sparrow drones for the transport of
    The contract with Vision calls for        president and CEO of DDC. “We have a                    goods including letters, general parcels,
DDC’s ‘Sparrow’ drones, which can car-        robust funnel of opportunities and we                   and medical supplies. CS

Photo: Drone Delivery Canada                                                                            www.canadianshipper.com       March 2020   11
CHEMICAL LOGISTICS

          SPECIAL
          DELIVERY          Safety is critical to the transportation of dangerous
                                       and non-dangerous substances

                                                  MARK CARDWELL

A
          s president and CEO of the            “Getting our goods to market is         pose the $6.6-billion Coastal Gaslink
          Chemical Industry Associa-        challenging,” Masterson told Canadi-        route that would move natural gas from
          tion of Canada (CIAC)—a           an Shipper in a recent phone interview      northeastern British Columbia to the Pa-
          group that represents the         from the CIAC’s offices in Ottawa.          cific Ocean.
majority of companies that transform        “Shipping is a major cost and concern           The Canadian Chamber of Com-
raw materials like oil, natural gas,        for our members.”                           merce called for an “immediate end”
minerals and biomass into substances            In addition to transportation bottle-   to the blockades, saying the coun-
and materials used to make more             necks that arise from a myriad of eco-      try’s supply chains “are being severe-
than 70,000 everyday products—Bob           nomic, infrastructure and regulatory        ly damaged by the continuing inter-
Masterson knows how crucial the safe        issues and problems, Masterson says         ruptions.”
and timely delivery of those goods is to    the service environment in Canada is            In addition to its own rail network,
the health and well being of the            also vulnerable to disruptions from ex-     CN warned the blockades would also
$60-billion industry.                       treme weather events or labour strife       soon affect business at the ports of
   But he also knows how demanding          like the recent CN workers’ strike.         Halifax, Montreal and Prince Rupert.
the handling, storage and movement              Then there are unexpected interrup-         “The impact is also being felt be-
of hazardous and non-hazardous              tions like the blockade in February of      yond Canada’s borders and is harming
products and substances requiring           much of the 30,000-km-long CN Rail net-     the country’s reputation as a stable
special care can be in a country as big     work by protesters in support of the        and viable supply chain partner,” CN
and diverse as Canada.                      Wet’suwet’en hereditary chiefs, who op-     said in a recent statement.

12   March 2020   www.canadianshipper.com                                                                               Photo: AltaGas
CHEMICAL LOGISTICS

      A CN train makes the first delivery of propane
     feedstock—from Alberta—to BC’s Ridley Island
Propane Export Terminal (RIPET) for export to Asia.        Chemicals also account for roughly         pand existing operations in Canada.
                                                       13 per cent of all Canadian rail network          Most, however, are captive rail
                                                       traffic and an equally large percentage        shippers with no viable shipping alter-
                                                       of the revenues of both CN and CP.             natives due to factors ranging from
                                                           Seventy per cent of that freight rail      access to a single rail carrier to the
                                                       volume—notably plastic resins, which           distance, volume and type of product
                                                       are used to make everything from food          being shipped.
                                                       and drug packaging to carpets, wall-              “Access to a safe, reliable and com-
                                                       paper and car parts, and sodium chlo-          petitively priced rail service is critical
                                                       rate, which is used to bleach wood             to the success of the Canadian chem-
                                                       pulp in the pulp and paper industry—           istry industry,” said Masterson.
                                                       is exported to the United States.                 He applauded recent initiatives
                                                           In return, Canada imports smaller,         like the 2018 Transportation Modern-
                                                       higher-priced volumes of sulphuric acids       ization Act, which brought in new
                                                       and powerful chemicals for the mining,         data requirements to improve trans-
                                                       electronics and refrigerant industries.        parency and help shippers better
                                                                                                      monitor Canada’s freight rail network.
                                                       Chemical relations                                The new legislation also introduced
                                                       Not surprisingly, the cross-border             measures like long haul inter-switch-
                                                       movement of these products require             ing (from a 30-km to a 100-km radius)
                                                       manufacturers, carriers, and third-            to help captive rail shippers and
                                                       party logistics (3PL) providers to be          granted Transport Canada the power
                                                       aware of and adhere to a complex web           and ability to launch investigations
                                                       of ever-changing federal and state reg-        into issues related to rail service.
                                                       ulations aimed at preventing safety               According to Masterson, the
                                                       hazards such as combustion, contami-           changes have helped to improve the
                                                       nation, and spoilage.                          industry’s mostly positive albeit some-
                                                           “A very complete alignment be-             times contentious relations with CN
                                                       tween Canadian and American regu-              and CP.
                                                       lations is critical,” said Masterson.             “We all share concern for public
                                                           In addition to maintaining regula-         safety and work closely together in our
                                                       tory harmonization, Masterson said             commitment to it,” he said.
                                                       there is an urgent need for public poli-
                                                       cies and investments that will improve         Safe distribution
                                                       Canada’s supply chain networks—by              One example of this was the recent de-
                                                       rail, road and ship—and support                cision by the CIAC-backed Transpor-
                                                       growing demand and capacity for                tation Community Awareness and
      Masterson echoed that concern.                   chemical production.                           Emergency Response initiative to re-
  “Investors do pay attention to these is-                 Masterson pointed to three new             vive the Safety Train with $220,000 in
  sues when making decisions on wheth-                 private projects worth a total of $13          funding from TC.
  er or not to invest here,” he said.                  billion—including a plastic resin plant           Starting this summer, the convert-
      Rail isn’t the only delivery method              in Sarnia and two facilities in Alberta,       ed tank car will travel to communities
  for Canada’s chemical industry. But it               which has massive reserves of lighter          across Canada that have chemicals
  is by far the most important.                        chemical-making feed stock like natu-          moving though them and serve as a
      According to Masterson, 80 per                   ral gas and ethane—that he says will           mobile classroom to help train emer-
  cent of the corrosives, acids, plastic               help put Canada on the Top 10 list of          gency responders.
  pellets and other products made by                   world chemical producers.                         For health and safety expert Jim
  chemical companies in Canada—mak-                        He said more projects that will double     Bird, chemical manufacturers and dis-
  ing it the country’s third-largest man-              those investments are in the works. “Plas-     tributors are like two peas in a pod
  ufacturing sector—are shipped by rail.               tics industries have grown 8.5 per cent an-    when it comes to the chemical supply
      Based mainly in Alberta, Ontario                 nually over the past 50 years,” said Master-   chain in Canada.
  and Quebec, the chemical industry is                 son. “That’s twice the rate of international      “Distributors play a key role in the
  also the second or third largest volume              GDP and continues to grow.”                    chemical industry because manufac-
  supplier by rail in Canada with more                     Rail service, he added, is a key fac-      turers, due to their size and policies,
  than $60 million of product moving                   tor in decisions by CIAC members on            can’t react as fast as to the needs of end
  daily and $23 billion annually.                      whether to locate a new facility or ex-        users,” said Bird, a regional director

                                                                                                       www.canadianshipper.com   March 2020   13
CHEMICAL LOGISTICS

The TRANSCAER Safety Train is a railway tank car that was converted into a classroom on wheels in 1990 to train emergency responders. It was the first training car of its
kind in Canada—a concept that has since been adopted by other organizations across North America and around the world.

with Responsible Distribution Canada                      textiles and insecticides)—Bird said the                         Though oil and gas are outside the
(RDC), a non-profit trade association                     relationship between distributors and                        scope of chemical distribution—even
for the distribution sector of the Cana-                  transporters is extremely close. “They                       though oil and gas companies are the
dian chemical industry.                                   both work with low profit margins and                        principal end users of substances like
    Before joining RDC five years ago,                    face the same issues,” he said.                              methanol, glycol and corrosion inhibi-
he spent 37 years with Univar Solu-                           According to Bird, one of the big-                       tors—Bird said the chemical distribu-
tions, a global chemical and fine ingre-                  gest issues facing both the chemical                         tion network is both targeted by and
dients distributor, and the leading dis-                  and transportation industries is the                         involved in the flammable liquid train-
tributor in Canada. He notably created                    lack of truck drivers. “The shortage is                      ing programs for fire departments that
the transportation safety program for                     even worse for the transport of danger-                      have sprung up across Canada since
the company, which had a fleet of over                    ous goods because you need trained                           the 2013 rail disaster in Lac-Mégantic
300 rail cars when he retired.                            drivers willing to expect added risk                         that killed 47 people and destroyed
    “Whether it’s rolling stock or road                   with no extra premium,” he said.                             much of the Quebec town’s downtown
transportation, distributors carry a                          In addition to knowing their com-                        core from the fires and explosion of
big share of the load in chemical trans-                  pany’s protocol in the event of an inci-                     multiple derailed tanker cars.
portation in Canada and account for a                     dent and what to do on scene, Bird said                          “The worst incidents usually in-
majority of shipments,” said Bird.                        drivers need to learn through certified                      volve oil and gas, and usually rail and
    Due to the special care needed to                     training courses everything from the                         pipelines,” he said. “There are many
make, handle, store and deliver the                       hazardous nature of the substances in                        more incidents on the road, but they
products and substances that account                      the tankers they haul and the pumping                        tend to be more contained because of
for the biggest volume of chemicals pro-                  rates for those products to the compat-                      the smaller amount of product in-
duced and transported by distributors                     ibility of transfer hoses and how to pro-                    volved and minor in nature, like a
in Canada—including caustic soda (a                       tect themselves and others in the event                      truck skidding off the road.”
corrosive commodity substance used in                     of an accident or incident.                                      He added that other major road-re-
the pulp and paper industry and in the                        “Some of these flammable liquids in                      lated incidents usually occur as a re-
oil sands), methanol (various uses), xly-                 bulk tanker loads and trucks on the                          sult of operator error at distributors’
ene (a common hydrocarbon solvent)                        road represent explosion and fire haz-                       sites, such as massive over spills of rail
and chlorine gas (a deadly disinfectant                   ards,” said Bird. “Some of them also                         tankers involving groundwater pollut-
used to treat drinking and swimming                       have exposure health issues like can-                        ants like xylene, which can require
pool water and to make hundreds of                        cer, burns and poisoning. Methanol,                          costly, long-term cleanup work.
consumer products, including paints,                      for example, is highly toxic.”                                   “Fortunately, there are lots of proto-

14   March 2020     www.canadianshipper.com                                                                                                        Photo: Railway Association of Canada
CHEMICAL LOGISTICS

cols in place and contained material       other safety issues that arise.              “The vast majority of industry oper-
volumes,” said Bird.                           “Trucks have had satellite tracking   ators are highly trained professionals,”
                                           for 30 years,” said McGuigan. “The big    said Kimmerly. But he said the drivers’
Going digital                              difference now is that our optimized      shortage, together with a pay-per-mile
Improved digital technology—both on        systems can proactively capture, har-     industry approach that is being torpe-
board vehicles and through service         ness, update and transmit information     doed by long border delays and more
providers—is also helping to improve       automatically to provide customers        lengthy inspection requirements, is
the safety and efficiency of the chemi-    with real-time visibility and informa-    leading many fleets to cut costs and
cal supply chain in Canada and the U.S.    tion on their assets.”                    manage risks by setting up drivers as
   “There is a technical renaissance go-       For his part, Doug Kimmerly, who      independent contractors who are sup-
ing on in our industry,” said Frank Mc-    owns a small brokerage company in         posedly eligible for deductions enjoyed
Guigan, CEO of Dallas-based Trans-         Toronto called DSN that focuses exclu-    by corporations—a tax-saving scheme
place, a North American leader in          sively on hiring trucks to transport      that may soon be challenged by the
transportation management services         chemicals and hazardous materials—        Canada Revenue Agency. CS
and logistics technology.                  everything from acids to lubricants—
   According to McGuigan, artificial       between the U.S. and Canada for
intelligence is helping to enhance the     chemical distributors and manufac-                         Mark Cardwell is an
digital tools and platforms his compa-     turers, sees the rise of the controver-                    independent journalist
ny has on the marketplace by provid-       sial employment model known as                             and writer based in Quebec
ing the ability to not only predict and    ‘Driver Inc.’ as a growing safety issue                    City. He is a
better understand shippers’ needs but      in the trucking industry as a whole and                    correspondent for publica-
to provide real-time information and       the chemical transportation industry      tions in various fields, including transporta-
assistance to help manage spills and       in particular.                            tion, business, agriculture, medicine and law.

                                                                                           www.canadianshipper.com       March 2020   15
CRUDE–BY–RAIL

                                                                                                               Calgary-based Melius Energy
                                                                                                             recently transported BitCrude
                                                                                                           bitumen via intermodal rail from
                                                                                                              Edmonton to Prince Rupert in
                                                                                                                custom 20-foot containers.

     THE BETTER WAY
                  New technologies offer safer ways of moving oilsands bitumen

O
           ngoing pipeline project de-      from Edmonton to Prince Rupert, B.C.          Melius says the product meets reg-
           lays and growth in crude-by-     in custom 20-foot shipping containers      ulatory requirements of the recently
           rail capacity from Western       via intermodal rail. From there, the       passed federal oil tanker ban in north-
           Canada, along with recent        containers travelled by ship to interna-   ern B.C. and can be exported from
derailments that have put the spotlight     tional markets.                            Prince Rupert.
on the environmental consequences of           “Now that we have tested the inter-        “We have now proven that we can
shipping crude, are leading some oil-       modal transportation method for ex-        ship bitumen to international markets
sands producers to look at alternative      porting bitumen, Melius Energy is fo-      safely and efficiently,” stated Broder.
methods of shipping bitumen.                cused on scaling the BitCrude                 Melius is establishing relationships
    Oilsands bitumen is a thick, sticky     transportation solution,” said Melius      with refineries in Asia and is working
oil which must be diluted with about        Energy’s president, Nicole Zhang. “Es-     to provide a long-term, stable supply.
half as much light petroleum to flow in     tablishing a transportation solution       Those refineries plan to turn the Al-
a pipeline, but diluent isn’t needed for    for Canadian energy that delivers tre-     berta bitumen into products such as
rail transport because the product can      mendous value for local producers          asphalt and low-sulphur diesel.
be heated for loading and unloading.        while satisfying the demand for our
    Recently, a pair of Canadian com-       energy internationally is our priority.”   Pellet-ized
panies, have demonstrated new tech-            The BitCrude process developed by       CN Rail is also working on a safe way
nologies that offer to ship bitumen,        Cal Broder, founder and chair of BFH       to transport bitumen, with its patent-
they say, safely and efficiently, by con-   Corp., uses an electrically powered di-    ed CanaPux, a solid pellet about the
tainer or rail.                             luent recovery unit to remove lighter      size of a bar of soap composed of heavy
                                            petrochemicals, thus producing a           crude blended with a polymer inside
Custom containers                           product that’s non-flammable for           and as an outside wrap. The pellets are
Calgary-based Melius Energy success-        transportation purposes, floats in both    turned back into a liquid, separating
fully transported 130 barrels of bitu-      fresh and saltwater in custom contain-     the polymer for reuse. Like BitCrude,
men last fall using the BitCrude process    ers and is non-toxic to marine life.       CanaPux is non-volatile, dust-free and

16   March 2020   www.canadianshipper.com                                                                             Photo: Melius Energy
CRUDE–BY–RAIL

is easily retrieved in the event of a de-                                 ern Alberta that will include a polymer
railment or if the pellets wind up in       CN Rail’s patented            recycling facility and biomass energy
                                            CanaPux isa solid
the water.                                  pellet about the
                                                                          plant that will process forest and con-
    Currently in the works is a pilot       size of a bar of              struction and demolition waste. It
project, which will see CN and Wap-         soap composed                 plans to supply pellets for non-com-
                                            of heavy crude
ahki Energy, a company owned by the                                       bustible uses in China and to off-tak-
                                            blended with a
Heart Lake First Nation in Alberta,         polymer inside                ers in South Korea.
each will invest $16.7 million.             and as an                        James Cairns, vice-president of pe-
    Under its Advantage Heavy Oil De-       outside wrap.                 troleum and chemicals at CN told The
velopment Ltd. company, CN plans to                                       Canadian Press that CN has signed a
build a facility capable of producing                                     memorandum of understanding with
100,000 pellets a day. It will include a                                  an unnamed Asian customer who is
recovery unit and rail facility where                                     interested in importing the pucks to
pellets will be loaded into hopper cars                                   his country and separating the oil and
capable of moving an equivalent 650                                       polymer for processing and sale.
barrels of oil. That compares to a tank-                                     Cairns said the pucks can help gen-
er, costing ten-times more to lease, at                                   erate industry profits by allowing Al-
500 barrels. Savings for producers are                                    berta bitumen and other heavy crude a
estimated at about $15 per barrel. The                                    less environmentally risky way to ac-
company is targeting Chinese refiners.                                    cess new markets.
    Wapahki Energy is looking at a                                           “It’s not going to replace pipelines,
10,000 pellet per day facility in North-                                  not even close,” Cairns said. CS

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Photo: CN                                                                  www.canadianshipper.com   March 2020   17
REVERSE LOGISTICS

                                                 As e-commerce helps push returns
                                                to record volumes, shippers and their
                                                partners look for ways to slow the tide

                                                                   BY IAN PUTZGER

         he battle with returns is getting   million returns on January 2. Steve Vi-    panies may send products to workers
         longer. On January 7 home deliv-    tale, director of communications of        on a project somewhere and then ship
         ery specialist ParcelHero de-       UPS Canada, says that returns have         back the unused products,” adding
         clared that peak returns were       ballooned at an annual clip of around      that B2B e-commerce now mirrors the
continuing into the second week of 2020.     10 per cent over the last four years and   B2C sector in many ways.
    Courier firms had braced them-           are going to continue to rise.                In B2C returns are simply part of
selves for an avalanche of return parcel        While this has been widely expect-      the course—an indispensable part, for
flows, with estimates of US$90-95 bil-       ed in the B2C arena, he notes that re-     that matter. According to one study, 67
lion worth or goods flowing back. UPS        turns in the B2B sector are also grow-     per cent of online shoppers check the
was expecting to handle in excess of         ing at a rapid rate, albeit from a         merchant’s returns section before
one million return shipments a day           relatively small base.                     completing their purchase. Another
through December into January, an-              “It’s becoming more a B2B play as       survey found that the returns experi-
ticipating to hit a peak volume of 1.9       well,” says Vitale. “For example, com-     ence impacts the likelihood of a repeat

18   March 2020   www.canadianshipper.com                                                                                Photo: UPS
REVERSE LOGISTICS

                According to one study, 67
               per cent of online shoppers
              check the merchant’s returns        As they mean extra cost for the           consumer to download and print a la-
                section before completing
                            their purchase.
                                              merchant, returns come across as the          bel. SEKO unveiled a new returns ser-
                                              bane of their existence, an image un-         vice last spring which utilizes a portal
                                              derscored by return rates north of the        (in the colors of the merchant) that
                                              30 per cent mark. Horst Manner-Rom-           consumers access to initiate the re-
                                              berg, principal of mail and parcel lo-        turns process.
                                              gistics consulting firm M-R-U, cau-               “The portal helps. It improves visi-
                                              tions that this picture is misleading.        bility. Customers see right away what’s
                                              Garments may be showing return                returned and why, which can help
                                              rates above 30 per cent in the e-com-         them reduce their returns ratio,” re-
                                              merce segment, but this is due to the         marks Bourke. “You shouldn’t ship out
                                              fact that consumers order the same            labels any more.”
                                              item in different sizes and/or colors,            Some shippers still employ archaic
                                              shifting changing rooms to their              systems to deal with returns, while oth-
                                              homes. Sectors like office equipment          ers have embraced hyper-modern meth-
                                              or furniture have much lower return           ods, notes Manner-Romberg. Emerging
                                              rates, he points out.                         software providers have spotted an op-
                                                  “Returns is a channel-specific issue,     portunity and unleashed a number of so-
                                              not e-commerce-specific,” he stresses.        lutions for merchants to manage returns.
                                                  According to him, the image of the            He is not too impressed with most
                                              e-tailer being a martyr to the cost of        of these. “There’s a lot of money looking
                                              returns is also misleading. “Merchants        for investment opportunities,” he re-
                                              have managed to build an image that           marks. Optoro, a technology company
                                              they are the battered ones, but they          which helps retailers and brands man-
                                              save more on what they would have to          age, process and dispose returned and
                                              pay retail outlets,” he says. “They have      excess inventory, raised over US$244
                                              a fat enough margin in e-commerce.”           million in several funding rounds.
                                                                                                At least these solutions are not getting
                                              Free shipping                                 in the way of the logistics aspects. They
                                              Consumers are not inclined to pay for re-     can usually be integrated through APIs or
                                              turns. In one survey 42 per cent named        plug-ins, says Vitale. “These tools are not
                                              free returns as the strongest factor con-     as cumbersome any more to implement.”
                                              tributing to a positive returns experience.       Bourke sees benefits in the emer-
                                                  Still, it is possible to charge for re-   gence of tech companies that have so-
                                              turns in some cases, says Brian Bourke,       lutions for e-commerce
                                              chief growth officer of SEKO Logistics.           “Nobody can do it all alone. We’re
                                              “You don’t have to offer free returns,        more into developing ecosystems with
                                              you have to offer easy returns. You can       companies like EasyShip,” he remarks.
                                              monetize returns. It depends on the               “Most retailers and brands have not
                                              value,” he comments.                          figured out returns management. They
                                                  For most online merchants the easi-       rely on someone to take care of it,” he
                                              est approach has been to include as           says. “The need for outsourced solu-
                                              return label with the outgoing ship-          tions is only going to increase.”
purchase from a merchant for 73 per           ment. This makes it easy for the con-             Datoo agrees. “A lot of people want
cent of shoppers.                             sumer to send an item back, and the           to outsource the whole process,” he
   “Years back returns was the ugly           shipment can be traced from the mo-           observes.
step-child, now it’s a mechanism to in-       ment it is picked up, which also helps
crease sales,” comments Vitale.               expedite the refund process, another          Disposable goods
   “If merchants don’t offer don’t offer      critical interface between merchant           This opens up opportunities for logistics
a simple returns policy, they’ll lose         and consumer.                                 providers that extend well beyond the
business,” remarks Mo Datoo, director             “Tracking is extremely important,         flows of return goods. To begin with,
of strategy & planning of eShipper.           also to steer the work process,” re-          merchandise coming back has to be in-
Amazon has blazed a trail, making the         marks Manner-Romberg.                         spected to determine what will happen
process simple and smooth, and oth-               However, Bourke sees labels on the        with it—can the item be repackaged and
ers have no choice but to follow suit,        way out, being increasingly replaced          put back up for sale straight away, or
he adds.                                      with online platforms that allow the          does it need treatment or repairs?

                                                                                             www.canadianshipper.com    March 2020   19
REVERSE LOGISTICS

                                                                                                       UPS and TerraCycle developed
                                                                                                       a system—called Loop—which
                                                                                                            eliminates the reliance on
                                                                                                             single-use packaging for
                                                                                                                     consumer goods.

    “Most of the time they don’t come in            Chances that items do not go back         shipments. The second reason is re-
and inspect the goods. We send them             to the seller rise exponentially if the       turns,” he remarks.
photos and ask what they want us to             consumer is located in another coun-             As a cost item they have to swallow,
do,” says Datoo.                                try. For returns of merchandise bought        merchants are eager to keep the cost of
    Imtiaz Kermali, eShipper’s vice-presi-      from Chinese suppliers the tenor is           returns as low as possible, so the pressure
dent of sales & marketing, adds that one        “forget it,” notes Manner-Romberg.            is on their logistics providers. Returns
client let some returns pile up in eShipper’s       “International is much more diffi-        programs are rarely contracted sepa-
warehouse and then came in to train staff       cult. A lot is disposed of, or the merchant   rately, though. They are usually part of a
how to assess and handle the products.          tells the consumer: ‘You got the wrong        package built around fulfillment. “We
    In some cases, SEKO actually per-           color? Keep it! We’ll send you a new one’.    rarely do just returns for clients. We offer
forms minor repairs of returned items,          Only high value goods are returned,”          end-to-end bundled solutions where re-
but this is not the norm.                       says Dean Maciuba, director consulting        turns are part of it,” says Bourke.
    “We have embroidery machines in             services at Logistics Trends & Insights.         “The only time returns are separate
some of our facilities, but this is no our          For returns from U.S. consumers eS-       is when a business needs a bit more
forte. We allow people to enter our fa-         hipper often looks to move the goods as       help, for example if they look for a con-
cility for refurbishment. There are             close as possible to the border to bring      solidation point for returns. It depends
companies that specialize in refur-             them into Canada in consolidations.           on a bunch of things,” notes Vitale.
bishment,” says Bourke.                         For the intra-U.S. leg, often the U.S.
    Often the cost of the merchandise           Postal Service is the preferred option.       Sustainable practices
does not justify sending it back for a              SEKO uses postal agencies in many         Consolidation of returns is a major lever
second sale. A large number of re-              countries. “We leverage global postal         for cost containment. It has the addi-
turned online purchases are disposed            solutions,” says Bourke. “It usually          tional benefit of reducing the environ-
of through a variety of channels, such          takes the least effort and the postal         mental impact, a theme that is rising in
as liquidation platforms, discount out-         company comes every day.”                     prominence, Vitale says. In the U.S. UPS
lets or charities, while some merchan-              Another key element of cost con-          leverages Coyote Logistics, a tech-based
dise is simply destroyed.                       tainment is the use of access points.         truckload brokerage to maximize con-
    “Amazon doesn’t want a lot of goods         These are overwhelmingly used for re-         solidation that it bought a few years
back. You can keep them or destroy              turns, says Maciuba. “Their biggest           back. It has also partnered with Optoro
them,” says Manner-Romberg.                     purpose is to manage undeliverable            to help retailers determine whether to
                                                                                                                                   continued
20   March 2020   www.canadianshipper.com                                                                                                Photo: UPS
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