Total logistics costs in Canada between 2005 and 2007increased by 22% in retail, with manufacturers and wholesalers keeping their cost within a 1% range, according to research entitled State of Logist...
Total logistics costs in Canada between 2005 and 2007increased by 22% in retail, with manufacturers and wholesalers keeping their cost within a 1% range, according to research entitled State of Logistics: The Canadian Report 2008.
The research was conducted by Industry Canada in partnership with Supply Chain & Logistics Association Canada (SCL) and Canadian Manufacturers and Exporters (CME).
Philippe Richer, Industry Canada’s Supply Chain Research project manager, presented the report’s key findings. “Most of the cost increase was attributed to inventory carrying costs and a rise of more than 35% in inventory levels. Compared to the US, total supply chain management and logistics costs were 12% higher for Canadian manufacturers, 18% higher for Canadian wholesalers and 30% higher for Canadian retailers in 2007,” he said.
The higher logistics costs this side of the border present an obvious challenge for Canadian shippers, particularly during a tough economic climate, but they also present opportunities for carriers keen on offering solutions for more cost-effective transportation.
Richer noted that there was a 60% increase in investment in new distribution facilities in Canada from 2001-2007, coinciding with the rising complexity of inventory management with supply chain partners from around the globe.
“Manufacturing is the most innovative and agile sector in logistics and SCM practices, focusing in on mass customization, supply chain agility and just-in-time delivery, and is the only sector that has not decreased its inventory turn in the last two years,” said Richer.
Re-exported products experienced the highest growth in all the regions of Canada, he said. In 2007 most of these transited through Central Canada to the US.
North America is also seeing a shift from an East- West, two DC model to a “pool” model of multiple inland DC hubs.
Compared to the US, however, Canada had supply chain agility gaps in manufacturing inbound goods inventory turns (24%), wholesale IT (10%) and retail IT (29%) in 2007, showing only a slight advantage in manufacturing finished goods IT at 3 %.
In terms of outsourcing trends, meanwhile, compared to Canada, in the US, outsourced activities were 52% higher for US manufacturers, 53% higher for wholesalers, and 54% higher for retailers, in 2007. mt