Western Canada boasts a distinct set of logistics challenges. During CITT’s Canada Logistics Conference 2014 in Calgary, Alberta, a panel session called “Success in the West”, moderated by Lou Smyrlis, delved into some of these challenges and into supply chain strategies as the winter approaches.
James Zacharias, vice-president of revenue accounting and LTL sales, with TransX, said that restrictions around certain single lane highways in the West mean the driving is much more dangerous, with the impact being more slowdowns, and traffic congestions.
“We spend a lot of time training drivers on proper passing, using simulators. Road closures really hold back the traffic flow in both directions. The cost doesn’t stop but the traffic does, and the impact to the shippers is delays at both ends. We lost 96,000 truck hours last year, more than double those of the year before.
There is not a lot you can do because of the single lane highway restrictions.
“With the GPS systems we have in play now we know if unit won’t be able to make it on time so we send out automated red alerts via email so that the customer is aware we may have to rebook the appointment. We also send a weather forecast out to our shippers so they will know to expect the truck is going to have some kind of delay. We added more rail capacity this year and on the logistics arm tried to secure some more capacity if needed,” Zacharias said.
John Ignaczewski, director intermodal wholesale sales with CP, said the railway has been leveraging its capabilities, working on its many western corridors, with a goal to provide comprehensive services throughout.
“We have put $1.2 billion dollars into capital expenditures of which 75% goes right back into getting the infrastructure ready for winter. Lots of money has been put into our north line into Edmonton, and we are also focused on the IT side of things, enabling customers to go in, get updates and see their overall supply chain and how it’s moving,” he said.
Mark Lerner, assistance vice-president, domestic intermodal, with CN, said the railway went through some painful steps in the 1990s to streamline operations, leading to increased train speeds under precision railroading in the 2000s. As to weather-related bottlenecks in the system, he said it’s a question of physics and how cold affects the rail.
“In Western Canada we can run some trains that are 14,000 ft. in length. Distributive power allows us to maintain longer trains. But at temperatures that are lower than -35 degrees Celsius we reduce trains to 8,500 feet with distributive power, so we have to add more power or crews and velocity and cycles are down. We have some resiliency in the network if it’s an issue of a day or two. But after 7-10 days in a row as we experienced last winter, it just shuts it down. We’re a network, and the whole network suffers. When you think about weather think about the extremes and the duration,” he said.
The winter of 2013-2014 taught CN to be more proactive on its communication strategies, he added.
“We have embarked on creating a customer service group that works 7/24/365. Dispatchers sit now with customer service reps so the CSRs have a pulse on the first and last miles. Even before we start shipping with the customer we create a service delivery plan around what are the escalation procedures, whom do we contact etc. We know when our regular customers are in jeopardy and we try to be proactive.”
Greg Stringham, vice-president of markets and oil sands for the Canadian Association of Petroleum Producers, said that CAPP, which represents about 90-95% of the gas industry that produces upstream, “has to rely on rail significantly more now. We are looking for logistics to get our product to market. We are also spending $71 billion this year in capital investments and in order to do that we need logistics to bring things in as well, to produce the product and move it back out internationally. Our board is focused on cost control given where oil prices are,” he said.
Warren Sarrafinchan, vice-president of supply chain/information services, at Sun-Rype Products, noted the company is seeing success with its expansion into US and Eastern Canada.
In terms of weather-and road related constraints in the company’s supply chain planning, Sarrafinchan noted the severity of some of the Western passes, especially during the winter months.
“You can reposition inventory differently depending on what is happening. You have to take a pragmatic approach: transit times are going to increase in the winter. If you structure around realistic transit times you have better chance of being successful. The uncontrollable delays are going to happen. It’s important we get the communication about the delays as fast as possible—good, timely and factual info about what is happening,” he said.
Some delays, he suggested, can however be considered “controllable.”
“It’s hard to plan around information that is not timely or fact based and (results in) you making the wrong decisions. Having a plan, extra assets, and the right maintenance programs are proactive approaches we’re expecting from our supply chain partners,” Sarrafinchan said.
How can shippers best deal with the inevitable road closure and weather delays when transporting goods through Western Canada?
“You have to be realistic—in the winter we are not going to have the same level of service. A lot of our shippers want to have lean supply chains but there are times when they are shipping forward a little bit. You saw similar activity when the IWLU was having trouble on the West Coast. We have over 8000 containers and we also use steamship line containers—in the winter the cycle time is lower. Customers will sit on the equipment. We also look at day of the week capacity and whether there is some flexibility in your fleet to wait for off-peak shipping,” Lerner said.
Forecasting is huge and it’s an issue amongst everybody, he noted.
“With road closures you have to look at your overall supply chain and build contingency into it,” Ignaczewski said.
“CP has moved into a new market—we’re actually now handling courier traffic. A lot of that was just understanding what they needed, I think that was a real success story especially as we went through the winter,” he said.
What are the prospects for the intermodal network in terms of being able to handle growth if there is an uptick in the economy?
“I could look at this in different ways—there are a lot of headwinds in trucking in terms of the driver shortage, use of EOBRs etc. If the economy spikes, it’s going to drive a lot of supply chain concerns, and it’s going to drive a lot of freight into intermodal,” Lerner said.
Said Zacharias of the trucking capacity situation, “Now we are trying to make some money again. We’re adding a lot more staff or trucks, and if we don’t have the right rates to support that, it is not going to make for a good economic model. Capacity will be much quicker to come on board. Shippers have been able to save some money, but as the whole market and industry starts to realize they have to make money again it becomes difficult to add the capacity. The driver shortage is not as much of a problem as it is in the US but it is still a problem. Can we get creative in converting long haul to more short hauls?” he said.
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