CAMBRIDGE, Ont. — The Supply Chain and Logistics Association of Canada (SCL) recently organized tours of two Ontario businesses in industries hardest hit by the global recession: automotive manufacturing and trucking.

Last week, about 40 supply chain professionals were given an inside look at Toyota Motor Manufacturing Canada and Challenger Motor Freight, both based in Cambridge, Ont.

The companies are starting to enjoy the green shoots of economic recovery, but only after having survived some of the most arduous business conditions in recent memory.

For Challenger, the pressing issue was the dramatic drop-off in freight volumes at the tail end of 2008 and throughout 2009. The surplus of capacity led some trucking companies to drop their rates in a desperate bid to keep their trailers full.
It’s a strategy that Challenger and other large carriers had to battle against.
"Unfortunately in the trucking industry we like to eat our own, so (some companies) have driven the rates down," said Larry Cormier, vice president of sales. "The buyers of freight are no different than yourself. We’ve become a society of coupon clippers."

At the same time, Challenger has been busy fending off a union drive by the Teamsters. Challenger President Dan Einwechter told todaystrucking.com recently that the campaign is being driven by the union’s head office and a small handful of Challanger workers. The majority of drivers are content with the carrier, said Einwechter. 

Challenger’s HQ is one of the most environmentally
friendly transport facilities in Canada

In a question-and-answer session with the group of logisticians and supply chain managers, Cormier said something has to happen to reverse the trend of ever-lower rates for transporting freight.

"The numbers that are being put on the street right now are not sustainable in this industry to a large degree," he said. "We need an event that will change the buying patterns, that will drive the rates back up. That’s what we need as an industry."

He said the most likely factor to drive rates back where they should be is fuel prices.

"Most indications are that we’ll be in around that $100 (a barrel) mark come June and they’re saying that will then hold. That would drive inflation, and (make buyers think) ‘Well, maybe tomorrow it won’t be cheaper, maybe I need to buy today,’" he said. "There’s going to have to be a bit of an adjustment. That’s what I’m talking about ‘an incident.’"

Cormier said freight volumes are coming back, making the company more optimistic about the coming months.

"From a volume standpoint, yeah, it’s real," he said. "The recovery is real in our books."

Challenger has about 1700 tractors and more than 4000 trailers. The company’s LEEDS-certified head office building makes it one of the most environmentally friendly transportation facilities in Canada.

"Here in Waterloo we compete for employees with these guys right here," he said, holding up his BlackBerry. "We want to hire the next generation of workers, so a lot of the justification for building this building is driven by the culture of what (the high-tech companies in the area) have created. That’s who we compete with."

For Toyota Motor Manufacturing Canada (TMMC), the challenges of the economic downturn were felt almost immediately, as consumers closed their wallets to ride out the recession.

On top of that, Toyota faced massive losses due to safety recalls. Guides on the Toyota tour were not allowed to discuss the safety concerns – mainly related to uncontrolled acceleration in some of its models.