TORONTO — World-renowned economist Jeff Rubin says unless supply chains are willing to pay for triple-digit oil prices, they’d better start thinking closer to home.

Speaking at a conference hosted by PricewaterhouseCoopers (PwC) to discuss the findings of its “Transportation and Logistics 2030” survey, Rubin said it’s likely companies will soon have to pay for the carbon footprint they leave behind.

“I believe that we are going to put a price on carbon emissions,” the former chief economist at CIBC World Markets said in Mississauga, Ont., yesterday. “But we are only going to do so when we also have the right to put a carbon tariff on other people’s emissions, so that any goods that are sold in our market are playing under one common set of rules. And when we do that, we will find that by putting a price on carbon, our world suddenly becomes a lot smaller.”

Rubin said the price of energy will ultimately decide which modes of shipping will be used by supply chains in the future, but he disagrees with the PwC survey’s focus on only gas and diesel as possible fuel sources in the future. This is unlikely, Rubin believes, especially if price for a barrel of oil hits triple digits within the next two years as he predicts.

“Unlike in the 1970s and 1980s, there no longer are undiscovered fields of cheap, conventional oil,” Rubin says. “That oil has long been burned. So yes, we can get more (oil). But that new supply is going to come at an ever-increasing price tag on it.” 

Larger ships, airplanes, and trucks will
be urged to make oil dollars go farther

Oil issues aside, the PWC survey on how supply chains will evolve in a low-carbon world predicts a significant decrease in exports once rising transportation and labor costs make locally produced products more attractive to consumers.

“A complete shift to local production is going to be unlikely, but there is going to be a move to have more locally grown and locally produced products available for consumers,” says Wendy Potomski, vice-president of PwC’s Sustainable Business Solutions and Climate Change Services practice.

The survey also suggests speed of delivery will play an increasing role in designing futures supply chains. Real-time measurements of the flow of goods in transit are also expected to help put an end to supply chain mix-ups in the future.

“Transportation and logistics companies are now going to need to include this type of possibility in their processes,” says Potomski. “It will decrease your deficiencies and potentially decrease the environmental impact that this has.”

The review also predicts the use of larger ships, airplanes, and trucks to make oil dollars go farther. These larger shipments and vessels will demand better dockside and intermodal facilities to accommodate the higher volume of shipments coming in.

The survey challenges supply chains to become more flexible in their distribution methods as unanticipated events such as hurricanes, earthquakes, and floods can affect the flow of merchandise. The ability to adapt quickly or work around these unplanned events can make a big difference in a competitive market, the report says.

— By Farrah Cole