WOODBRIDGE, Ontario: Conspiracies and cartels, the international economy and sustainability were all topics on the agenda at the International Warehouse Logistics Association (IWLA) Canada Spring Conference.
Paul Ferley, assistant chief economist in the economics department at the Royal Bank of Canada opened the event with a presentation on the global economic outlook. Although Ferley said there are challenging times ahead thanks to the European sovereign debt crisis, slow job growth in the US, cautious consumer spending in Canada, the high Canadian dollar and worldwide fiscal restraint, his outlook was generally positive.
“The bottom line view is these challenges will be addressed in a manner that allows growth to continue, both globally and within North America. Not as rapidly as we’d like to see, but the positive growth will continue.”
Sustainable supply chains
Following Ferley was a presentation from the Sustainable Supply Chain Foundation. The Washington, DC-based body has been contracted by the IWLA to provide independent verification of the Sustainable Logistics Initiative (SLI). SLI is a continuous improvement program designed to demonstrate and measure the steps businesses are taking to make their facilities greener and more sustainable.
“Our logo will hopefully will hopefully become the ‘Good Housekeeping Seal of Approval’ for the supply chain, said Richard Bank, director of the foundation. (Unfortunately, he likely didn’t realize the Good Housekeeping Seal of Approval is an advertising-based program, especially in light of the foundation’s intention that a program such as this will help do away with ‘greenwashing’ and unverifiable eco-claims).
The program, which costs US$1,200 for two years, requires companies to log into a website and enter data derived from verifiable sources such as energy bills that will be used to calculate year-over-year improvements in green initiatives. Companies will then be able to use the results to prove they engage in sustainable practices and offer up the proof to potential customers who require sustainability programs as part of their RFPs or corporate policies. They will also be able to use the improvement targets created by the program to plan future sustainability efforts.
Additionally, he said there is an added regulatory benefit to self-policing programs.
“Having industry-created programs can hold off government-created programs that are harder to live with and don’t offer the same service.”
Foundation director, Lisa Harrington, gave two example of companies that demand suppliers have sustainability programs. She said both Unilever and Procter & Gamble require their 3PLs to prove the green credentials.
“Those will become a basis for elimination, essentially. If you’re a 3PL and you want to do business with companies like this, and you don’t have a sustainability program that is measured year-over-year, it’s an automatic elimination. You won’t be considered in the pool. Sooner or later this will become table stakes for the 3PL sector.”
Changes to Competition Act
The next presentation was made by Catherine Pawluch, partner at Davis LLP in Toronto. A specialist in transportation and competition law, Pawluch spoke about fairly recent changes to the Competition Act that create new cartel/conspiracy offence.
“We have a Competition Bureau in Canada that has been much more rigorously pursuing Canadian businesses that violate competition laws,” she said. “We have currently a commissioner of competition, Melanie Aiken, who takes her job very seriously. At a recent international cartel workshop, the commissioner spoke and she referred to violations of the Competition Act as ‘economic crime’. She also stated the Bureau is more frequently seeking jail time for individuals and she believes custodial sentences are important to deter these economic crimes.”
She told attendees that under the old legislation, getting a conviction on conspiracy charges was difficult, as the Crown had to prove the collusion between competitors would unduly limit competition. This required the colluding companies to have significant market power. Under the new law, that no longer has to be proven. Now the mere existence of an arrangement or agreement between two competing parties about the pricing for a product or a service, or about limiting the supply of a product, or dividing territories or customers is enough for a conviction. And convictions can result in severe penalties—fines of up to $25 million per violation, or imprisonment for a term of up to 14 years, or both.
Today, for example she said a famous logistics-related case, the “Car Pool” case of 1995, would be decided differently. At the time, freight forwarding companies agreed to set pricing for the forwarding of goods between Toronto and western Canada, but because the Crown failed to prove the conspirators working together would unduly limit competition—essentially because the defence was able to define the sector as the entire transportation sector and not just the smaller freight forwarding portion of it—the charges were dismissed. Pawluch said under the new law, a conviction would be the likely result.
The legal theme continued during the last session of the day, when four experts discussed issues not only about the law, but also about regulatory environments, insurance, contracts, and liabilities. Sitting on the panel were Christopher Neufeld of Neufeld Legal PC, Matthew Yeshin, managing director of marine practice at insurance broker Marsh Canada Ltd, Lise Dufresne, director of contract management at the healthcare logistics firm Accuristix, and Marlene Ing, account manager at insurance broker HKMB Hub International. Among the topics discussed was the trend by banks and other organizations to ask for logistics firms to waive their lien rights, situations where insurance might not cover losses (such as in the case of accounting errors or mysterious disappearances) and standard terms and conditions contracts.