How Canada’s transportation modes impact supply chains

An update on the current status of Canadian rail, air and road transportation modes was one of the highlights of the CITT’s Canada’s Logistics Conference, this year held in Halifax, N.S.

On the rail side, Jordan Kajfasz, assistant vice-president, international intermodal and autos for Canadian Pacific Kansas City (CPKC), said CP’s acquisition of KC just over a year ago has not only transformed the company but also the Canadian rail network.

“It was a transformational acquisition and combination for the North American rail network, making CPKC the first and only railroad to connect Canada, the U.S., and Mexico on a single rail line,” said Kajfasz.

He went on to highlight the importance of Canadian trade with Mexico, saying the North American partner can be a supplement to China, particularly when considering what happened to global supply chains during the COVID-19 pandemic.

“The Mexico business environment,” said Kajfasz, “not a day goes by where you don’t hear about near-shoring and manufacturing being built in Mexico and really with the goal of Mexico becoming maybe not necessarily the replacement for China, but certainly a supplement to what comes out of Asia.”

Since the merger, CPKC has also been able to run a single-line, four-day service from Mexico to Chicago that competes with single-driver trucks and has been moving reefers from Mexico into Canada and the U.S. The railroad has also started construction on a second rail span across the Rio Grande River in Laredo.

“We believe that trade lane is going to grow every year and we’re going to need the infrastructure to support it,” said Kajfasz.

Frank Figliomeni, chief commercial officer with Fastfrate Group, echoed Kajfasz’s sentiments on the emergence of Mexico, saying the country is now the largest importer, based on its location and ability to get products to market quicker.

“Customers are trying to get their product closer to market just to avoid some of the challenges in the supply chain,” he said.

Fastfrate, which has a long-term partnership with CP as its largest drayage supplier, has invested in approximately 400 containers, around 100 of which are in the Mexican market.

“We had to learn about Mexico, it’s not an easy market,” said Figliomeni. “There are a lot more manual processes to get containers from Mexico into Canada.

“Part of our future initiatives is opening up an office in Mexico, as well, and replicating what we have in Canada from a drayage perspective.”

Corrine Kostyshyn, assistant vice-president, international intermodal for CN Rail, said there are several options her company utilizes to help improve the efficiency of moving goods from Mexico into the North American market.

“We have what we’ve had for years,” she said. “Access to a rail ferry that gets you from the Coatzacoalcos Coast into the Gulf and then connects with our rail network that way. And that’s carload shipments. So, for carload shipments, a product can move up into the North American network that way.”

CN also has a short-sea shipping option and its Falcon Premium service, which is a partnership with Union Pacific and Ferromex to reach into the Mexican market north and southbound.

Air

Since the pandemic, Janet Wallace, managing director, cargo operations and transformation for Air Canada, said the air cargo business has completely changed for the airline.

“At the end of 2019, we were competing for space on all of the passenger aircraft to move cargo,” said Wallace. “And then during the pandemic, we took control of over 50 wide-body aircraft and we were travelling internationally and creating new relationships with suppliers in terms of how we would import into Canada or move commodities to and through Canada.”

Over the last two years, Air Canada made the case to operate its own freighters and now has eight Boeing 767s with the plan to ship over an ocean soon.

“Oftentimes in the passenger world we think it’s the last customer who boards the aircraft who makes the route viable,” said Wallace. “We’ve now proven it’s really the last kilo that gets boarded onto these aircraft that makes the routes viable.”

Wallace said Air Canada cargo saw really good business to Latin America and the Middle East between 2020-24, but moderate business within North America during that time.

“But overall, Air Canada cargo remains very optimistic in terms of what we can bring through air, through the country,” she said.

Wallace said the future of air freight will remain strong, particularly with the rise of e-commerce.

“As long as we all continue to buy everything online on our phones, as long as we want to have everything with the speed of now,” she said. “If you look back, 80-something years ago, we weren’t happy with mail arriving in a couple of days. And I’m still not happy with mail arriving in a couple of days. It’s an indicator of what’s going to be going forward. I think things are just going to be sped up really fast.”

Pierre-Yves Fouillen, business development, North America, for Flying Whales, a French aeronautic start-up that develops environmentally friendly airships to transport large, heavy loads, said his company will be in operation within a five-year timeline.

Flying Whales is in its last phase of engineering and by the end of 2024 plans to start construction of its first factory in France.

And, by 2026, the first machine is scheduled to take flight and the certification process in the EU and Canada will commence.

“Once we are certified, we will start the production in France, and in Quebec to deliver in the Americas, to have the first commercial operations in the second quarter of 2028 in Quebec and then have all the airships delivered to various regions in Canada and in the Americas,” said Fouillen.

Road

Over the past few years, there has been a slight shift toward the use of electric and hydrogen electric truck options to help maximize efficiency and reduce emissions.

“The electric vehicle is definitely starting to be more prevalent, but, unfortunately, when you look at the overall infrastructure and at long-haul, it’s not something in Atlantic Canada that is supported 100 per cent,” said Maryse Doucet, vice-president, LTL and terminal operations at Armour Transportation.

Doucet said the use of advanced telematics is another area where companies are investing to help reduce miles per gallon, as well as idling time.

Shelley Walker, CEO of the Women’s Trucking Federation of Canada, said in order for carriers to reap the advantages of all the new technologies available to trucking companies, training is key.

“People often assume that drivers are scared of new technology, and actually in this case, drivers are embracing it,” said Walker. “A key piece of advice is making sure your drivers get the proper training on that equipment because that is one of the big fallbacks.”

From a competitive landscape, Benoit Poirier, vice-president and industrial products analyst at Desjardins Securities, has confidence in what Canada has to offer.

“Canada is pretty attractive. We’ve made very sizable investments at the ports,” he said, pointing to recent labour issues as a potential hurdle to overcome. “I’m sensitive about Canada’s reputation. I hope those labour issues will get resolved to make sure that Canada is not losing a competitive advantage over the country south of the border.”

Poirier also believes Canada must continue to invest in new technologies to remain competitive in the global supply chain market.

“We’ve seen a lot of investment toward EV, toward technologies and labour skills,” he said. “I think we need to continue to look forward and sustain those investments in order to keep up our productivity and improve productivity.”