Despite the current global recession, Canada is moving forward with a multi-billion dollar infrastructure investment strategy. The resources of government and industry are being applied to transform Canada into an efficient and competitively priced gateway to the North American market and to strengthen Canada’s domestic infrastructure.

The west coast of Canada is a centrepiece of the country’s infrastructure strategy. Port Metro Vancouver, a amalgam of 28 terminals, including Vancouver, Fraser River and North Fraser, is Canada’s busiest port. The Port is serviced by CN and CP Railways, Burlington Northern Santa Fe, BC Rail and Southern Railway of BC, the Trans-Canada highway and the U.S. Interstate system.

The Asia-Pacific Gateway and Corridor Initiative represents one of the major undertakings. Prime Minister Steven Harper has indicated that “Canada should be the crossroads between the massive engine of the United States and the beginning economies of Asia.” Canada’s trade with China has doubled to C$47.5 billion over the past five years making China Canada’s second largest trading partner after the United States. The bulk of this trade flows through Port Metro Vancouver. Canada’s stated goal is to take market share from Long Beach, Los Angeles, Seattle and Tacoma by increasing the number of TEU’s though the Port of Vancouver from the current 2.3 million to 9 million in 2020.

This past September, funding of up to C$40 million was announced for shortsea shipping and two road projects in British Columbia’s lower mainland. Among other features is the construction of barge docks and ramps at the Vanterm and Deltaport container terminals of Port Metro Vancouver. Using the barge docks, the terminals will be able to shuttle containers by barge to and from the Fraser River. To date Canada’s Federal Government has committed over C$1 billion to the Pacific Gateway, with $800 million for projects in British Columbia and the remainder targeted for projects in Saskatchewan and Alberta.

A total of C$14 billion has been allocated by public and private sector interests to improve B.C.’s road, rail, port and airport networks. This includes investing in the new container terminal in Prince Rupert, B.C., a third container berth in Deltaport, C$4.6 billion for roads and bridges in British Columbia and major investments by CP Rail and CN Rail in their intermodal operations.

Port of Vancouver USA commissioner approved agreements between the port and the BNSF Railway Company creating a historic transaction facilitating the construction of the port's $137 million West Vancouver Freight Access project (WVFA). The port will purchase nearly 17 acres of railroad right-of-way from BNSF for $3.1 million, and the railroad will donate more than $6 million of accompanying rail infrastructure to the port to allow the construction of the port's preferred rail alignments. As a part of the deal, the port has agreed to finish construction of the project by December 31, 2017.

Port customers now use more than 57,000 rail cars annually. Recent studies forecast that rail use at the port could grow to as many as 160,000 rail cars per year when the project is complete and operating. The WVFA expands the dedicated port rail facilities from 18 miles of track to more than 43 miles, providing significant unit train improvements and marked capacity improvements to the Pacific Northwest railroad system that will benefit the region for years to come. Seventy percent of the port's cargo is currently moved by rail, a number that's expected to grow to more than 80 percent upon completion of the project. BNSF currently handles all rail services inside the port property, and delivers approximately 20 percent of port traffic for further handling by its competitor, Union Pacific Railroad (UP).

The agreement also opens the way for new commercial rail access for shippers within the port's expanding marine and industrial facilities at Terminal 4, the Alcoa property (also known as the port's future Terminal 5) and the future development at Columbia Gateway. As rail service continues to grow it will provide shippers with commercial access to the mainline networks of both BNSF and UP. Some of the important deal points include a basis for the port to collect maintenance fees, rail infrastructure expansion repayment fees, access fees; support for existing port tenants including: Vestas, Subaru, Tristar Transload, Boise Building Products, Food Express, Commodities Plus, Plastics Northwest, Trimac Panel Products; and the establishment of a stronger relationship between the port, as the rail owner, and the BNSF Railway as the port's exclusive rail operator. This makes the railroad a vested marketing and operating partner with the port.

The Canadian Government has announced the creation of an infrastructure Framework Agreement worth more than C$33 billion under Building Canada, the Government's long-term infrastructure plan. The "Building Canada" Infrastructure Plan will include investments in roads, public transit, gateways, trade corridors and border crossings. It provides tools to modernize infrastructure right across the country while eliminating its weaknesses.The Plan will help address infrastructure needs and priorities until 2014. Individual agreements have been signed with each province.

$6.4 Billion will be Spent in Ontario

Ontario is targeted to spend C$6.4 billion under the Building Canada program. Under this Agreement, approximately C$3.09 billion from this Fund will go towards infrastructure initiatives in Ontario through two components: more than C$2.73 billion in funding will support larger-scale projects; while under the Communities Component; C$362 million in funding will be available for partnership investments in communities with populations less than 100,000. Ontario will match federal funding. This will include identified improvements on Highway 11/17 in northwestern Ontario, expanding rural broadband coverage in southern and eastern Ontario, and rapid transit in the Waterloo region as initial priorities that the two governments will work together on under Building Canada.

$5.0 Billion to be Spent in Province of Quebec

In Quebec, the completion of Highway 30 between Vaudreuil-Dorion and Candiac will total $1 billion. Moreover, the governments of Canada and Quebec will invest $75 million over five years to restore the infrastructure of shortline railways throughout the province. Under the Building Canada plan, Quebec will be provided with more than $5 billion. With regard to public transit, investments will amount to $1 billion per year. Projects such as the Windsor-Quebec high-speed rail studies recently launched with Quebec and Ontario governments are a step in this direction. In addition, the 2008 federal Budget included $500 million to support capital investments through the Public Transit Capital Trust.

Port of Quebec to be Expanded

Ross Gaudreault, the President and CEO of the Quebec Port Authority (QPA) is planning to launch more expansion for the Port of Quebec to make this the premier bulk transhipping location to the Great Lakes. Investments that range up to half a billion dollars over the next ten years are being considered.

Port of Montreal to Grow Significantly under Vision 2020 Plan

The Port of Montreal is the third largest container port in North America. The Port handles more box traffic than New York/New Jersey and has excellent connections to key markets such as Toronto, Chicago and New York. Thirty percent of containers moving through Montreal are United States traffic, and 75 percent of that connects with Chicago. In an interview, Patrice Pelletier, President and CEO of the Montreal Port Authority said. "Illinois is our No. 1 shipping region outside of Canada, and for traffic between Europe and Chicago we beat everyone else by three to four days." Pelletier sees Montreal-U.S. traffic increasing, however long the current economic slowdown may last, and wants rail freight carriage across the border to further improve. He urged governments and private companies to move ahead with a long-proposed tunnel expansion for Canadian Pacific Railway under the Detroit River between Detroit and Windsor, Ontario.

Pelletier also said Montreal has been "strengthened by diversity" since it is not dependent on markets in China and Asia, where freight flows have dropped markedly. Some 70 percent of Montreal's traffic is with Northern Europe, 20 percent with the Mediterranean, and the balance with the Caribbean.

Last April, the Port of Montreal unveiled an ambitious 12-year, four phase strategic development plan designed to triple its container-handling capacity and more than double its impact on Greater Montreal’s economy. Titled Vision 2020, Mr. Pelletier is also looking at spending C$2.5 billion. Today vessels with a capacity of up to 4200 TEU’s (twenty foot equivalent units) call on Montreal and there is talk of ships with a 6000 TEU capacity entering this St. Lawrence River port.

Now underway until 2011, the plan’s initial phase entails improvements in operating efficiency and removal of bottlenecks to allow container-handling capacity to increase from 1.5 to 2.0 million TEUs. The fourth phase will add, during the period 2018 to 2020, the final increment of container capacity to bring the total to 4.5 million units.

$300 Million to be Spent on Melford International Terminal in Nova Scotia

Other significant investments are being projected for Nova Scotia. A C$300 million investment is planned for Melford International Terminal on the Strait of Cansco in Nova Scotia to attract vessels expected to come to the East Coast via the Suez Canal. Proponents behind the container terminal and logistics park development on the mainland side of the Strait of Canso have forged a partnership with the world’s largest commercial real estate firm, CB Richard Ellis to find customers for the facility. Paul Moore, team leader on the project for CBRE, believes the Melford project will be a “significant economic influencer” both locally and worldwide, and will impact upon shipping patterns. MITI is developing a 315-acre deep-water container terminal, intermodal rail facility and 1500-acre logistics park. This could mean more water-borne commerce for Northeast Ohio in the years to come. The Melford port, which could open by early 2011, enhances the possibilities of Cleveland as a container distribution hub.

Federal Finance Minister Flaherty will be presenting a budget to Parliament within the next couple of weeks. While the government is projected to run a deficit, expectations are that infrastructure spending will remain a major component to boost the economy. We will soon learn if these planned investments will remain in place, be scaled back or expanded to create more jobs and enhance Canada's competitve position.

Just days before the inauguration of President Obama, a “miracle” occurred on the Hudson River in New York City. As a result of the failure of its engines, a US Air Pilot landed a plane safely in the frigid waters of the Hudson River. Captain Chesley (Sully) Sullenberger demonstrated amazing skill and calmness as he performed this remarkable feat. Further demonstrating his professionalism and concern for his passengers, he walked the full length of the aircraft twice while it was sinking in the water to ensure his passengers and crew had all left the aircraft. All 154 passengers and crew were able to disembark safely.

Perhaps this remarkable act of skill and heroism will inspire the incoming President as he takes on the most challenging job in the world. President Obama will face the daunting task of fixing a severely contracting domestic economy while America is engaged in wars abroad. He will need all of his confidence, charisma, coolness under fire, intelligence, charm, interpersonal , listening, political and management skills to succeed. This indeed is a tall order for anyone, even for someone as gifted as the new President.

On behalf of all Canadians, I wish him the best of success. As a Canadian, I am indeed proud and pleased that he will make Canada the first foreign country he will visit as President of the United States. Listening to Secretary of State Hillary Clinton’s testimony in the Senate this week, we are heartened to hear that strengthening relations with Canada is a priority. As a consultant to shippers and carriers in both Canada and the United States, my clients need all the help they can get. We hope that President Obama and his team will address many of the major issues that are having a significant impact on transportation industry. They include the need to:

a) Restore confidence that the government of the United States is trying to help those citizens that have faced or are facing the foreclosure of their homes or who are facing the loss of their jobs.
b) Make credit available so businesses can invest and consumers are not afraid to buy.
c) Find new, cost effective renewable sources of energy sources.
d) Reduce harmful emissions to slow down the process of climate change.
e) Restore integrity to America’s business institutions.
f) Improve America’s infrastructure.
g) Provide support to industries that have viable business plans and opportunities for long term success and to let unsustainable businesses fail.
h) Facilitate trade between our countries, the world’s two largest trading partners.

We know that President Obama will falter at times. Looking at his history, he has shown a pattern of being knocked down, of making mistakes but of learning from his mistakes and coming back stronger and smarter than ever. There is much debate as to whether some of the proposed tax cuts and stimulus packages will work to turn the economy around. Some leading economists are predicting even darker days ahead. We hope everyone will understand that the expectations for the new President are unrealistic and impossible to attain.

The key issue is the need to restore America’s pride, confidence and fairness. This is a prerequisite to an economic turnaround. Certainly, the election of America’s first African American President has sent a message around the world that Americans embrace change. President Obama needs to continue to champion his message of the “audacity of hope.” Americans and Canadians need to see change and need to feel confident again. By listening to the American people and to folks around the world , by demonstrating fairness, by communicating his message of hope and by launching well thought out initiatives to help restore America’s economy, even if some of these programs fail, this will go a long way towards moving the citizens of North America on a journey of hope and prosperity. Good luck President Obama!

During my daily meetings and discussions with carriers and shippers, the conversation invariably returns to the state of the economy and how to weather the storm. Everyone is asking the same questions. How long will the recession last? How much worse will it get? What should I do to survive and lead my company through these very difficult times?

The media have also jumped on the bandwagon. A number of articles and books are beginning to appear on this topic. “Managing through a Crisis” was last week’s cover story in Business Week. The highly regarded consultant, Ram Charan, has recently weighed in with “Leadership in the Era of Economic Uncertainty.’ One book that addresses this topic particularly well is “Judgement” by Noel M. Tichy and Warren G. Bennis, a 2007 best seller that contains a good section on crisis management.

In the next few blogs I would like to offer some thoughts on this topic for consideration. I have lived through a number of recessions and crises in my working career. I have had an opportunity to observe what has worked and what has not. Here are a few thoughts.

In their book, Tichy and Bennis outline three approaches that a leader can take in a crisis. These are identified as:

1. The “Ostrich”
2. The “Bull in The China Shop”
3. The “Fox”

The “Ostrich” is in denial. He believes that the recession or crisis will pass and that if he and his company “hunker down,” they will survive. He adopts a “business as usual” approach, hoping that the strategies of the past will suffice in the present and future. By taking this posture, these companies often act too late and their efforts are often ineffective.

The “Bull in the China Shop” panics. He takes drastic action without fully thinking through the consequences of his initiatives. This may include “firing” the wrong customers or terminating the wrong employees or closing the wrong terminals. Frequently these decisions come back to haunt the company. How often have you seen a trucking company de-market an account (e.g. large rate increase, stop serving the customer) and then have second thoughts about what they have done?

The “Fox” “keeps his cool” and thinks through the situation. Based on a well thought out and deliberate plan, the leader takes calculated steps to cut non-essential costs and add profitable business. The fox also recruits quality employees and customers from a rival and/or possibly makes a strategic acquisition, strengthening the company in the short and long term.
Companies that are successful in surviving and prospering during a crisis employ a number of strategies.

They engage their Boards, Mentors and Customers

The service requirements of trucking companies often change in a crisis from what is expected in more “normal” times because the needs of their customers change. Good companies listen carefully and stay close to their customers. They adjust their business strategies and operating processes to meet the changing needs of their customers.

They also listen to their boards and mentors. They consider what has or has not worked in the past. They utilize the wisdom of their boards and mentors to test out new business strategies.

They engage their Employees and Create a Fact-Based Plan

Successful companies take a fact based look at their resources and capacities, their people and the state of their finances and craft a solid plan. The plan is developed by the leadership team and executed by the leadership team with the support of the entire team.

They Act Decisively

Cost cutting is done in a well planned decisive way. Rather than handing out a set of pink slips every Friday afternoon, the cuts are identified and done quickly and methodically. This reduces the “water cooler” discussions and allows the company to move forward confidently with its business.

They Communicate

Through town hall meetings, lunch room meetings and one on one discussions, their employees are kept informed. Moreover, they are actively engaged to be part of the solution. This is extremely critical since this is an unsettling time. Some reassurance from the company leaders can go a long way towards maintaining morale and productivity.

They Capitalize on Opportunities

During a crisis, some companies stumble. Some key employees and customers get “nervous” and become vulnerable to competitive overtures. This is the time for bold action that enhances your company’s bottom line and future growth. Some of these opportunities may never surface again.

It’s not about the economy; it’s About You and the Leadership you provide

These are the most difficult times many of us have faced in our working careers. “Keeping your cool” and executing a well designed plan can help you lead your company through the turbulent times.

There is an old saying that if you fail to plan, then you are planning to fail. The starting point for any trucking company executive in trying to lead his company through turbulent times is the creation and successful execution of a sound business plan. In this blog I will address the 7 elements that need to be in place to achieve great results. Here they are.

1. Customers

It is customers that ultimately pay our salaries so they must be at the starting point of every business plan. During these difficult times, it is essential to engage customers and remain close to them. They are experiencing similar pressures brought on by the challenging economy. To meet their evolving needs, it is important to understand how their world is changing and how a carrier’s value proposition may need to adapted to current realities. Are customers planning on consolidating shipments on certain days of the week or shifting freight from road to intermodal or focusing more on regional rather than long haul markets? Staying close to customers allows carriers to maintain their business and add business from competitors that no longer have a viable business proposition.

It is also essential to have accurate contribution margins by account and business segment and have them reflected in the business plan. During these times, there is a tendency to add freight at any rate, regardless of the contribution and to jump in and out of businesses without proper analysis.

It is also important to find ways of adding value whether it is providing service in lanes that are not part of the carrier’s current coverage map, or by providing cross-docking or warehousing. This is the time to look at non-capital intensive means of building the business. This can include using agent terminals, contracting line haul transportation to others or providing freight brokerage services, both as a new source of revenue and as a means of meeting the needs of customers that cannot be fulfilled through a carrier’s asset based businesses.

This is the time to fire up sales through a relentless focus on pipeline management. This is not the time to rush out and cut rates indiscriminately since this may turn low margin freight in losing freight and erode the profitability of the business.

2. Employees

It is hard to open a newspaper or turn on a television set without hearing about job cuts. These are going on throughout North America. They key question is who are the employees who should fill the lifeboat if the ship capsized. While some staff reductions may (or may not be necessary) based on projected business volumes, the objective is to retain the best employees, not necessarily the employees with the longest seniority. While employee loyalty is commendable, contributing to a company’s bottom line is more commendable. Rather than across the board cuts, it may make better business sense to bolster the strong segments and make deeper cuts in the weak ones.

This is the time to be creative when it comes to employee retention. Job sharing, cutting back on number of days worked and asking employees to take unpaid vacations are all methods of adjusting staff levels to the available work. The key is to retain the productive employees who contribute to the business plan. Now is the time to replace non-productive employees with the good performers.

3. Capacity

Every trucking company has some capacity constraints. It is essential to look at those variables that impact directly on a company’s ability to generate revenue. They include an assessment of the size, type and age of the fleet, the driver pool (and access to additional driving resources), operating authorities (including the need to service all the locations applicable to these authorities), insurance and a company’s ability to handle overflow. The key is to make a careful assessment of the maximum contribution that can be achieved though the optimization of capacity. It is also the time to carefully assess which vehicles should remain in service and which vehicles should be parked.

4. Costs

There is a need to look at all fixed, variable and overhead costs and to calculate some key ratios.

Total Operating Costs + Overhead / total KM/Yr = Cost per KM

Revenue = Rate per KM X Number of KM

Profit = Revenue – (Expenses + Overhead)

The focus must be on maximizing revenue generating kilometres while minimizing non-revenue producers.

Which costs can be combined, eliminated, outsourced, or converted from fixed or semi-fixed to variable? Realistic budgets must be set and spending on all non-essential items must be controlled. There needs to be a focus on purchases with a quick ROI. Cost concessions should be sought by combining and leveraging outsourced activities with vendors. Cash flow must be managed very diligently. This requires a very intense collections process and a skilful prioritization of payables requirements and timelines.

5. Measurement

Dashboards are helpful in managing each segment of the business. This is where it is important to focus on the critical few KPI’s that mean the most to the business. The short list probably includes employee productivity, sales performance, contribution management, capacity utilization and cash flow management.

6. Accountability

Everyone has to step up in order to achieve results. Every member of the team must have KPI’s that are monitored continuously. Non-performance must be dealt with swiftly and effectively or other members of the team will lose motivation.

7. Results

The first six steps mean nothing if the objectives are not achieved. If a company is not hitting its targets, there is a need to understand the obstacles and faulty assumptions. All excuses must be challenged. The idea is not to placate the “whiners.” It is essential to deal with the real performance issues.

On the other hand, if there are flaws in the assumptions underlying the plan, the plan must be recalibrated to achieve results. If the targets are not being hit, after the plan is recalibrated, then the people issues must be dealt with quickly.

We are not living in a static world. A company’s competitors are out there planning their own initiatives. They are targeting the same good customers and employees. That makes it so much more important that the core strategies be revised and recalibrated (if and when appropriate), to ensure the Business Plan is viable. Addressing these seven items in a systematic way can help trucking company leaders guide their companies through the turbulent times.