tag:blogdg.ctl.ca,2010://1 2010-07-23T21:21:08Z The blog description goes here. Movable Type 3.34 tag:blogdg.ctl.ca,2010://1.200 2010-07-23T21:05:50Z 2010-07-23T21:21:08Z

Noel Perry, a Partner with FTR Associates, has written a very interesting and thought provoking paper entitled, “The Challenge of Deep Economic Cycles,” In his report, he argues that “the United States has resumed a pattern of high cyclicality. That...

Dan Goodwill Smoothing The Cycle. Mr. Perry suggests that there are five variants to this option for a carrier: • Choose a customer segment that is growing, in the hope that the underlying trend will moderate a downturn. • Choose a customer segment with inherently low cyclicality. The classic example is the reefer segment. Americans always overeat; there is no undereat. . . • Assemble a diversified portfolio of customer segments that vary in different ways and at different times. Railroads, inherently do this with large portfolio of weather-related commodities (grain, coal) that offset autos and steel that cycle with the economy. . . • Concentrate on the most stable portion of any customer’s business, usually the base load, dedicated portion. Customers attempt to protect their dedicated operations in a downturn to keep productivity high and cost low. . . • Attempt to lock in volume during a downturn in exchange for guaranteeing capacity during the next upturn. The catch to this strategy is the tension between market conditions and the smoothed trucker’s earnings. During the downturn those earnings are above industry averages attracting competitive attention. During the upturn the smoothing results in earnings below industry averages, creating pressure for a move. This tension requires very committed manage¬ment and solid relationships with customers.” The other option is: “Chasing The Cycle. The alternative is to adopt flexible operations that move with the cycle. One cuts cost aggressively during the downturns . . . then adds capacity rapidly during the upturn—for a price. This approach puts a premium on forecasting and monitoring because the highest returns go to the first adapter. That firm cuts costs before prices collapse in a downturn and scarfs up capacity just before the real capacity crunch. The deep-cycle economics of the current decade will require managers (and investors) to adopt four new paradigms, heretofore seldom seen in North American logistics. The first is a switch to flexible budgeting and planning, abandoning the comfortable notion that the next year is predictable. This will take a significant increase in market tracking and scenario planning. The second switch is from short-run profit maximization to full-cycle profit maximization. All of the possible strategies for managing deep cyclicality make the practitioner suboptimal at some point in the cycle. Management (and investors) must fight the urge to abandon the strategy at that point. The third switch is related; that is the development of full-cycle relationships between shippers and carriers, characterized by much tighter three- to five-year contracts rather than the loose one-year contracts in vogue. Jumping ship has a much higher cost in a deep-cycle economy. The fourth switch is the change from simple cost minimization to cost minimization with capacity assurance. This will be a major challenge to a shipper base whose value system rejects price premiums and a carrier base shy about extracting capacity premiums.” ]]> tag:blogdg.ctl.ca,2010://1.199 2010-07-17T15:18:12Z 2010-07-17T15:24:04Z

In 2009, trucking company executives faced the most serious economic challenge since the Great Depression. Many leaders adopted a survivor mentality. The focus was on maintaining essential business while cutting all discretionary costs. Despite the departure of an estimated 3000...

Dan Goodwill Improved Skill Sets According to a new survey conducted by ExecuNet of 3,636 executive recruiters and human resource professionals, big changes are under way. Over one in four companies surveyed plan to expand their executive teams with new hires and 56 percent are planning to “trade up.” They are seeking replacements that are better equipped than the incumbents to meet current expectations and market demands. Drivers of Business Growth and “Quick Wins” This year industry executives must be able to drive growth. Business owners are looking for “adaptability,” the ability to change course and take decisive action to make things happen. Executives must be able to secure “quick wins,”. . . . “launch new initiatives and make an immediate positive impact on the organization and its bottom line,” according to Craig Herner, a partner with recruiter Odgers Berndtson in Vancouver. Motivators This year leaders must be motivators. As reported in a prior blog, many survivors of staff cuts are suffering from “employee layover syndrome,” an emotional and physical state brought on by over work and stress. These employees are looking to their leaders for good direction, a solid plan, support and team building skills. Retention of High Potential Staff In a recent Toronto Globe & Mail article, Rick Lash, Toronto-based national practice director of leadership coaching company, Hay Group, expressed the view that “in a recovery, organizations want managers who can retain their high-potential staff because, as the economy improves, top quality staff are usually the first group to look elsewhere for other opportunities.” Operational Excellence Trucking company executives will also need to bolster their operational skills to ensure their drivers pass the CSA 2010 checks. For truckers that have not focused on this area, this initiative will force these companies to improve their fleet management processes. This will take operational excellence and quality improvements skills. In summary, trucking company leaders will need to drive business growth, upgrade their skill sets to meet changing environmental factors and regulation, improve morale, retain their top performers and upgrade operational performance to achieve success in 2010. ]]> tag:blogdg.ctl.ca,2010://1.198 2010-07-10T16:11:59Z 2010-07-10T16:17:05Z

The last five years have seen major swings in the freight pendulum. In the mid 2000’s, carriers called the shots on rates and capacity as business volumes soared. During the latter months of 2008 and throughout 2009, the freight pendulum...

Dan Goodwill The last five years have seen major swings in the freight pendulum. In the mid 2000’s, carriers called the shots on rates and capacity as business volumes soared. During the latter months of 2008 and throughout 2009, the freight pendulum swung backwards. With the recession and the major contraction in freight, shippers took advantage of being in the driver’s seat by negotiating major decreases in freight rates and dictating to carriers the loads they expected them to carry. In 2010, we are witnessing a tug of war. Business volumes are increasing. Shippers that have both head haul and backhaul truckload freight moving in the same geographic area are seeking to find carriers that will move one-way loads and round trips. While some shippers are able to cover a significant percentage of their loads, there are certain head haul or backhaul lanes that are a chronic problem for them on a weekly basis. Certain carriers are telling their clients that they will pick up specific loads of interest to them. When it comes to trying to match head haul and backhaul loads, don’t bother trying. In 2010 truckload carriers are being much more selective and are turning down loads that don’t work for them. These carriers are indicating that they will find their own loads moving in the other direction and balance their lanes themselves. These comments seem to mirror an interesting discussion that has been taking place on one of the LinkedIn groups, The Truckload, Trucking, Logistics, Supply Chain, 3PL Distribution group. Here is one of the explanations offered in this group. “We are a small company and do not track the turn downs but we estimate it to be in the range of 20-30 per week. To say it is due to a lack of capacity would be somewhat misleading. Many of the loads that we turn down are due to inadequate rates. We have determined that we will no longer accept freight that does not cover our full costs. We have taken that dreaded "back haul" out of our vocabulary. We certainly could accept more loads but why wear out our trucks, drivers and office personnel for a break even rate. We are also finding that we are receiving calls pleading for trucks at any rate. It is becoming a "can you get it today?" and then what rate do you need to do it. Hopefully we are reaching a point of making a reasonable profit once again.” Another member of the group added this observation. “. . . The . . . majority of trucking companies need and want to improve their balance sheets rather than expand. Besides they have plenty of idled trucks that have been sitting on the fence. The real shortage is in "qualified" and I can't stress that word enough. Once CSA 2010 kicks in there will be nobody in those shiny new trucks.” Clearly carriers are being more discerning on the loads they choose to pick up in 2010 as the volume of business increases. Many are focused on trying to improve their profitability after the ravages on the recession. This does not mean that shippers should throw up their hands and accept that their core carriers will move loads in only one direction and not the other or accept every rate increase that comes their way. Rather, shippers should be taking a hard look at their inbound and outbound routing guides. While it is fine for carriers to wish to take the higher paying loads that are moving in the lanes where they need more volume, it is entirely appropriate for shippers to expect their core carriers to take the good with the not so good, if the round trip rate is within an acceptable range. If a shipper has inbound and outbound loads coming from and going to the same geographic areas on a consistent basis, this is the time to have face to face meetings with the carriers that service these areas. Transport companies seeking core carrier status should be focused on building business partnerships with their clients. These relationships should be based on profitability for both parties, service quality, loyalty and reliability. If your so-called business partners are solely focused on their selfish needs and are not willing to be team players, this may be the time to pursue other options. tag:blogdg.ctl.ca,2010://1.197 2010-07-03T14:58:20Z 2010-07-03T15:53:49Z

Some years ago, I had the privilege of running one of Canada’s elite IMC’s and freight brokerage businesses. At that time we offered a fairly full portfolio of ground transportation services including LTL, partial truckload, full truckload, intermodal and carload...

Dan Goodwill Some years ago, I had the privilege of running one of Canada’s elite IMC’s and freight brokerage businesses. At that time we offered a fairly full portfolio of ground transportation services including LTL, partial truckload, full truckload, intermodal and carload services. We were proud of the fact that we offered domestic Canada and cross-border LTL services. We sought out carriers that could offer us wholesale (discounted LTL tariff) pricing that we could use to create retail rates. We cobbled together a North American network of LTL carriers that allowed us to provide our customers with a good quality service. While not true marketing partners (in terms of sharing sales leads and unrouted freight), they were valued operating partners that picked up and delivered the freight that we secured on behalf of our customers. At that time, LTL revenues were a small part of our business. The LTL revenue we provided to our various partners was not a large percentage of their revenues either. We had difficulty finding LTL carriers that were willing to work with us. Shippers were more inclined to sort their business by mode and work directly with asset based providers, particularly in the LTL arena. Since that time the world changed. The growth in the capabilities, size and scope of 3PL providers along with shipper needs for suppliers with a complete menu of services have shifted the balance of power. Whereas 3PL’s and freight management companies previously had to do the chasing and courting to recruit LTL service providers, these carriers now recognize that 3PL’s have achieved a significant level of control over the customer interface. No longer viewed as “freight pimps” or parasites, 3PL’s now command more respect by virtue of their IT capabilities, supply chain expertise and the higher pecking order they have achieved with many shippers. As a result, it was with great interest that I read that one of North America’s largest LTL providers, the troubled YRC Worldwide, is forging closer relationships with third-party logistics providers as it tries to rebuild its business. This is being driven by the realization that brokers or logistics intermediaries account for more than a third of YRC Worldwide's revenue. The company claims it began a sweeping re-evaluation of its relationships with 3PLs last year as it rolled out a restructuring program affecting every corner of its operations. Eventually, it plans to launch new products and services with 3PL partners and closely integrate its less-than-truckload operations into their supply chain networks. It's a step other motor carriers need to take to stay on the road in a fast-changing market, said Bruce Kennedy, YRC Worldwide's vice president of enterprise strategy. "In August 2009 we began an initiative to change our culture internally and externally from one of frankly competition (with 3PLs) to collaboration," Kennedy said. Kennedy told trucking and logistics executives at last week’s SMC3 meeting in Florida that previously "an intermediary was considered a threat." The carrier started restructuring its 3PL strategy by identifying all the logistics providers in its customer database -- more than 2,000 companies, Kennedy said. It then classified those 3PLs to reflect their marketplace roles, from supply chain managers to forwarders and brokers to price negotiators and "rate resellers." From that initial 2,000, YRC identified a subset of 200 logistics companies "that were significant in terms of their spend and potential spend with us," Kennedy said. "We took action to align ourselves with those partners we truly want to identify with." There are a couple of things that stand out to me in the YRC initiative. If the statistic above is correct, YRC does not have control of the direct customer interface with a third of its customers. This leaves a significant block of its business vulnerable to third parties that can shift this freight at its discretion. Second, why did YRC wait so long to launch a marketing program targeted at such a large segment of its business? This suggests that YRC is having difficulty attracting shippers through its own sales program. LTL carriers have also begun to realize that developing close ties with particular 3PL’s can allow them access to a whole new set of clients. When Con-way Freight expanded its business with Caterpillar Logistics last month, it not only gained greater access to freight from the $32.4 billion Caterpillar but also to more than 65 other companies that contract Cat Logistics to manage their supply chains. Relying more on 3PLs for freight can be a difficult step for trucking executives who built their freight business on direct relationships with shipper customers. But viewed in the context of the slowly recovering economies of North America, the significant share of business controlled by 3PL’s and the need to find growth in the sector of the transportation industry acknowledged to have the most capacity, this appears to be a sound strategy for LTL carriers to employ. tag:blogdg.ctl.ca,2010://1.195 2010-06-26T12:22:21Z 2010-06-26T12:37:24Z

For the past 21 years CSCMP has issued a report on the state of the logistics industry. This year’s report, prepared by Rosalyn Wilson, has the very apt title, The Great Freight Recession. The report contains some astonishing statistics that...

Dan Goodwill For the past 21 years CSCMP has issued a report on the state of the logistics industry. This year’s report, prepared by Rosalyn Wilson, has the very apt title, The Great Freight Recession. The report contains some astonishing statistics that place the devastation of the past couple of years in perspective. To start, the cost of logistics in the United States declined by 18.2 percent, the largest one year drop since the report was first prepared. Taking 2008 and 2009 together, logistics costs have declined by almost $300 billion during the recession. Transportation costs have declined by 20.2 percent since 2008. Trucking and other modes of transport both declined by over 20 percent. Ms. Wilson concludes that this drop was due to two factors - - - “a rapid decline in shipments and the cutthroat rate environment.” In her report, Ms. Wilson identified some interesting developments in the area of inventories. She noted that compared to 2001, manufacturers were slower to clear out inventories in 2009. One of the main reasons was the long supply chains which resulted in orders being fulfilled and delivered well into the recession. The inventory to sales ratio began to “skyrocket” at the beginning of the recession and is now just returning to more normal levels. While sales are picking up, inventory levels remain moderate due to the lean manufacturing processes put in place by many manufacturers. Retailers responded by shrinking their product mix and skewing their mix toward more lower cost items. Suppliers were encouraged to hold supplies in their inventories. Ms. Wilson noted a number of significant trends in transportation. Many shippers abandoned their longstanding relationships with their carriers in favour of spot market pricing or 3PL’s. Average length of hauls and truck-ton miles declined. Increased use of intermodal transportation and more regionalization of DC’s became important. While about 2000 trucking companies left the business, many more reduced the size of their fleets. U.S. freight capacity dropped by 12.5 percent. With heavy truck utilization at 75%, new truck sales dropped dramatically. The consequences of actions taken (or not taken) by truckers in 2009 will play out in 2010. Those companies that held back on preventative maintenance to reduce costs in 2009 may now face the prospects of not being able to pay for those repairs in 2010. The Federal Safety Administration’s new CSA 2010 (Comprehensive Safety Analysis) program will create challenges for those carriers that receive poor safety scores. Rail transportation was not immune to the recession. Carload traffic dropped by 16.1 percent in 2009 while intermodal traffic declined by 14.1 percent. This was the worst year on record since the Association of American Railroads began tracking rail data in 1988. By mid 2009, an astonishing 500,000 railcars, or 32 percent of rail capacity, was placed into storage. As Ms. Wilson points out in her report, “the big difference between the loss of capacity in the trucking sector and the loss in the rail sector is the rail equipment has been merely sidelined and is readily available to return to service when demand rises.” The good news is that 2009 is now in the rear view mirror. Business is picking up, albeit at a slower pace than most of us would like to see. tag:blogdg.ctl.ca,2010://1.196 2010-06-26T12:22:21Z 2010-06-26T12:37:24Z

For the past 21 years CSCMP has issued a report on the state of the logistics industry. This year’s report, prepared by Rosalyn Wilson, has the very apt title, The Great Freight Recession. The report contains some astonishing statistics that...

Dan Goodwill For the past 21 years CSCMP has issued a report on the state of the logistics industry. This year’s report, prepared by Rosalyn Wilson, has the very apt title, The Great Freight Recession. The report contains some astonishing statistics that place the devastation of the past couple of years in perspective. To start, the cost of logistics in the United States declined by 18.2 percent, the largest one year drop since the report was first prepared. Taking 2008 and 2009 together, logistics costs have declined by almost $300 billion during the recession. Transportation costs have declined by 20.2 percent since 2008. Trucking and other modes of transport both declined by over 20 percent. Ms. Wilson concludes that this drop was due to two factors - - - “a rapid decline in shipments and the cutthroat rate environment.” In her report, Ms. Wilson identified some interesting developments in the area of inventories. She noted that compared to 2001, manufacturers were slower to clear out inventories in 2009. One of the main reasons was the long supply chains which resulted in orders being fulfilled and delivered well into the recession. The inventory to sales ratio began to “skyrocket” at the beginning of the recession and is now just returning to more normal levels. While sales are picking up, inventory levels remain moderate due to the lean manufacturing processes put in place by many manufacturers. Retailers responded by shrinking their product mix and skewing their mix toward more lower cost items. Suppliers were encouraged to hold supplies in their inventories. Ms. Wilson noted a number of significant trends in transportation. Many shippers abandoned their longstanding relationships with their carriers in favour of spot market pricing or 3PL’s. Average length of hauls and truck-ton miles declined. Increased use of intermodal transportation and more regionalization of DC’s became important. While about 2000 trucking companies left the business, many more reduced the size of their fleets. U.S. freight capacity dropped by 12.5 percent. With heavy truck utilization at 75%, new truck sales dropped dramatically. The consequences of actions taken (or not taken) by truckers in 2009 will play out in 2010. Those companies that held back on preventative maintenance to reduce costs in 2009 may now face the prospects of not being able to pay for those repairs in 2010. The Federal Safety Administration’s new CSA 2010 (Comprehensive Safety Analysis) program will create challenges for those carriers that receive poor safety scores. Rail transportation was not immune to the recession. Carload traffic dropped by 16.1 percent in 2009 while intermodal traffic declined by 14.1 percent. This was the worst year on record since the Association of American Railroads began tracking rail data in 1988. By mid 2009, an astonishing 500,000 railcars, or 32 percent of rail capacity, was placed into storage. As Ms. Wilson points out in her report, “the big difference between the loss of capacity in the trucking sector and the loss in the rail sector is the rail equipment has been merely sidelined and is readily available to return to service when demand rises.” The good news is that 2009 is now in the rear view mirror. Business is picking up, albeit at a slower pace than most of us would like to see. tag:blogdg.ctl.ca,2010://1.194 2010-06-19T23:03:33Z 2010-06-22T13:55:52Z

This topic of freight capacity surfaced several times at last week’s 2010 Shipper Workshop co-sponsored by Canadian Transportation & Logistics and Dan Goodwill & Associates. Representatives from four well known Canadian trucking firms, Wes Armour of Armour Transportation System, Sandro...

Dan Goodwill Disappearance of Trucking Companies FTR Associates has reported that an estimated 2000 trucking companies went out of business in 2009. The same number is expected to leave the industry this year. Shrinkage of Fleet Sizes While the number mentioned above may come across to some as large, it represents a small fraction of the total number of companies in the trucking industry in North America. As highlighted at the workshop this week, this number masks the many trucking companies that downsized their fleets. As trucking company executives put their business model under a microscope and looked more carefully at their yields on different lanes, it was not uncommon for some to reduce their fleet size by 25 to 50 percent. The net effect of the company failures and equipment downsizing is an estimated drop of 12 percent in freight capacity in North America. Driver Losses Some companies cut drivers and / or reduced the wages of their drivers. For those individuals who could find employment at higher pay in other industries, these developments served as an incentive to leave the trucking industry. This coupled with the fact that many drivers are in their mid 50’s or higher suggests that a significant number may not return as the economy improves. Looking down the road, the question is whether young people will seek a career that keeps them away from home for days or weeks at a time? If the money isn’t sufficiently attractive, they may go elsewhere. One panellist pointed to this as one of the most significant causes of the looming capacity crunch in the future. Financial Institutions May Ultimately Pull the Plug on Many Trucking Companies One of the other reasons cited at this week’s conference for the limited closures of trucking companies is the lack of a market for used trucking equipment. Faced with the prospect of receiving twenty cents on the dollar for a used piece of trucking equipment, creditors have chosen to prop up some of the (financially) weaker players. As some of the trucking company executives mentioned at the workshop, there are many truck fleets that are technically bankrupt. They continue to operate because their creditors are not willing to put them out of their misery. If the economy recovers and the market for used equipment improves, some of these companies may be pushed into bankruptcy. No Market for the Weak Players While some of the financially troubled carriers are seeking a “white knight” to buy them, potential purchasers with deeper pockets are walking away. As one panellist commented this week, why buy a business with no real estate, no profits, old equipment and a base of customers that is largely derived from load brokers. The smarter companies are looking in another direction and are focussing on organic growth. If an opportunistic purchase comes along that is complementary to the core business and has positive financials, their balance sheet will be scrutinized. For a company with “no assets, no profits and no hope,” they are a “dead man walking,” waiting to go to “trucking company heaven.” This could happen in big numbers in 2010. Some weak players, who manage their business well during the recovery, by sticking to their value proposition, increasing yields, selling off excess equipment and adding profitable business, may live for another day. The expectation is that the long expected consolidation in the trucking industry is on the way. State of the Freight Report from Wolfe, Trahan Supports This View The second quarter State of the Freight Report from Wolfe, Trahan & Co. (formerly Wolfe Research) reveals that shippers are seeing supply and demand in the transport markets finally starting to swing back somewhat towards carriers. In the Q2 2010 report, Wolfe Trahan sees further signs that volumes and rates are continuing to rise amid economic recovery. Shippers foresee tightening capacity in the US truckload market. What does all mean for shippers? If this set of forces plays out as some of the folks at this week’s conference are predicting, a driver shortage and a lack of equipment will induce a severe capacity shortage. Freight rates have come down about as far as they are likely to go. The most logical place for rates to go is up. If capacity tightens significantly as some expect, freight rates could go way up. ]]> tag:blogdg.ctl.ca,2010://1.193 2010-06-12T16:02:11Z 2010-06-12T17:01:51Z

We live in an amazing time. Economists, transportation trade journals and the investment analysts who follow the transportation sector paint a picture of an economy and a transportation industry on the rebound. They present a large array of facts and...

Dan Goodwill We live in an amazing time. Economists, transportation trade journals and the investment analysts who follow the transportation sector paint a picture of an economy and a transportation industry on the rebound. They present a large array of facts and figures to support their case. Interest rates are at record lows. The affordability of U.S. homes is at record levels. Inventory levels are on the rebound. Car production is up. Key indices such as the U.S. ISM (Institute for Supply Management) that measures economic activity in the manufacturing sector expanded in May for the 10th consecutive month. The rate of growth as indicated by the PMI is driven by continued strength in new orders and production. Employment continues to grow as manufacturers have added to payrolls for six consecutive months. The recovery continues to broaden as 16 of 18 industries report growth. There are a number of reports, particularly in the tech sector, of shortages of components; this is the result of excessive inventory de-stocking during the downturn." A host of transportation indices are in very positive territory. The ATA truck tonnage index and the rail tonnage index have been positive for a number of months. Spot market rates are way up and contracted rates are moving into positive territory. All of this positive news seems to suggest that we were “out of the woods.” The Great Recession and the Great Freight Recession were starting to become a thing of the past. But a number of recent events are shaking people’s confidence in the recovery. The gulf oil spill, the financial challenges in Europe, and the stock market gyrations all paint a different picture. The daily high definition video footage of the oil spill in the gulf along with pictures of birds covered in oil tell a story of futility and ineptitude. These images are made worse by the statements of the U.S. President claiming he is in charge but cannot fix the problem and by the head of BP Oil who changes his story on a daily basis and who also cannot fix the problem. Why can’t these talented minds figure out a way to cap a leak the width of a garbage can? The constant media attention this receives and the lack of results are very disheartening. The symbolism of these events go well beyond the oil spill itself, suggesting an inability on the part of our leaders to share the facts, to create a sound plan and to implement a solution in a timely and effective manner. This is a disgrace and a huge distraction from the major economic issues that need to be addressed. The constant threats of a European debt crisis are creating additional uncertainty and fear. If the solution is less government spending and cuts to government employee wages, why can’t everybody jump on the train and get on with the task at hand? Canada went through a process of bet tightening in the 90’s that did not cause massive job losses. It helped make our country stronger financially. The report in today’s Toronto Globe & Mail reinforces the view that the recovery is facing strong headwinds. “The once mighty American consumer . . . (who is key to both a Canadian and American turnaround) . . . is emerging from the recession weighed down by worries about jobs and debts and is in no mood to drive a global economic recovery. . . Shoppers turned especially cautious in May, defying economists’ predictions of a rise. Retail sales fell 1.2 percent from the prior month, the first such decline since last September, according to data from the Commerce Department released Friday. . . Now, however, the effects of the government stimulus are slowly petering out, while banks remain reluctant to extend credit to consumers. Unless either of those factors changes, consumer spending will have to grow the old-fashioned way – through rising incomes.” The report quotes two esteemed sources. Charles Plosser, head of the Federal Reserve Bank of Philadelphia, noted in a speech that while consumer spending has improved in recent months, it wouldn’t rebound as strongly as it did in prior recessions. That’s because “labour market weakness will likely restrain income growth and thus consumer purchases.” Joshua Shapiro, chief economist at MFR Inc. in New York supports this view by stating that “since the unemployment rate is hovering near 10 percent and hiring remains anaemic, consumer spending will be lacklustre.” The doomsayers seem to be carrying the day. In a recent financial report the following passage appeared. “Whether the European currency can survive is debatable. . . . Now it appears that many countries balance sheets cannot sustain the debts they have taken on. Despite massive stimulus programs, the world economy is still very fragile and may be too weak to offset these problems. The whole paper money system that the world uses is now in jeopardy of falling apart. . . .” Canadian companies have to deal with a number of other realities. Some 73 percent of Canadian exports went to the United States last year, despite the rise in the value of the Canadian dollar and the economic challenges in the U.S. If the Canadian dollar remains within a range of $0.90 to parity, it will make it difficult to increase business to that large market. For those companies seeking to build business to Europe, they will face another set of challenges. Some European countries will likely be bogged down in a mix of major spending cuts and tax hikes that will curtail demand for imported goods. Clearly we are not out of the woods yet. This recovery is going to take time. tag:blogdg.ctl.ca,2010://1.192 2010-06-04T21:45:42Z 2010-06-04T21:54:01Z

One of the most interesting topics discussed by both shippers and carriers at last week’s Carrier Conference, co-hosted by MotorTruck Fleet Executive and Dan Goodwill & Associates, was rate increases. The carrier perspective is that despite all of the cost...

Dan Goodwill One of the most interesting topics discussed by both shippers and carriers at last week’s Carrier Conference, co-hosted by MotorTruck Fleet Executive and Dan Goodwill & Associates, was rate increases. The carrier perspective is that despite all of the cost cutting that was done from September 2008 through to the end of 2009, profit margins have sunk to unsustainably low levels. The shipper position is that with the deterioration in business activity, freight rate reductions were required for many shippers to maintain their profitability. The economist who spoke at the conference indicated that we are clearly on the road to recovery. There will be volatility so it is going to be a slow and bumpy climb. The Canadian economy is well positioned to respond more quickly than other economies but no country is an island unto itself. Canada is still strongly linked to the U.S that faces significant challenges at this time. Shippers understand that carriers will be seeking rate increases this year to improve margins. However, one of the messages communicated very clearly last week was that carriers looking for rate relief should not expect shippers to sign a blank cheque. Some shippers are receptive to rate increases but they must be cost justified. The carrier sales person must come in armed with data on union wage increases, increases in operating costs, fleet upgrade costs and other documented expense increases. For a carrier rep to just walk in and “sing the blues” is not going to be a recipe for success with some shippers. Both shippers and carriers must do their due diligence and have a good knowledge of carrier capacity and the volume of freight flows on each lane, particularly on freight moving between the United States and Canada. With so many trucking companies having left the business or parked trucks, capacity is going to be an issue in certain markets at certain times. On lanes where limited or no backhaul exists, premium or round trip rates may be necessary to move a shipper’s freight. The carrier panel at the conference addressed the issue of transparency. One carrier executive indicated that his company is willing to open its books to selected shippers and share with them the costs and margins on their accounts. The expectation is that this openness will ultimately translate into much needed rate relief. Certainly this is not an approach that will work with all shippers and carriers. This demands a level of trust and maturity that is missing with some companies on both sides of this negotiation. It requires a level of honesty and transparency on the part of the carrier that is a new paradigm for many companies. On the shipper side, there is a requirement for receptivity, integrity and fair play. For those that shop the costs and rates back to the competition, it will ultimately undermine their ability to surround themselves with reliable, durable carrier partners. For shippers that have worked with their core carriers for some time and where the value proposition and trust have been established, this could be an effective mechanism to reach a fair meeting point on rates. This type of communication can be the foundation for a long lasting partnership tag:blogdg.ctl.ca,2010://1.190 2010-05-29T11:35:41Z 2010-05-29T11:50:32Z

The second annual Shipper Conference, co-hosted by Canadian Transportation & Logistics and Dan Goodwill & Associates, is scheduled for June 16 at the Airport Marriott Hotel in Toronto. The theme of this year’s conference is “Managing your Freight Program during...

Dan Goodwill Carlos Gomes, Senior Economist at Scotiabank. Carlos will outline a number of the variables his company is tracking in today’s resetting economy. He will also specifically highlight a number of transportation sector key indicators and draw out their significance to shippers. In addition, he will provide his forecast as to where his company sees the economy going over the balance of the year. Lou Smyrlis, editor of Canadian Transportation & Logistics, will provide a summary of the results of his magazine’s annual shipper survey. Lou will specifically highlight shipper expectations as they pertain to mode utilization, mode shifting and shipper freight rate expectations. The conference will then feature a series of speakers who address both domestic and international freight issues. Laurie Turnbull, Supply Chain Consultant, Cole Group, will provide his insights into the state of ocean and air freight shipping. Laurie will be followed by Gary Breininger, of Breininger & Associates. Gary will share with the audience his thoughts on the state of the small parcel market. I will follow Gary and provide some observations on the current state of the LTL and truckload freight markets. Specifically I will look at such issues as capacity and freight rates and provide some strategies for managing a freight program in 2010. The morning session will conclude with one of the most eagerly awaited segments of the day, a shipper panel that will be moderated by Lou Smyrlis. Lou will engage a group of leading shippers in a dialogue on their companies’ strategies with respect to freight transportation. Immediately after lunch, Lou will lead a discussion with a panel of carrier executives on what they are planning to do to respond to the needs of shippers in 2010. Immediately after the two panels, Carol West, the President of the Canadian Society of Customs Brokers, will provide everyone with an overview of current issues in the field of customs clearance. As a result of the economic downturn in late 2008 and 2009, many manufacturers and distributors had a mandate to reduce supply chain costs. There are a number of companies that are still in this mode. Toby Brzoznowski, Executive Vice President, Sales and Marketing, LLamasoft, Inc., will look at ways of reducing freight costs through network optimization. The formal presentations will conclude with a presentation from Jim Papineau, Director of Supply Chain Systems & Automation, Dan Goodwill & Associates Inc., who will provide the attendees with an overview of the results of a recently completed survey looking at transportation management software systems. The final segment of the day will include some small roundtable discussions on four of the major topics discussed during the day, freight management and procurement, network optimization, ocean and air freight shipping and TMS systems. Each group will be facilitated by one of the speakers who made a presentation earlier in the day. At the end of the day, there will be opportunities for everyone to network and engage in one-on-one discussions with the attendees and speakers. There is still time to register for the event. To do so, go to www.dantranscon.com. I hope to see you there. ]]> tag:blogdg.ctl.ca,2010://1.189 2010-05-22T12:40:38Z 2010-05-22T13:52:20Z

With the financial problems in Europe, the world stock markets in freefall and the gulf oil spill, it makes one wonder if we are heading into a double dip recession. Despite these troubling events, there is enough positive news to...

Dan Goodwill ATA Chief Economist Bob Costello said in a recent statement that he is getting more optimistic about the motor carrier industry's recovery. "Freight is moving in the right direction and I continue to hear from motor carriers that both the demand and supply situations are steadily improving," he said, adding that this growth is due in part to the growing economy and to a slight inventory build after some sectors slashed inventories by too much in 2009. "For most fleets, freight volumes feel better than reported tonnage because the supply situation, particularly in the truckload sector, is turning quickly." These events beg a few questions. Will the growth in demand, coupled with reduced capacity, translate into higher rates and how quickly will freight rates return to pre-recession levels? Truckload volumes and rates started to decline in late 2007 and throughout 2008, then took a nose dive as the Great Recession took hold with the financial collapse in fall of 2008, with many carriers pricing during 2009 at or below their variable operating costs. While things have modestly stabilized, shippers are still driving hard bargains in contract rate negotiations, even as the economy recovers, with the supply and demand equation likely to stay strongly in the favour of shippers into 2012. This is the view of John Larkin, the respected transportation industry analyst at Stifel Nicolaus, based on a variety of recent conversations with shippers and carriers. Larkin sees the following current market dynamics at play. The continued increases in the sophistication of shipper bidding techniques and technologies are still yielding meaningful rate reductions. Contract truckload rates will probably not move up until 2011, at the earliest, and that will simply reflect underlying carrier cost increases. While there is likely to be some modest rates increases in 2011, those will simply reflect increases in driver pay and costs associated with 2010 (and beyond) EPA compliant engines. The implication is that significant truckload rate increases likely will not occur until 2012, Larkin says. Capacity is tight, however, in certain geographic sectors of the US. “Capacity tightness has been "bouncing around" from one geographic region to another and has not been homogeneous across the US,” according to Larkin. Shippers keep knocking down “pockets” of exceptionally high rates that have existed for years. Larkin says one carrier he spoke to cited a large East coast shipper that recently was able to knock down rates by 30-35%. “This phenomenon has been particularly noticeable in lanes historically viewed as backhaul lanes,” Larkin says. “With backhaul lane pricing under pressure, carriers must endeavour to price headhaul lanes adequately, in effect to make up the difference. This would seem to be "easier said than done” in this environment, however. Some customers are again willing to pay for expedited/high service capabilities. In markets such as the auto assembly markets, “shippers are now willing to consider rate increases in exchange for expedited, time-definite truckload services (especially when driver teams are involved),” Larkin says. IHS Global Insights analyst Charles Clowdis has a slightly different view, saying rates may in fact rise more rapidly and quickly than many current projections. Clowdis believes that the number of carriers and owner-operators that have left the market has decreased total available US trucking capacity to the point where continued economic growth could lead to constrained capacity in the fairly near term, and therefore push rates sharply higher. “Many carriers, both truck load and less-than truck load, have not replaced their fleets on a schedule that puts the most fuel-efficient equipment requiring less maintenance into service,” meaning fewer trucks will be available on any given day. Overall, Clowdis predicts TL and LTL rate hikes in the 7-10% range, “as capacity decreases and becomes more valuable to serve the released consumer demand.” Of course, even rate hikes in those ranges would still leave shipping costs well below rates in 2007, but from a current year perspective, if Clowdis is accurate, it could lead to sharp year-over-year cost increases that could affect a shipper’s bottom line and ability to meet transportation budgets. My own view is that freight rates will begin to migrate upward but less quickly that what is predicted by Mr. Clowdis. There is still too much capacity in the LTL sector for rates to increase in a meaningful way. More capacity reductions, industry consolidation and growth in demand is required for any significant upturn in LTL rates. Even in the truckload sector, with some exceptions, there will be a steady but bumpy upward movement in freight rates as supply and demand remain in reasonable balance. Freight rates are on the rise but it will take some time to return to pre-recession levels. ]]> tag:blogdg.ctl.ca,2010://1.188 2010-05-15T12:39:39Z 2010-05-15T13:13:23Z

As consultants, we typically are given the opportunity to speak with a number of individuals at various levels in our clients’ organizations. As part of our fact finding, we engage in some very candid discussions with a number of our...

Dan Goodwill As consultants, we typically are given the opportunity to speak with a number of individuals at various levels in our clients’ organizations. As part of our fact finding, we engage in some very candid discussions with a number of our clients’ key employees. The conversations that have taken place so far this year have opened my eyes to some worrisome trends that I will share with the readers of this blog. During the recession, many companies cut staff. The work was spread over a smaller employee base. While business volumes have declined in many manufacturers, distributors and transportation companies, the basic work elements did not disappear. They may have declined slightly but the key tasks are still there. The consequences of these staff cuts are quite apparent. The remaining employees are being asked to work harder and to work longer hours. The good news is that they did not get a pink slip; the bad news is that many have “layoff survivor syndrome.” This means they have more responsibility, more work and more stress. They stay later at work and make sure they wave good bye to their bosses to let them know that they are working late. They eat lunch at their desks to pick up some work time. For those employees who supervise others, they have less time to support their team since they often have more people to supervise than they had before and their workloads have increased. Inevitably, this will result in medical related issues as these employees cut back on essential exercise, eat more junk food and worry as to whether they will be part of the next wave of job cuts. This will have consequences for their subordinates as well. Less interaction with their supervisors will result in more insecurity and more worries. Increasing numbers of employees are experiencing emotional and physical burnout. The results from the Q-GAP health survey administered to 26,000 Canadians have indicated that the most common symptoms of overwork and stress are joint pain, stiffness and muscle aches, all musculoskeletal problems. Many also feel unhappy or frustrated with their family members and partners, a likely consequence of an unhealthy work-life balance. There are many books and articles published on the subject of how to launch and maintain a healthy diet and exercise program. These can easily be ordered online or from a leading bookstore. What I observe are possible changes in work processes that can go a long way towards easing workloads and relieving stress. Here are few that I have seen. Most employees now work with computers that come equipped with Microsoft Office. For many employees, basic training in how to use WORD or EXCEL would go a long way towards making these employees more productive and efficient. This is a very inexpensive way to improve productivity and morale. I continue to be amazed at how many companies enter and re-enter the same data on a daily basis. Certain reports are printed each day and used as source documents for other reports with certain basic fields such as customer profile data entered over and over again. My suggestion is to look at what your employees do every day. Make a determination as to the most important tasks and the relative time consumed each day in performing these repetitive tasks. Engage your IT resources to automate the most time consuming high volume tasks. This will enhance the morale of your employees by providing them with more mentally stimulating work and by allowing them to be more productive. Don’t overload your employees with weekend work, with weekend conference calls and with weekend e mails. Allow your employees to have some down time. Encourage them to engage in healthy workouts and eat healthy foods. Subsidize their participation in fitness clubs that allow them to enjoy a mental health break. As business volumes increase, hire the resources you need to run your business effectively and provide them with proper training. There are many good people who are currently unemployed or underemployed. Take advantage of this unique opportunity to selectively strengthen your team where you are thin in resources and where your people are overworked. A company’s employees are its most important asset. As a business owner or leader, your employees should be encouraged to live a healthy lifestyle. A healthier workforce will be a more productive workforce that can provide your company with a competitive edge. tag:blogdg.ctl.ca,2010://1.187 2010-05-08T14:29:03Z 2010-05-08T14:39:51Z

The potential benefits of intermodal transportation have been recognized for years. However, for many shippers, intermodal transportation has been viewed as a niche service. It is an attractive option for truckloads moving 1000 miles or more that are not service...

Dan Goodwill The potential benefits of intermodal transportation have been recognized for years. However, for many shippers, intermodal transportation has been viewed as a niche service. It is an attractive option for truckloads moving 1000 miles or more that are not service sensitive. For short and medium length of haul movements, where speed to market is a requirement, over the road truckload is the preferred option. There are several forces at play that are suggesting that intermodal transportation is about to make the leap to prime time. One major impetus for change came from a book published in 2006, written by Rahm Emanuel and Bruce Reed, entitled “The Plan – Big Ideas for America.” Emanuel who is now White House Chief of Staff and Reed who is CEO of the Democratic Leadership Council, wrote then that “railroads are a highly efficient way to move people and goods.” Shifting 25 percent of freight from trucks to rail “would save 15 billion gallons a year” of fuel. It would also reduce commuting time and relieve congestion on America’s highways. The Obama Administration is championing this recommendation by forming a national freight transportation policy that has as its mission to take more trucks off the road. Deputy Transportation Secretary John Pocari elaborated on this policy at a March 24 Senate Environment and Public Works Committee hearing where he stated that “we want to keep goods movement on water as long as possible and then on rail as long as possible and truck it for the last miles.” Certainly another factor that is helping the intermodal cause is the current state of America’s economy and more specifically, the potential magnitude of the U.S. debt. Huge budget deficits may limit the funds available for investment in road infrastructure. At the same time, shippers trying to restrain their expenditures on freight transportation should also serve to boost the demand for intermodal service. The fuel cost spikes in 2008 caused a number of major truckload carriers to re-evaluate their business models and trucking networks. While J.B. Hunt has been the leader in migrating their long haul business to intermodal and shrinking their over the road truckload business to the short haul and dedicated business segments, other leading carriers such as Schneider and Heartland Express have followed Hunt’s lead. On a going forward basis, fuel prices will need to be closely watched. As of today’s writing, the economic debt problems in Greece and potential problems in other European countries have driven down the price of a barrel of oil to $75. Some folks are questioning if these problems may trigger a worldwide economic retreat. On the other side, one leading Canadian economist, Jeff Rubin, is forecasting the price of oil to rise to $150 a barrel by year end 2010 and $200 a barrel by the end of 2011. We will have to wait and see how the events of the past few days, including the Gulf oil leak, will play out in the future cost of oil. Nevertheless, any future spike in oil costs (and fuel surcharges) could trigger an upsurge in demand for intermodal service. Another driver for intermodal growth is that an increasing number of carriers see intermodal's length of haul shortening considerably, especially in the Eastern USA, as Norfolk Southern and CSX build the infrastructure needed to haul intermodal freight economically in the 500- to 800-mile range. "In the East we're seeing more intermodal opportunities for what would typically be considered short haul," said Chad Thomas, director of intermodal at J.B. Hunt Transport Services. "There are significant highway conversion opportunities for shippers in that market," Thomas said. This strategy is now moving beyond the key truckload players. LTL trucking company FedEx Freight, which has pointedly rejected rail transport in the past, could switch and turn to intermodal in coming years if the price is right and customers want the option. The transportation industry is changing rapidly, and carriers must also be ready to change, Bill Logue, president of FedEx Freight, told shippers at the NASSTRAC annual meeting this week in Orlando, Fla. "Customers want options," said Logue, president of FedEx Freight. The less-than-truckload sister company of FedEx Express has characterized rail transport as inefficient and unwieldy for what it terms “fast-cycle logistics,” delivering freight next-day or second day up to 800 miles. The stance has put FedEx Freight on the opposite side of UPS, which has long been one of the largest customers in the rail industry for the longer linehaul portions of its domestic parcel network. Logue says he isn't ready to drive freight toward intermodal yards. "We find in most cases the railroads still have a transit time issue," he said. "But five years down the road, intermodal may be much more significant. As international globalization continues, the dynamics will change, and there will be an opportunity for more rail," Logue said. Averitt Express, another large LTL player, is now providing intermodal services as part of its full-load/volume transportation services package. Averitt's Executive Vice President of Sales and Marketing Phil Pierce says Averitt's foray into the intermodal arena is a result of market conditions and customer feedback. "Working with a single provider who can handle multiple facets of your shipping saves you time, money and headaches," said Pierce. Averitt can bundle our intermodal services together with our LTL, truckload, international ocean/air, warehousing, PortSide® and leading-edge transportation management technology to bring shippers the ultimate value for their transportation dollar. Very few providers in the industry can do that. . . Our LTL distribution network and our 1,500 unit over-the-road fleet help us provide customers with operational and pricing flexibility they can't get anywhere else. We can react more quickly than other intermodal providers to sudden shifts — even with shipments already en route.” This begs the question of what share of the transportation pie can intermodal service expect to garner in the years ahead. The trucker’s view is that highways are the most expeditious way of moving freight in North America and will likely continue to garner 70 percent of North America’s freight movements. Will intermodal be able to build on its base of long haul movements and gain market share in the mid range markets (500 to 800 miles) over time? The combination of rail service improvements, particularly in relatively untapped mid range eastern markets, the shift by national truckload carriers to more regional truckload business models, the potential increase in LTL linehaul traffic, a possible upward movement in fuel costs, government policy initiatives and customer demand for more cost effective transportation should allow intermodal service to make some strong single digit market share gains in the years ahead. tag:blogdg.ctl.ca,2010://1.186 2010-04-30T17:29:36Z 2010-04-30T17:34:27Z

Many sports fans throughout North America have been amazed by an event that played out over the past couple of weeks, namely the defeat of the Washington Capitals by the Montreal Canadiens. What made this hockey playoff event so interesting...

Dan Goodwill Many sports fans throughout North America have been amazed by an event that played out over the past couple of weeks, namely the defeat of the Washington Capitals by the Montreal Canadiens. What made this hockey playoff event so interesting was that the 8th place team defeated the first place team in a best of seven game hockey series. What does have to do with trucking? For me there were a lot of parallels. I will explain. Winning a best of 7 game hockey series is different from a 96th seeded tennis player defeating a number 2 seed. A singles tennis match is between two players. Hockey games are played by teams with multiple sets of players. Many top tennis players have off days. However to lose 4 games over a two week period is a different story. It is not about playing one bad game or set but about being defeated on 4 different occasions. For most of the season the Montreal Canadiens were a mediocre team, barely securing the last playoff spot in their division. The Washington Capitals were the class of the division with some of the elite players in the game. The Caps team finished 33 points ahead of Montreal in the regular season. Very few hockey experts gave the Canadiens much chance of winning this series, particularly after they fell behind 3 games to 1. Most hockey fans gave them up for dead. So what happened? Some hockey experts are giving all the credit to Montreal’s young goalie, Jaroslav Halak, who was excellent in the Canadiens’ last 3 victories. There is no doubt that he performed at a very high level and was a big factor in the team’s success. But the explanation for the team’s success goes back to the off season. The team’s head of hockey operations, Bob Gainey, had a vision of the kind of team that he was looking for. In an unprecedented move, he replaced nine players on the team. A number of small skilled forwards joined the team. Several new defensemen were brought in. A number of very experienced veterans including the team’s former captain were moved out. He also hired a new coach. For most of the year, the vision did not translate into success. The team was inconsistent. Mr. Gainey left the organization. Then something unusual began to happen. The team began to execute on Mr. Gainey’s vision. The team bought into the plan of the coaching staff. The small speedy forwards skated hard. A top defenceman was brought in from a minor league team to replace an existing veteran in the playoffs. The players checked the Capitals as hard as they could. The team took away the time and space from the star forwards on the Caps team. The Caps’ best player, Alexander Ovechkin, was forced to shoot the puck from the outside lanes. Everyone on the team bought into the idea of blocking shots. The young goalie played brilliantly. The result was that David defeated Goliath. The lessons for trucking firms are very clear. The leader of the company must have a vision of what his trucking company must do to win. The leader must hire a management team that can train, motivate and lead its employees to execute on the vision of the owner or CEO. The players must all be committed to executing the game plan and the game plan must be realistic and achievable. The lesson learned is that a cohesive, well motivated team, that can execute a well thought out game plan, can compete with their less well coached industry giants and win. Can the Habs do it again? Well the element of surprise is gone. Enjoy the series. tag:blogdg.ctl.ca,2010://1.185 2010-04-24T12:59:02Z 2010-04-24T13:05:09Z

The Canadian population is about one tenth the size of the U.S. population or roughly the size of California. Its economy, ranked tenth largest in the world is about ten percent of the size of the U.S. economy. The two...

Dan Goodwill The Canadian population is about one tenth the size of the U.S. population or roughly the size of California. Its economy, ranked tenth largest in the world is about ten percent of the size of the U.S. economy. The two countries have been each other’s largest trading partners for many years. The 2008-2009 recession had a dramatic impact on U.S. – Canada trade as cross-border activity dropped by 30%. The two economies did not experience the same impact from the recession. “Canada experienced a short, sharp recession,” Mark Carney, governor of the Bank of Canada, told the Winnipeg Chamber of Commerce in February. “Domestic demand, fixed capital investment and employment in Canada all held up substantially better than in the U.S.” A number of factors are reshaping trade and freight flows between the two countries. Canada did not experience the U.S. housing bubble and banking crisis. The Conference Board of Canada’s Consumer Confidence Index hit 96.6 in January, well beyond the 55.9 confidence rating in a similar U.S. measure and the highest the board has measured in 23 months. The Canadian dollar has appreciated against the U.S. dollar over the past twelve months from $0.80 to par. The Canadian dollar is likely to continue its ascent. This week the Bank of Canada signalled that it will increase interest rates (ahead of the United States). A faster Canadian recovery bolstered by the fast rising dollar and more confident consumers are causing Canadians to speed up their purchases of U.S. goods. February’s trade data provided evidence that manufacturers, who export half of what they produce, are using the currency’s effect on import prices to buy new equipment that will help them become more efficient. Imports rose to $32.6 billion as volumes increased, mostly for machinery and equipment. Last year, Canadian companies bought more assets abroad than they sold for the first time since 2004. In a report prepared by the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison, they showed that the value of Canadian cross-border deals jumped by 94 percent last year to $U.S. 37.1 billion, the largest proportional gain of any of the 10 countries the firm looked at, including the U.S., Britain and China. Anecdotal evidence is also suggesting that Canadians are taking advantage of the currency increase to purchase winter homes in U.S. Sunbelt locations. One client this week indicated that his company is shifting some production from their Canadian operations to their U.S. plants to better serve their U.S. clients and take advantage of the lower cost base, specifically the lower freight costs that are a by-product of manufacturing goods closer to their U.S.-based consumers. These impacts are being seen by truckers in the cross-border freight flows. Ernie Valdez, director of international solutions at Tennessee based Averitt Express, a member of the Reliance Network that links to Canadian carriers Epic Express and Canadian Freightways, reported that he saw a “decline in less-than-truckload business domestically, but we actually saw an increase on the export side. . . Toward the end of the year we saw a 13 to 14 percent increase in shipment count.” To capitalize on the business upturn, UPS Freight is extending its reach across the U.S.-Canadian border by shortening transit times between major Canadian cities and U.S. markets. The company opened a $30 million, 145,000 square foot distribution centre in Calgary, Alberta that is close to the FedEx operation at the Calgary International Airport. Much of that cross-border business is moving north, said Joe Picone, vice president of eastern U.S. and Canadian operations at the Virginia based arm of UPS. Historically, this type of swing in the value of the currency would spell doom for Canada’s highly export driven economy. This time things are different. February marked the fifth straight monthly surplus, which eclipsed analysts’ expectations by widening to $1.4 billion from $754 million in January. Canada’s exporters are pushing deeper into diverse markets as global trade rebounds. The increase in exports outpaced import gains three-to-one, even as the currency moved toward par with the U.S. dollar. Exports to the U.S. rose 2 percent to $4.4 billion on demand for autos. But companies are reducing their dependence on the damaged U.S. market. Exports to countries other than the U.S. rose by 5.2 percent as sales to Germany, Mexico, the U.K., Turkey, Ghana, Hong Kong, Australia and Brazil were up from year ago levels. So Canada seems to benefitting on two fronts. The stronger dollar and the quick economic turnaround are causing Canadian companies to increase their purchases of American goods and companies. The recovering Global markets are allowing Canadian companies to increase their exports to a diversity of countries. This is also a very positive scenario for the U.S. A fast recovering Canadian economy is helping pull the U.S. into a quicker recovery. Strong international markets are keeping Canadian companies in good financial health, propelling them to buy more American goods.