CALGARY, Alta.–CITT’s Canada Logistics Conference 2014 launched today at the Fairmont Palliser in Calgary, Alberta with a learning session on “SUCCESS IN THE WEST”.
Moderated by Canadian Shipper’s Editorial Director Lou Smyrlis, the session featured a panel of industry speakers who weighed in on Western Canada’s distinct set of logistics challenges.
John Ignaczewski , Director Intermodal Wholesale Sales, CP, said the company has been leveraging its capabilities, working on its many western corridors, with a goal to provide comprehensive services throughout.
“We have put $1.2 billion dollars into capital expenditures of which 75% goes right back into getting the infrastructure ready for winter. Lots of money has been put into our north line into Edmonton, and we are also focused on the IT side of things, enabling customers to go in, get updates and see their overall supply chain and how it’s moving,” he said.
Mark Lerner, AVP, Domestic Intermodal, with CN, said that the railway went through some painful steps in the 1990s to streamline, leading to increased train speeds under precision railroading in the 2000s, and in the last few years, under CEO Claude Mongeau, CN is aiming to be a supply chain enabler of complete, end to end solutions.
Discussing the key issue of bottlenecks in the system because of weather, Lerner said it’s a question of physics how cold affects the rail.
“In Western Canada we can run some trains that are 14,000 ft. in length. Distributive power allows us to maintain longer trains. But at temperatures that are worse than -35 degrees Celcius we reduce trains to 8,500 feet with distributive power. We have some resiliency in the network if it’s an issue of a day or two. But after 7-10 days in a row as we experienced last winter, it just shuts it down. We’re a network, and the whole network suffers. When you think about weather think about the extremes and the duration,” Lerner said.
Lerner said the winter of 2013-2014 taught CN to be more proactive on its communication strategies.
“We have embarked on setting up a customer service group who work 7/24/365. Dispatchers sit now with customer service reps so the CSRs have a pulse on the first and last miles. Even before we start shipping with the customer we create a service delivery plan around what are the escalation procedures, whom do we contact etc. We know when our regular customers are in jeopardy and we are trying to be proactive around this,” said Lerner.
James Zacharias, Vice President, Revenue Accounting and LTL Sales, with TransX, said that restrictions around single lane highway mean the driving is much more dangerous, with the impact being more slowdowns, and traffic congestions.
“We spend a lot of time training drivers on proper passing, using simulators. Road closures really hold back the traffic flow in both directions. The cost doesn’t stop but the traffic does, and the impact to the shippers is delays at both ends. We lost 96,000 truck hours last year, more than double those of the year before. There is not a lot you can do because of the single lane highway restrictions,” he said.
Greg Stringham, Vice President, Markets and Oil Sands, Canadian Association of Petroleum Producers, said that CAPP, which represents about 90-95% of the gas industry that produces upstream, “has to rely on rail significantly more now. We are looking for logistics to get our product to market. We are also spending $71 billion this year in capital investments and in order to do that we need logistics to bring things in as well, to produce the product and move it back out internationally. Our board is focused on cost control given where oil prices are,” he said.
Canada is probably the 6th largest producer in the world, and the US is now the #2 producer.
“They are now looking at exports too, so Canada must look to the global stage.Even three years ago we would probably have not had rail cars on the covers of our oil and gas magazines. With the geopolitical issues occurring around the world Canada could be seen as a stable supplier. The dynamic has shifted dramatically over the last few years,” he said.
Warren Sarrafinchan, VP Supply Chain / Information Services, Sun-Rype Products, noted the company, which aims to help people live better lives, is seeing some success with its expansion into US and Eastern Canada.
In terms of weather-and road related constraints in the company’s supply chain planning, Sarrafinchan noted the severity of some of the Western passes, especially during the winter months.
“You can reposition inventory differently depending on what is happening. You have to take a pragmatic approach: transit times are going to increase in the winter. If you structure around realistic transit times you have better chance of being successful.The uncontrollable delays are going to happen.It’s important we get the communication about the delays as fast as possible-good, timely and factual info about what is happening,” he said.
Full coverage of CITT’s Canada Logistics Conference will be featured in Canadian Shipper’s November/December issue.