Canadian Shipper


Businesses more likely to leverage Canada-Europe trade deal with supply chain strategy in place: UPS Canada

MISSISSAUGA, Ont.–According to a UPS Canada survey conducted by Leger, there is a significant divide between what small, medium and large businesses in Canada support in principle when it comes to free trade and how or if they plan to capitalize on the benefits. 

UPS’s Canada-European Union Comprehensive Economic Trade Agreement (CETA) survey reports that more than 4 in 5 businesses in Canada see global trade as critical to driving private sector competitiveness. Some 84 per cent believe that trade diversification beyond North America is necessary. Yet, less than 25 per cent of businesses in Canada strongly support CETA, with another 44 per cent showing only lukewarm support.

“The ambivalence we’re seeing among Canadian business may be a result of the fact that the deal is still very new,” said Cristina Falcone, vice-president, public affairs, UPS Canada.

The company is optimistic that as businesses learn more about CETA and how it opens up new opportunities for competitiveness, there will be a stronger endorsement and strategic engagement with prospective new European customers.

“When we look at Canada we know our country is export-driven. But exports have been soft,” Falcone told Canadian Shipper.

“it’s very important to engage SMEs as these will drive export volume for Canada,” she said.

Stephen Poloz, governor of the Bank of Canada, has remarked that Canada is missing out on export sales and is in the slow lane with 2% export growth per year, she added.

“There seems to be some promise in US growth but we do need to diversify for more stability and resiliency. CETA offers huge advantages. It covers a wide range of industries and can be used by companies of all sizes,” said Falcone.

While the deal is relatively new 2016 will be here sooner than we think. Falcone said UPS is partnering with associations, with government, to get the word out and give them tips on what they need to consider to prepare.

“In our numbers we saw that 84 % of these businesses thought trade diversification was necessary but support for CETA was low. Getting companies engaged is key,” said Falcone.

Next week UPS will present a webinar on CETA, with regard to information sharing around the agreement and around regulatory provisions. The webinar will be presented in association with IE Canada and will feature a trade lawyer from Deloitte.

“We are speaking to boards of trade across the country as well. You’re always going to hear from the naysayers of trade but trade has delivered tremendous benefits to Canadian exporters. For every 22 packages crossing the border a job at UPS is sustained. We see a direct correlation in export volume growth when the deal is signed. UPS’ volume boost is estimated to be at least 10 %-and that’s a conservative estimate right now,” Falcone said.

As first steps, SMEs should be looking out for business matchups in the EU, aligning Canadian companies with potential business partners in the EU.

“Businesses that had a supply chain strategy were more likely to believe that CETA could benefit them, and were more likely to exceed their growth benchmarks. We’ve seen great successes when companies engage with third party service providers,” said Falcone.

These companies also tend to strategize more around how they can target larger exporters and become part of their value chain.

“The EU has highest penetration (60%) in terms of online shopping, (80% in UK). We view e-commerce as a tremendous opportunity for SMEs in Europe, with 500 million consumers,” she said.

Other important findings from the UPS Canada CETA survey include:

• Two thirds of businesses currently export globally and of these companies, only one third export to the E.U.

• Of those businesses that target Europe for export, 37 per cent expect CETA to compel them to increase export volumes to E.U. markets

• Only 17 per cent of respondents anticipate the deal to motivate them to examine opportunities in Europe for the first time.

• Businesses that have a supply chain strategy in place (62.7%) are much more likely to believe that their organizations could leverage CETA to their advantage than those that don’t (43.7%)

• Overall businesses were more likely to exceed their growth benchmarks with a supply chain strategy in place (24.6%), rather than without (16.3%)

• Nearly 6 in 10 organizations have a supply chain/shipping strategy

One half of businesses in the survey currently use a third-party company for exporting or would find it beneficial. Of those who do, 84 per cent would recommend businesses of any size leverage the services of a third-party supply chain specialist.

“It’s encouraging to see that a supply chain strategy that has international legs is fundamental to driving innovation and productivity,” adds Falcone. “As global logistics specialists, we encourage businesses of all sizes – but especially small business – to get to know this deal better. By integrating their products or services into global value chains; companies of all sizes can benefit from this opportunity. CETA represents an exceptional channel into a market that boasts more than 500 million people who live and work in highly developed and diversified economies.”

This survey was completed on-line between March 17th and March 21st, 2014 using Leger’s online panel, LegerWeb, with a sample of 807. Individuals across Canada working for, or running, a business that currently spends at least $5,000 annually on shipping were interviewed. Only those at a manager level or above qualified. Awareness of the Canadian-European Union Free Trade Agreement was not required to qualify for this survey.

A probability sample of the same size would yield a margin of error of +/- 3.5%, 19 times out of 20.