Understanding the Canadian Freight Market – Part 3 – Intra-Canada Freight Transportation

This blog will focus on road and rail transportation within Canada; the next blog will look at cross-border freight transportation.

Rail Transportation

As outlined in the first blog in this series, Canada is large land mass with limited population. As a result, Canada’s two class 1 railways, along with the country’s short line carriers, play a very important role in meeting the needs of Canada’s freight industry. The networks of Canada’s two major railways, CN and CP, appear below.

CN Rail is a tri-coastal railway. It connects Canada’s major ports in Eastern Canada to the ports of Vancouver and Prince Rupert, BC, and the major cities in between and then goes through Chicago, IL all the way down to New Orleans, LA on the Gulf of Mexico. CN connects to the major American class 1 railways to supply cross-border service for the points that it does not serve on a direct basis.

                                                                                                                              CN Rail Network

CP Rail connects Central Canada to Western Canada. It links through to Atlantic Canada on an interline basis. It also serves certain US markets in the northern and northeastern USA. Like CN, it has interline arrangements with the American class 1 railways to prove cross-border service.

                                                                                                                                    CP Rail Network

The two railways have truly national networks that link Canada in a unique way. They supply a range of equipment - - - grain cars, tanker cars, pulp and paper cars, domestic and international containers - - - to meet the needs of a broad range of industries in Canada. They move carloads, full container loads and LTL loads for shippers and freight forwarding companies. Both companies have gone through major management transformations over the past twenty years and are lean, efficient operations. Shippers wishing to serve the Canadian market must consider how to make best use of rail service in their operations.

LTL Service

The US market is served by a number of national LTL carriers that have operations throughout the United States. It also has a number of high quality regional carriers that serve a block of states in various parts of America. The Canadian market is somewhat different.

Day & Ross is the only LTL carrier that has operations in all 10 provinces and has a national network. However, Day & Ross only serves Western Canada via an over the road service. Manitoulin Transport also has an extensive LTL network but works with a partner carrier in Atlantic Canada. The TransForce Group has the largest stable of LTL carriers, with multiple carriers serving specific geographic regions. However, it does not have one national LTL network and works with a partner in Atlantic Canada. Shippers seeking to pick up and/or deliver LTL freight within Canada must be fully aware of their vendor and customer locations and pull together the appropriate mix of LTL carriers to meet their requirements. As highlighted in the first blog in this series, Canada is made up of a group of regions. Each region is served by a unique set of LTL carriers.

The chart below displays some of the major LTL players serving Atlantic Canada. It should be noted that the Armour Transportation Group is an independent company and not affiliated with any specific Canadian or US carrier. They have one of the more extensive terminal networks in Atlantic Canada. As a result, they are the pick-up and distribution LTL agent for over 20 Canadian and US carriers. Day & Ross and Midland Transport, each part of major Canadian conglomerates, also have extensive terminal networks in the region and have partnerships with specific American carriers. The other carriers in the chart offer service between Central and Atlantic Canada and serve mostly the larger urban areas in the four provinces.

The province of Quebec is another distinct market. Some companies serve only the major cities, Montreal and Quebec City, or specific regions in the province, while others have more extensive networks. TST Overland Express and Kingsway Transport are both TransForce companies. Most of the other companies, excluding Day & Ross, Midland and Manitoulin, are independent, family run businesses. Shippers seeking to serve customers in Quebec should verify the scope of their carriers’ networks and the service levels to your customer locations.

Ontario is the largest market in Canada and is well served by a range of LTL carriers. Most LTL carriers have good coverage of the key markets (i.e. Toronto, Hamilton, London, Kitchener/Cambridge, Waterloo). Shippers need to check on coverage and service levels to the Niagara Region/Buffalo, NY, Windsor/Detroit, MI, Eastern Ontario (i.e. Belleville to Cornwall and Ottawa) and Northern Ontario (i.e. Thunder Bay, Sudbury etc.).

Western Canada consists of four provinces (Manitoba, Saskatchewan, Alberta and British Columbia) and three territories. There are three levels of service from Central Canada to the Western Provinces. They are intermodal service, regular over the road service and expedited (team driver) service. Note that each service has its own rate schedule and transit times. Some carriers only offer one level of service while others offer multiple levels of service. For some shippers, having multiple service levels is an important consideration selecting an LTL carrier. It is also worth noting that some carriers only serve the major cities (i.e. Calgary, Edmonton) but do not go directly to the smaller locations. Some of the major carriers appear in the chart below.

There are several small regional LTL carriers that serve specific areas within one or more western provinces. Shippers should check on the location of their vendors and customers in creating their Western Canada LTL network. For shippers that can utilize intermodal service, they should pay attention to service days and ship consolidated LTL shipments (i.e. consolidate LTL shipments from Toronto to Vancouver on Wednesday, Thursday and Friday and move them on Fridays) to minimize shipping costs.

Truckload Service

There are truckload carriers of all sizes and quality levels in Canada. Most Canadian truckload carriers focus on specific geographical areas (i.e. Windsor to Quebec City corridor, Atlantic Canada - northeastern USA – Central Canada triangle). Shippers need to do their due diligence on their truckload carriers and make a determination as to which ones have the coverage, service, capacity and rates to meet their specific needs. Shippers should be aware that American truckload carriers without proper operating authorities are not permitted to move truckload shipments within Canada. This is known as cabotage. Below are a number of major Canadian truckload carriers that provide at least dry van truckload service.

Some of these companies and a variety of other Canadian carriers provide refrigerated, bulk and/or heavy haul services. Most major truckload carriers provide both domestic and cross-border services.

Small Parcel Carriers

Some small parcel carriers service specific areas within Canada (i.e. Midland serves Central and Atlantic Canada, Dicom serves Quebec and Ontario). Some carriers focus on heavier weight parcels (i.e. Nationex), health care products (i.e. ATS), pre-8:00 AM deliveries (i.e. Cardinal) or same day service (I.e. Dynamex). Purolator, Canada’s largest national small parcel carrier competes with FedEx, DHL and UPS in Canada for domestic Canada courier shippers.

Pricing Issues

Small parcel pricing in Canada is similar to the US in the sense that there are rates for various time specific services. LTL pricing is different. Canada does not use the National Motor Freight Classification (NMFC) system that is still widely employed in America. Canadian LTL rates are based on commodity and density (pounds per cubic foot). Truckload rates are similar (i.e. flat rate, rate per mile) in structure to American rates.

Fuel surcharges are different in Canada. The Freight Carriers Association fuel surcharge formulas, the industry standard, are published weekly. Fuel surcharges vary by mode and whether the freight is moving domestically within Canada or cross-border. Note that for larger shippers, it is reasonable to negotiate a discount off the published fuel surcharge.

If you need assistance in serving the Canadian or cross-border market, contact me at dan@dantranscon.com. To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466). To learn more about the Canadian freight market, come to the 2016 Surface Transportation Summit (www.surfacetransportationsummit.com ) on October 13 (#sts16).