My first job in transportation logistics was fifteen years ago selling Ontario and Quebec LTL for a “retail specialist” carrier. This trucking company concentrated on selling prepaid freight to vendors of major Canadian retailers such as Eaton’s, Zellers, Bargain Harold’s, SAAN Stores and BiWay. This industry was booming and as a result, the transportation service sold itself.
US Retailers entering Canada was good for the Canadian transportation industry
While the next decade was not a good time for most of the Canadian retailers listed above it was a busy time for Canadian carriers moving retail freight. The American retail invasion was well on its way with new players entering the market every year. For a complete list of when some of the largest American retailers entered the Canadian market please read this article International Retail Expansion in Canada: New Frontier or Next Wave? With all the new stores opening up in Canada, transportation providers that managed freight for American retailers were growing at a rapid rate. Then 2008 hit and everything changed. There were more carriers and less retail freight to split amongst them. Many of the US retailers stopped opening up new stores in Canada. Any companies that thrived and survived during that time found ways to reduce costs and compete against the American powerhouses.
How can Canadian retailers reduce freight transportation costs?
One of the ways Canadian retailers can reduce costs today is through vendor consolidation programs. This is especially true for retailers located in Atlantic and Western Canada that are hundreds and even thousands of miles away from the large vendors in Ontario and Quebec. If you are a retailer and not controlling your own freight and not using consolidation programs you may be leaving a lot of money on the table. In the past retailers received much of their freight on a prepaid basis from the vendors. Now the terms have switched to collect and the LTL shipments from various suppliers consolidate and move as a full load. This program will reduce the amount of trucks delivering to their facilities and reduce overall transportation and administration costs. Under the terms of this program vendors usually pay the retailers a freight allowance.
What the future holds in Canadian retail transportation
There have been many changes in retail transportation in the last fifteen years and I’m sure the next fifteen year will have even more surprises in store as home delivery and retail e-commerce continue to grow at an ever increasing rate. These programs need to be supported by logistics service providers. Transportation Management Systems (TMS) should provide for full transparency on all shipments and even allow such features as tracking by buyer, GL code and splitting invoices by purchase orders.