Understanding the Canadian Freight Market – Part 6 – Some Tips for Carriers

This is the sixth and final blog in this series on surface freight transportation within Canada and between Canada and the United States. In this blog I will focus on tips for carriers to help achieve success in the Canadian freight market.

Is the Canadian Freight Market Worth the Investment?

As outlined in the first blog in this series, Canada is a large country, from a geographic perspective, with a population about the size of the state of California. The first question that any American carrier should ask is whether or not Canada is worth the investment in time and resources. As outlined through this series of blogs, when dealing with Canada, there is much to learn about Canadian laws, customs clearance, exchange rates and a host of other issues. Is serving the Canadian market of strategic importance to your company or would another US market (or foreign market) be more profitable? If there is value in the Canadian market, there are a series of steps that need to be undertaken.

Educate yourself on your Canadian freight activity and Canadian carriers

As a starting point, it is important for American and Canadian carriers to learn as much as they can about Canadian shippers and carriers. Examine the volume, location and distribution of your Canadian business in order to make a determination as to how best to service these accounts. Learn as much as possible about the competition. This will lead to a decision on whether or not to utilize company assets or whether to work with one or more Canadian partners. Will your cost structure allow your company to quote profitable rates?

As outlined previously, there are two distinct markets to consider, the intra-Canada domestic market and the cross-border market. Each market presents a unique set of challenges and opportunities.

For truckload carriers that wish to “dabble” in the cross-border market, it is important to remember that customs processes must be followed properly, drivers must know what to do when they come to the border and there is a requirement to find freight to come back out of Canada.

Do you have a solid business platform in Canada?

Some American carriers become interested in Canadian freight when they buy a Canadian carrier. They soon find out that there are a range of issues to consider. Does the carrier have:

a) a stable and growing book of business and profit generating rates?

b) a quality management team?

c) quality information systems?

d) a late model fleet that has been properly maintained?

e) quality facilities?

f) quality maintenance services?

g) a driver workforce that will they remain with the firm post-acquisition?

h) customs clearance expertise?

Is the carrier compatible with your business model and expertise? What makes you think you can be successful in a foreign market? How confident are you that your value proposition will work well with Canadians?

How to Select a Canadian Partner or Partners

If you are in the cross-border small parcel and LTL markets, it is usually essential to find suitable partners. Here is checklist of issues to evaluate in your prospective partners.

a) Have they partnered with American carriers in the past and if so, why are they seeking to make a change? Why did things not work out with their previous partner or partners? What will be different this time?

b) Is your company a “good fit” for your potential partners? Are the leadership teams compatible? Do your partners share a common vision of how they wish to develop the market?

c) Does the partner or partners have the terminal networks and service coverage to serve major geographic areas? Do they service these areas with their own terminals and equipment or do they make extensive use of interline carriers?

d) Do their sales teams have the mandate, the training and the compensation structure to achieve results? Will there be ongoing sales meetings and communication, after the initial partnership agreement is established between the companies, to drive results? Will there be metrics put in place for this program and will they have visibility throughout the company? How much cross-border business can they “bring to the table” and why have they not developed more in the past? Do they have enough sales people to produce results in their markets?

If you are seeking success in the province of Quebec, are there bilingual sales people (and other employees) on the team? How long have they been with their Canadian carriers and what is their following of accounts? How many years have they been selling in their respective markets? Are they active members of Quebec-based transportation clubs?

In summary, the Canadian market is quite different from the American market. While the two countries are each other’s largest trading partners and share some cultural values, achieving success in Canada’s freight market takes a well-conceived plan and great execution. 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.