By Alex Binkley

Shippers are feeling a wee bit more optimistic about prospects for the new year than they did in late 2011, says Lou Smyrlis, Editorial Director of Canadian Transportation & Logistics Magazine. Despite a lot of negative forecasts for next year, surveys show 53 per cent of shippers expect to move more goods in 2013 than they did this year, Smyrlis told a workshop put on by the Chartered Institute of Logistics and Transportation in North America (CILTNA) on November 19. A year ago, only 50 per cent expected to ship more freight.

“2012 started strong but slowed down over the summer and the last quarter hasn’t come out that well,” he said. It’s been a tough slog for the freight industry since 2004, when a strong economy propelled a 71-per-cent gain over the previous year. Back then, he recalled, carriers struggled to move all the freight that was available. The following year, decline set in and really hit home during and after the 2008 recession. He said one other positive indictor for next year is that only 2 per cent of businesses expect to be moving less freight during 2013 and 40 per cent predict the new year will match 2012’s traffic levels. The main beneficiaries of any increase in business will be the less-than-truckload (LTL) carriers who are best positioned to cope with shippers “who have doubts about next year and will bring in smaller shipments so they don’t become overextended,” he forecast.

Ian Hamilton, Vice-President of Business Development & Real Estate with Hamilton Port Authority, said the Port is banking on the continued increase in demand for intermodal services by creating a multimodal hub that will include a $10-million investment in beefing up the port’s railway network. “We will be able to handle up to a 9,000 cars a year. It will go a long way into making the port into the Southern Ontario Gateway.” He noted that the Port began a program in 2008 to diversify its cargo base and to expand terminals, which will bring another 20 million tonnes of freight to Hamilton in the coming years.

Michael Broad, President of the Shipping Federation of Canada (SFC), urged Transport Canada to take a multimodal approach to transportation policy. Rather than focusing on policies for the individual modes, SFC would like a freight transportation policy with international and domestic components. “The international freight policy would support Canada’s international trade policy; it would rely on international trade agreements, maritime conventions and customs conventions,” he said. “It would focus on gateways and trade corridors and offer Canadian importers and exporters an efficient and competitive conveyor belt to and from foreign markets.”

The domestic policy would encourage the best use of all modes for moving goods efficiently within Canada, he said. “This domestic policy could favour domestic service providers, although this would be an industrial rather than a transportation policy requirement.”

Mark FeDuke, Director Trade Compliance for VLM Foods of Montreal, said a better relationship between shippers and carriers is overdue. “They’re like ships that pass in the night. We need to find a new way to structure the relationship, a new way to dialogue and determine pricing. There’s a lot of volatility out there right now. Let’s have that conversation. What we’re doing now doesn’t make a whole lot of sense.”

Smyrlis anticipates that strong growth in intermodal traffic in Canada and the United States this year will continue in 2013. CN and CP have been working hard at shrinking transit times and cutting costs. Smyrlis noted that only a few years ago, the cut-off point for shipping intermodally rather than by long-haul truck was 700 miles, but in some cases that has been reduced to as low as 350 miles. Many LTL carriers – such as courier companies – as well truckload operations are sending cargo by rail. Carriers have shed unwanted equipment during 2012 to bring their fleets in line with expected shippers’ demand, Smyrlis added. “In the last 12 months, carriers have moved from excess to balanced capacity. Shippers feel there will be sufficient capacity to meet their needs. There has been continued growth among small truckers.”

Trucking lines have cut their rosters of tractors and trailers by 12 per cent during the last few years, he noted. A majority of them are planning to buy new equipment in the new year, “but it will replace old equipment, not increase capacity.” Meanwhile personnel shortages in the transport sector are becoming more acute, Smyrlis said. “Right now, the industry needs 27,000 employees. Through retirements and turnover, that could reach 74,000 by 2015. If the economy rebounds, it will take the transport sector time to catch up to the need for additional capacity.”

Broad said the transport sector also has to pay close attention to budget cutting initiatives at Transport Canada and the Canadian Coast Guard that include downloading costs on the shipping industry. “We don’t mind paying a fair share, but there is a need for a direct relationship between fees and the benefits to the user/payer – in other words, the user should only have to pay for the infrastructure or services they need and use and there should be standards with respect to fees and levels of service,” he added. “Too often, services are inefficient and bureaucratic, and we need to ensure that the proper party is paying for the service, he continued. “In 2010, Port Metro Vancouver instituted an infrastructure fee to recover costs to build pedestrian overpasses and bicycle paths in cities outside the port area and assessed the fee on our members’ ships,” he noted. He said the shipping industry is paying close attention to the anticipated announcement of a new federal rail freight service policy. “I am not saying that it is perfect, but we do see a gradual movement by both CN and CP to expand their intermodal business and a real effort to improve service,” he pointed out.