Former CIFFA presidents reflect on the early days of freight forwarding and CIFFA’s founding

by Canadian Sailings | Jul 4, 2018 | Corporate events & profiles, Keith Norbury, Supply Chain and Logistics

By Keith Norbury

On the wall of his office, Chris Gillespie displays the first budget that his grandfather established when he founded Gillespie-Munro Forwarders Ltd. in 1947. “They estimated gross income of $3,000 a month, with expenses of about $2,830 a month. So the estimated net income was $170 a month.” In the ensuing years, Montreal-based Gillespie-Munro Inc. has grown considerably. The company has gone from nine employees, including his grandfather and an “extra man,” to nearly a hundred. “We’re like a $10 million revenue a year company. So it’s gone up quite a bit,” he quipped.

The Canadian freight forwarding industry has also changed dramatically in the last seven decades, as has the association that represents it. “We could never do the volume of business we do today without computerization,” Mr. Gillespie said.

Celebrating 70 years

A year after founding his company, Douglas Barwick Gillespie became the first President of Canadian International Freight Forwarders Association, which is celebrating its 70th anniversary in 2018. “My grandfather would have been pretty impressed with how the business had changed,” said Mr. Gillespie, who succeeded his father, Douglas Russell Gillespie, as President and CEO of Gillespie-Munro around 1980.

Like his grandfather and father, Mr. Gillespie also served as CIFFA President. His dad held the post in 1970 while the younger Gillespie did the honours in 1987 and 1989, his tenure interrupted because CIFFA bylaws at the time prohibited anyone for holding the office for consecutive years. “I was honoured by being the first third generation President of CIFFA,” Mr. Gillespie said.

Another former CIFFA President with a familial connection to the founders is Bill Gottlieb, who led the association in 1994. His uncle, Arthur Nathan Kirsch, was the association’s first Treasurer. Arthur was the son of David Kirsch, a Lithuanian immigrant who founded David Kirsch Forwarders Ltd. and was Mr. Gottlieb’s grandfather. Mr. Gottlieb eventually succeeded his uncle as Kirsch’ President.

“I joined the company back in 1975 full time, and his advice to me was if you want to learn the business or what goes on around you, you should get involved with the forwarding association,” Mr. Gottlieb said. He sold his interest in the family business in 2013 and since 2015 has been the Eastern Canada Director for ITN Logistics Services Inc.

Both Mr. Gillespie and Mr. Gottlieb also served two-years terms as President of FIATA, the international body of freight forwarders associations. Mr. Gillespie was FIATA President from 1999 to 2001, while Mr. Gottlieb’s term was from 2007 to 2009.

Eight founding members

CIFFA itself had eight charter members. Aside from D.B. Gillespie and A.N. Kirsch, the others were Vice-President J.A. Nuttall of A.W. Kyle Company; Secretary J.M. Dever of Wm. H. Johnson Jr. Ltd.; and Directors B.V. Abrahams of Guy Tombs Ltd.; and J.O. Stratton of Thomas Meadows & Co. Canada Ltd., according to clippings from the Journal of Commerce and the Shipping Digest.

Those eight names are on CIFFA’s original articles of incorporation, said Ruth Snowden, the association’s Executive Director since 2008. “By February 1949, there were 15 paid up members,” she said.

Today the association has about 260 member companies as well as about 160 associated members from outside of freight forwarding. Those numbers have about doubled in the decade that Snowden has been at the association. “Part of the role of the association was to petition Parliament and to represent the international freight forwarder,” said Ms. Snowden, who worked in freight forwarding for about 25 years before taking on her current role. “Fast forward over the years and we have this association, CIFFA, where we have a very strong advocacy role.”

CIFFA no longer petitions Parliament and it seldom engages with federal cabinet ministers “except when we have to,” Ms. Snowden said. For example, CIFFA wrote to federal Transportation Minister Marc Garneau and International Trade Minister François-Philippe Champagne this March regarding delays in the movement of intermodal cargo and to ask the government to address intermodal infrastructure by moving ahead on spending money pledged in a $2 billion National Trade Corridors Fund.

“Seventy years ago, these guys got together and formed this association and here we are fast forward 70 years later and we’re still petitioning ministers of the Crown to improve the facilitation of the movement of goods,” Ms. Snowden said.

According to those yellowed clippings, the association’s objective was “to support and protect Canadian freight forwarders and their clients by establishing uniform trade practices and regulations and eliminating trade evils and abuses.”

Mr. Gottlieb said the association started because those in the industry decided they needed a way to voice their concerns with port authorities and steamship companies about the role of freight forwarders, who often worked on commission.

Before containerization

“Remember, there were no containers back then; everything was loose freight,” Mr. Gottlieb said. “So they’d get a commission. In some cases it would be per piece. Other times it would be a percentage of the freight.”

Freight forwarders of the day also had issues with how cargo was handled. In those days, it was all manual, often by longshoremen using hooks. “Part of the commodities that we were moving at the time were textiles for the garment trade,” Mr. Gottlieb said. “So you can imagine what one of those hooks going into a roll would do to the fabric.”

The association also enabled members to air their issues, sometimes in ways that are now frowned upon by authorities. “Back in the 40s, I will use the word, they could ‘collude’ like they can’t do today,” Mr. Gottlieb said. “When I first got involved with CIFFA there were still fee schedules on the customs broker’s side and there were also fee schedules on the forwarding side. Those have since been discontinued many years ago because they are deemed to be anti-competitive.”

A fascinating business

After he finished his studies in international business at Northern Illinois University, Mr. Gottlieb followed his grandmother’s advice and came to Canada to give freight forwarding a try. “I decided what the heck, I’m young. I came up for a year on the basis that I’d give it a go for a year and bottom line is it’s a fascinating business,” Mr. Gottlieb said. Forty-five years later, he is still in the business. He is also mentoring the fourth generation of his family in the profession, his son Brian.

But how the work of a freight forwarder has changed in the last seven decades!

Forty-five years ago, the garment and footwear industries were huge in Montreal. Today almost all that manufacturing is offshore. “And what we have left are basically importers and distributors,” Mr. Gottlieb said. He has heard stories for years about a similar death knell for freight forwarding, going back to the early days of Federal Express. But he considers that obituary to be premature.

“Forwarders do a lot besides just consumer goods,” Mr. Gottlieb said. “We’re moving machinery. We’re moving liquid enzymes. We’re all over the place. We’re using dangerous goods, explosives, hazardous chemicals, etc.” Meanwhile, the rise of electronic commerce giants like Amazon has renewed worries. Yet it also presents opportunities for forwarders. “We have several clients that are supplying the Amazons,” he said “They’re shipping in bulk, over to China for Alibaba, as well as trucking to Costco, etc.”

Ditto machine recalled

One of Mr. Gillespie’s first jobs was to run the ditto machine, or spirit duplicator, to fill the machine “with that great smelling” (alcohol) liquid. Meanwhile, the women who typed the documents “became very skilled with razor blades,” Mr. Gillespie said. “Instead of having to correct the whole text if they had typed something incorrectly, they’d go in and chip away at the ink that had been imprinted on the back of the page. They’d remove that section, then retype over that section (with) the correct information.” Typing a letter from dictation was a different matter. If his grandfather or his father wanted changes made to a letter, the secretary “had to go back and type it all over again,” Mr. Gillespie said.

His father, Douglas Russell Gillespie, became President of the company in the late 1960s and ran it for about a decade. Earlier, D.R. Gillespie had gone to work for a vessel agency that one of the two Munros in Gillespie-Munro had hived off of the original company.

“My grandfather was still working when I first started with the company working summers as an office boy,” said Mr. Gillespie, who was born in 1949. He can’t say whether his grandfather would be “impressed or distraught” by the myriad security regulations that freight forwarders now have to deal with but that didn’t exist when the company and CIFFA were founded. “Nor did they exist when I first started in the business,” Mr. Gillespie said.

He was referring specifically to global security measures implemented in the aftermath of the Sept. 11, 2001 terrorists attacks in New York City and Washington, D.C. “I’m talking about systems where governments want to know exactly what is coming into Canada” Mr. Gillespie said, and making sure such information is available and understandable, he said, citing dangerous goods as an example. “We’ve had instances in the last few years of ships catching fire and almost every instance of this happening can be traced back to either improperly packaged or incorrectly declared dangerous goods,” Mr. Gillespie said. For that reason, he always advises his clients to have adequate marine insurance. “For one reason, if you are on a ship that catches fire, or worse case scenario ends up being salvaged, there is a huge, huge amount of money that’s going to be involved in the bond that you’re going to have to put up to get your cargo released,” Mr. Gillespie said.

Breakbulk ship parties

Containerization was still taking its baby steps by the time he joined the industry in the 1960s. “I can still remember going to ship parties onboard breakbulk ships that would come into the port of Montreal and they’d be there for a week or more loading and discharging, whereas nowadays these ships turn around in a day or two. And they have to because the costs are just phenomenal,” Mr. Gillespie said.

When his father took over the company, the evolution to containerization was picking up steam and he took the business to the next level. “We always handled a lot of breakbulk cargo but all of that breakbulk cargo eventually moved to and is now for the most part carried in containers,” Mr. Gillespie said.

One of the driving forces behind the move to containerization was that it greatly reduced the risk of cargo damage and pilfering. “For example, the risk of damage to newsprint in breakbulk ships is much greater than if it’s been loaded stowed and secured by the shipper in the container at his premises, or by others that know how to do that,” said Mr. Gillespie, whose company still does much of its work with forest products.

Advocacy efforts

Much of CIFFA’s work, meanwhile, still involves advocating for improvements to Canada’s transportation infrastructure. For example, in a recent letter to federal Transportation Minister Marc Garneau and International Trade Minister François-Philippe Champagne, Ms. Snowden and current CIFFA President Gary Vince cited such problem areas as congestion at CN terminal operations in several central and western cities. “We felt that the federal government had to be made aware that the problems were not just in the movement of grain but that export containers and import containers were very much delayed,” Ms. Snowden told Canadian Sailings.

Meanwhile, CN Interim President and CEO J.J. Ruest responded promising improvements in dwell times and alleviation of congestion. CN also recently completed “a series of strategic investment decisions,” including ordering 38 cranes and 37 shunt tractors, and spending $250 million to increase track capacity between the West Coast and Chicago, not to mention significant additions and replacements of its fleet of grain and lumber cars. Ms. Snowden said part of the problem was that nobody expected such a huge jump in the movement of containers in 2017, such as the 11 per cent increase at the port of Vancouver. “The railroads, yes, they were prepared for a 2 or 3 or 4 per cent growth but they weren’t prepared for double digit growth and it hit early in the year,” Ms. Snowden said. “and they didn’t make the investments early in the year that they needed to in additional cranes, for example, building some longer sidings, and getting more rail cars and locomotives.”

The EManifest saga

Another area of advocacy that CIFFA has been involved with is the Canadian Border Services Agency’s electronic manifest system, or eManifest, for filing customs documents. The eManifest system, the third phase of CBSA’s Advance Commercial Information program, has been dogged by numerous missed deadlines and delays. CIFFA is waiting for CBSA to fix security gaps in its systems, she said. However, by the time the enhancements have been made and tested, she doubts that CBSA will be able to make the eManifest mandatory before the end of 2019.

A great decade

Ms. Snowden has been with CIFFA for a decade. “I came for five years in 2008, January 2008,” she said. Before that she worked in freight forwarding for 25 years, including as a Vice-President at UPS Supply Chain Solutions. She also did some consulting, including for Transport Canada. “I knew how to run a freight forwarding company,” Ms. Snowden said. “But I didn’t know much about managing an association. So I’ve learned a lot about managing an association. And, you know, we’ve had a great decade, I’ll tell you.”

The membership of CIFFA is always changing as companies merge, big ones absorb smaller ones, some go out of business, and new ones start up. Every year the association loses about four or five per cent of its membership, Ms. Snowden said. But then it acquires new members. To qualify for membership, a company has to have been in business in Canada for at least 36 months. A company also has to meet insurance and training requirements. “A lot of the small, new freight forwarders don’t meet our eligibility requirements,” she said.

What the future promises

Looking ahead, Ms. Snowden anticipates that blockchain — a subject on the agenda for the CIFFA conference in Toronto this October — “is going to enable us to transfer data and documents securely, and that’s going to, we hope, take away some paper out of the current paper system, and eliminate unnecessary data entry duplication.”

Blockchain is something Mr. Gillespie has been trying to wrap his head around.

“I guess one of the most interesting things I read somewhere was blockchain is great where you have high value, high security requirements, but that it’s probably not realistic to look at its application to commodities, per se,” Mr. Gillespie said. “I really don’t understand how it applies to transportation. I know that the carriers themselves are looking at using it but they don’t seem to be looking at using it for the actual fulfillment of their transportation function as much as other aspects of their operations.” Mr. Gillespie also has trouble imagining that self-driving vehicles will take over the roadways any time soon, noting some of the highly publicized troubles Tesla Motors has encountered.

What he does expect to see is more consolidation in transportation industries as well as more companies trying to be “all things to all people,” such as by doing warehousing and trucking. But whatever the future holds for transportation, he imagines a role in it for freight forwarders. “The manner in which you move it, or the approach you take to moving the cargo, is always going to be dependent on somebody — a human being who has the creativity and the knowledge to understand what that cargo is going to face.”