Measures to Promote Better Integration in
Canada’s Rail-Based Supply Chains
Joseph F. Schulman
Principal Consultant
CPCS
Presented to RAC AGM
Calgary, AB
October 16 – 18, 2011
INFRASTRUCTURE DEVELOPMENT CONSULTANTS
Outline of Presentation
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Purpose of Study.
Methodolgy.
Analytical Framework.
Synthesis of Findings.

Appendix A – Detailed Findings.
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Purpose of Study

Carried out by CPCS for RAC, mostly in 2010.

For Canada to remain internationally competitive,
productivity and efficiency must improve.

For a trading nation like Canada, improving SCI is a key
means of improving productivity and efficiency.

Objective was to identify the key issues and measures
for improving SCI in Canada’s rail-based SCs.

Focused on international container traffic.
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Methodology

Review literature on SCI.
•

Interviews with SC stakeholders.
•

Academic, consultant studies, submissions to Rail Freight
Service Review, etc.
Limited number but covered wide spectrum of views and
experience.
Study focused on:
•
•
•
Performance of Canada’s rail-based SCs
Factors hindering SCI
Measures that could improve SCI
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Organizations/Groups Interviewed

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

British Columbia Trucking Association
Alberta Finance and Enterprise, Industry Development
Canadian International Freight Forwarders Association
Canadian National Railway
Canadian Pacific Railway
Pulse Canada
Ray Mont Logistics (Montreal)
Supply Chain & Logistics Association of Canada
Transport Canada, Transportation Technology and Innovation
Transport Canada, Strategic Policy
Western Transportation Advisory Council (WESTAC)
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Framework for Analysis
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Infrastructure Integration
The connectedness and inter-operability of physical
infrastructure and equipment

Major elements of the SC physical infrastructure include
• Transport terminals,
• Ports,
• Railways,
• Distribution centres,
• Equipment associated with these facilities.
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Commercial Integration
Refers to various possible commercial arrangements
among supply chain members

Includes mergers and acquisitions, outsourcing, or
cooperating to exploit synergies.

Arrangements can be vertical or horizontal.

Commercial agreements are an important dimension.
• e.g. “Co-production” has existed in the North American rail
industry for many years.
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Commercial Integration – Cont’d

Recent efforts have stressed Service Level Agreements
(SLAs) between railways and other supply chain
members.
• SLAs can establish respective service obligations, traffic levels,
performance metrics and standards, communication protocols,
penalties, dispute resolution procedures.
• Came to prominence during Rail Freight Service Review process.
• SLAs are innovative, entailing agreements among SC members
including those with operational but not necessarily commercial
relationships.
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Work Practices Integration
The integration or harmonization of work practices
to move cargo more efficiently
 Pressure has been to move towards 24/7 operations, to enable
continuous flow and better integration in using different assets.
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Information Integration
The interconnectedness of information systems or
ability to communicate through IT

Major drivers
• Pursuit of competitive advantage by market leaders.
• For market followers, keeping up with competitors.
• Complying with customer demands or regulations.

Categories of application
• Asset tracking.
• On-board status monitoring.
• Facilitating movement through gateways.
• Web-based freight status information.
• Monitoring transport network status.
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Regulatory Integration
The structuring or harmonization of regulations to
promote better integrated supply chains

Increasingly a challenge as SCs lengthen and transcend
modes and jurisdictions

Areas of regulation
• Safety
• Environment
• Pricing
• Customs
• Crossborder
• Customization
• Cabotage
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Planning and Funding Integration
Planning and funding infrastructure from an
integrated, multi-modal total SC perspective

Much has been done to close Canada’s “infrastructure
deficit.” This, and the weak global economy, have
reduced the urgency around overall infrastructure needs.

The Asia-Pacific Gateway and Corridor generally
considered a model for Canada of integrated
infrastructure planning, funding and provision.

Several – localized – infrastructure issues raised in
interviews and submissions to the RFSR.
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Customs/Border/Security Integration
Integrating or harmonizing practices to move goods
more efficiently and securely through borders

Majority felt Canada-US border issues were relatively
minor; political commitments would ensure continued
improvement.

Recognition world-wide on need to improve security of
SCs, ensuring:
• Cargo is what is stated on the Bill of Lading.
• Cargo remains unchanged between origin and destination.
• Routing follows the intended route and remains within secure
•
modes and locations.
Information about the cargo is authenticated and verifiable.
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Synthesis of Findings

Lack of comprehensive SC performance data a major
gap. Improving this could be one of the best ways to
help promote better SCI.

Concerns now are almost entirely around commercial,
information and work practices integration. These
should be priorities.

SLAs seen as promising for driving SCI in several ways,
including better commercial, information and work
practice integration.

CN and CP have signed a number of SLAs, but process
still in its infancy. Results should be monitored.
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Synthesis of Findings – Cont’d

Different size of domestic (53’) and international (40’)
containers an issue for all SCs. “Virtual container yards”
and pooling and sharing seen as helpful solutions.

Lack of universal 24/7 operations an issue for all SCs.
Measures could include making 24/7 standard in SLAs,
re-negotiating labour contracts, and where possible,
using incentives, e.g. congestion pricing.

Pursue macro-level efforts to develop metrics, monitor,
identify best practices and disseminate results. TC’s
Fluidity Indicator and Supply Chain Mapping research
should be supported.
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Synthesis of Findings – Cont’d

There are localized issues needing resolution, including
issues relating to :
• Infrastructure (e.g. Detroit/Windsor crossings, ensuring
•
•

adequate long term port terminal capacity)
Work practices (e.g. container drayage in Vancouver)
Information (e.g. railways getting better/more timely forecasts
from ocean carriers regarding container arrivals)
Solutions are not obscure. It is a matter of initiative. The
challenge is to implement and carry through.
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Questions
Thank You
www.cpcstrans.com
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Appendix A – Detailed Findings
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Infrastructure Integration Issues and Measures
Key Issues
Potential Measures
•
Effects of inclement weather on •
port operations
Operational problems
intermodal yards
Invest
in
improvements
needed
at
rail
•
•
local
Viability of short line railways
Port
/terminal
capacity
inadequate for long term needs
•
•
•
•
Different sizes for domestic (53’)
vs. international containers (40’)
•
•
Enable terminals to load ships
in all weather (bulk).
Terminal
investment
in
additional buffer capacity to
handle
ship
delays
(container).
Result
Eliminates constraint on loading
moisture-sensitive bulk exports.
Mitigates impact of delays and
bunching in ship arrivals.
Improve truck reservation Reduces excessive truck waiting
system.
times.
Increase
investment
in
equipment and staffing.
Eliminate
Detroit/Windsor
road crossing and rail tunnel
constraints.
Provide needed investment
dollars.
Eliminates bottlenecks; increases
efficiency of traffic movement.
Ensures viability of key part of
rail network.
Develop long term growth Ensures long term growth needs
plan for PMV recognizing its met
geographic constraints.
Plan for/expand west coast
bulk export terminal capacity.
Establish
Round
Table Ensures
sufficient
containers
involving all supply chain available for inland loading of
partners to address issues.
exports; minimizes trans-loading.
Establish “virtual container
yard.”
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Commercial Integration Issues and Measures
Key Issues
Supply chain members work too
much in isolation; need more
collaboration and concern with
performance of entire system.
Ensure rail assets and networks
used to maximum effectiveness.
Potential Measures
Result
•
Railways
should
develop Establishes respective service
SLAs with other supply chain obligations,
traffic
levels,
members.
performance
metrics
and
standards,
communications,
penalties,
dispute
resolution
procedures. Makes all aware of
common
interests;
promotes
collaboration.
(See
also
Information Integration)
•
Expand use of commercial
Increases rail asset utilization,
agreements between
network efficiency and supply
railways for practices such as chain competitiveness.
“co-production,” where
appropriate.
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Work Practices Integration Issues and Measures
Key Issues
Potential Measures
•
Need for all supply chain
members to work 24/7, wherever
cost-beneficial.
•
•
Need common scheduling system
for drayage in port of Vancouver.
“1st
and last mile” rail service
issues.
Encourage
collaborative
agreements that make 24/7
standard.
Renegotiate
labour
agreements as required.
Use congestion pricing where
appropriate.
Result
Reduces variability that prevents
traffic from flowing evenly.
Promotes optimal use of existing
assets and capacity.
•
PMV brings parties together Reduces costs in waiting time,
to
develop
common routing and being tied up in
scheduling system.
congestion; increases efficiency
of traffic movement.
•
Railways develop SLAs with Improves
reliability
and
other supply chain members. predictability on car supply, ETAs,
switching, cars ordered in, and
communications
and
responsiveness.
•
Railways develop SLAs with
other supply chain members.
Transport Canada does
overall and ongoing
monitoring.
Better alignment of operations
between railways and supply •
chain partners.
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Resolves adverse impacts of
railways and others working
individually
to
their
own
schedules. (See also Information
Integration)
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Information Integration Issues and Measures
Key Issues
Need for single intermodal
database/portal, accessible by
all.
Potential Measures
•
•
•
Railways need better forecasts
from ocean carriers on arriving
containers.
Volatility or market changes
require better
transparency
and more information from all
supply chain members.
•
•
Supply chains need standards of
service
for
all
partners,
processes
for
measuring,
monitoring,
evaluating
and
reporting
on
service,
exchanging information, and
identifying opportunities for
supply chain improvement.
•
•
•
•
•
•
•
Neutral party receives data, makes
information available.
Requires “champion” to promote and make
happen.
Transport Canada assigns 3rd party and
oversees.
Bring shipping lines into SLAs.
Move to web-based visibility on ocean
carriers’ ETAs.
Ongoing
measurement/sharing
of
information among supply chain members.
Improve
forecasting
through
better
systems and information exchange.
Railways improve their ETA accuracy and
communications to customers.
Develop SLAs binding stakeholders to
service levels, which can also be
benchmarks.
Stakeholder
committees
set
targets,
monitor, and compare efficiency/reliability
across the supply chain.
Independent
body
administers
performance measuring and monitoring.
Transport Canada acts as catalyst for
identifying best practices, exchanging
information and developing performance
criteria/indices.
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Result
Provides
the
flow/
visibility
of
information needed for efficient traffic
movement and by customers.
Allows railways to better plan cargo
movement, enables demand to be met
with less stockpiling.
Helps secure more reliable and efficient
supply chains by improving information
and its availability regarding volatility or
market changes.
Enables assessment of supply chain
members’ efficiency and reliability,
improved
processes
and
problem
resolution
through
information
exchange
and
establishment
of
communication
platforms,
better
understanding of respective supply
chain
members’
businesses,
and
optimization of overall supply chain
efficiency.
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