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Canadian exporters stymied by high costs

Canadian exporters are stymied by higher costs, including government fees, than their competitors and as a result Canada is only doing OK as an exporter, says Rob Bryson, vice-president of Parrish & Heimbecker.

Despite buoyant commodity markets, the world is walking on the edge of another bout of bad economic times, he warned the annual Transportation Situation and Outlook Conference, sponsored by the Chartered Institute of Logistics and Transportation in North America.

In general, Canadian exporters are in the middle of the pack internationally, he added. They have to become better at “controlling external operating costs,” which range from the property tax assessments on port grain elevators to better accountability by port authorities the settlements given port workers. The performance of ports across the country “is not at the same level.

“We can’t rest on our laurels, we have to become more competitive and drive costs from our system,” he added.

While the end of the Canadian Wheat Board monopoly over wheat and barley exports happens in just over two months, “it’s still business as usual for the grain companies,” he said.

The Canadian grain industry must meet “super strong standards for the environment, health and safety and we’re waiting to get rewarded for it,” he said. “We would like to find markets that will pay for sustainable development.”

The overall theme of the conference was that shippers and transporters can’t let their worries about slow global economic growth prevent them from refining their supply chain to be ready for a future upturn.

“End-to-end performance is what matters,” said Vee Kachoo, CN’s new vice-president for supply chain solutions. “Silos don’t work, averages are meaningless and finger pointing is useless.”

CN is focused on service excellence rather than the precision railroad model it advocated a few years ago, he said. “We tried to run a tight ship and at times it was too tight. Our focus is on growing with our customers. At the same time, we have to make sure we have the equipment and capacity to haul new business.”

One area that’s receiving a lot of attention is improving the pickup and delivery of freight from a shipper’s facility, he said. Referred to as first-mile and last-mile service, it’s regarded as the area where major productivity gains can be achieved. It also involves getting carloads in and out of ports without protracted delays.

CN has introduced service agreements with ports and major customers and a scorecard system for shippers, he said. As a reflection of his new job, Kachoo said the railway will work with customers on supply chain development and solutions.

“There’s no room for complacency,” observed Kristine Burr, assistant deputy minister for policy at Transport Canada. The expanded Panama Canal will be a game changer when it opens in a couple of years and the department is studying what impact it will have on the country’s supply chains.

International trade has been a central force shaping transport and logistics and Canada’s economy as a whole, said Tim Lane, deputy governor of the Bank of Canada. “Advances in transport and supply chain management have played, and will continue to play, a central role in enabling that expansion,” he said.

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