The Pacific Gateway Project
Logistics Industry August 31, 2011
What Is It?
In recent years, we have seen an accelerating shift in transportation patterns in Canada, with more and more products coming through the Port of Vancouver. To address the need for infrastructure to accommodate this dramatic growth, construction of several new roads and rail lines has been in process for the last few years. Long overdue, it is being welcomed by many Vancouver area residents, as the existing roads cannot accommodate the rapid population growth in the region.
Until recently, with high profile events like the Olympics, the Gateway project had become a bit of an afterthought. In the last few months, however, tangible signs, such as new overpasses, road paving, and so forth, have brought the spotlight back on the project. Nonetheless, I still feel that even most people have very little understanding of the scope of the project, and the transformational effect it will have on our region.
Vancouver remains one of the most ideal entry points on the West Coast of North America, and this will expand its capacity. As I have touched on in other articles, due to population growth in Western Canada, it is becoming increasingly attractive for our clients to strategically place a larger percentage of their goods in Western Canada.
Traditionally, the percentage of sales in Western Canada was routinely 20 percent or less, making it not worthwhile to split inventories, so most shippers grudgingly accepted that they would have to absorb greater freight costs, as well as longer transit times, to service their clients in Western Canada. These negatives, adversely affecting profit margins, often led to companies not servicing this market as aggressively as possible. Regional sales teams were often left feeing unsupported, and even ignored.
The dramatic growth of Western Canada's population has started, and will continue, to change this. The irony of importers shipping containers to Eastern Canada, and then reshipping a small percentage of the goods 3000 kilometers back West, has become increasingly painful. With an increasingly demanding and one of North America's most affluent consumers groups, demands on the supply chain have become greater. Customers in Vancouver and the Western region are increasingly unwilling to accept the delays and lack of availability of product, as they have in the past. As more companies recognize this, the ones that have been more aggressive supplying this market are seeing rapid returns on their investments. Those that have demonstrated the ability to directly service this market are quickly capturing their competitor's market share.
These factors are accelerating the realignment of Canada's transportation paradigms. In several cases, our customers are electing to split their inventory. In some cases, it has even proved easier to have the product distributed out of Vancouver entirely. However, freight costs often demand east and west stock. A third solution, that is increasingly attractive, is having the containers arrive in Vancouver, where they are destuffed, and our Vancouver branch retains the 30%-40% they require to service Western Canada. We then ship, either by road or rail, the remainder to our Toronto area facilities. With several of our clients using this service, we are able to offer consolidated service, so our customers can take advantage of better rates. They can also relax, knowing their goods are in our hands at all times, and deal with fewer parties.
Every client has a unique set of needs, and we have found that this type of strategic planning is what our customers want as our market place continues to evolve.