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New name and game for Canada's couriers
Ken Mark
Canada's courier industry is catching up with the times. At a recent annual conference, the national industry association officially changed its name to the Canadian Courier and Logistics Association (CCLA). The decision was not based on a whim.
"Last year, we undertook a strategic review to develop a future business plan," says Phil Cahley, the CCLA's Mississauga, Ont.-based executive director. "We asked ourselves, 'was the name, the Canadian Courier and Messenger Association still relevant? Did it reflect the new reality of the marketplace?'
"We concluded some of our members were starting to offer shippers additional logistics services such as warehousing. This trend, which is more noticeable in the US, will provide regional and niche players more opportunities to partner with large integrated players."
For shippers, it's another step closer to single-point sourcing with their existing courier. At the same time, it offers more choices for finding outsourced logistics services suppliers.
It may also be cheaper, since by sticking with existing couriers, they avoid "switching costs" and other hassles related to breaking in a new supplier. By calling on their existing couriers to do more, shippers will also be able to establish a true business partnership with them.
'Everything else' logistics
The expansion into logistics services also fits into other business trends. "Many shippers are working very hard to 'shorten the bench' in terms of their service suppliers," says Gary Breininger, president of Infobase Marketing Inc. in Toronto, a market research firm.
Moreover, closer links between couriers across Canada and around the world are not entirely new. "They've been working together for years," says Breininger. "What's different now is that the business relationships are formal and structured as are the IT links; whereas in the past, they were informal and ad hoc."
In Breininger’s view, to diversify successfully beyond transportation, couriers must bolster their business processes, IT infrastructure and skills to manage the wider and more complex relationships involved with external partners.
Jump Courier is a case in point. In May 2005, the company changed its name to Jump Logistics, and shifted its focus from conventional courier deliveries to "everything else" logistics services.
To fuel that transition, Jump boosted its server complement from one to 11, installed a fiber-optic link into its head office and set up in-house skills and capabilities to offer web services, database management and e-commerce to clients.
It also developed proprietary warehouse and inventory management software to control its own 30,000 square-foot facility in Cambridge, Ont. The software is used in about 40 other warehouses across Canada. This external, inventory-handling network enables Jump to expand successfully into "virtual warehousing" services, in which they manage warehousing data on behalf of the client.
Currently, logistics services make up about 30 per cent of Jump's total revenue—more than three times what it was before the name change. The goal is a 50-50 split between logistics and courier.
Hosting web sites
One member of Jump’s extended courier network is Regina-based Coutts Courier Co. Ltd. Most of its revenue—95 per cent—is still derived from traditional activities such as providing last-mile delivery for large integrated couriers. But it's also dipping into logistics services. "For a retail client of Jump Logistics," says president Ron Coutts, "we delivered a load of new clothing racks, removed clothes from the old ones, placed them on the new and disposed of the old ones."
On its own, Coutts offers critical parts inventory and delivery either by next flight out or direct-drive white-glove service within Saskatchewan. It also delivers and, if required, installs equipment such as pin pads for bank machines. "In 2000, we didn't offer any of these services," says Coutts. "Now it's five per cent of our revenue and growing quickly."
However, Jump provides complete turnkey service for all the in-between activities—storage, order taking, and pick and pack; not to mention handling customer remittances and in- and out-bound deliveries.
Its IT investments are facilitating the diversification of Jump's services. "We can also host clients' web sites where their customers can order products as well as track and trace their orders and deliveries. At the same time, clients can also check inventory on line so they can manage it remotely," says Brian Kelly, Jump's president, based in Cambridge, Ont.
For one firm trying to grapple with spectacular sales growth, Jump offered a comprehensive range of logistics and other services. The client's annual Canadian sales had skyrocketed from about $100,000 to $1.2 million.
"Rather than invest in new warehouses and then have to equip and staff them, they outsourced everything to us. Besides handling all the inbound and outbound movement of goods, and all the details related to ordering and handling goods, we also provide them with weekly and monthly reports on what goods are moving and need to be replenished," Kelly explains.
"Our facilities are relatively small, so we have to focus on A-level inventory—items that move very quickly. We always want to have them in stock. Many smaller firms don't have their own processes or systems to monitor and analyze sales that way."
Kelly and his colleagues share sales data with clients, encouraging them to order more of the fast-moving items and get them out quickly. "With this just-in-time approach," he says, "we help boost the client's ROI, increase its cash flow and improve their inventory turns."
Network design
Clearly, couriers can entrench themselves deeply in their clients' business. Many shippers welcome the evolution, as it simplifies their sourcing of logistics. They're also becoming more intimate with their couriers' business, to ensure an optimal partnership is achieved.
At the recent courier conference, shippers shared some of their updated strategies for dealing with logistics vendors. “We concentrated on two items," says Mike Grier, Montreal-based logistics director with Avon Canada.
The company spends close to eight figures annually on couriers. "The first is network design. We want to be sure a carrier is using the right equipment in the right lane. So even if our contract requires a five-ton truck but under current conditions, a cargo can do the job, we would like to see the switch.
"Secondly, we're redesigning our packaging by bringing in a packaging engineer and a manufacturer to redesign our boxes to ensure we’re maximizing the cube in all our shipments."
Each year, Avon sets a ZOG (zero overhead growth) target. "It's related to business volume," says Grier. "So costs can rise if revenues do as well, but the cost per unit must fall or stay the same. And rather than beat up couriers on rates, we try to work with them to control costs."
In another presentation, Oryst Dydynsky, Ottawa-based vice-president of regulatory affairs and cross-border transactions with Descartes Via Safe Inc., explained why couriers must forge stronger ties with customs brokers. "Since 9/11, US Customs' mandate is to make borders secure; not to facilitate the movement of goods.” As a result, Customs and Border Protection (CBP) is about to launch its ACE (automated commercial environment) initiative requiring truckers to transmit shipment data electronically to customs services at least one hour before the vehicle reaches the border crossing.
"Data submitted by carriers such as couriers and others must exactly match the data CBP has on file for that shipment," says Dydynsky. "If not, for instance if quantities are over or under, it will issue warnings. But after ACE's official launch, expected as early as the end of the year, such shipments will be turned back."
Another crucial element is proper product identification. "Providing accurate product information requires diligence from carriers and awareness from shippers," Dydynsky says. "Catalog part numbers are of no use to Customs. Harmonized...tariff codes would be much more helpful. But that will require bringing in customs brokers.
"When courier sales representatives are talking to clients, they need to tell them what information is required to get goods across the border smoothly. If there is any inconsistency errors or other exceptions in the data, it slows down the process. However, when the data, the goods and the technology are all properly aligned, everything moves quickly."
Now that the association has changed its name, shippers should expect to see an image makeover in the courier industry—from a driver holding a steering wheel, to a logistician staring into a computer screen.
Ken Mark is a Toronto-based logistics, technology and business writer.
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