Since the early days of Calgary’s existence, the transportation and logistics industry has played a key role in the economy. It was the arrival of the Canadian Pacific Railway in 1883, in fact, which marked the beginning of the city’s growth into a dominant commercial and agricultural centre. Then, and now, the transportation and logistics industry provides the backbone to the region’s prosperity.
The numbers are telling: approximately 5,155 transportation and logistics companies with operations in the Calgary area; roughly 50,000 people employed by those companies; $5.4 billion towards Calgary’s economy, accounting for 4.6 per cent of municipal GDP.
Rail, trucking, air passenger and cargo, warehousing and distribution, logistics, supply chain management and oil and gas transportation companies populate the industry. They support virtually every other industry including oil and gas, manufacturing, agriculture, construction, retail, food and beverage, tourism and real estate development, to name a few.
“The transportation and logistics industry has so many assets that contribute to the economic growth of our community,” says Deana Haley, vice president, business development and workforce innovation at Calgary Economic Development. “It plays into every other sector – it’s an enabler.” Its importance, she says, is a regional reality, and the city works closely with surrounding communities to promote the benefits of the Calgary Region Inland Port.
The reasons why Calgary is the transportation and logistics hub that it is today are many, location being a prime one. Sitting at the intersection of the Trans-Canada Highway (spanning the country east to west) and the CANAMEX north-south trade corridor (connecting Northern Canada to Mexico), Calgary is a uniquely-positioned inland port.
“There are 50 million people accessible within 24-hour ground transportation,” says Ben Smith, chair of the Calgary Logistics Council, “and with air transportation at YYC we have access to virtually any market within 48 hours.” The Calgary International Airport has more than doubled in size and passenger volumes in the last 20 years, and its $2-billion expansion includes cargo facilities, the longest airport runway in Canada and a new international terminal.
Other reasons include two intermodal rail yards (CP Rail and CN Rail), Calgary’s large number of head offices, its highly skilled workforce and excellent land availability.
Because of all this, the region has become a top distribution hub. “Many of the major and brand-name distribution centres are actually located in the Calgary region,” explains Haley. Costco, Walmart, Loblaws, Sears and Sobeys all have major distribution centres here. While taking advantage of Calgary’s ideal location, these companies also enjoy cost savings.
“We’re a city that offers good truck volume out of the location,” says Doug Romanuk, vice president, western region at Bison Transport, a Winnipeg-based Canadian carrier that runs approximately 400 trucks from its Calgary facility. He explains that Calgary is typically known as a “backhaul city,” meaning it is cheaper to send freight out of than into it. “There are advantages to having a big distribution centre in Calgary that ships to Vancouver or Winnipeg,” he explains.
Another advantage the Calgary region offers is its designation as a foreign trade zone (FTZ). A FTZ enables companies involved in handling or moving goods to reduce and eliminate normal trade barriers, such as tariffs, quotas and compliance costs. Many companies, for example those in oilfield services, may be able to take advantage of the FTZ.
The industry is ever evolving, with technological advancements leading the charge. In trucking, both the U.S. and Canada have mandated the switch to electronic logs by 2017. Bison, Romanuk says, is currently 100 per cent electronic log compliant. It also runs collision avoidance systems and is the largest long combination vehicle (LCV) carrier in North America. “The carbon reduction footprint is enormous when you pull two trailers together,” he says. “You burn a little extra fuel because you have more weight, but the exponential difference is incredible. We’re doing lots of that work.”
Autonomous vehicles, Romanuk predicts, are potentially next. “It’s likely five to eight years off before we might have an autonomous truck of some form doing some kind of work, but it’s coming.”
On the logistics side, helicopter and droning services are some of the latest advancements. Nikolas Karanikolas, business development manager at WTS Logistics Inc., explains that for many clients, these services are a cost-effective alternative to traditional methods. “For example, pipe maintenance,” he says. “It’s tedious, time consuming and requires a lot of manpower. To avoid that, we use a drone which is able to go all the way down to thermal imaging.”
Technological advancements highlight another important point about the industry: it offers myriad careers. “It’s more than the typical stereotype,” says Romanuk. “We’ve got continuous improvement, a learning and professional development department, a human resources group, customer service, planning, dispatch, fleet, sales – there’s a lot more to trucking than dispatching and driving.”
Potential career opportunities can be explored at various educational institutions in the city. The Calgary Board of Education, University of Calgary, Mount Royal University, SAIT and Bow Valley College all offer programs in the logistics and supply chain areas.
Romanuk is particularly enthused about a new logistics course at James Fowler High School. “We have kids who are trying to make decisions on what they should do for post-secondary education, and if they don’t know anything about transportation and logistics they don’t have an opportunity to consider it.”
Employment opportunities do exist, notwithstanding the economic climate. “This is one sector where there would be lots of opportunity for people to explore a new career in the coming years,” Haley offers.
Smith agrees. “Those servicing the oil and gas sectors are affected more, but overall the logistics and supply chain sectors have benefited from being able to fill skilled jobs that were previously unfilled due to competition with higher paying oil and gas companies.”
The industry, to be clear, is not immune to the downturn. “Things are obviously tight in the marketplace,” concedes Romanuk, “but I think it’s a time to be responsible – from an efficiency perspective, but also for the type of service that you’re offering.” Bison has been taking costs out of its business, not including people, and has maintained a very high level of service. “Our western level of service last year on 179,000 orders was 97.5 per cent on time,” he reports.
Standard rates, Karanikolas says, are obsolete in the downturn. “I’m looking at market rates; market reality. A complete shift from premium prices to market-adjusted pricing.” WTS also aims to provide extra value to customers. “We do a lot of back-flow optimization,” he explains. “Let’s say we have a truck going from Edmonton to Fort McMurray and the client has equipment to ship back to Edmonton from Fort McMurray – we will not charge the full price. The truck and driver have to come back anyway.”
He is optimistic about the future. “I can tell you out of experience, in any kind of economic downturn, logistics is always the last sector to be affected and we’re the first ones to recover, because you have to move items.” Involvement in the global market also helps. “There are still plenty of opportunities as we continue to focus on building stronger relationships with our customers and developing new partnerships within the World Freight Group.”
Smith shares the confidence. “The outlook is a positive one,” he opines. “As the economy begins to grow again we are well positioned to use existing capacity and further develop additional capacity to service growing markets.”
A shining, often under-appreciated, star for the region’s economy. As the city trudges through this downturn, the transportation and logistics industry will continue to provide the much-needed life-support that it always has. It can only emerge stronger.