With supply change issues continuing to prevail in Canada, transportation providers are paying increasing attention to offering warehouse space through distribution centers to boost resiliency and competitiveness. This is especially the case around critical hubs like the Port of Vancouver, Canada’s leading Pacific gateway handling fully 40% of traffic handled by the 17 Canada Port Authorities, and the Greater Toronto Area, accounting for one fifth of Canadian GDP and leading generator by far of the nation’s foreign trade.
It is with such important demands in mind that Maersk recently announced plans for a new Toronto distribution center – slated to go on stream in November 2022 - to serve the growth of Canada’s import and export cargoes via ocean, rail, air and road. The facility is designed to complement an existing Maersk Performance Team Pacific Transload Express center in Vancouver that opened last September to render Asia-Pacific Northwest supply chains more flexible and cost-effective.
As a result, end-to-end supply chain solutions will be created by Maersk’s multi-gateway Ocean services calling the Port of Prince Rupert, Vancouver, Seattle, Montreal, Halifax and Mobile (Alabama, U.S.) that can be integrated with rail service, air freight and Maersk Customs Services for customs clearance and cross border expertise.
“Toronto is the fastest growing logistics intersection for goods across Canada as well as into the United States through the US border. Our Toronto site will create a strong hub to help accelerate Canadian supply chains and strengthen their ability to face future supply chain disruption challenges,” said Jason Walker, Executive Vice President of Operations at Performance Team - A Maersk Company.
Some 8.6 million people live within 50 miles of the Performance Team Toronto facility, representing the highest population density in Canada. Nearly 15 million people are within 250 miles, creating Canada’s largest customer and consumer demand market.
As the largest logistics center in Canada, Toronto has excellent access to seven major highways that provide access to locations across Canada and U.S. border crossings. The market is directly served and focused as a hub by both the Canadian National and Canadian Pacific railways with intermodal railyards.
In addition, the Toronto Pearson International Airport processes over 45% of Canada’s air cargo, serving 175 international destinations and most Canadian E-Commerce consumers due to the strategic geographic location. The airport also serves as the center for the region’s rail and highway network, ensuring scaled supply chains to ship to the region’s retailers who are expanding in this market.
The 568,000 square foot, 97 dock door Toronto building will be a state-of-the-art facility located on Airport Road in the Toronto metro-area – strategically-located as the ideal balance of distance to port, airport, and close proximity to the Canadian Rail Intermodal complex. The ability to transload international containers into domestic 53-foot trailers for inland rail destination to Toronto and the U.S. Midwest enables customers to achieve overall cost savings (per cubic meter) for domestic distribution, while reducing storage costs related to port demurrage and detention of international containers. Supply chains flowing through the facility comprise fast-moving consumer goods (FMCG) in the retail and lifestyle segment that need agile response capabilities to consumer demand fluctuations. FMCG represents 80-90% of the volumes and auto parts are 10-20% into the Midwest.
Omar Shamsie of Maersk Canada
Commenting on persistent supply challenges in North America and on developing opportunities in Midwest markets was Omar Shamsie, President of Maersk Canada.
First of all, he pointed out that the ports of Prince Rupert, Vancouver, Halifax and Montreal have all been managing through extraordinary, pandemic-driven cargo volumes. Such volumes have tested North American port and landside infrastructure capacity to inland markets, including population and manufacturing centers in the U.S. Midwest. Canadian ports are experiencing higher import volumes and importers are facing longer lead times from origin to destination due to infrastructure bottlenecks.
“The pandemic changed everything,” Shamsie said. “Supply chain disruption is a constant. Those companies that are agile and have developed integrated supply chains have achieved strong business gains in this market. We are looking at all possible means to help trade growth by getting logistic flows moving smoothly and minimizing supply chain disruption of our customers in North America. We want to get service delivery to acceptable levels, but for that we need many factors, including those outside our direct control to align.”
“Bringing this new supply chain solution into play marks an important addition to our customers’ Canadian logistics options,” Shamsie said. “Our customers are looking for faster order fulfillment in Toronto and the surrounding markets through integrated logistics. E-commerce sales continue to soar and supply chains need to tap into this growing market.”
Shamsie stressed: “We will continue to study strategic investment opportunities for integrated end-to end solutions here in Canada and the U.S. Midwest. By doing so, we will keep pace with our customers growth needs and contribute to Canada’s economic and trade aspirations.”
Maersk has Canadian port calls in: Prince Rupert – a port designed for rail into Canada and the US Midwest. Maersk serves the port with a weekly TP-1 Asia/Canada service and partners with CN Rail to serve inland markets. In Vancouver, Maersk calls the port with the weekly TP-1 and TP-9 Asia/Canada services, partnering with CP Rail to offer rail into the Pacific Transload Express center located just outside the port. In Montreal and Halifax, Maersk has port calls with the CAE Express string.
Pacific Transload Express
Meanwhile, since September, CP has been shuttling containers by rail from the three major Vancouver container terminals (Centerm, Vanterm and Deltaport) to the Pacific Transload Express facility. CP built the 117,000 square foot, 103-door facility on CP land adjacent to its Vancouver Intermodal Facility to offer optimal transload services with fewer handoffs and better accountability of service.
“This was an attractive feature to our customers intent on integrating their supply chains for higher performance,” noted Shamsie.
Currently, transit times range from 35 to 75 days from Asia to North America from factory at origin to a distribution center at destination. With such a big variation, it is difficult for companies to plan supply chain management well while meeting the heightened expectation of cargo delivery to the end consumers.
Maersk says it can help customers reduce the transit time variation from 35-75 days door-to-door to having the cargo in consistently at 35-40 days. This helps customers create a more precise and predictable supply chain that helps them reduce safety stock, saving money on inventory storage costs with this transload solution. Maersk asserts it is “the first and only company providing this solution in the market.”