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Canada logistics and Courier services

Canada logistics and Courier services

The Canadian logistics industry is very robust as it features a selection of companies dealing in trucking, freight, logistics, and courier services, serving companies and individuals in Canada, North America, and around the world. Given Canada’s centralized location, it has preferential access to the rest of North America as well as the larger Northern Hemisphere, through rail, roads, air, and shipping. There is a common link bringing together the courier service with trucking services as Canada is a large country and every means of transportation of goods, people and packages has to synchronize to serve the people of Canada better.

Canada’s transportation and logistical industry

Canada’s domestic transportation and logistics industry rely majorly on rail and trucking. Rail accounts for 30% of all logistical transportation whereas trucks account for up to 70%. Given the liberal nature of the Canadian industry, and the sheer geographical span, the trucking industry mainly relies on small trucking businesses that rely on for-hire operators and in some cases, owner-operators to move goods across the country. However, there remain larger logistical companies that manage fleets featuring hundreds of trucks across the country. Despite the significant size of the larger trucking companies, none of them commands a larger than 5% shareholding and therefore they don’t warrant deeper examination other than their overall contribution to the general growth of the industry.

Trucking industry determinants in Canada

Since the majority of the small trucking companies operate similarly by covering only short distances, these companies tend to cooperate whenever goods are moving from one corner of the country to the other, across difficult terrain. Because of these short-distance covers, these small trucking companies are extremely vulnerable to consumer spending habits, international trade activity, and manufacturing activity. The recent Covid-19 pandemic has demonstrated just how vulnerable such an industry is because it is almost entirely reliant on small businesses which rely on localized consumer spending.

The interplay between logistics and transportation

The trucking industry simply relies on fleets of trucks, operating under a common code for transportation. The North American Classification system Codes (NAICS), allow companies to operate on a singular platform and this enables them to conduct cross-continental logistics. Therefore, it is inevitable that warehouses will be required to cater to this complex system of codes and logistical systems. The Warehousing and storage industry currently employs about 2.2 Million Canadians, with Toronto boasting over 12,500 firms in the industry. This is an indication of the decentralized nature of the industry and further indicates that warehousing and transportation require similar systems for planning and operations.

Courier and Local Delivery Services

The domestic courier services in Canada have largely relied on public courier services. However, innovation and technological resourcefulness have pushed private companies to operate at a higher frequency and flexibility. There still exist a lot of opportunities for the local courier and delivery services, especially given the penetration of digital technologies that have replaced traditional technologies that have long been relied upon for the delivery of parcels, goods, and letters across the country. As small businesses enter the digital space, the need for local delivery services has skyrocketed, further protecting the bottom lines of traditional courier and logistical firms.

The NAICS codes are further featured in the Courier services. These have been instrumental in ensuring market stability since the largest threat to the delivery industry is the high competition arising from the many numbers of small companies offering the same services. Currently, SMEs have a lot of couriers and local delivery services to choose from thereby allowing them to operate by simply aligning their warehousing systems to the trucking systems and companies of their choice. The three industries namely: courier, trucking, and logistics rely on each other even more in a fast-changing world.

Major Trends and Issues facing the Industry

Technology and diplomacy offer the most dynamic changes and issues that the local trucking and logistical industry face in Canada. The adoption of digital technology has opened up new markets and further injected the needed efficiency, safety, reliability, and sustainability that the Canadian market is known for. This has further given a competitive edge to Canadian companies intent on expanding their networks into the larger North America, establishing outposts in Mexico and the United States. However, threats from new entrants remain the major risk in the industry and that’s why the number of trucking companies remains high but with a very low ceiling for success. These small trucking companies largely operate as family-owned enterprises operating between two or three towns and cities.

Diplomatic relations with Canadian neighbours have however improved and this has allowed Canadian trucking and logistical companies to make forays into the larger US market. This is set to rapidly shift the market landscape, giving Canadian truckers new market access but also opens them up to direct competition from larger American firms, in all sectors of logistics, namely: trucking, delivery, courier, and overall logistical services.

Written by Shilpa

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