VANCOUVER, BRITISH COLUMBIA--Canada could become a leader in terms of building a North American Gateway, said a new report released today by the Asia Pacific Foundation of Canada (APF Canada).
The report, “Seizing the Continent: Opportunities for a North American Gateway”, was authored by George Stalk, The Boston Consulting Group and Charles McMillan, of the Schulich School of Business.
“The Asia Pacific Foundation of Canada has had a long history of involvement in Asia Pacific gateway research and convening, going back to the Asia Pacific Trade and Transportation Forum and the creation of the Greater Vancouver Gateway Council in the early 90s-which led to the current APCGI. This latest contribution by Stalk and McMillan is an important advance in thinking on the importance of the gateway, not just for the west coast but for all of Canada. I commend the authors on the report and look forward to working with them to advance their ideas,” said Yuen Pau WOO, President and CEO, Asia Pacific Foundation of Canada.
According to the report, Canada has become a “front-row player in the rapid evolution of the globalized world economy. Not since Prime Minister John Diefenbaker found terms of agreement with U.S. President Dwight Eisenhower in the 1950s to create the St. Lawrence Seaway, or since Brian Mulroney and Ronald Reagan made free trade between the two countries a reality, have Canadians had the opportunity to take centre stage in globalization,” it said.
Canada’s physical infrastructure (ports, railroads, and highways), corporate talent, and government are well placed to create a North American Gateway (NAG) for the timely, reliable, and cost-effective flow of goods from Asia and Europe into and out of central North America.
The report suggested that if Canada could establish the AG, thousands of jobs could be generated both here and in the United States. While the job-creation potential from an increase in exports resulting from easier and cheaper transportation of goods to export markets is difficult to estimate it is potentially large and clearly a bonus.
“Canadian and U.S. consumers will definitely benefit from the lower cost of delivered goods, because logistics cost can be as much as 30 percent of the retail price consumers pay,” said the report.
Realizing this opportunity requires increased management talent rather than more monetary capital. The report calls for a more “collaborative platform to enable users and suppliers of logistic services to cooperate in accessing Canadian infrastructure effectively and efficiently for the movement of containers. If the collaborative platform is successful, Canada will experience a dramatic increase in North America’s share of the movement of container and bulk goods. Railroads and ports like Prince Rupert will soon need to expand capacity as more and more end users and liner companies choose—because of reliability, speed, and value- to move their goods though Canada rather than the United States,” it said.
"The collaborative platform is a tool whose users differentiate themselves in their ability to utilize it effectively, but it does guarantee parity or advantaged performance," the report added.
Challenges to realizing profits through collaboration come from many factors, however. Collaboration can be a hard sell, said the report’s authors.
“Today’s players are focused on optimizing their performance within their segment of the supply chain. Investments needed to dramatically improve end-to-end (or system) performance may result in a mismatch of monies invested in a segment of the supply chain and another segment that actually enjoys the benefit of the investment,” said the report.
There is also no forum to readily bring the users and suppliers of the North American supply chain together to discuss making NAG a reality—hence, one is needed.
“Because the overall benefits accrue from systemwide performance improvements, the system needs a highly respected and energetic leader to push the changes needed. What we call the NAG already exists today as part of a slow evolution in which end users and liner companies are attracted to Canadian ports and railway access to central North America. Various Canadian gateway initiatives- most notably the Pacific and Atlantic Gateways—are nascent efforts to bring elements of the local supply chain into stronger collaboration. What we envision is a revolutionary, step-function increase in volumes flowing into and out of Canada as the collaborative platform enables the integration of users and players in the supply chain and heightens reliability, increases speed, and lowers delivered costs. The NAG we foresee is both a national and an international venture, with tentacles stretching from Asia, Europe, and Canada and across the United States,” said the report.
With US logistics gridlock a reality, even with the best of intentions in the political realm, it cannot be solved quickly. The NAG would be an opportunity for Canada, but in practical terms, it "requires a clear understanding of the importance of Canada’s trade position, the need to link transportation issues with trade flows, and the necessity to position Canada for future developments in overseas markets, especially with the likelihood of new free-trade arrangements with the European Union, Japan, and the Trans-Pacific Partnership in Asia."
“What Canada at large-both public and private sectors-faces, and what policymakers increasingly understand, is how Canadian industry must fit into global trade and transportation supply chains. Global trade and global logistics are realities. Canada needs to invest in a three-way national strategy to link the Pacific coast ports, the Atlantic coast
ports, and the St. Lawrence–Great Lakes corridor. But any such initiatives require a massive educational process in both the public and private sectors, showing Canadians why the country intends to be a global player in international trade and is willing to invest the time and money to design a transportation system that has the global reach to create jobs tomorrow. The intention of this report is to expedite that education process,” said the report.