Skip to main content

Emerging opportunities and threats in the Canadian logistics industry

 According to the Council of supply chain management (2021), logistic management is an element of supply chain management that guide management in planning, implementing and controlling the flow and storage of goods. It also helps manage information from the point of origin and consumption to satisfy customer needs and wants. An increase in international trade gives more prominence to intercontinental supply chain management (Supply chain logistic association Canada, 2011). Logistic performance has a significant impact on the national income and GDP of a country, and the performance of logistics depends on the actions of public and private individuals (International transport forum, 2016)

Canada is the third-largest country with vast natural resources like gas, crude oil, gold and silver. And the government also maintains international trade and agreements with countries worldwide through various treaties and agreements. The logistics management industry of a country has an active role in the importing and exporting of a nation. Canada's logistics management sector is also vibrant and contributes positively to the country's international trade.

Emerging opportunities in the Canadian logistic industry

Cole International, Entrec, Agility and Yusen logistics are world-famous Canadian logistics companies providing services worldwide. Here we briefly describe the emerging opportunities and trends in the Canadian logistic sector.

1.     The logistic industry is expected to grow at the rate of 2.5% per annum

According to the Mordor intelligence report (2021), for the forecasting period, 2019-2024, Canada's logistic industry will grow at 2.5% per annum. It means the logistic sector in Canada is active and expanding; the growth rate indicates ample opportunity for corporate to start and grow their business in the logistic sector. 

2.     Oil and gas project in Canada and logistics services

Canada has the world's largest crude reserve after Venezuela and Saudi Arabia). The revenue from oil and natural gas contributes 7% of the GDP of Canada. But the country failed to fully explore, extract and transport this crude reserve because Canada's logistic industry could be more efficient and advanced. So the country has to find out the various logistic solution to utilize the crude oil reserve for the benefit of the country. For this purpose, the government has to introduce some programs and incentives to strengthen the logistic industry in the country.

3.     Logistics management and advanced technology

Every corporate, citizen and government uses new and improved technologies in their life for various reasons. Like logistic and supply chain management companies, they are also adopting many new and efficient technologies in enterprise resource planning, inventory management, warehousing, assets tracking etc. To reduce the time, cost and effort in logistic management. The new technologies adopted in logistics include Blockchain, IoT, cloud enterprise software, Artificial intelligence and big data analytics. So if the logistics company is in the logistics industry, it must tie-up with technological companies to adopt efficient technologies.

4.     Growth of Canadian ports and international shipping service line

Canada's ports act as crucial nodes in domestic and global supply chains. They extended the supply chains to more than 160 countries handling over 460 million tons of goods (Bob Armstrong, 2012). The expansion of trade in the port is increasing year by year; this also causes an opportunity for logistic companies to grow in Canada.

5.     Free trade agreements

International trade quantity and value are increasing yearly due to WTO, world band and IMF intervention to reduce trade restrictions and free trade agreements between different nations. The Canadian government is also a member of WTO, the world bank, and the IMF, and it entered so many free trade agreements with the U.S, Mexico and 27 countries in the European Union to promote free trade by reducing tariff and non-tariff measures. It can also make a positive impact on the logistics sector of Canada. It helps the logistics companies in Canada to expand their share in the global market.

Threats in the Canadian logistics sector

Following are the main threats faced by each firm in the Canadian logistics industry.

1.     Frequent changes in the weather

Unexpected weather conditions in the environment sometimes create problems in the logistics industry. It may cause delay and unsafe delivery of the product due to a spontaneous snowstorm in the winter season in Canada, where the weather tracking helps the logistic companies to make a contingency plan in an emergency.

2.     Environment Act, rules and regulations

The Canadian government framed some new rules and regulations to reduce greenhouse gas emissions and protect the atmosphere's ozone layer. The government planned to reduce GHC emissions by 130 megatons in 2020. It has also hindered the logistic industry in Canada because 50% of Carbon emissions come from the industry.

3.     Globalization effect

Globalization has a positive and negative effect on the country's national income. International trade has increased daily due to liberalization in the international policies of various countries. But the main problem domestic companies face is tough competition from the global market. It may cause a reduction in the national income of the country from the logistic sector. Globalization also compels companies to follow some standards, rules, regulations and other trade restrictions while producing and exporting goods from one country to another.

4.     Frequent hikes in the fuel price

Continuous increase in the price of diesel, petrol, gas and coal in the global market creates problems in the logistic industry. The rate fixed at the time of loading and the rate charged at the time of unloading may differ due to these changes in the price. It may affect the relationship between the logistics company and the customer and cause inflation in the economy by increasing the cost of the products. 

5.     Cost of new technology adoption

When a company establishes new technology, it may incur new costs like importing data, appointing a new technical person, providing training to the staff etc. This cost may be more than the benefits of implementing the technology. So the company should make a cost and benefit analysis before implementing technology.

6.     Insufficient port infrastructure

Insufficient infrastructure in the Canadian ports also challenges the logistics industry. If the port continuously fails to build the infrastructure, it may cause the loss of so many best opportunities to the logistics companies in Canada.

Conclusion

By analyzing various factors, it is clear that Canada's logistic industry is showing positive growth potential in future. And the sector provides many new opportunities to new and existing firms in the international market like free trade agreements, technological advancement in logistics, expansion of Canadian ports etc. But the industry analysis shows some threats to the growth of the Canadian logistics industry like unexpected weather changes, volatility in the global fuel market, and insufficient port infrastructure. So the company should consider these threats when operating in the Canadian logistics industry.

References

Bob Armstrong, A. D. (2012). Maximizing the efficiency of the supply chain. Dany Malley.

Council of supply chain management. (2021, 4 16). Council of supply chain management professionals. Retrieved from https://cscmp.org/

forum, I. t. (2016). Logistics Development strategies and performance measurement. OECD.

Intelligence, M. (2021). CANADA PROJECT LOGISTICS MARKET - GROWTH, TRENDS, COVID-19 IMPACT, AND FORECASTS (2021 - 2026). Mordor intelligence report. Retrieved from https://www.mordorintelligence.com/industry-reports/canada-project-logistics-market

Supply chain logistic association Canada. (2011). Global Business Strategy and Innovation. Supply chain logistic association Canada. Retrieved April 16, 2021, from www.ic.gc.ca/logistics
Labels:

Comments

Post a Comment

Popular posts from this blog

STEWARDSHIP THEORY

Donaldson and Davis established the stewardship theory in 1989 and offered it as a normative substitute for the agency theory. Stewardship theory offers a non-economic foundation for describing the connection, unlike agency theory, which prioritises control and conflict (Sundaramuthy and Lewis 2003). According to the stewardship hypothesis, managers will take good care of the resources they are in charge of. It also asserts a direct link between employee happiness and an organization's ability to succeed. "Stewardship is the prudent practice of Allocation, management, and supervision of capital to produce long-term value for customers and beneficiaries, resulting in long-term gains for the economy, the environment, and society. Therefore, it is clear that stewardship must be seen from a long-term perspective in order to produce sustainable advantages for the stakeholders. According to the stewardship hypothesis, ownership just holds a firm trust rather than really owning it. A...
Post a Comment
Read more

Resource Based Theory (RBT)

  RBT, or resource-based theory, is a well-known method for strategic management. In order for a company to maintain a competitive edge, it has been frequently used as a managerial framework to identify essential resources. The theory offers a crucial framework for deriving explanations for and projections of the basic drivers of a firm's performance and competitive advantage. Penrose (2009) introduced Resource-Based Theory (RBT) for the first time by putting up a model for the efficient management of organisations' resources, diversification tactics, and business possibilities. The idea of seeing a corporation as a coordinated collection of resources to address and tackle how it might achieve its goals and strategic behaviour was first put out in Penrose's book. RBT offers a framework to identify and foresee the core elements of business performance and competitive advantage. In response to prior managerial interest in the industry structure, a more macro viewpoint, RBT tu...
Post a Comment
Read more

Green Washing

You've probably heard of whitewashing at least once in the corporate world. Whitewashing is when an organization hides or conceals scandalous information by presenting a biased account of the facts. However, greenwashing is less well-known. Many stakeholders are more conscious of environmental considerations due to rising environmental problems and, subsequently, rising general knowledge. Stakeholders like investors, buyers, governments, and corporate clients have increased their pressure on businesses over the past ten years to share information about their environmental performance and to produce environmentally responsible goods. Environmentalist Jay Westerveld coined "greenwashing" in a critical essay in 1986. This was inspired by the irony of the "save towels" movement in hotels, which had little impact other than saving on hotel laundry costs. The idea arose at a time when most consumers got their news primarily from television, radio and print media. ...
Post a Comment
Read more