Global Logistics: Are Canadian Firms Competitive?

By Chan, David; McMillan, Charles | Ivey Business Journal Online, May/June 2007 | Go to article overview

Global Logistics: Are Canadian Firms Competitive?


Chan, David, McMillan, Charles, Ivey Business Journal Online


The time has come for Canadian firms to take a wider view of trade opportunities, a global view of the link between logistics, trade, transportation and corporate strategy. Such a view implies an urgent need for Canadian firms to design a global supply chain. These authors have the plan to help companies achieve this goal.

Students of business strategy and international business typically focus on a range of optimal strategic choices, based on competitive force analysis, resource views of the firm's competencies, or internal leadership skills to execute best-practice models. Global logistics and technologies now make past behaviours sub-optimal or obsolete and call into question current practices for a range of manufacturing and retail businesses. A global view of the link between logistics, transportation, trade, and corporate strategy suggests that global supply chains are now a corporate imperative for strategy making and seriously calls into question corporate strategies based on national or regional perspectives of the firm.

For Canada, two issues stand out, as national transportation policies become linked to global trade and investment issues. The first is truly transformative, namely the staggering changes in global transportation supply chains, with ever bigger ships and aircraft, fewer but more strategic port developments, shifting traffic corridors through the Panama and Suez Canal, and new, integrated technological and communications links with inland transportation (freight forwarders, railways and trucking) and new, strategic management tools. The second issue is the role of corporate supply chains as a strategic element of corporate decision-making. Globalization dictates why companies and their employees must refocus their thinking. Past emphasis on provincial, regional, or even national supply chains must shift to truly global sourcing, marketing and transportation policies linking suppliers and customers across international boundaries. This article defines the challenges and offers solutions for Canadian firms.

Canada

For Canada, and indeed for North America, ports like Vancouver and Halifax are ideally suited to address these two global supply-chain issues mentioned. They have the location, deep-water natural harbours and channels, and direct links to inter-modal transport like roads and rail lines. The volume of container trade on mega-carriers is growing so fast that bottlenecks on the west coast, and the problems of using these ships to serve the shallower ports on the North American East Coast, are the competitive challenges for the Atlantic Gateway1. This initiative requires new thinking by all levels of government, the private sector and various stakeholders, because global trade and investment now directly integrate Asia with North America. Jobs, investment, immigration, training and education and national productivity demand new co-ordination, not only for Asian trade strategies, but for new technologies, new skills and new global thinking.

Asian trade, of critical importance to Canada's well being, is now shaped by profound changes in the transportation tools available around the world. Economic forces drive these new supply chains, divorced from the national or continental perspectives of the past. In particular, new patterns of marine transportation, with supporting human resources - educated workers trained in new supply chain technologies - are being adopted in developing and developed countries alike. Global supply chains now involve a physical component - transport of goods via ships, rail, and trucks - an information component (computers, software tools, and PDAs) - and a people component, representing skilled workers who deliver the products.2

Global maritime shipping is itself being transformed - bigger ships, more cargo in containers, bigger and more productive ports and terminals, and new forms of inter-modal transport. This integrated package forms one element of the global supply chain, linking countries around the world on ocean transport routes, and opening new job and trade opportunities. …

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