Friday, January 21, 2011

Giant to the North:

Canadian market presents strategic opportunity, plus unique challenges.

There is a foreign country with enormous trade with the US, and the potential for much more. No, not China – the largest trading partners in the world are the US and Canada, with $479 billion in 2010 trade through November, versus $414 billion between China and the US. Unlike many other trading partners, Canada imports more from the US than it exports to us.

Canada did not experience the depth of recession which throttled back the US economy, so this stable, growing economy, where most of the people speak a form of English, provides an attractive market for US firms. Exporting to Canada, with pockets of population spread over a vast area, and a 3,000-mile border, comes with a unique set of supply chain challenges.

Shippers must determine whether to service Canada from stateside Distribution Centers, establish DCs in Canada, or consolidate shipments across the border and use a cross-dock operation. The players and the rules in Canada are different; Purolator dominates the parcel delivery field, much as UPS and FedEx do here, and LTL (less than truckload) pricing is calculated on pallets, volume or density, rather than zip code pricing.

If you plan to take advantage of the opportunities the Canadian market presents, be sure you understand all the distribution nuances. With the growing strategic importance of the Canadian market, the worst thing to do with the opportunity for increased trade with the giant to the north, would be to ignore it.

Kirk Shearer
800-989-0054 x 103

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