Paul TessySenior Vice President, Purolator International
Creativity isn’t a word cross-border shippers usually associate with their logistics strategies, but in today’s atmosphere of global trade uncertainty, it must be a priority. It’s no longer enough to have a logistics plan that is “good enough,” in which shipments “mostly” arrive on time. Instead, as North American businesses find themselves unwitting participants in an escalating, costly trade war, it’s time to fight back.
This means looking for opportunities to add efficiency and reduce costs wherever possible. And with U.S. businesses spending $2.3 trillion on logistics costs last year – a figure that represents 8.7% of the GDP, a logistics strategy is a good place to start.
With evolving trade policies and new tariffs on the horizon, exporting to the U.S. is becoming more complex. Recently, my colleague Danny Cipollone; General Manager & Head of Customs Brokerage, Purolator Inc, hosted a webinar alongside Jill Hurley; Senior Director, Global Trade Consulting, United States, Livingston, and Jeff Fraser; Director, Global Trade Consulting, Canada, Livingston, to discuss the latest updates on U.S. import tariffs, reciprocal duties, and de minimis thresholds. They also shared key mitigation options such as Foreign Trade Zones (FTZs), duty drawback programs, and other cost-saving strategies.
Watch the full webinar below:
The good news? Smart, innovative logistics providers like Purolator are ready to help, with new ideas and approaches that can dramatically improve cross-border efficiency while helping to manage costs. For businesses left to wonder how to manage during this time of tariff-induced uncertainty, the opportunity to wring savings from the logistics budget is welcome news.First though, let’s start with a story. One of our customers is an international shoe manufacturer. The company is based in Germany but sells to retailers and other venues across the globe. In Canada, shipments generally arrive at the Port of Vancouver and are distributed throughout the country. Purolator inducts the shipments into its Canadian distribution network and loads them onto trucks for end delivery based on their final distribution. A likely scenario would have one truck head east, and another move throughout the western provinces. Splitting the shipment allows shipments to move directly to their final destinations. This ensures shipments arrive on time and adds efficiency to the process. It’s a commonsense solution.But this customer, the shoe manufacturer, was over the moon. Before switching to Purolator, this manufacturer had been forced to accept a shipping strategy whereby shipments would arrive in Vancouver but then travel hundreds of miles to Ontario for processing in a centralized hub. Then, shipments destined for British Columbia, or Alberta or other parts of western Canada would have to double back. It was an enormous waste of time and money. But until presented with an alternative, it was the way this manufacturer operated.
Another customer thought Purolator’s proposal for revamping its cross-border strategy was out-of-the-box thinking and a potential gamechanger for its supply chain. This company is a Minnesota-based manufacturer of snowmobiles and other types of recreational vehicles with an extensive network throughout Canada. The company came to us with a goal of reaching 96% of its dealers within two days, and 100% within three days. We responded with an out-of-box solution that called for courier, freight and air services. When shipments began arriving on time, and the efficiencies we promised began to materialize, this customer knew it was no joke.
My point in citing these examples is that just about every type of shipment can benefit from logistics innovations that improve efficiency and reduce costs. A good first step, of course, is to choose a logistics provider, like Purolator, that wants to be your partner. A company that will take the time to understand your objectives and work closely with you to develop solutions that address the realities of today’s business environment. A few opportunities include:
Scenario/contingency planning:
How resilient is your supply chain? Have you been able to easily adapt to the unexpected challenges that have come your way in recent years, or have you been left scrambling? Uncertainty, it seems, is the only constant for today’s cross-border shippers. Which means businesses must be prepared for all contingencies and have a plan ready to launch should a change become necessary.
This requires comprehensive planning and the steady hand of an experienced logistics provider. An experienced provider will take out the white board and make a list of every requirement, every scenario, and every contingency. Transit time, delivery requirements, supplier networks, landed cost components (including duties, taxes, and brokerage fees), special handling, multi-channel platforms, and risk factors. Everything. An innovative provider will use that information to develop a series of workable solutions that can be seamlessly implemented while ensuring continuity across your entire business.
Customized solutions:
A well-executed white board session will reveal detailed information about your business’s operations and priorities. That information can be used as the basis for developing solutions that address your specific needs and nuances. Would your business benefit from an evening pickup, for example, or maybe a hybrid solution that combines air and ground services for time-sensitive deliveries? Or maybe a solution that allows you to fulfill Canadian market orders from a U.S. distribution center?
Logistics capabilities have come a long way. Today businesses can rely on solutions that sync with their operating schedules, rather than solutions that require businesses to adapt to a transportation carrier’s rigid schedule. Like never before, logistics providers can offer options and flexibility, regardless of where in the world a delivery needs to be made.
Extensive Service Portfolio:
A typical business will have diverse needs that require access to multiple service options. This includes, for example, access to “mission critical” air services for time-sensitive, high value, or fragile shipments; courier services that can accommodate e-commerce deliveries to consumers’ homes along with just-in-time deliveries to manufacturing facilities, medical facilities, or retail locations; freight services to industrial locations; last mile services that prioritize customer preferences, or any combination of these services. An ideal logistics provider will offer all these capabilities with the ability to accommodate precise delivery requirements.
One logistics company, multiple service options, global coverage, full visibility and guaranteed service.
Omni-Channel Platforms:
Does your business engage in online sales? If so, how proficient are you at offering consumers the types of flexibility and service options they have come to expect? More than half of Canadian online shoppers, for example, use “click and collect” services, also referred to as “buy online pickup in store” (BOPIS). According to eMarketer, this fulfillment option is “central” to e-commerce growth in Canada, “where distribution conditions make home delivery costly in many parts of the country.” Canadian consumers are not alone. The BOPIS fulfillment option has been used by 70% of U.S. shoppers and is considered an expectation, rather than a “nice to have.”
Omni-channel services require special logistics capabilities including warehousing, fulfillment services, inventory allocation and management. An experienced provider will help manage the “alphabet soup” of omni-channel services that often include:
- BOPIS – Buy online, pickup in store.
- BOSS – Buy online, ship from store.
- BORIS – Buy online, return in store.
- STS – Store-to-store transfers.
Inventory Segmentation:
Businesses need fast, reliable access to top-selling products and confidence that supplies can be redeemed seamlessly. At the same time, a business must have ready access to slower-moving items so that when needed, they can be easily located and transported. Technology-based forecasting has become quite adept at helping to project inventory needs. This in turns allows logistics providers to accommodate businesses warehouse needs and ensure adequate capacity is available to ensure seamless replenishments.
Consolidation:
Although this is not necessarily a “new solution,” consolidation is more important than ever in adding efficiency to cross-border shipments. In a traditional consolidation model, smaller shipments are combined to form a single, larger unit with benefits that generally include improved transit time and reduced freight costs. Purolator improves on that model with capabilities that allow a business to load all Canada-bound shipments – courier as well as freight – onto a single truck. This is a gamechanger with benefits that include:
- Reduced costs. Businesses no longer need to arrange separate trucks for courier and freight pickups. Instead, all shipments are picked up at the same time via a single truck, with the larger consolidated shipment qualifying for a lower freight rate.
- Improved transit time. The consolidated shipment moves directly to the border with no additional stops or pickups. It’s not unusual for a shipment to arrive in Canada on the same day as its U.S. pickup.
- Customs efficiency. Consolidation is especially beneficial during the customs process. Consolidated shipments are listed on a single entry form, clear customs as a single unit, and are accessed a single fee. Alternatively, for non-consolidated shipments, paperwork must be completed and filed for each individual unit. Each unit must then be evaluated by customs personnel, pay duties and fees, and wait for final clearance.
- Fast, direct deliveries throughout Canada. Once in Canada shipments enter Purolator’s extensive distribution network which ensures direct, in-network service to all provinces and territories. Shipments remain within the Purolator network which ensures visibility, accountability, and the highest levels of service.
Clearly, when it comes to cross-border shipping into Canada, consolidation can be a real gamechanger. Not every logistics company has the resources to offer the service, but given the potential benefits, it’s worth investing the time to enlist a provider that does.
Geographic Reach:
Many businesses have been surprised to do the hard work of enlisting new international customers only to experience difficulty finding a suitable logistics provider. This includes U.S. businesses that expand to the Canadian market but quickly learn that most carriers limit service to certain geographic regions. With regard to Canada, these service limitations are largely due to the relatively small size of the population – 40 million people – spread across a geographic area that is second in the world only to Russia. Maintaining a distribution network is expensive, and requires vast networks of vehicles, facilities, and personnel. Purolator is an exception in that we service the entire country. Our distribution network includes all 10 provinces and 3 territories with guaranteed service to just about every address in the country. With Purolator, all shipments remain “in network,” which means U.S. businesses never have to worry about losing track of a package or having to juggle multiple regional carriers.
On a global basis, Purolator partners with local companies that offer similarly high levels of service throughout the geographic regions they service. Through this global network, Purolator fills a critical need for U.S. and Canadian businesses with customers and suppliers located throughout the world.
A business planning to expand to international markets should make no assumptions about the availability of logistics services. Instead, a business must do its homework and identify a reputable provider that services the desired geographic region and has a proven record of results.
Customs Efficiency:
Customs is an unavoidable part of international trade, but there are ways to facilitate compliance and reduce, sometimes even eliminate costs. This includes, for example, managing tariff assessments by ensuring the accuracy of the tariff classification code assigned to a product prior to its arrival at the border.
Tariff classification codes determine a product’s rate of tariff, including eligibility for duty free status under free trade agreements such as the United States-Mexico-Canada Agreement (USMCA). But identifying the correct code can be quite difficult, which often results in improper duty assessments. Analysis by Ernst & Young, in fact, found that among their European business clients, nine out of ten pay more in duties than they actually owe. Helping customers identify the correct tariff code was the reason Purolator built its Trade Assistant tool.
An experienced logistics provider can help by offering customs optimization services. Customs optimization refers to a series of techniques that can be used to facilitate the clearance process and ensure businesses take advantage of all opportunities to add efficiency and reduce costs. Optimization techniques may be as obvious as double-checking the accuracy of all information listed on a customs form and ensuring the correct tariff classification code has been selected. Other techniques may include the strategic use of shipping terms (known as Incoterms), application of free trade agreement benefits, or the use of “in-bond” shipment status for products that must cross multiple borders. Customs optimization services are generally offered by licensed customs brokers, trade professionals, or experienced logistics providers, including Purolator.
Sustainable Delivery Models:
Consumers care deeply about the environment and as study after study has shown, they are willing to support businesses that prioritize sustainability. A study by software company Sifted, for example, found almost 80% of consumers said they would wait an extra day for delivery if it improved sustainability, while 76% said they would pay more for sustainable shipping. Another study, by Deloitte, concluded that “we’re on the brink of a major shift in consumer behavior” as consumers increasingly demand higher commitments to sustainability from the brands with which they choose to engage.
With regard to logistics, sustainability can come in many forms. At Purolator, sustainability includes the use of electric delivery vehicles along with environmentally sound packaging standards, significant success in reducing emissions, and strict energy standards across all buildings and facilities.
The Deloitte research found consumers are no longer willing to tolerate companies that make “flimsy claims” about their commitment to sustainability. Instead, consumers are turning to companies like Purolator that demonstrate that sustainability doesn’t have to mean sacrificing supply chain efficiency.
The first few months of 2025 have been a time of uncertainty for North American cross-border shippers, with no clear idea of when, or how, the current trade environment is going to shake out. One bright spot though, is the chance to improve efficiency and reduce costs by reassessing logistics practices and incorporating some of the exciting new innovations that have taken hold. After all, good logistics practices always make sense, trade war or not.
Written by Paul Tessy, Senior Vice President, Purolator International