Canadian ATV enthusiasts were pleased when this Indiana-based parts manufacturer entered the Canadian market, making available a wide range of parts and accessories for use on vehicles sold by leading manufacturers. But that enthusiasm soon turned to dismay as higher than expected shipping costs and exorbitant brokerage fees – forced the company to rethink its Canadian strategy.
Because products were consistently arriving late at the Canadian parts distributors where they were needed, the manufacturer knew it was time to look for a different transportation/logistics provider.
The retailer had been approached via a cold call from Purolator’s local sales representative who asked for the chance to submit a proposal that would “guarantee” greater efficiency with marked cost savings. Purolator essentially rewrote the retailer’s strategy for its Canada-bound shipments. Shipments now arrive at their Canadian destinations on time and at a reduced cost. But the biggest savings has come from Purolator’s detailed knowledge of U.S./Canadian customs processes, which allows shipments to clear customs without having to pay a penny more than is necessary.
The Challenge
This retailer supplies a wide range of ATV parts and supplies to the Canadian market, including steering wheels, transmission parts, brakes and brake pads, hard tops, and everything in between. Many products are designed and produced in the company’s Indiana production facility. The company is highly regarded as a low-cost provider of high-quality parts and accessories.
Because of the odd shapes and weights of certain products – axles, frames, and hard tops, for example – not every product can be easily shipped. Instead, irregularly shaped products need special packaging, which often triggers special pricing and, in some cases, accessorial fees.
The manufacturer had enlisted a large, internationally recognized transportation provider to service its Canadian shipments. The manufacturer was already using this same provider to transport its intra-U.S. shipments and had been generally pleased. The manufacturer assumed the provider would be able to replicate the same service levels in the Canadian market.
But as the manufacturer soon learned, shipping to Canada is an entirely different animal than shipping within the United States. In addition to the obvious customs issues, a provider needs to have an understanding of the Canadian market, a deep distribution network with sufficient resources, last-mile service for deliveries to addresses in the country’s remote provinces and territories, and a full menu of service options. The manufacturer was disappointed that its provider seemed ill-equipped to handle its Canadian deliveries.
For one thing, shipping charges, especially for irregularly shaped and heavy materials, were excessive. The manufacturer came to learn that its provider was charging an “accessorial fee” for every oversized product in addition to its regular shipping fee. This seemed unfair, especially since the identical products were being shipped within the United States without incurring the extra charges.
But what really set off red flags were the excessive customs fees. Each Canada-bound package was being individually evaluated by Canadian customs officials and assessed a customs fee. The combined customs fees and shipping charges, in some cases, added up to more than the value of the products inside the packages. Additionally, shipments were consistently late in arriving at the parts manufacturer’s Canadian dealers, so it was clear that a change needed to be made.
We addressed fees on two fronts: consolidating shipments to create a single customs entry and ensuring expert tariff classification to prevent overpayment. This proactive approach dramatically reduced customs-related costs.
We restructured the pickup schedule from daily to 2-3 times per week to perfectly match the actual shipment volume. This simple change reduced operational waste without impacting delivery times.
By using our deep distribution networks in both the U.S. and Canada, we were able to customize a solution that actually transports products into Canada faster and at a lower cost than the previous provider.
Shipments are processed at our strategic center in Detroit and sent directly to our Toronto hub. This model allows packages to feed directly into our extensive Canadian network, minimizing idle time.
The Result
The manufacturer has been delighted by the complete turnaround in its Canadian logistics operations. In fact, since Purolator took over its Canadian operations, the retailer has seen a tremendous spike in orders from Canadian customers. Volume that only recently could be counted on one hand now totals several hundred weekly shipments.
“We knew pretty much right away that we could provide a better solution,” says Betty Jo Rodey, Purolator International’s Strategic Account Executive. “No one else has the access to the Canadian market that Purolator does, so we went to work to deliver the solution this company wanted in the first place.”
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