January 9, 2019

Delivery Service Experience within Canada

Many of our US-based customers expect delivery speed and cost to their Canadian customers to be similar to their experience south of the 49th parallel. Often, they are surprised to find that service is slower, and costs are higher than expected. Moreover, when shipping temperature-sensitive materials and products by ground service they are disappointed to hear of damage, freezing or spoilage.

I recently had a conversation with a potential client from the UK who was used to very inexpensive delivery charges (as well as same-day and next-day delivery) and was surprised that he had to include a larger allowance for “freight” than expected. Since Canada is 32 times larger than the UK and has half the population, population-density is one-sixty-fourth that of Britain! As a result, the cost to deliver to the “last mile” is significantly higher than in all of Europe and the US.

Sending a small package to Ellesmere Island in the High Arctic costs well over $20 – even by Canada Post – the least expensive option for rural areas! Also, no-one else delivers to most of the three northern Territories in Canada and so not only is there no competition, but perhaps surprisingly, services to these remote locations are often subsidised through higher charges to the rest of the country.

Even shipments between two major cities, such as Toronto and Vancouver require truckers to drive in up to -40C conditions for four to five days. Any liquids can freeze, and glass may shatter. In the summer products can over-heat and glass may again crack simply due to the vibration of the vehicle and the resonance frequency created when glass meets glass – which can break the bottle, like an opera singer shattering a crystal goblet.

For prospective distributors or “On-Line” sales companies these issues can create a significant barrier to profitable B2C shipments. The value of the order needs to be able to generate a margin that covers not only the delivery charge but also the storage and handling charges associated with a well run, and well-heated, Canadian warehouse. As a result, it may be worthwhile calculating carefully the sales value at which free shipping is offered. Companies may also want to limit the geographical area that can be offered either free or discounted shipping.
 

Some of the factors that need to be considered include:

  • Intrinsic value and cost of the item being offered. The higher the value, the better.
  • Decision on free-shipping based upon destination address. Some Provinces such as Newfoundland (NL) or New Brunswick (NB) are fairly distant from major centres and may incur additional delivery costs - and so offering free service may be expensive.
  • Selection of Canada Post as the delivery method for rural areas (Note – any Rural Postal Code in Canada will have a zero as the second character (e.g. L02 C2A). i2i can automatically select Canada Post for rural areas as the order imports into our IBIS System.
  • Decision to use temperature-controlled shipping services (this is offered by i2i fulfillment)
  • Protective packaging required including separation of glass bottles – i2i fulfillment offers this service at a small additional cost.
  • Major courier companies such as FedEx, Purolator and UPS offer country-wide service, but their pricing will generally be higher than for equivalent distances in the US and they do not cover the entire country using their own vehicles, but instead hand-off final delivery of remote areas to other partners – including Canada Post.

Despite the geographical and financial challenges of distributing in Canada, there are many reasons why it should still be attractive. First, Canada has a well-educated and fairly prosperous population - 90% of which exists within 100 miles of the US border! Rural customers understand their remoteness and therefore delivery expectations have been managed over time with no unrealistic hopes over super-fast service.

Navigating through the maze of unique Canadian challenges is something we have been doing for over 15 years and so i2i fulfillment can be an enormously valuable resource as you expand your business into, or across, Canada.