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Canadian Tire Corporation

Company Background

Canadian Tire is a general merchandise retailer comprised of: Canadian Tire Retail, the focus of this success story, which operates 485 stores; PartSource, a chain of 87 franchise and corporate specialty automotive stores; Canadian Tire Financial Services; Canadian Tire Petroleum; and Mark’s Work Wearhouse® (Mark’s), a network of 378 retail apparel stores¹. The company and its dealers employ nearly 57,000 Canadians.

Global sourcing of products has become common practice in the retail business and Canadian Tire has a strategic plan for procuring products from the global market that have the price and quality attributes it seeks for its customers. It expects that the proportion of products it acquires internationally will increase from 34.5% in 2005 to 52.4% in 2015 (Figure 1).

The sea shipping, land transportation and distribution of goods are important aspects of Canadian Tire’s cost competitiveness. In 1995, Canadian Tire was a pioneer in the use of transloading – the transfer from sea-shipping to land-shipping containers – in Canada. This practice provides environmental and operational benefits to the company.

Driving Forces

From its start 89 years ago, Canadian Tire has emerged into a major, sophisticated, Canadian retailer. The company has developed and instituted a Business Sustainability Strategy comprised of three aspirations: to grow the business without increasing the net carbon footprint of the economy; to eliminate unnecessary packaging while sending zero waste to landfills; and provide innovative products and services that meet customers’ needs without compromising the ability of future generations to meet their own needs. The results of Canadian Tire’s business sustainability work are tracked and the benefits to the business are reported on a quarterly basis.

Canadian Tire looks at the direct impact of its operations, but also considers those of its suppliers, transportation partners and third-party vendors. The strategy is put into action through Canadian Tire’s work related to energy, climate, packaging and waste, and its products and services.

Canadian Tire is a member of Canadian Business for Social Responsibility³ (CBSR), a non-profit, member-led organization that mobilizes Canadian companies “to make business decisions that improve performance and contribute to a better world.”

The Transportation Challenge

To deliver goods from offshore, Canadian Tire has developed a complex transportation and distribution network to service its 485 stores that span from Vancouver to St. John’s. Shipping and distribution – the supply chain – is considered to be a core competency and key to keeping the cost of goods as low as possible and minimizing the use of transportation energy. By 2015, Canadian Tire expects to source more than half its products from offshore.

The main offshore source of Canadian Tire products is Asia. The Port of Vancouver receives 83% of all the Canadian Tire offshore shipments, Halifax 15%, and the balance enters through Los Angeles, CA, and Newark, NJ. In 2010, the company imported 25,000 FEUs (Forty Foot Equivalent Units) from Asia through the Vancouver gateway and 4,500 FEUs via Halifax.

Canadian Tire Retail has four main Distribution Centres (DCs): one is located in Calgary, Alberta; two are located in Brampton, Ontario; and the largest is located in Coteau-Du-Lac, just west of Montreal. The challenge is to deliver foreign and domestic products to customers in the most efficient way possible.

Actions to Reduce the Shipping Footprint

In 1995, Canadian Tire became one of the first large Canadian retail companies to begin using transloading with the commissioning of a facility situated near the port of Vancouver.  Since that time, Canadian Tire has added another facility in Vancouver and one in Halifax, and has made many refinements to refine transload facility operations.

The key purpose of the transload facilities is to offload 40-foot ocean containers and reload their contents onto Canadian Tire’s domestic 53-foot rail containers, so that rail and truck distribution is fast and efficient.  Each ocean container has a capacity of about 2,400 cubic feet (ft³) (68 cubic metres [m³]), whereas a domestic container has a capacity of about 3,800 ft³ (107  m³).  About 80% of the Vancouver containers are transferred to 53-foot containers and trucked to CP Rail’s Intermodal yard in Coquitlam, and shipped to Toronto by rail. The other 20% are trucked directly to the Calgary distribution centre.  The company has a fleet of 2,300 domestic containers.

The reloading strives to ensure the additional 1,400 ft³ (39 m³) of space available on domestic containers is filled with product and the contents are selected to minimize the amount of handling required to get products to customers.  Most rail containers leaving transload facilities are loaded with product destined for a single distribution centre.  This greatly facilitates and speeds the receiving process at the distribution centres because only product destined for a given distribution area is unloaded there.  In certain cases, the company can capitalize on the ability to transload product and ship directly to stores on the west coast, by-passing the need to utilize its distribution centres.

Transloading minimizes handling, trips between various distribution centres, the number of containers required, and transportation distance.  It also minimizes the number of ocean containers travelling large distances inland, allowing for a quicker return of ocean containers back to the port and reducing each ocean container’s cycle time.  Transloading significantly reduces the number of rail slots required to move product across Canada.  For example, the contents of the 30,000 ocean containers imported through Vancouver and Halifax in 2010 were transloaded into 20,000 53-foot rail containers.

The majority of the time, Canadian Tire is able to transport ocean containers from the port terminal to the transload facility, transload the contents into domestic containers and return the empty ocean containers to the respective container yards in less than seven days.  This means ocean container repositioning costs and any costs incurred on the detention of these containers is kept at a minimum.

Optimizing Container Utilization

Since Canadian Tire first started using transloading in 1995, there has been a steady increase in the amount of product loaded into each domestic container.  This improvement can be attributed to several factors.  For one, Canadian Tire carefully monitors all facets of freight movement.  It has established several key performance indicators to measure and manage transloading, shipping and distribution activities.  For example, the company has partnered with Century Distribution Systems, a freight movement specialist, to collect details of all products loaded onto ocean containers from the port of origin.  Canadian Tire has been able to make use of the data available to help find ways of achieving continuous improvement.

In addition, Canadian Tire regularly communicates, shares information and collaborates with the transload facilities, drayage operations and port terminals to maximize performance, build key relationships, share capacity and optimize the equipment use.

The domestic container utilization improvements to date have been done manually to a large extent.  The company’s International Transportation Team will be implementing an automated Load Building Tool at the Vancouver transload facility in early 2011.  It is expected to help the company increase the domestic container utilization by an average of one m3 per container, which represents a decrease in 215 rail slots needed to transport product to the destination distribution centres.

Environmental Benefits

An analysis was done to assess the environmental benefit of transloading, using an in-house end-user computer model developed in 2010 and reviewed by independent consultants. This analysis compared the greenhouse gas emissions (CO₂ equivalent) using the transload facilities in Vancouver to greenhouse gas emissions that would result if transloading was not the common practice (Table 1).

 Table 1: Estimated annual emissions (carbon dioxide equivalent)*

Annual Emissions (Tonnes of CO2e) for 2009
Current operations	23,374
Simulation without Transload	27,693

The findings illustrate that using the transload facilities in Vancouver results in a decrease in greenhouse gas emissions of about 16%.  The simple idea of using transload facilities and carefully managing the movement of goods has resulted in environmental benefits and cost reductions for Canadian Tire.

Other Best Practices

Packaging Optimization

Right-sizing is the process of working with suppliers to identify and reduce excess packaging. This reduces the amount of waste and results in smaller packages that fit more efficiently in shipping containers and trucks, thereby reducing shipping costs and related emissions. In 2010, 66 products were right-sized, contributing to a forecasted annual avoidance of over 450 tonnes of packaging material and over 1600 C0₂-eq of GHG emissions. For example, Canadian Tire worked with vendors to change the packaging of its Likewise brand of garbage bags from a flat-fold format to a new roll format. This reduced the size of the package and related product by 30% and reduced the weight by 11%.

Next Steps

As Canadian Tire continues to search for ways to minimize the environmental effects of transporting products, it is actively involved in the following initiatives:

• Encouraging improvement in Canadian transportation infrastructure to improve the movement of goods (for examples, new routes, highway twinning and higher maintenance standards);
• Working with suppliers to reduce the size, weight and amount of packaging material;
• Seeking alternatives to road congestion through off-hour usage of roadways, night deliveries and seven-day operations;
• Increased utilization of rail (intermodal and expressway) technology; and
• Optimize the network to create capacity & improve asset utilization & maintain balance; and
• Training and benefits to encourage driver retention.

Additional Information

1. Canadian Tire corporate social responsibility: http://corp.canadiantire.ca
2. Canadian Tire community and business sustainability report: http://corp.canadiantire.ca
3. Canadian Business for Social Responsibility: http://www.cbsr.ca/
4. Century Distribution Systems: http://www.cds-net.com/solutions.aspx

Date modified:

2012-03-14

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