Executive Summary
As part of the Government of Canada’s Asia-Pacific Gateway and Corridor Initiative (APGCI), Foreign Affairs and International Trade Canada (DFAIT) has the mandate of promoting Canada’s Asia-Pacific Gateway as the route of choice linking North American markets with Asian markets. In order to effectively implement marketing and promotion of Canada’s ports as gateways, DFAIT needs to understand how business executives, who decide on their companies’ trade routes, perceive Canada’s ports. To help DFAIT achieve this goal, IE Market Research (IEMR) conducted a survey of executives at target companies in the United States, and examined their perceptions and use of Canada’s ports.
The online survey conducted by IEMR was generally successful in getting responses from executives at large firms. 41% of the respondents work for companies with annual revenues above US$1 billion, and 6% of respondents are employed at firms with annual revenues above $10 billion. 53% of total respondents work at firms with more than 1000 employees. One weakness of the survey was that, despite our best efforts, we were unable to get any responses from shipping lines servicing U.S.-based clients, which, in our opinion are an important category of firms to capture in this type of analysis.
IEMR’s Gateway Index1 (GI) shows that Seattle/Tacoma has the highest score among the ten North American ports we studied. In this study, we have indexed our Gateway Index score for Seattle / Tacoma to 100 and compare the score of all other ports to this standard. Montreal was ranked #2 on the Gateway Index with an overall score of 92 while Vancouver was ranked #5 with a Gateway Index of 84. Readers will note that both Vancouver and Montreal rank quite close to the top compared to other leading U.S. ports. Montreal’s Gateway Index was 7% above LA/Long Beach’s score while Vancouver was competitively ranked between LA/Long Beach and New York/New Jersey.
The high GI score received by Montreal is due to the following three factors: 1) Competitively priced rail transit options (Montreal received the highest score in this category among the 10 ports studied); 2) Congestion at port is limited (Montreal received the highest score in this category); 3) Customer service at port is excellent (Montreal received the second highest score in this category).
Vancouver’s #5 spot was driven by the following three factors: 1) Competitively priced rail transit options (Vancouver received the third highest score in this category after Montreal and Seattle/Tacoma); 2) Customer service at port is excellent (Vancouver ranked #6 in this category); and 3) Trade route minimizes transit times across the supply chain (Vancouver received the third highest score in this category after LA/Long Beach and Seattle/Tacoma).
Given that the two major Canadian ports ranked competitively with the leading U.S. ports on these attributes, these results indicate to us that marketing and promotional collateral of Canada’s Asia Pacific gateways need to highlight issues around competitively priced rail transit options, congestion, customer service, and transit times across the supply chain.
In addition, when promoting Vancouver, DFAIT should target freight forwarders, Third Party Logistics (3PL), and Fourth Party Logistics (4PL) firms rather than importing or exporting firms. This is because, while importers and exporters are most concerned about security of goods and speed of customs process, freight forwarders and 3PL firms are looking for shorter distance to origin/destination of goods. Hence, Vancouver, which enjoys a significant geographical advantage of being close to Asian markets, is an attractive port of choice to them. However, the survey results show that the respondents did not give Vancouver a rating as high as those of LA/Long Beach and Seattle/Tacoma in this attribute. We think that this may be because of lack of information on Vancouver among US executives at 3PL and 4PL firms.
Customer service at ports appears to be an important element for the executives surveyed. Montreal, in particular, received the second highest score after Savannah in our Quality of Customer Service Index. This should definitely be highlighted when marketing Montreal as an Asia-Pacific gateway.
On the other hand, the two other Canadian ports in the survey – Prince Rupert and Halifax – lag behind Montreal and Vancouver in terms of their overall GI scores. This is because Prince Rupert and Halifax received particularly low ratings in many of the key factors we asked the respondents about in the survey such as “Competitively priced road transit options”, “Maximum reliability across supply chain “ and “Trade route minimizes transit times across supply chain”.
However, Prince Rupert and Halifax each showed strength in other factors. First, Prince Rupert received the highest average rating among the ten ports in “Quick, accurate, reliable customs process” and the third highest score in “Minimal labour-related disruptions”. This result suggests that marketing and promotion of Prince Rupert should highlight both the speed with which goods can be transported to inland destinations from Prince Rupert and minimal labour-related issues that can be encountered through this port.
Halifax received a higher average score than all of the other nine ports in “Congestion between port and inland destinations is limited.” Although the survey respondents had not used Halifax for international trade in the past, they have high expectations of Halifax in terms of limited congestion. This fact should be highlighted when promoting Halifax.
We also find that many US business executives are not at all aware of the infrastructure and transportation initiatives undertaken by the Canadian government and Canada’s private sector. This result suggests that DFAIT should not only implement marketing of specific Canadian gateways but also implement marketing of the overall initiatives led by the Canadian government and Canada’s private sector to increase the level of awareness of such initiatives among US executives.
For this survey, the superior overall ranking given to Montreal needs to be put in the context of the number of responses received for Montreal. Of the 339 responses received, only 19 had actual experience with Montreal while 282 had no experience with Montreal. This can be compared to 61 respondents (more than 3x as many respondents) who had some experience with Vancouver or 169 respondents who had some experience with Seattle/Tacoma. In our view, given the limited and non probability nature of this sample, the high score received for Montreal is based more on expectations of the respondents rather than actual experience and should be an important conditioning factor when interpreting the results of the survey. Similarly, for Prince Rupert only 18 respondents had actual experience with this port and no respondents had any experience with Halifax. Overall, therefore, among Canadian ports respondents in this survey had the most experience with Vancouver, while the level of experience for other Canadian ports was small compared to U.S. ports.
[1] The Gateway Index measures the relative performance of the top ten North American ports surveyed on thirteen factors relevant to the movement of goods across North American ports. These factors include: security of goods; the accuracy and reliability of the customs process at ports; labour disruptions at ports; congestion between ports and inland destinations; congestion at ports; pricing of road and rail transit options to/from ports; costs, reliability, and transit times of the supply chain as a result of using specific ports; customer service at ports, and distance to origin and destination of goods.
