13 part 2: Cross-Border Chaos: The 2024 Canada Post Work Stoppage and Its Ripple Effect on e-Commerce

Voiceover: 00:00:00

This is outside the box with Ascendia usa, a podcast educating US based brands, marketplaces and e tailors on international shipping topics and how they can expand their global e commerce footprint.

Jason Rowland: 00:00:14

Welcome back for our second part of our Canada special edition episode with our special guests Dave Mayes and Tom Foley.

Tom Foley: 00:00:19

I think a lot of clients were gun shy about making a move because I think everybody, like we talked about earlier, everybody was kind of hoping this wasn't going to happen. But it did.

And when it did happen, as you know, everybody, the sales organization were reaching out to their clients saying, hey, we are probably the only one that has a good plan B, a very good plan B for your packages and your shipments. And we had so many individual requests from clients to get this thing done, including myself.

I had a very, very large client, one of our largest top five accounts who really wanted to move over and we got them moved over. We took everything we had to do. Everybody did everything they needed to do. Dave's team include and it was an excellent experience.

The feedback we got from him and his clients were, well, thank God you guys had something for us. And it really did help out. And I can tell you being in the industry that I am not a lot. Nobody in our space really had a solution like we did.

They really did.

I heard phone calls being made and people begging to come up with some kind of a delivery partner up in Canada and it was really, really kind of a very difficult situation for them. You're right.

Jason Rowland: 00:01:36

No, I, yeah, I think, I think it really gets down to what's the yes, but. Right. So in these things is always what's the but. And here, yeah, we have this great solution.

But you have to do all the customers clearance yourself and you have to pay the, you know, whatever it is, it's going to be extra. So for, for us, I want, and I always tend to look at things through a compliance lens.

Jason Rowland: 00:01:55

Right.

Jason Rowland: 00:01:55

Because that's the world that I come come from.

But so was there anything different from a compliance standpoint that these customers that made this switch needed to do in order to gain access to this tool? Or was it, is it all just kind of ready to go from, from what they needed?

Because a lot of times customers will shy away from that additional regulatory burden or additional filing or additional tasks or data elements that need to be, you know, included in these kinds of, you know, kind of off the cuff solutions. So is there anything different that they needed to do from a compliance standpoint?

Tom Foley: 00:02:29

Yeah, I mean I can tell you from clients who are shipping through the usps a lot of the requirements that are just not being enforced by the usps. For instance HTS codes, the tariff schedule codes, that's required country of origin for the most part.

But when you move over to a commercial service like Dave's on the broadreach side, that is kind of required. But we're lucky we have a tool, Jason. Right. I mean you manage this. We have a tool that actually helps provide that documentation the client can't.

So that really kind, really kind of helped out I think. Right, Dave? I mean that was, that was a help.

Dave Mays: 00:03:06

Yeah.

At the end, at the end of the day there is an inarguable difference between the postal stream and the commercial stream in terms of the enforcement of stated rules and laws.

We combination of our police daily by CBSA through our bond through our truck trucking licenses and through again working with agents and and releases that we must have accurate values and we must provide accurate HTS codes which is a function of having a accurate Description. So gift $9 made in the USA and it's a $120 sweater going to grandma or whomever I met the. You know, so there was a lot of work to do.

What principally should be theoretically should be easy to. To move over. But we all know it's more difficult than that. But we have a, we have a great team.

We, we knew when we knew this was happening, which was unfortunately the day of the strike, we decided we are going to do everything to throw resources at every solution to get all these parcels delivered the 98% of them at no additional cost or hassle to our emergence. Granted, again we need good data. Those are for like, for like services.

Meaning on day one they're using the SENDIA direct DDP to Canada and on strike day two they're using send you direct DDP to Canada for the postal switch over crossover from a postal solution to a commercial solution. There might have been some additional costs associated with reconstructing the entire program, but both of those channels we handled amazingly well.

Easy for me to say that in my office here in California, but the team on the ground, the trade services folks it and obviously on the, on the US side of the board of the Ascendia team did an amazing job and I, you know, I don't think there's really accurate published transit times and recovery and alt solutions, but I'd like to hear a story of someone doing better than a Cindy and Broadreach had during that period. I doubt it exists.

Jason Rowland: 00:05:10

That's fantastic.

Nick Agnetti: 00:05:11

Thanks. No, I love it.

Tom Foley: 00:05:12

Yeah.

If you think about it, if you think about it too, you know, knowing what the massive amount of backlog is going to up in Canada, not just from the US but from China, from Europe, I mean all these countries that feed, nothing was moving. Absolutely nothing was moving.

So one of the things that in the conversations I had with my clients and Nick, you probably did as well was what is this going to look like? I mean, how much just from the US is backlogged and how long then is it going to clear? So the strike ended what, on 17 December. Right.

USPS didn't open back up again until 6 January and then many, many days after that they were still trying to get the mail out of their building.

So knowing that ahead of time and being able to offer the solution with broadreach was very, very helpful to, to some of our very, very important clients. You know, it's really about the, the magnitude of the backlog is really, oh significant.

Nick Agnetti: 00:06:12

I mean we talked about, you know, 10 million sitting in Canada plus 10 million plus, let's say.

And then you're talking about, you know, 90 plus trailers, 53 foot trailers, you know, in different areas that are, then you're talking, that's just us to Canada. What about, what about the world? Right?

I mean, you think, I mean there's impact there that we're not even talking about because we're so focused on our U.S. you know, our North America perspective.

But I think it's important to, to, to provide some distinction that for, for listeners if you're thinking, well why the heck wouldn't I be using this network anyway? As it is, there are some differences. Right.

So, so the EPAC plus product that we talked about, which is really, it's a postal partnership product, right, that if you were processing using EPAC plus, it wasn't going anywhere till the strike was over and backlog was cleared. That's what was highly impacted. Right.

So the Direct Access product, Dave's product, you're looking at, you're going from a postal product, that's a DDU or delivered duties unpaid versus a DDP product, which is Dave's product. Now it's, you're looking at apples and oranges here and we have a couple podcasts previously that we recorded where we talked about this.

But I would just highlight here and kind of take a quick break during the conversation that any additional questions that you may have or any additional interest, we are happy to field those and get you to the right people to talk about those things.

But there are Some additional requirements, as Tom mentioned, or at least, you know, kind of led the conversation with, in terms of, you know, proper descriptions, HS codes, values, countries of origins and things that you need to be able to provide in order to access that direct access network.

Okay, so let's talk about a couple things that I found just scouring the web and I remember going back through those dark days there with some backlog info. So. So listen to this statistical average that I thought was interesting.

er weekday during peak season: 2023

I mean, these numbers have got to be, I mean, things that we just, we won't have access to. We won't know what the true numbers are. Right. But they had to be tremendous. An estimated, you know, over 10 million parcels on hold in Canada.

Many more process and stage for us to cross border delivery.

,: 2025

Then it says when talks are set to resume. Anybody know what that means? I'm just, I'm just asking.

Tom Foley: 00:09:01

No, no, not really. I mean, I just hope that they don't wait until the last possible minute to let us know what the, you know, what's going on with it.

You know, we could be in the same exact position as we were December.

Dave Mays: 00:09:13

Well, that, yeah, I mean, the contract expired way before the strike date this last, this last year.

So I don't really know what, what changes from that period to this period that we're in other than mandated back to work probably due to compounding and escalating losses by the postal corporation that ultimately is a crown court that ultimately is, you know, going to impact taxpayers.

I mean, there's a, there's a universal service obligation and there was just a, there was a lot of pain and suffering during this strike period that I don't think can be overstated. All that being said, Canada Post, I'm not going to go into specifics because I don't know them, but loses a lot of money.

We'll just say and they perform and they've been going through a postal transformation almost as long as I've been working with them. And that postal transformation has been slow but positive. You go to their facility in Greater Toronto.

If you see the, the postal transformation terms of technology and equipment, they're a very, very fine service provider of mail, packets, parcels and even their expedited services are quite good. But again, it's a very, very open marketplace for private couriers and regional couriers and national and international couriers to participate.

So they have competition, which competition is generally good. But this was particularly tough because let's just name a couple couriers but not be specific.

Maybe you're UPS, maybe you're Purolator, maybe you're another integrated provider. On November 15th 16th, your doors getting beat down with merchants trying to give you as many parcels as you can physically take.

Their networks were not only full, they were not accepting freight for a period of time from small and medium sized businesses, making some exceptions for large businesses. And it the trickle down effect or the ripple effect of this affected a lot of the larger transportation companies that move parcels.

So what, you know, what was the lesson?

Well, the 25 years of not having a hard straight work stoppage to the degree that we just had, it didn't really penalize, I think Canada Post, to put it that way, with permanently lost business, this probably will impact the next 2, 3, 4, 5 years of their operating income and or profits as it relates to customers they may have lost for good. And what does that do to the competitive landscape? So it's a very subjective as much as it is objective conversation on this.

Canada Post go out and lower rates and try to win all this business back. Do they, do they ask for longer, you know, more binding contracts? Do they commit to never have a work stoppage or strike again? I don't know.

I mean, I'm in California. We have natural disasters, it feels like all the time, mudslides and fires and earthquakes.

I think, I think it's about preparedness and I think small and medium sized businesses, especially large ones, maybe, maybe not need to plan for these type of events more seriously in the future.

Nick Agnetti: 00:12:33

All right, so Jason, are you okay if I just transition into, you know, current state and you know, where we are with, you know, timelines in terms of, you know, transits and then talk a little bit more about the direct access network and so yeah, let's do it. Okay. All right, so. So Tom, I think you're probably closest to it at this point. Where are we today with, with transits and such?

Tom Foley: 00:12:56

Okay, well, yeah, I mean as of last Week. What is today? What's today? Monday. Right.

So middle of last week, we're, we're noticing that receptacles that we gave them for Canada especially that have what they call an N46 error. It's a term that's being used which means that there's no customs data.

All the mail that we brought back to them like we were instructed to was not moving. Then all of a sudden we started making some phone calls and emails and the IME group got involved.

Turns out that there was an internal systems issue with the USPS nationwide at all the international service centers that would not allow this mail that was kicked back to be brought back until they fixed that. So not only did they not accept any mail up until very recently, but even the mail that we were allowed to give back, they still couldn't get rid of.

So as of right now, that's been cleared up. That was cleared up on Thursday of last week. I believe it was Thursday.

So now we brought all of our mail back and now we're starting to finally see some movement. So, and today is the 13th, you know, so this is probably around the 10th or so.

So we're talking, you know, an additional four, five, six days that mail did not get cleared even after the USPS waited quite a while before they released their suspension. So right now I think we're in a good place. But when you asked me about this last week, if you remember, I wasn't too confident.

Nick Agnetti: 00:14:19

You were not. You were not.

Tom Foley: 00:14:20

I wasn't. But now, now I see things moving.

Now we just have to look and see, okay, what are the delays going to be now with the USPS and Cannapost when it gets there? That's, that's part two of this.

You know, supposedly Canada Post has cleared up fairly well up there, but when I start doing some analysis, we'll see, you know. Okay, so that's, that's kind of like the current situation. That's for the USPS volume, the epac, plus some of the EPAC select, the pmi.

So it's finally getting up there with a major delay.

Nick Agnetti: 00:14:52

So, okay, so, so let's transition to, you know, yes, this is a Sunday is podcast. And, and you know, we don't want to be, you know, overtly, you know, biased. Right.

We want to be more educated or educative, if you could, towards the listeners and viewers. But the reality is we do have a solution.

You know, we have a very good solution to offer shippers, you know, enterprise brands, extremely large enterprise brands all the way to you know, even large or medium, you know, sized organizations or shippers too.

So we're talking, you know, if you're an enterprise brand, if you're an online retailer, online only, you know, if you're a subscription, a large subscription box brand or base brand, three pl or even ooh.

And the ones that really got kind of burned here too, those fulfilled by merchant marketplace sellers that are having to do all those, you know, credits, you know, I want to talk to you a little bit about our Canada direct access network. So again, this is our own network. I'm not going to sit here and talk to you about it because I got Dave Mason and Dave created the network.

Tom Foley: 00:15:53

So.

Nick Agnetti: 00:15:53

So Dave, just maybe sort of a high level one more overview for listeners, even though I know you've done it a couple times already, just how the network works and, and really how it helps shippers that are doing good amount of parcels going to Canadian recipients.

Dave Mays: 00:16:09

So I think maybe 20 and 30 years ago it wasn't really understood what the value of a consolidator is in the marketplace.

So in our particular case, we do not pick up 500 individual parcels and move them through an individual network being handled independently of each other. We pick up 500 parcels that are going from a state in the United States to 500 different consumers in Canada. You pick them up as one shipment.

We aggregate and transmit customs and or package level detail.

We truck those things into Canada, we do an electronic release, we use our bonded carrier code into our bonded facilities and we release all those with customs without having to physically touch or have paperwork associated with each individual customs release.

Then they go into our inter Canadian network where we drive them down to the closest major city and give it to the best possible delivery provider to complete the end to end door to door experience for a US merchant shipping to Canada. The carrier agnostic kind of position that we take means our preference is the best option.

Best option being defined as a blend of cost and service to achieve or reach the goals that we've commonly set with the merchant. Depending on the state that you're in, service levels will vary.

gh Louisville or Memphis. The: 8020

It's the 20% that is difficult. And that's where the strike really hurt, hurt us.

So we had to pay additional costs and we had to onboard additional carrier options to get the 98% that we committed to get delivered, delivered.

But at the end of the day, we're a trans, we have a network, a transportation network that drives those parcels anywhere between 90 and 98% of the total mileage of that journey. And we give it to Fonmail delivery partners for the last 2 to 10% of the total mileage of that journey.

Again, if it's a packet, if it's 4 ounces, Canada Post is a fantastic option. If it's a box, if it's 8 pounds gravity and 20 pounds dimensional, ups or Intelcom might be a better option.

We've evolved so that all of our transport coming into Canada reaches certain destinations at certain times to reach certain sort requirements to really improve the service versus our peers.

But ultimately, at the end of the day, we are an aggregator consolidator that has a exclusive focus on Canada to move again, small, medium and large size. We didn't have any large customers. It'd be hard to do what we're doing for the small and medium size. Right.

But I don't want to forget about the small and medium sized businesses that get to gain the service advantage of having these trucks full moving into Canada.

Nick Agnetti: 00:19:23

Yeah, excellent. Thank you, Dave. Jason, do you have anything you want to add to that?

Jason Rowland: 00:19:30

No, I think the only other question I would have even for Dave is so assuming this, you know, in a perfect world this would be, you know, kind of a podcast that goes out into nowhere, never happens again, nobody ever has this problem again. Assuming that, you know, one day it does happen again. What, so what do customers need to do for you in order to make that change?

Is there, what do they need to ask for? What do they need to reach out about and kind of who, who's it open to? Is it open to everybody? Or you know, just tell me a little bit about that.

Dave Mays: 00:20:07

So from my perspective, the only takeaway that I have is that we need to figure out a way to get that 2% delivered that we had to hold. It's really two, two and a half, whatever. And again, it's communicating with the merchant who communicates with the customer.

So really the Canada Post exclusive and or Canada Post only points are something we need to work on in the future to provide a solution to from our perspective, outside of that, because of the nature of the way that our network is set up, you can, we can flip on and off carriers left, right and center doesn't really matter. Our cost may go up. So there might be a price adjustment. But again, it really depends.

The question that you asked, actually better for Tom to answer because that's where the work is going from the USPS package service into the broadreach Direct Entry network. That is a big move for us to move the hundreds of merchants that we currently have in a strike environment.

Although physically is a lot of work, just not technically data systems wide, it's not a lot of work.

Tom Foley: 00:21:10

Yeah. And I just wanted to add to Dave.

You were talking about your service versus USPS for instance, and I could tell you that one of the things that I've been hearing back from a couple of my very, very large clients that are using this is the difference in the trend. The tracking.

In the tracking events, particularly the amount of events that the client sees going through the Direct Access network compared to the USPS is probably almost double. You know, with the USPS, when the clients using ePacket, all they're getting is it arrives in country.

They may see something in customers, but my opinion, doubtful. The next event will be when it arrived at the Destiny post office and then it delivered.

With the Direct Access network, you're seeing a lot more tracking events as it's being processed through. And that's the number one feedback that I received back besides the better transits. But it's also about the additional tracking events.

But yeah, Dave, there is a big difference between what he's offering. The USPS is kind of like we talked about earlier, said, no frills.

The E packet really kind of designed for lighter value, lower value shipments, kind of lighter weight, kind of goes through, you know, CBSA customs up in Canada, just kind of does a wave through and off it goes. But. But the world is getting a lot tighter and stricter now.

You know, more and more clients are realizing that paying duty and doing everything up front is a lot easier than waiting for it to happen later. So in the case of the usps, their shipments, when they go through, they're knocking at the door, collecting at the door at delivery.

And a lot of times that's not the best experience.

So clients that move over to the Direct Access solution or any DDP type service might be a little bit of, a little bit of work upfront to get those HS codes and all that, but long term is definitely valuable to have, you know, so. But there is a clear cut.

There's some clients that might not be a good fit, but for the most part DDP is a, is a much better experience in the long term.

Nick Agnetti: 00:23:11

Yeah, Fantastic. Thanks. I'll echo that. And I think for, for, we're gonna, we're gonna wrap it up here soon.

But I would just say for any of the viewers and listeners that have interest, if you, let's say you're a current Ascendia client, you're listening to this and say, you know, hey, I, I, I'm interested in, in migrating over to the direct Access network. Great. Send us the question. We'll work with you to see if it's a great fit. If you are not an Ascendia client, great. Come over.

We'll see if we can make that work. If it's a good fit for our, for our network.

Either way, again, our, our goal here with this show is to really help you guys navigate the cross border direct consumer delivery landscape.

of: 2024

And again, speculation because we, there's really very little fact on it right now, but that's kind of where we're at and we want to, you know, is there anything before we wrap it up guys, that you guys want to add?

Tom Foley: 00:24:14

No, just to say that we did get some nice testimonials recently on the, on the switchover and the service that was provided. I think we could share that if, if clients need to. But you know, overall it's been a very, very good experience for most of our clients.

A lot of them are going to stick with the service that we asked them to switch to that helped them. So a lot of that volume is going to retain, remain in that network, which I think just kind of proves the point that it works, you know, so perfect.

Nick Agnetti: 00:24:41

Dave.

Dave Mays: 00:24:43

Yeah, my, my last comment not specific to the strike would just be. Let's all keep an eye out for potential changes in the USMCA agreement if it remains intact through the duration of the contract period. Life is good.

If things significant happens, that could change quite a bit.

We'll need to have another podcast specifically on that topic because as we spoke about in the other podcast, up to 40 bucks Canadian is de minimis and duty and tax free. Up to 150, no matter manufacturing origin independent up to 150 Canadian is duty free.

And that is a significant commercial advantage to our program through the postal Stream. Theoretically it's 20 Canadian. So, you know, assuming that remains intact, everything we said is consistent.

If that is disrupted or changed, that can make a material impact on cross border shipping.

Nick Agnetti: 00:25:44

So you'll be seeing us again with another episode. All right, Jason, anything you want to.

Tom Foley: 00:25:51

Add before we wrap it up?

Jason Rowland: 00:25:52

No, just. Just a big thank you to Dave and Tom for, for their time and, and thanks to you, Nick, for your time and effort.

I know you go through a lot to put these things on, so thanks a lot and looking forward to doing it again.

Nick Agnetti: 00:26:04

Jason, you're the man. Welcome to your first show. By the way, I just want to say congrats. You did a great job.

And thank you both very much, Dave and Tom Tomahawk, for being on the show. And that's it, folks. We're done for the day.

Tom Foley: 00:26:16

All right, thank you.

Jason Rowland: 00:26:18

Thanks guys.

Voiceover: 00:26:19

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