Canadian Tire buys part of a shipping port in move to upgrade its supply chain
Canadian Tire Corp. has purchased a 25 percent stake in Ashcroft Terminal Ltd., British Columbia’s largest inland port, to support the retailer’s supply chain flexibility and sustainability goals.
PSA International Pte Ltd., one of the world’s largest container port operators, will continue to operate and retain a majority interest in the 320-acre inland transload and storage terminal.
The $40 million investment is expected to help Canadian Tire lower carbon emissions by allowing the chain to shift volume from trucks to rail in Western Canada, as well as to stage more inventory in British Columbia rather than shipping it back and forth across the country.
Canada’s largest retailer also benefits from shorter lead times and long-term savings.
“The deal secures railway capacity against our future requirements, allowing us to work across a smaller number of partners,” said Greg Hicks, Canadian Tire’s CEO, last week on a quarterly call with analysts.
Working more closely with PSA also promises to improve fulfillment performance.
“We’ve spoken before about how our merchants work with our vendors to get enough product into the country to meet the demand at the right time,” said Mr. Hicks. ”Equally important to our sourcing capabilities is having goods available in the right geography. And that is dependent on our ability to transport goods around the country as effectively, efficiently and sustainably as possible, and our investment in Ashcroft is a step in making that happen.”
Canadian Tire makes the investment as pandemic-driven headwinds around transportation and supply availability forces the company to aggressively chase inventory as well as container, shipping and warehouse capacity.
Major U.S. retailers have made recent investments in fulfillment centers near ports.
Amazon.com announced plans in early August to open a more than one million-square-foot fulfillment center in Port St. Lucie, FL.
Walmart broke ground last December on a three-million-square-foot distribution center near South Carolina’s Port of Charleston.
Greg Smith, Walmart’s EVP of supply chain, said in a statement, “SC Ports’ proven track record of handling high-demand supply chain needs for the automotive industry gives us full confidence in their ability to meet our retail distribution and e-commerce needs.”
- Ashcroft Terminal Signs Investment Agreement with Canadian Tire Corporation – Ashcroft Terminal/Canadian Newswire
- Canadian Tire Corporation Announces Strong Second Quarter Results – Canadian Tire Corporation
- Canadian Tire Corporation, Limited (CDNTF) CEO Greg Hicks on Q2 2021 Results – Earnings Call Transcript – Seeking Alpha
- Amazon Announces First Fulfillment Center in St. Lucie County, FL – Amazon.com
- Walmart breaks ground on distribution center in South Carolina – South Carolina Ports
DISCUSSION QUESTIONS: What obvious and less obvious benefits do you see coming from Canadian Tire’s equity stake in Ashcroft Terminal and partnership with PSA International? Is forming stronger connections with ports becoming more critical to support retail supply chains?