Transport Canada’s regulatory impact on Canadian supply chains

Summary: Case study examining Transport Canada’s regulatory impact on Canadian supply chains.

Purpose

In 2019, Transport Canada published the Transportation Sector Regulatory Review Roadmap, a plan to address regulatory barriers to innovation and investment. One of the roadmap’s initiatives was a 3-year study to assess the impact of transportation regulations on supply chains.

One of the roadmap’s key deliverables was a case study that looked at how Transport Canada’s regulations impact the pulp and paper sector’s supply chains. As part of this study, we used 2 surveys to ask industry stakeholders about the regulatory bottlenecks that impact their operations.

The respondents to these surveys shared:

there’s a need for a systems view of “end-to-end” supply chains
the federal government has an important role in supporting supply chains as they adopt new technology
that regulators need to consider the impact that regulations have on supply chains

This case study highlighted some areas that Transport Canada could explore or continue developing to address stakeholder concerns.

The importance of supply chains

The term “supply chain” refers to the process of getting a product from its original state (raw materials) to its destination (the consumer). These are complex, interconnected systems that include extracting resources, processing, manufacturing, delivery to end customers, and returns.

Each of these parts is made up of many people, groups and functions that all use different modes of transportation and operating systems to move goods to market. It’s also important to note that each of these parts is impacted by regulations. Understanding the impact that regulations have on transportation is key to making policies that can support resilient Canadian supply chains.

Canada’s transportation sector plays a key role in keeping both domestic and global supply chains fluid (running smoothly). Disruptions can:

affect essential services
cause goods shortages, and
raise prices for businesses and consumers

To keep supply chain running smoothly, Canada’s regulations must be clear, flexible and consistent.

Growing supply chain complexity

As the world gets more complex, so do supply chains. Unplanned factors like the pandemic, a 100% annual growth in online orders in 2021 and offers of next-day deliveries have created new challenges for the transportation sector.

These challenges have shown that regulators need better tools to determine how regulations impact supply chains and competitiveness. Stakeholders have noted that misaligned or inconsistent regulations with heavy workloads can keep Canada’s supply chains from being competitive and keep supply chains from running smoothly.

Aligning regulations poses a challenge because the transportation industry is regulated by 3 levels of government and also has many international obligations.

Work to date

The 2019 Regulatory Review Roadmap on Innovation committed Transport Canada to a 3-year user-centric study looking at regulations that could affect the flow of goods through Canadian supply chains.

From August 2020 to winter 2021, Transport Canada launched 2 surveys that received 58 responses. Responses came from associations that represented transportation operators and shippers in 22 Canadian industry sectors. There’s no doubt that the survey’s scope was impacted by the pandemic.

From this consultation, we identified 4 main problems with regulatory barriers or the supply chain itself:

many regulations from many jurisdictions overlap
existing regulations aren’t flexible enough to adapt to new and emerging technologies
the supply chain is vulnerable to emergencies and disruptions, and
existing regulations are unclear

Creating more flexible regulations

51% of survey respondents said that their company has invested in, or plans to invest in, technologies, services, products or processes that would improve their transportation operations. 48% plan to invest in innovations that will help them comply with government rules.

Stakeholders also reported that shortening the process to approve new technologies, plus regulatory sandboxes and pilot projects could help them use new technologies as they become available.

Consultation findings

Based on the feedback we received via interviews and surveys, we found that transportation operators face different regulations from different levels of government. Some of the issues stakeholders face include:

conflicting and/or inconsistent regulations between provinces

rail shipping rates
tariff regulations
the level and frequency of interacting with government agencies
challenges with collaboration, and
challenges during the regulatory delivery process

All these challenges increase the regulatory burden on stakeholders. As possible solutions, participants suggested:

using a consistent inspection and monitoring schedule for similar businesses to make sure they all follow the same standards and practices, and
reviewing inspection processes to reduce the administrative burdens (office or paperwork) that don’t identify risks

Case study findings

Government decisions that impose new measures or rules on supply chain operators can sometimes be a risk or burden. Conflicting or overlapping regulations from multiple jurisdictions can disrupt their operations.

We need to continue addressing these issues to ease disruptions in the supply chain. The findings of our case study identified areas that need more analysis:

aligning regulations across jurisdictions
using a systemic, multi-modal approach to evaluate and prioritize risks
continuing to digitize regulations
improving Transport Canada’s ability to use data
developing tools that will help stakeholders navigate regulations, and
creating more flexible regulations

Conclusion

This case study showed that Canada’s regulations are complex and involve a heavy workload. It also showed how challenging assessing this system of rules can be.

The current focus on the challenges facing supply chains is our chance to improve regulations and legislation.

Our analysis shows that with the right data and good research methods, it’s possible to measure how regulations impact specific sectors of the transportation industry.

For more information, please contact:

RegulatoryInnovation-Innovationreglementaire@tc.gc.ca

Language selection

WxT Language switcher