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Canadian food producers face mounting financial pressure from transportation costs that directly impact their bottom line. Transportation represents a major expenditure, accounting for up to 11% of total production costs in manufacturing sectors¹. For food producers seeking international markets, the burden intensifies—over 54% of Canadian export value faces transportation charges of 10% or more at the border¹.
The food subsector spent an average of $0.67 on materials and supplies for every dollar of revenue generated in 2022, one of the highest ratios among all manufacturing sectors². This category includes shipping charges by common carriers, confirming that significant logistics costs are embedded within these already high expense ratios².
Food businesses face unique obstacles that amplify standard shipping complexities:
This established PEI food production company had built strong operational relationships with UPS through a direct account. However, their loyalty to a single carrier created both cost and operational vulnerabilities that limited their competitive positioning.
Core problems:
Like many businesses with established carrier relationships, they faced the strategic challenge of balancing loyalty against financial optimization. Their shipping costs were consuming a significant portion of revenue, typical for food producers but representing opportunity for improvement through diversified carrier strategy.
Our analysis revealed significant savings potential through strategic carrier diversification while maintaining comparable service levels. The recommended approach utilized ShipStation’s automation capabilities to manage multiple carrier relationships efficiently, reducing dependency on any single provider.
Volume optimization: Strategic allocation to maximize rates across carrier portfolio
Canada’s food production sector faces increasing pressure from both rising costs and growing e-commerce demand. The Canadian Food eCommerce market is expected to generate $2.12 billion in revenue in 2024, with anticipated annual growth rates between 5% and 10%⁹. This growth coincides with persistent inflationary pressures affecting the entire supply chain.
Small and medium-sized enterprises contribute 78.1% of total GDP in the accommodation and food services sector¹⁰, yet approximately 93% of food processing establishments are classified as small businesses with fewer than 50 employees¹¹. Despite representing 93% of establishments, these smaller producers account for only 15% of total shipment value¹¹, illustrating the scale challenges they face.
The data reveals why shipping optimization matters critically for food producers:
Customer experience pressure: 83.5% of shoppers are unlikely to make repeat purchases following poor shipping experiences¹³
The multi-carrier strategy provides protection against common single-provider vulnerabilities while maintaining the service levels food producers need.
The transformation to multi-carrier strategy provides protection against common single-provider vulnerabilities:
Scalable growth support: Multiple relationships support business expansion without single-carrier limitations
¹ Transport Costs and Their Implications for Price Competitiveness in Canadian Goods-Producing Industries – Government of Canada
² Annual Survey of Manufacturing Industries, 2022 – Statistics Canada
³ Behind the Numbers: What’s Causing Growth in Food Prices – Statistics Canada
⁴ Support: Fuel surcharges on Canada Post services – Canada Post
⁵ Information Bulletin — Dimensional Weight – Innovation, Science and Economic Development Canada
⁶ Canada Cold Chain Logistics Market Size & Share Analysis – Mordor Intelligence
⁷ Climate change impacts on Canada’s food supply cold chain – National Collaborating Centre for Environmental Health
⁸ Overview of the food and beverage processing industry – Agriculture and Agri-Food Canada
⁹ Online Grocery Industry in Canada 2017-2029 – ECDB
¹⁰ Key Small Business Statistics 2024 – Innovation, Science and Economic Development Canada
¹¹ Retail fees in the Canadian food industry – Agriculture and Agri-Food Canada
¹² Small businesses spend over 250 hours or 32 business days a year wrapped up in red tape – Canadian Federation of Independent Business
¹³ The impact of shipping speed on customer satisfaction – DHL
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