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The Canada 3PL market had a value of nearly $1.6 billion in 2019 due to expanding trade, globalization, and the ever-growing e-commerce industry. That market value is projected to nearly double and come in at more than $3 billion by 2027 at a CAGR of 9%. The market is enormous, and it’s only getting bigger.
Although the pandemic slowed the traditional pace of their population growth, Canada is home to 37 million people, but that growth continued to be the fastest amongst G7 countries.
An ever-expanding population in Canada translates to ever-expanding sales opportunities for Canadian and US companies, and therefore a need to quickly and accurate fulfill and deliver orders to customers.
When you are counting the costs and sifting through all the potential Warehouse locations in Canada, you will want to examine a few key factors relating to geography.
We will get more in-depth as you read on, but you will want to make sure that the location is in strategic proximity to:
Aside from considering the warehouse location within Canada, you will also want to look into several other integral criteria.
We screen 3PLs in Canada based on several factors, including;
We have many options for you to check out when looking for fulfillment and warehousing companies in Canada. Your particular company needs are unique, and it’s all about determining what warehouses and fulfillment centers will suit your needs in Canada’s market.
You have diverse needs in the amount of warehousing space or weight. Your technology integrations may also be unique.
The final destination of your products or materials is also a consideration in that you could be shipping to employees, and you could have a B2B or B2C situation. Regardless of your organization’s current size or scale, we have companies suited to work for you.
They say, “you don’t know what you don’t know.” Simply put, warehousing and 3PL companies in Canada have connections and processes that you may not be able to fathom.
Using a 3PL company for warehouse storage and fulfillment decreases overall costs, which serves the bottom line. Keeping everything in-house may seem desirable, but warehousing companies in Canada have developed sophisticated methods and have established connections with Canadian companies. These are relationships and systems you may otherwise not have access to.
The cost decrease is a desirable benefit of working with warehousing companies in Canada. Typically, 3PL companies can save you money on warehousing (because you only pay for what you use), freight costs (because they usually get better freight rates through aggregating volume), and even labor rates.
But that’s not the end of the savings – don’t forget about all of the other costs incurred to run a warehouse in-house. There is a plethora of costs that include software, supplies, management, volume, mass, contract negotiations, and more. Make sure to incorporate all of the costs when you are estimating the in-house option versus a Canadian warehousing company.
You may have good relationships with US warehousing companies and fulfillment centers. Using already established local relationships and methods for fulfilling orders in Canada is tempting, but there are benefits in working with warehousing companies in Canada for US companies.
Costs will undoubtedly increase when shipping across the border. Cross-border shipping takes much longer and can cause delays as well as extra expenses due to customs. Working with warehousing companies in Canada gets rid of all of this. Especially as your volume increases and you get more complaints from customers (or lose more sales because they don’t want to pay the enormous shipping costs at checkout), sourcing a Canadian fulfillment center will suit you well.
When you’re searching for fulfillment centers or 3PLs in Canada, you will want to think about what services they can provide.
Each company can be vastly different, and you will want to be sure that it matches both your requirements and expectations. There is some confusion when looking at options and you may think a warehouse is a warehouse – but figuring out what they can do for you and what they will allow you to do in the space is some fine print that will need to be read.
There are many types of services, such as:
Public warehouse storage is typically a storage-only service. However, public warehousing is an intelligent move for overstock situations because It’s usually a flat pallet in and pallet out model. This is helpful for overflow scenarios, or situations where full pallets are being shipped out or even full cases (boxes). As order get more intricate (such as picking and packing individual items), a fulfillment service may be required.
Sometimes companies will expect to have direct access to physically work in the warehouse space, but this is usually not possible with a 3PL. If that is something you want, you may need to consider leasing a co-warehouse space.
Fulfillment services are specialists in the pick-and-pack. They cover breaking open boxes and picking items. Fulfillment companies in Canada also handle complex retail services that require EDI and B2C fulfillment. If you have a storage-only need, it is unlikely that they will be able to facilitate that need beyond storing inventory.
Ecommerce 3PLs in Canada are particular in shipping orders directly to the consumers – and these are orders placed through e-commerce shopping carts, and other marketplaces such as Amazon, eBay, Etsy, etc. The challenge is that they usually haven’t invested in the required technology for B2B shipping. These eCommerce fulfillment services in Canada are capable of integrating with marketplaces and shopping carts that you sell online, and can also specialize in subscription fulfillment.
You can hit roadblocks when looking for companies that can suit your business’s needs. One common challenge is finding a fulfillment center that is capable or willing to accept your size and volume.
Your company may be a massive titan with an equally high order volume, or your business may be relatively small. Many fulfillment centers have minimums, but we know which ones want to work with you. Most importantly, it’s imperative to understand that finding the right fit for your specific volume is necessary.
After determining the type of 3PL warehouse and fulfillment center that you will need, you will want to consider where the best fulfillment centers in Canada are and how you can find them.
You will need to do your research here because Canada is massive, and its population centers are spread out.
The location where your products are produced and where they may enter or exit Canada is going to be a determining factor for your warehouse locations. Additionally, you can narrow down the consumer’s location through the use of sales data which will be another factor that can impact what would be the most strategic location.
The most significant markets in Canada include major cities like Vancouver, British Columbia, Alberta, Montreal, Quebec, Mississauga, and Toronto, Ontario. Depending on how close your fulfillment center is to a major city may affect your warehousing rates, so if you are budget conscious, consider hosting a bit outside the major markets. Furthermore, weighing the costs and benefits of bringing product into a larger population area such at Toronto (which may cost more in terms of inbound freight) versus bringing product into a closer port such as Vancouver (but potentially incurring higher outbound shipping costs per order to other areas of Canada) is critical in this analysis.
For 3PLs in Central Canada, Toronto is considered to be the best choice for Canada fulfillment services because of its sheer volume as a potential customer base. The metro area population of Toronto in 2022 is more than 6,300,000, it’s also extremely close to the capital, Ottawa. In fact, the greater Toronto area (GTA) is hands down the number one market for 3PLs in Canada.
Many businesses have found great savings and success expanding their fulfillment into Toronto, Ontario, or the Greater Toronto area. The GTA offers cost savings, as well as streamlined customs processes at the United States / Ontario Border. Furthermore, the population base is higher in this area, and it is close in proximity to other major Canadian markets such as Quebec and Ottawa. And on top of this, there are an abundance of high quality Toronto area fulfillment centers.
Toronto is the largest city in Ontario and the largest in the entire country of Canada, so fulfillment centers are not only abundant in Toronto and the GTA, they offer the benefit of strategic location with access to roads, air, and the Port of Toronto, a gateway to the St. Lawrence Seaway and the rest of the world.
Toronto also has excellent proximity to the Midwestern states in the United States, and having access to major transportation networks is crucial for the logistics involved with your products.
In addition to Toronto itself, the major metropolitan areas in the GTA include the following:
Mississauga is a suburb of Toronto situated along Lake Ontario. The city offers the benefits of being close to Toronto but may offer lower costs on warehousing and fulfillment due to its location.
Under an hour’s drive to Toronto is the city of Hamilton, Ontario. Like Mississauga, Hamilton benefits from its proximity to Toronto without the big city overhead.
If you are considering 3PL in Western Canada, you will want to know that despite global supply chain issues, the port of Vancouver’s volume went up by 1% while many other ports remained stagnant or decreased.
Beyond being the secondary population center in Canada, coming in at 2,632,000, their consistent increase in the movement of products makes Vancouver the best choice for a 3rd party warehouse in Canada.
If you’re bringing in product from overseas, and your main objective is to minimize inbound freight costs, Vancouver is the place for your fulfillment.
The population is always going to be a factor when considering a 3PL, but if you are looking for a solution based in Quebec or Eastern Canada, Montreal has a massive population base of about 4,277,000 people.
One thing to keep in mind in this region will be the differences in the language since almost 40% of the population speaks exclusively French, with almost the total of the other half speaking English.
It makes sense to start by analyzing your supply chain and to discover where most of your product is flowing to. The key to a successful and efficient supply chain is to consider the following questions:
The location of Canadian customers falls roughly in line with a provincial population map. With that in mind, it is generally safe to assume that 38.4% of Canadians are in Ontario, 23.6% in Quebec, 13.1% in British Columbia, 10.9% in Alberta, 3.6% in Manitoba, and 3.1% in Saskatchewan. These provinces make up almost 93% of the Canadian population. All other provinces are under 3% or less.
The interesting thing about the map below is that it does not give you an idea of where people live within the provinces. 90% of all Canadians live within 100km (62 miles) of the US border. So the map below may look daunting, but the vast majority of Canadians are actually very close by.
The greyed out area makes up 0.8% of the Canadian population – not including polar bears.
Considering the above information, we can see that the 4 most likely locations to consider in terms of sheer population size are Ontario, Quebec, British Columbia, and Alberta.
The two key distribution hubs are Ontario and British Columbia as most consumer products come through Vancouver’s port, and the majority of perishable and automotive shipments pass through Ontario by road or rail. Ontario and Quebec make up 62% of Canada’s population, and this number is growing every year. Most major companies distribute their products from either Ontario or Quebec because the largest cost is the end delivery either to distribution centre, store, or the customer’s home address. If 62% of your customers are in one area, it makes sense to warehouse your product in close proximity. Furthermore, 53% of Ontarians live in the Greater Toronto Area, or within 1 hour’s drive of Toronto.
If product arrival is not time sensitive, it may be an option to utilize rail as a means to move product from Vancouver to Ontario or Quebec. Shipping by rail can save companies as much as 33% on shipping costs. However, if getting your product to your warehouse is a priority it makes sense to utilize air freight, or a reliable large carrier such as Challenger Motor Freight. Full truckload shipments from Vancouver to Toronto generally take 4-5 days of driving (weather dependent) for a single driver, and that time can be cut in half by team drivers.
Here’s an example to show why it often makes sense to warehouse your product in Ontario:
This is not to say never to warehouse product in Vancouver. If a customer has enough order volume in British Columbia or Alberta, it may make sense to warehouse some product there rather than sending it all the way to Ontario, only to ship it back out to West. That would be expensive and wasteful.
If you’re shipping from China to Vancouver and have customers all across Canada, one alternative is to warehouse some product in Vancouver area, and to move the rest to the Greater Toronto Area. This is a broad and general statement, but at the end of the day it usually holds true. The key is to look at where your shipments are entering Canada, and to analyse your order destinations within Canada. Keeping the distance and time short on the final delivery is very important.
When considering your options for 3PLs, you will want to understand some of the key statistics that could impact your decisions. Canada’s fulfillment services and warehousing data on a comprehensive level are as follows.
The Population of Canada in 2022 stands at 38,654,738, and the number of Warehouses in Canada were 4,931 in 2022. Amazon Warehouses, in particular, are currently about 46, with their operations constantly expanding.
The Average Warehouse Labor rate for Canada in US currency is about $18.86 per hour, and the Personal Tax Rate for the average warehouse work will be between about 15% and 25%.
The Corporate Tax Rate is a bit more involved. The Part 1 tax is 38% of one’s income, but about 28% after federal tax abatement. After the tax reduction, the net tax rate is 15%. For Canadian-controlled private corporations claiming the small business deduction, the net tax rate is 9%.
The “Harmonized Sales Tax Rate” or HST rate is 15% in all of Canada’s provinces, except Ontario, which is 13%.
For the Property Tax Rate, Every municipal region across Canada will determine its yearly property tax rate. Usually, this figure is in the region of about 0.5% to 2.5%.
Fulfillment costs can change rapidly based on the location or company, and determining a specific cost for fulfillment centers in Canada can be challenging too.
The average cost of fulfillment and warehousing in Canada is going to be somewhere in the region of $2 to $6. Due to varying fees and integrations, you won’t want to trust a ballpark figure. Most companies will send you an invoice with the totals tallied up at the end of the month. The fees that you will want to anticipate include;
Knowing when to expand your warehouse and fulfillment footprint to Canada is a choice that must be weighed carefully.
While fulfillment centers throughout the United States offer convenience and affordable rates and can ship internationally, sometimes expansion into other countries such as Canada make more sense for your business. But how do you know if you should expand to Canada? Many factors must be weighed into your decision.
Here, we break down just a few considerations you should make when making your choice.
At the end of the day, it boils down to shipping costs and shipping times. Shipping orders one by one from the US to Canada will potentially cost more per shipment and could take more transit time per order.
But your monthly order volume will impact the point at which it makes sense to carry additional inventory in Canada rather than continue to ship orders from a US-based fulfillment center.
The first thing you’ll want to consider when it comes to expanding into Canada are international shipping costs. Remember that Canada uses a different currency than the United States, so make sure you have the proper conversion rates when making your budget.
Furthermore, you’ll have to account for the differences in shipping costs in Canada versus the US. There are a number of different Canadian shipping carriers and options, so familiarizing yourself with those options and obtaining sample price quotes will help with your analysis. Many websites offer Canadian shipping calculators so you can see the pricing for shipping of orders.
Also, keep in mind that you may incur other fees such as customs fees, clearance fees, and import/export duties. These must be calculated on a per order basis when shipping orders from a US based fulfillment center, and they can be compared to the costs of shipping a bulk order of inventory to Canada for fulfillment of orders by a Canadian fulfillment center.
According to the Canada Border Services Agency, “any item mailed to Canada may be subject to the Goods and Services Tax (GST) and/or duty.” This tax of five-percent pertains to goods imported into Canada and is based on the value of the goods in Canadian currency. These fees may be subject to change depending on the goods you are importing and the country of origin. Items mailed into Canada are exempt from these fees if they are worth CAN $20 or less, or if they are considered gifts from friends or family and worth less than CAN $60.
Some provinces collect an HST (harmonized sales tax) of 13 percent, so check with the local municipality where you plan to host your fulfillment to see if this will apply to you.
Customs clearance fees cover the process of preparing and submitting the customs paperwork. Clearance fees are not included in shipments sent to Canada with shippers such as UPS Ground or FedEx. If you are considered a higher volume shipper, you can negotiate a discounted fee, however, some ground shipments accrue a customs entry preparation fee which is assessed upon the shipment’s “value for duty.” This fee begins at around seven dollars and increases up to 20 percent of the shipment’s total value.
According to Canada.ca, most goods that are imported to Canada will accrue the federal GST. This is “five-percent of the duty paid value of the shipment.” The fee must be collected at the border at the time of entry unless the goods are being shipped to a bonded warehouse. If the planned destination is a bonded warehouse, the GST is due when the goods leave the warehouse and are able to be sold in Canada.
For export duties, any goods which are eligible for the GST/HST may be untaxed if being exported from Canada. These are considered “zero-rated” goods. There are many criteria that must be met to qualify for this exemption, so check with a reputable source such as Canada.ca to see if your merchandise qualifies.
The good news is depending on where in Canada you host your fulfillment services, these fees may not make much of an impact on your overall cost.
Another consideration when deciding to expand your fulfillment center to Canada is delivery times. Because goods to Canada must go through customs, there could be delays in delivery times crossing the border. This significantly impacts individual orders that are sent from the US and can cause intense friction with customers as their orders are delayed during this process. There can also be delays as shipped goods switch postal services from Canada Post to the United States Postal Service or vice versa so take that into consideration as well. On the other hand, if you ship a bulk inventory of goods into a Canadian warehouse, outbound orders to individual customers won’t have to clear customs, and therefore will arrive much quicker, increasing customer satisfaction.
Expanding your fulfillment services to Canada can be a financially rewarding move for your business. If you are considering expanding your fulfillment services to Canada, remember to consider all fees and duties on your merchandise, and remember to select a location that will allow your merchandise to reach its intended destination without significant delay.
3PLs can satisfy your business needs whether you’re based in Canada or have found that many of your customers are located in the region. If you have a large customer base in Canada, it will make sense to have distribution and fulfillment stemming from there also.
WarehousingAndFulfillment.com is innovative in the process of finding 3PL providers that suit your business needs.
With our innovative screening process, we’re able to sift through an exorbitant amount of data and match you with the ideal Canada fulfillment center.
We want you to maintain positive relationships with logistic companies and expand your operation consistently. In the growth process, you won’t have to jump between distribution companies. Instead, we’ll work with you to make the perfect match because WarehousingAndFulfillment.com is the best source for vetted lists of recommended 3PL services in Canada.
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