It’s been a rough few weeks for Purolator.
The Canadian courier, majority owned by Canada Post, was so overwhelmed with packages when postal workers across the country went on strike, it had to pause incoming shipments from some courier companies to give it time to process the backlog.
And then it had to deal with its own internal labour issues when Teamsters Canada announced Purolator union members wouldn’t handle packages identified as originating from Canada Post.
Throughout the upheaval, Purolator president and CEO John Ferguson stayed true to his long-term strategy and says improvements made during the COVID lockdown, such as building a $350-million sorting facility in Toronto, “put us in really good shape to manage the … fluctuations.”
Born and raised in the border town of Fort Erie, Ont., Ferguson enrolled in business administration at nearby Brock University but had little interest in pursuing the typical business graduate path into consulting and banking.
Around that time — not long after the North American Free Trade Agreement was signed — Ferguson began working as a customs agent on the Peace Bridge between Buffalo and Fort Erie. There, he watched goods and people flow across the border, and paid particular attention to one regular visitor, who was known for crossing in a large, white Cadillac: E.J. Freeland, founder of Peace Bridge Brokerage, or PBB.
“One day he came into my customs line, and I did about a 10-minute interview with him, while the cars backed up on the highway,” Ferguson says. “I found out about this great burgeoning business; he was super entrepreneurial, a very interesting guy, and he invited me to come over for an interview.”
Ferguson would spend the next nine years working for Freeland at PBB, followed by five years at U.S.-based transportation and logistics firm Schneider, and another six years as president and CEO of Canadian supply-chain solution provider SCI Group. Then, in 2016, Ferguson was tapped to take over as president and CEO of Purolator at a pivotal moment for the company.
“This was turnaround time,” he says of his first days on the job. “Purolator has been a great Canadian brand for over 60 years, but at the time, there were some real challenges in the business, and it was struggling to find its way.”
When most CEOs join a large legacy business, they spend months studying its operations before making any major changes. Given his two decades of experience in the industry prior, Ferguson says he was able to hit the ground running with a transformation effort that centred around the company’s employees, which now number over 14,000.
Since that time Purolator’s revenues have more than doubled, and its earnings have grown fourfold, but Ferguson says he’s most proud of the company’s non-financial achievements. Purolator has landed on Forbes’ annual list of the best Canadian Employers each of the last nine years, its annual Purolator Tackle Hunger program donated more than two million pounds of food last year in partnership with the CFL, and last year the company invested $1 billion to electrify its Canadian fleet.
The Star spoke with Ferguson from the company’s head office in Mississauga about how those transformation efforts helped Purolator overcome the challenges of COVID and recent labour-related disruptions, how technology is reshaping the industry, and why he’s confident that goods and people will continue flowing freely across the southern border, regardless of who’s in power.
What were some of your first priorities at Purolator?
They wanted someone to come in and implement a turnaround, and I grew up in this business, so I understood the minutiae of everything from the ground up. Normally, you have a 90-day plan, a 180-day plan, but we were already in full execution mode in the first week.
When I started, I immediately noticed that there were a lot of distractions; we were making major bets on complex technologies and there were just too many assets being deployed, so we worked on getting back to basics. I talked a lot in those days about hitting singles versus going for the grand slam, like just getting on base.
I’ve always thought that leadership trumps everything else, so the number one thing I looked at was, do we have the right leadership team, and is everyone rowing in the same direction? We needed a team that’s working together on the same vision, which we called “One Team.”
That’s a foundational concept in LEAN Cultures, or a Kaizen Continuous Improvement Culture, and that was the second thing we brought in. I love Toyota, I love the Japanese management principles, and that is massively important in an industry where cost is so important.
The third was a big piece of accountability and empowerment, drilling that into the culture, and fourth was “delight the customer,” which was always a strong part of Purolator, but we wanted to get that muscle even stronger.
The fifth was doubling down on safety; opening every meeting with safety training, dedicating investment, measurement, recognition programs, and tying it in with continuous improvement.
How far along are you in that journey?
The results were almost immediate, but if you don’t keep it up it can fade over time, so we constantly measure it. We have expectations in terms of cost avoidance and true cost savings, but there’s a lot of things like pride in the workplace, professionalism and quality.
After that first turnaround, which was more about getting us to a rock-solid foundation, I pivoted to building a great culture, demonstrating the right tone from the top. The secret sauce that we’ve been able to build here is this incredible place where everybody talks about our people.
We were starting to really invest in all of this at the top of the house, but then we quickly realized we have so many front-line leaders that are far away, so we trained every front-line leader, knowing they had the most impact on our clients, sorters, couriers and everyone else.
How did those efforts help you manage the challenges of the pandemic?
Our COVID story is going to be two chapters in my book someday, if I ever write one.
Just before COVID we hired a chief medical director because we wanted to focus on mental health. Then COVID hit, and suddenly it became the most important thing that we could have ever invested in, because we were getting packages from China, and people thought they were going to get the virus off the cardboard. We had medical advice out there all the time communicating how to deal with COVID, and helping us get through it.
When COVID hit we also saw a shift from B2B and e-commerce to almost all e-commerce with rocket ship-like volume, because everyone was at home. We hired 3,500 people virtually, built a $350-million sorting facility in Toronto designed to ramp up or down — to go from little traffic to a million packages a day very quickly — and it’s put us in really good shape to manage the recent fluctuations.
Are you referring to the Canada Post strike?
Yes, but don’t forget we also had ports go on strike recently, and it’s probably a record year for labour disputes.
We’ve been able to manage ups and downs and trade lane changes, so goods that came into Vancouver are now coming into L.A. and up, for example. We are really attuned to moving around and being flexible, so it hasn’t been an issue this year, mostly because what was built in COVID.
How will technology further disrupt the industry?
The two big trends going forward will be automation and robotics. The automation helps us deliver to precision anywhere in Canada, and we’ve looked at having robots carrying packages behind our couriers, so that you can kind of double up. We’ve leveraged road optimization — think Waze or Google Maps on steroids — where it avoids left turns and understands traffic patterns. That smart technology is a major part of the future of the industry, and we’ve been investing like crazy in what we call modernizing our network.
With AI, there’s also an opportunity to do more effective pricing, customer care, even strategy. A lot of people are looking to us as a bellwether of the economy. Because we move so much product, we can see trends happening in real time; we can see who’s winning, we can see the effects of interest rate changes on the economy, and AI will help us better understand that data.
What is that bellwether saying now?
Before the holiday peak we were looking at some economic headwinds, especially in the retail and e-commerce space, but it does seem to be coming back, and that was offset for us by international trade.
When I was working on the border Purolator was moving into the U.S. in anticipation of the Free Trade Agreement, and the amount of trade between them has been just astronomical. We have 30 U.S. locations, and they’re all built for the U.S.-Canada-Mexico trade lane. That has been an unbelievably important network for feeding the Canadian market from Newfoundland to Vancouver Island, with our own people and our own terminals everywhere.
That’s been an even greater focus for us now that Mexico has emerged as a red-hot opportunity as part of this decoupling from China effort. We are doing more and more on the Mexico border with the U.S. through our gateways, so growth in that nearshoring trade and the U.S.-Canada-Mexico trade lane has been a major part of what we’ve been seeing.
Are you concerned that the Trump administration will make good on its threats to limit trade?
There’s a lot of questions about that right now, but we’ve been through this before, and it all worked out. The U.S. and Canada are so integrated; I know that from my earliest days, watching it live at the border, while studying economics. This might be part of the negotiation, but I don’t see how either economy survives without it.
I think the border could get a little more complex, which companies like us help with, so we may be in even greater demand. But I think when all is said and done, the trade relationship is too vital to too many states and too many sectors, and it’s so integrated, that it would be hard to cut that off — at least not without a 10-year plan to figure out how to move manufacturing around.
