Marrying British Columbia's liquor logistics monopoly with Alberta's, where Exel's Connect Logistics has operated since 1994, is not the only reason why an arm of the world's biggest third-party logistics corporation hired B.C. Liberal insiders Mark Jiles and Patrick Kinsella to lobby the B.C. government since 2005. It is not the only reason why Exel considered using its relationship with liquor minister Rich Coleman to try and influence the tendering process.
Exel and its parent, Deutsche Post DHL, have bigger ambitions. They are thirsty to become the major player in the movement of beverage alcohol products around North America and privatizing B.C.'s warehousing and distribution is key.
In the U.S., beer, wine and liquor stores brought in $44 billion revenue and employed 171,892 at 41,373 businesses, according to IbisWorld market research. Statistics Canada figures for 2009 show the retail booze industry was worth $17.4 billion north of the border. The wholesale and distribution side of the Canadian industry was worth $3.9 billion in 2009, according to StatsCan.
The latest instalment in the #LiquorLeaks series, excerpted from the Exel Logistics Oct. 6, 2009 Project Last Spike internal memo, is the Exel expansion strategy in a nutshell.
The LDB is a provincial agency responsible for the importation, distribution and retailing of beverage alcohol in the province of BC. Exel serves the Alberta Gaming and Liquor Commission (AGLC) through its member company Connect Logistics. This pursuit is consistent with Exel's desire to grow its alcohol beverage distribution business within Canadian provinces and US states where the importation and distribution of beverage alcohol is controlled.
In April 2008, the Canadian operations of DHL Express, DHL Global Forwarding, Exel, and ETS conducted a CIP (Bob note: capital improvement plan) workshop. The workshop developed strategies to pursue opportunities that leverage the capabilities of the DHL Deutsch Post companies. One strategy formulated was the Importing of Beverage Alcohol Finished Goods into Canada. Expanding the LDB mandate to offer importing and consolidation services for products destined to other provinces in Canada is a major step in executing this strategy. It combines the service offerings of DHL Global Forwarding, Exel, and ETS.
Exel's Ohio-based Americas division boasts $4.1 billion in revenue, 42,100 workers at 456 facilities encompassing 111 million square feet. That's equal to 1,031 hectares; imagine one big warehouse, two-and-a-half times the size of Vancouver's Stanley Park. In 2011, it sold ETS to Hub for $83 million, but industry observers say its liquor industry strategy remains otherwise the same.
A company this big isn't infallible. Exel Inc. was fined $283,000 by the U.S. Department of Labor for workplace health and safety violations in Pennsylvania. Exel is appealing. Various Exel-affiliated companies were named in a massive European Commission antitrust investigation. The DHL and Exel companies escaped fines because they cooperated with investigators. Closer to home, there was the February 2011 closure of a Burnaby, B.C., warehouse operated by Exel-owned Summit Logistics on contract to Canada Safeway. One person died in the decommissioning, almost 400 people were laid-off and their pensions were much less than what the workers expected.
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