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Logistics giant pushes for provincial liquor deal

Patrick Kinsella's Progressive Strategies lobbies on behalf of Exel Logistics

The B.C. government's Tuesday-disclosed decision to privatize liquor warehousing and distribution could be "wunderbar" for the well-connected arm of a German giant.

Exel Logistics, whose Americas operations are in Ohio, is owned by Deutsche Post DHL. Exel has been a client of lobbyist and B.C. Liberal political strategist Patrick Kinsella since at least 2006.

"I don't have any comment at this time, but I would be quite interested in looking at any RFP that comes out from the government on this whole subject," Scott Lyons, vice-president of business development for Exel Logistics in Toronto, told BIV.

Asked about Exel's B.C. operations, Lyons declined to comment. The Exel-owned Summit Logistics shut down its Burnaby warehouse at the end of February 2011, laying off almost 400 workers, when Canada Safeway shifted its contract to Cold Logic in Langley.

According to the B.C. lobbyist registry, Kinsella's Progressive Strategies (dba the Progressive Group) registered from April 1, 2010, to April 9, 2013, to lobby the B.C. government on behalf of Exel Logistics. Target contacts include Jobs, Tourism and Innovation Minister Pat Bell, Justice Minister Shirley Bond and Rich Coleman, who regained the liquor and gambling portfolio earlier this month.

The form said Exel is seeking "to develop a new liquor distribution system for the Province of B.C."

Kinsella was behind Gordon Campbell's 2001 and 2005 election wins and Christy Clark's successful 2011 Liberal leadership win. Progressive client Accenture made a 10-year, $1.45 billion outsourcing deal with BC Hydro in 2003. Kinsella was also an adviser to BC Rail during negotiations for its sale to CN Rail.

When the request for proposals is published, it could be a highly sought-after deal. Richmond-based ContainerWorld, which specializes in beverage alcohol logistics, is a likely bidder. Owner Dennis Chrismas did not respond to an interview request before deadline.

According to its Tuesday-released service plan, the Liquor Distribution Branch (LDB) is forecasting $2.9 billion in sales in 2012-13 and $906.1 million in net income. The LDB has warehouses in East Vancouver and Kamloops and supplies 1,400 retailers (only 197 of which are government-owned) and 8,000 bars and restaurants.

The government has not published a business case for privatizing liquor logistics, but the LDB service plan mentioned a benchmarking study that compared it to public and private operators in Canada and the U.S. While LDB claimed to have among the best operating costs as a percentage of sales, cost per case was on the better side of the scale but net income and worker productivity were in the middle. •