As part of Retail Insider Reports, this Q3 2026 Logistics & Supply Chain Report analyzes Q3 2026 developments in the supply chains supporting Canadian retail. Drawing on Retail Insider coverage, industry research, company disclosures, government data, and broader market signals, it identifies key dynamics shaping distribution investment, freight, inventory, sourcing, and operational resilience. These reports are designed to deliver executive-level insights across major retail sectors and can be accessed through the Retail Insider Report Hub.
This report examines logistics and supply chain developments affecting Canadian retail, including sourcing, transportation, warehousing, fulfilment, inventory management, freight, distribution, and operational resilience.
Report Contents
Executive Summary
Canadian retailers and suppliers continued investing in logistics capacity during the third quarter of 2026 while facing uneven freight costs, shifting inventory requirements and trade policies capable of changing sourcing economics within weeks. Lululemon brought a highly automated distribution centre of more than one million square feet fully online in Brampton, supporting e-commerce fulfilment across Eastern Canada and the eastern United States. Richelieu Hardware committed more than $15 million to expand regional distribution capacity in Quebec, while Loblaw extended technology designed to improve truck and freight processing at distribution-centre yards.
The investments arrived as Canada’s industrial real estate market showed renewed absorption and transportation conditions varied considerably by lane and service. Cargojet reported stronger e-commerce activity in parts of Canada while managing higher labour costs and emphasizing the profitability of individual routes and customer relationships. Trade disruption added another consideration. Gather Packaging rapidly accelerated U.S.-bound production ahead of tariff exposure and began pursuing additional Canadian customers, while Dupray moved some manufacturing closer to Montreal after the failure of an overseas supplier and amid U.S. tariff uncertainty.
Together, the developments show businesses adding options to their supply chains while paying closer attention to what those options cost. Warehouse capacity, inventory, automation, transportation choices and alternative sourcing can improve responsiveness, but their value depends on whether they protect service and margins when conditions change.
Canadian retail logistics continued expanding during Q3 2026, while transportation costs, inventory conditions and trade uncertainty increased the importance of how that capacity is used.
- Lululemon brought its automated Brampton distribution centre of more than one million square feet fully online, with 525 AutoStore robots, 292,000 storage bins and approximately eight kilometres of conveyors supporting Eastern Canadian and eastern U.S. e-commerce fulfilment.
- Canada’s industrial availability rate declined to 5.2% in Q3 as national net absorption reached 10.3 million square feet, although average asking rents remained below year-earlier levels.
- Cargojet reported stronger e-commerce activity, including among mid-market customers and in secondary Canadian markets, while a 26% increase in pilot wages and its focus on yield illustrated continuing transportation-cost pressure.
- Loblaw expanded Vision AI gate automation with Canadian technology company EAIGLE across multiple distribution-centre yards, applying AI to vehicle processing and freight information.
- July wholesale sales increased 7.9% year over year in dollars but only 1.8% in chained volume, while inventory conditions varied substantially by category.
- Gather Packaging and Dupray adjusted production strategies as tariffs, supplier disruption and lead times changed the economics of existing supply arrangements.
- Freight rates alone provide an incomplete measure of logistics cost, as service failures can generate additional handling, expedited shipments, customer-service expenses and markdown exposure.
Retail Insider Coverage
Lululemon Adds Major Cross-Border Fulfilment Capacity
Lululemon’s new Brampton distribution centre provided one of the quarter’s largest examples of Canadian logistics investment. The facility spans more than one million square feet and supports e-commerce operations across Eastern Canada and the eastern United States. Its AutoStore installation includes 525 robots, 292,000 storage bins and approximately eight kilometres of conveyors.
The centre became fully operational in June and was formally unveiled at a July 8 ceremony. Its Greater Toronto Area location puts a large automated fulfilment operation close to major Canadian consumer markets, transportation infrastructure and cross-border connections. Lululemon broke ground on the facility in 2023, making its opening the completion of a multiyear capital decision instead of a response to one quarter’s trading conditions. The company has positioned the centre around speed, flexibility and scalability as e-commerce volumes and seasonal requirements change.
The facility entered operation as Canada’s industrial real estate market showed stronger absorption. CBRE reported that national industrial availability declined 30 basis points during Q3 to 5.2%, while net absorption reached 10.3 million square feet, its strongest level since Q4 2022. National net asking rents averaged $14.77 per square foot, down 2.4% from a year earlier. The figures point to improving demand for industrial space without a return to the unusually tight conditions that characterized earlier periods of logistics expansion.
Richelieu Expands Regional Distribution in Quebec
Richelieu Hardware also committed capital to a larger Canadian distribution footprint during the quarter. The company announced an investment of more than $15 million to expand its Drummondville, Quebec, distribution centre from nearly 40,000 square feet to 180,000 square feet. The expanded facility is expected to become operational in spring 2027.
It will serve customers across Montreal’s South Shore, Centre-du-Québec and the Eastern Townships. Richelieu supplies cabinetmakers, furniture manufacturers, woodworkers and hardware retailers, giving the investment a different customer base from Lululemon’s consumer e-commerce network. The project extends distribution investment into specialist networks where broad assortment and reliable replenishment are central to customer service.
Loblaw Applies AI to Distribution-Centre Friction
Loblaw’s expanded partnership with Canadian technology company EAIGLE provided a targeted example of logistics investment. The companies announced in September that Vision AI gate automation would be deployed across multiple distribution-centre yards, expanding earlier work designed to reduce processing times and improve data accuracy.
The technology validates vehicles, captures freight information and connects with existing warehouse, transportation, yard-management and enterprise systems. Its purpose is to improve the movement of vehicles and information through facilities already processing large volumes of merchandise. “This is about scaling what works in real operations, a practical and measurable use of applied AI in supply chains,” EAIGLE chief executive Amir Hoss said in Retail Insider’s coverage.
The announcement did not disclose the number of additional yards or quantified savings. It provides a Canadian example of AI being applied to a defined operating process.
A DOSS survey of 230 U.S. consumer packaged goods operations leaders found that 40% were using AI, while 14% said it had meaningfully improved efficiency. The research does not measure Canadian adoption, but its findings around packaging errors, launch delays and outdated information reinforce the importance of reliable underlying operational data.
Tariffs Force Faster Supply-Chain Decisions
Gather Packaging’s experience during the quarter showed how quickly trade policy can change production schedules. The Toronto-area paper shopping-bag manufacturer accelerated roughly two and a half to three months of production into approximately three weeks, moving affected orders across the U.S. border by August 14 ahead of new tariff exposure.
More than 75% of the plant’s production volume had been destined for the United States. Existing customers continued honouring orders and the company retained a backlog, but the economics of subsequent U.S. orders became less certain. Gather began pursuing additional Canadian customers to use available production capacity. Canada’s counter-tariff measures added another sourcing consideration for domestic retailers, with affected U.S.-origin paper bags becoming subject to a 50% counter-tariff on September 8.
After a retailer approached Gather seeking domestic supply, the company rearranged production and began deliveries in approximately one week, compared with a typical lead time of one to two months. The opportunity remains product-specific. Paper shopping bags are bulky, making freight costs an obstacle when pursuing more distant markets, and additional Canadian demand cannot automatically replace a large U.S. customer base.
Dupray Tests Manufacturing Closer to Home
Montreal-based Dupray approached supply-chain uncertainty from another direction. After a manufacturing partner in Spain went bankrupt, the appliance company moved production of its Bloom air purifier to a facility near Montreal. U.S. tariff uncertainty also influenced the decision.
Approximately 70% of Dupray’s sales remained in the United States, while Canadian manufacturing represented a small share of its overall volume. Management described the operation as a pilot, with a second product being introduced and additional opportunities under evaluation.
The rationale centred on speed, control and resilience without assuming that manufacturing in Canada would always produce a lower unit cost. Gather and Dupray demonstrate different responses to supply-chain uncertainty. Gather sought additional Canadian customers for existing domestic capacity previously serving the U.S. market, while Dupray created Canadian production capacity after an overseas supplier failure.
Neither case establishes a broad reshoring trend. The economics depend on the individual product, including manufacturing costs, freight, lead times, market access and the value of greater control over supply.
Broader Industry Coverage
Cargojet Shows How Inventory Placement Changes Freight Demand
Cargojet’s second-quarter results, discussed during its August earnings call, provided another view of changing Canadian distribution requirements. Domestic overnight revenue, excluding the year-over-year effect of fuel-price pass-throughs, increased 3% to $104.9 million. Company-wide revenue on the same fuel-adjusted basis increased 5% to $250.1 million.
Those are revenue measures and do not establish equivalent parcel-volume growth, which Cargojet did not disclose. Chief executive Pauline Dhillon described stronger e-commerce activity, including among mid-market customers and in secondary Canadian markets. She also pointed to retailers holding more inventory in warehouses and less at individual stores, while the disappearance of Hudson’s Bay locations was affecting some shipping patterns.
Changes in store networks and inventory placement can still alter freight requirements. Serving a smaller market through centralized inventory and direct fulfilment creates different distribution needs from holding a broader assortment locally.
Transportation Costs Vary by Lane and Service
Stronger freight demand does not necessarily produce lower delivery costs. A new Cargojet pilot agreement increased wages by 26% effective July 1, with additional annual increases scheduled over the following four years. Productivity changes are intended to offset part of the increase.
Cargojet has also emphasized revenue quality, yield management and the profitability of individual lanes and customer relationships. Contract structures determine how quickly higher costs can move into pricing, with major long-term agreements creating a longer lag.
Broader freight data show why national averages provide only part of the picture. ACT Research reported aggregate intra-Canada spot truckload rates excluding fuel of approximately US$1.83 per mile in August, up 7.8% from a year earlier, while individual equipment categories and directional lanes moved differently. For retailers, transportation economics depend on the route, equipment, service requirement and contract structure involved.
The Freight Invoice Is Only Part of the Cost
Supply-chain strategist Gary Newbury made a related point in Retail Insider’s examination of Canadian freight conditions, arguing that retailers need to understand transportation exposure by lane, service and product. A lower freight rate can be offset by split shipments, expedited replacements, additional handling and customer-service work. Seasonal merchandise arriving late can create markdown exposure that exceeds the savings from choosing a cheaper service.
The relevant calculation extends beyond the freight invoice to the full cost of serving the order. That can justify paying more for speed or reliability when a service failure creates a larger commercial cost. Other products and routes may not warrant the same premium. The decision depends on the merchandise, customer promise and consequences of failure, not simply the quoted transportation rate.
Inventory Conditions Differ by Category
Statistics Canada’s July wholesale data show a substantial difference between growth measured in dollars and underlying volume. Wholesale sales increased 7.9% from a year earlier, while the corresponding chained-volume measure increased 1.8%. Month over month, sales increased 0.3% in dollars but declined 0.6% in volume.
The series measures upstream wholesale activity rather than consumer purchases at retail and excludes petroleum, other hydrocarbons, oilseed and grain. Wholesale inventories stood at $140.6 billion in July, essentially unchanged from June and 5.5% higher than a year earlier. The inventory-to-sales ratio was 1.51 months, compared with 1.52 in June.
Textile, clothing and footwear inventories were 21.1% higher than a year earlier, although the category declined from June. The figures warrant attention without establishing a general inventory glut. Seasonality, product launches, pricing, order timing and sell-through can all affect inventory positions. For retailers, the more useful question is where excess or insufficient stock exists by category and location, and what it will cost to hold, reposition or clear it.
Editor’s Take & Outlook
Outlook: Supply-Chain Options Need to Earn Their Cost
Additional inventory, transportation capacity, supplier relationships and automation can protect a retailer when conditions change, but maintaining those options requires investment. A transportation premium can make economic sense when late merchandise creates a larger markdown or customer-service cost. Additional inventory may be justified for products with unpredictable replenishment, while a domestic supplier can warrant a higher unit cost when shorter lead times materially reduce inventory or disruption risk.
Automation presents a similar calculation. Faster processing creates value when it removes meaningful friction, but technology still depends on reliable information and integration with the systems around it. Entering the holiday period, retailers need visibility into critical routes, suppliers and category-level inventory exposure, along with clear points at which purchasing or fulfilment plans should change. Reliable information and established supplier and transportation relationships provide more time to act when conditions shift.
Editor’s Take
Canadian retailers and suppliers added logistics capacity during Q3 while confronting a more complicated question: where is resilience worth paying for? Lululemon’s Brampton distribution centre provides substantial automated fulfilment capacity. Loblaw is targeting friction inside existing facilities. Cargojet is managing transportation around labour costs, yield and individual lanes, while Gather Packaging and Dupray have adjusted production as tariffs and supplier disruption changed established supply arrangements.
Resilience carries a cost through inventory, supplier options, premium transportation, automation, domestic production or infrastructure that may not always be fully utilized. The relevant comparison is the cost of maintaining those options against the disruption they are intended to prevent. A low freight rate loses its advantage when merchandise arrives too late to sell profitably. Lean inventory becomes expensive when stockouts lose sales, and a lower-cost supplier can become the costly choice when it cannot deliver.
The strongest Q3 developments show businesses adding options to Canadian supply chains. Their value will be determined by whether those investments allow merchandise to move more reliably and profitably when demand, costs or trade conditions change.
Representative Articles
- Lululemon Opens Massive Automated Distribution Centre in Brampton — Jul 16, 2026
- Richelieu investing more than $15 million to expand Drummondville distribution centre — Sep 8, 2026
- EAIGLE, Loblaw expand AI partnership at distribution centres — Sep 17, 2026
- Rising costs and supply chain volatility put consumer goods brands under growing pressure: DOSS — Jul 14, 2026
- Cargojet Sees E-Commerce Growth as Retail Shifts in Smaller Canadian Markets — Aug 20, 2026
- Canada’s Freight Market Is Shifting Unevenly. Here’s What Retailers Should Watch — Aug 7, 2026
- Gather Packaging Pivots to Canada After 50% U.S. Tariff — Sep 3, 2026
- Dupray brings part of air purifier production back to Canada amid U.S. tariff uncertainty — Sep 22, 2026
