I’m often asked by companies selling products into the transportation industry to outline the major trends that are both driving the success and fueling the fears of their motor carrier customers. I put it down to three main trends: Accountability, Complexity and Cost. Over the next few blogs I would like to closely examine all three.

Let’s look at accountability first. To do that, we must take an important step further back in the supply chain and look at the motor carrier customer, the shipper. I think they are starting to see transportation in a new light. Thirty years ago, heck, even 10 years ago, companies focused their attention on product development, marketing, sales. How the product got to market, well, that wasn’t really considered critically important. Within the past 10 years, however, there have been a number of impressive studies that finally proved the existence of transportation’s equivalent of the Holy Grail. That supply chain management has a distinct and quantifiable impact on a company’s financial performance. And, of course, the majority of supply chain management spend, goes to transportation.

For example, one well-publicized study found that the compound average annual growth in stock value of companies considered leaders in how they managed their supply chains was 10 to 30 percentage points higher than those who DIDN’T do a good job managing their supply chains.

A ground-breaking study by a Canadian professor, Dr. Kevin Hendricks who was the University of Western Ontario at the time (he’s now at Wilfrid Laurier and his thoughtful research is always worth a read), looked at things from the opposite end. He studied what happens to public companies when they don’t get their transportation and logistics practices right and can’t get product to market for one reason or another – say their carrier is on strike just as the holiday season rush starts or an important shipment of a new line is stuck in a hopelessly congested intermodal yard for days. What’s the stock market’s reaction? For anyone who thought, well, the stock market probably wouldn’t take notice, the results were eye opening.

Hendricks tracked more than 800 companies announcing supply chain disruptions. He found they suffered, on average, an immediate 7% drop in their stock market value the day of the announcement. Imagine taking seven percent of everything you will earn this year and throwing it out the window.

The stock market did not forgive.

Nor did it forget.

Over a three-year period, those public companies announcing supply chain disruptions suffered an incredible 30-40% valuation loss. Supply chain disruptions proved to be more damaging than announced decreases in capital spending, IT problems, even plant closings.

Now CEOs get to be CEOs because why? Because they’re good at the “S” word. Survival. (How many of you thought I was going to say, sex? -- did you know by the way women have something like 860 different thoughts a day. Men have about the same number, but they happen to all be about the same thing, but I digress.)

Anyhow, it didn’t take long for CEOs at top companies looking at such studies to figure out that transportation was actually important. A recent study found almost three quarters of company executives agreed their CEO now views supply chain management as either “very” or “extremely” important. In fact, for many companies, supply chain risk is now considered the top threat to their main revenue generators.

What that means for motor carriers, is that that they are under the microscope. The margin for error is razor thin. A Canadian study we published in our last issue about the transportation buying habits of shippers in the Windsor- Quebec City Corridor found that just a 1% increase in perceived security risk for a carrier was enough to cause a 3 fold decrease in the likelihood that carrier would be chosen again. Just a 1% increase in shipment damage caused by a carrier was enough to lead to 10 FOLD decrease in the likelihood that carrier would be chosen again.

Our own annual study of more than 2,000 shippers across Canada examines 7 key performance indicators that shippers consider when choosing one carrier over another, across all modes. Every year, we find trucking is held to some of the highest standards among all the modes.

Let me give you one example of what I’m talking about. A few years ago I was out to speak to the logistics team at Home Depot Canada, which is responsible for an inventory greater than 50,000 SKUs sourced from about 2,500 different vendors and totaling over one million shipments per year. But it’s not sheer size of the operation that presents their most daunting challenge. It’s the absolute emphasis on competitive pricing and the distinct seasonality of the business.

When that first warm spring weekend hits and do-it-yourself-minded Canadians start thinking about their gardens and other outdoors projects they head to a Home Depot store. And they expect to find the merchandise they’re looking for on the shelf. If it’s not there, they’ll walk over to the nearest competitor.

The easy solution is to have a robust distribution centre network so Home Depot would have the ability to pre-hold inventory and make last-minute adjustments easier to deal with. But remember Home Depot’s emphasis on a lean operation. They don’t want the costs associated with a distribution empire. The company got to where it is by being able to buy large quantities of merchandise and sell it, in essence, “right off the truck.”

Home Depot has more than 100 stores across Canada, hundreds of suppliers, thousands and thousands of products. Yet up to 90% of merchandise is moved directly from the manufacturer to the individual stores, using just a core group of motor carriers, Toronto’s Muir’s Cartage being the main player among them. And the motor carriers are the ones expected to make this very precise, highly fragile arrangement work. If a Home Depot vendor calls Muir’s today and has ten times the amount of freight it had yesterday because there is a seasonal spike, Muir’s has to have the capability to be able to make that work, in what ever city it’s required.

Do you think their performance is under the microscope?

Do you think they can afford to have trucks sitting in the shop when a seasonal spike hits?

So what does that mean to suppliers serving the Canadian trucking market?

Quite simply, motor carriers can’t meet such high expectations without your help. They need expert help to select the right products for their operation. They need products that work the way they are supposed to. And they need immediate help, not excuses or stone walling, when they don’t.

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The June 29 version of the Environmental Registry confirmed Ontario Regulation 280/07, a law that prevents companies from burning waste oil for heat as of June 1, 2009.

Truck News has been covering this story in recent months and the coverage has sparked much criticism of the provincial government. This initiative appears to be politically-motivated and the province has provided no scientific evidence that the use of waste oil heaters has a negative impact on the environment.

In fact, in many jurisdictions, waste oil heaters are encouraged as an environmentally responsible use of waste oil. Nonetheless, the province has gone ahead with this nonsensical law, with little regard to concerns voiced by industry.

Consider this, during a comment period, the ministry received a total of 560 comments; 117 in support; 441 not in support; and two neutral. Overwhelmingly, those who contacted the ministry were opposed to the ban.

Here are some of the common themes addressed during the public comment period:

 The proposed regulation does not have any data (e.g., exceeding allowable emissions from space heaters, evidence of detrimental effects to the environment) or any other scientific information to support the government’s decision to ban the burning of used oil in space heaters. The government has not studied the issue in enough detail to make this decision.

 The proposed ban does not include northern Ontario. If there is a risk to human health from the burning of used oil, the ban should extend to the entire province.

 The overall emissions from the collection of used oil across the province, including the re-refining of oil, would far exceed that of the emissions from used oil space heaters. Spills are more likely to occur and damage the environment.

 Used oil pick-up cost will increase if the proposal is put in place and may be illegally dumped to avoid the charges.

 There will be a loss of revenue to small business owners since their heating cost will increase significantly. Also, a significant investment has been made to purchase and install the used oil space heating equipment. Businesses will close due to the incremental operating cost associated with heating a facility.

 The ministry did not actively go out and consult with manufacturers, distributors and owners of space heater before announcing the draft regulation to the public.

 Burning used oil in space heaters can burn as clean as and more efficient than some household oil burning furnaces. Replacement fuel will be less environmentally friendly as the total CO2 emissions associated with its production and transportation will be higher than that of burning used oil in space heaters:
a. Natural gas is not readily available
b. Wood is extremely inefficient.

Despite all these valid arguments, the ministry has gone ahead with the ban. Something to think about with a provincial election looming.

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It’s no secret that professional drivers are generally not the fittest of folks. Of course there are exceptions to the rule, but it’s not easy to stay in shape when you spend long hours behind the wheel and the most convenient meal options are the truck stop buffets.

It’s not much easier as a truck journalist, I often contend. The job involves a fair bit of travel, some long days and many meals on the road. My own fitness regime involves long stretches of inactivity followed by months of intense training. When active, boxing is my activity of choice; I have a deep appreciation for both the physical and mental aspects of the ‘sweet science.’

Regardless of the type of work you do, it’s important to maintain some degree of physical activity. Thankfully, many fleets are making it easier for their drivers to do just that. Some are installing gyms in their terminals. Others are providing incentives for weight loss and subsidizing physical activities. Doing so is a win-win situation. The carriers help lower their WSIB- and WCB-related claims costs and drivers enjoy the benefits of a healthy lifestyle. There’s no denying that when you’re physically active you feel better, have more energy and also are likely to extend your life expectancy.

Carriers I’ve spoken to that have launched an employee health program all say they have noticed an overall improvement in morale and productivity. It’s an excellent investment for employers.

As a driver, if you can find 30 minutes a day to exercise, you’ll undoubtedly feel a lot better. It could be something as simple as going for a walk or it could be a more rigorous workout. Gym equipment such as exercise mats, hand weights, skipping ropes etc. occupy very little cab space and can be used just about anywhere. The biggest challenge is finding the time and then getting into a routine.

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They say bad things happen in three but we’re beyond three and still counting when it comes to recent truck crashes on major GTA highways caused by four-wheelers.

Yesterday a cement truck rolled over on Hwy. 427, closing the well-travelled road for most of the afternoon. The driver remains in hospital with life-threatening injuries. Media reports say a Volkswagen Jetta driver caused the accident by trying to change lanes where there was no room to do so.

That marks the second time in a week that Hwy. 27 was closed in one direction following an accident. Just days earlier, a gravel truck rolled over when a man in a BMW reportedly lost control and ran into the truck.

On the 401 near Salem in Ajax, a man is lucky to be survived after he lost control of his SUV while speeding in the middle of the night. His vehicle reportedly crossed three lanes and smashed into the back of a tractor-trailer, erupting into flames. The eastbound lanes were still closed the next morning when I drove to work and I saw the remnants of the Hyundai Tuscon – a hunk of twisted black metal was all that remained.

We all know by now of the accident on Hwy. 400 that claimed the life of trucker David Virgoe. He was hailed as a hero for taking evasive actions which saved the lives of drivers in oncoming vehicles.

Despite these well-publicized accidents, four-wheelers continue to drive way too fast and with reckless abandon. I have yet to see a stepped up police presence on our highways. Let’s hope drivers begin to understand that speeding and weaving in and out of traffic is not worth the risk. Until these drivers come to realize there will be consequences for their actions, however, no change is likely to take place. In the meantime, remember to wear your seatbelt and be careful out there.

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Ontario Transport Minister Donna Cansfield has unexpectedly announced (amid very little fanfare during a long weekend) that the province is going ahead with an OTA proposal to require the use of speed limiters on heavy-duty trucks operating within the province.

You know all about the proposal by now – all trucks running within Ontario will have to be governed at 105 km/h under the new law. The Canadian Trucking Alliance hopes Ontario will pave the way for other provinces to follow suit, creating a national standard.

Only time will tell, but it appears the initiative will gain steam with Ontario’s commitment. While the writing has been on the wall for some time, what was most puzzling about the announcement was the timing. While the province’s citizens are up in arms about a rash of recent street racing crashes and fatalities (one involving a heroic truck driver who crashed to avoid other vehicles) the government announced it would limit truck speeds.

I spend a lot of time on the GTA’s 400-series highways and I don’t see a lot of 18-wheelers racing each other or speeding excessively. I do, however, see plenty of evidence that young drivers are engaging in increasingly dangerous driving habits including, but not limited to, racing.

There are plenty of steps the province and its enforcement agencies could take to tackle the problem of street racing head-on: Step up the police presence on the province’s highways. Re-introduce photo radar. Introduce educational programs. Enforce speed laws from the sky, as other jurisdictions have begun to do. Increase minimum penalties for offenders.

Targeting truck speeds does nothing to address the dangers of speeding four-wheelers. In fairness to the province and the OTA, the speed limiter proposal was never intended to address four-wheeler driving habits. It was designed to reduce emissions, improve overall highway safety and – let’s not kid ourselves – level the competitive playing field among carriers.

But given the fact street racing has been such a hot topic in the mainstream media lately, why not introduce tough new laws that affect all vehicles equally – not just trucks? When the trucking industry was suffering bad press resulting from a series of wheel separations in the early 90s, the province didn’t announce a major enforcement campaign against speeding cars. It targeted the offenders – heavy-duty truck operators. It came down hard on violators and the industry is better for it.

Want to send a message? Limit the speeds of all vehicles. There’s no need for a passenger car to be travelling over 130 km/h. Slow’em all down. Now that would make this speed-limiter pill a lot easier to swallow for professional drivers.

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