Over the past few years I’ve been telling anyone who would listen about the environmental leaps and bounds being made by the trucking industry. I am always quick to point out that it takes 60 2007 trucks to create the emissions of just one truck built in 1988.

I point out that the insides of smokestacks on new trucks are in some cases corroding because there’s no soot buildup to protect the steel. I tell them about the ‘hanky test’ I performed on several new trucks and how I wouldn’t hesitate to use the same handkerchief I held over the smokestack to wipe my hands with after lunch. I tell them that before long, trucks in some urban centers will be churning out cleaner air than they take in!

It’s a remarkable achievement, and it’s still ongoing with another generation of heavy-duty engine technology slated to hit the market in 2010. This is something the industry should take great pride in, and it should be doing more to educate the public about its environmental accomplishments.

For whatever reason, it seems people who aren’t connected to the industry still perceive trucks as major polluters that are solely to blame for the smog-filled air that hangs like a sickening cloud over the GTA every time there’s a heat wave.

I believe part of the reason the public is either: a) uninformed, or b) uninterested in this great story we have to tell, is that there’s still too much evidence to the contrary. There are still far too many trucks puffing big clouds of black smoke into the air, and I cringe every time I see it happen. It belittles everything the industry has done to clean up its image. The biggest perpetrators of this are older model dump trucks – it’s amazing how many of these trucks built in the 70s and 80s are still in service.

B.C. and California have proposed requiring older model trucks to be retrofitted with emissions-reducing devices such as diesel oxidation catalysts. The cost to the owners of older equipment would be substantial – but so would the environmental benefits. Sixty tonnes of particulate matter can be removed from B.C.’s air each year as a result of that province’s proposal, according to government officials.

I was initially surprised to see the B.C. Trucking Association endorsed the provincial proposal to limit the emissions of older trucks. But on further thought, I can concur with their position. The rest of the industry, most notably the over-the-road sector, has incurred enormous costs to invest in new, environmentally-friendly equipment. Why should companies that continue operating older technology get a free pass? I say: Make the polluters pay!

Let’s rid our roadways of these smoke-belching machines of yesteryear and kill the lingering perception that big trucks are big polluters.

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If you think congestion can make picking up containers at our international ports a real hassle now, wait till July 1, 2012.

That’s when the US wants to have its scan-all legislation in effect. The legislation decrees that as of July 1, 2012 “a container that was loaded on a vessel in a foreign port shall not enter the United States (either directly or via a foreign port) unless the container was scanned by non-intrusive imaging equipment and radiation-detection equipment at a foreign port before it was loaded on a vessel.”

We already have the prospect of worsening congestion in many of the world’s container ports as volumes grow year on year, Vancouver being an excellent case in point. As Nicolette van der Jagt, Secretary General of the European Shippers’ Council commented about the new US initiative: “One can only imagine the huge queues that will form when every container has to run through radiation and image scanners.’

All members of the Global Shippers Forum, have emphatically stated, the approach calling for 100% scanning will result in enormous costs to users, suppliers and ultimately consumers without accomplishing the very objective that the scan-all requirements are seeking to achieve. This view is shared not only by the members of the GSF, but it is the opinion of the US Department of Homeland Security (DHS), Bureau of Customs and Border Protection, all major cargo organizations, shippers, the ocean carriers, the European Commission, and the governments of America’s trading partners including- Canada, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Japan, the Netherlands, Norway, Poland, Portugal, Singapore, Spain, Sweden, and the United Kingdom.

How could the US push through legislation that even its own security agencies won’t buy into?

The impact 9/11 has had on the American psyche can’t be underestimated. The transportation community’s strong belief that security and efficient flow of trade must remain of equal importance is under constant threat by a fearful public that doesn’t bother to think through all the ramifications of over zealous security policy and politicians willing to take advantage of the public’s fears to score points, particularly just before an election. The US Democrats may be guilty of this latest attempt to break the necessary balance between trade and security in their desire to position themselves as tougher in dealing with the terrorist threat than the Republicans for the 2008 election, but they’re just following a well-established pattern set down by the Bush administration.

But the potential impact on trade AND security of such ill-advised legislation also can’t be underestimated.

Personally, I would not object to the US trying to dictate supply chain security if there was good reason to believe they really knew what they were talking about. Avoiding another 9/11 trumps national pride in my books. But this legislation is based on the premise that in five years scanning technology will have advanced to the point that scanning all containers would not slow the flow of commerce to a halt. Currently, there is no scanner that can do the job the new law demands. In other words, the US is hoping that future technology will provide the magic bullet. I hope the money they are sure to invest in developing such technology proves worthwhile but the problem is you can’t legislate technological breakthroughs.

And, as the GSF and others point out, chasing after this single-layer “magic bullet” will divert vital funding and focus away from the current multi-layered approach to security that most experts believe is the most effective. US partisan politics before an election year may very well create more costly and congested global trade and, in the worst case scenario, set the stage for another successful terrorist attack on US soil.

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When I discuss with industry suppliers the cost challenges their owner/operator and fleet customers face, I’m often asked what would be the best way they could help truckers reduce their costs.

Before addressing the ways to help, it might be best to address the one way NOT to help. And that’s through pushing sub-standard off shore parts.

The trickle of cheap offshore knock-offs that started 10 years ago is becoming a torrent. It’s estimated that the big three North American truck lighting manufacturers have lost 15% of their business to offshore knock-offs in the last few years. Our own research has found that 20% of fleets and 10% of owner/operators have purchased cheap offshore tires in the past year. Braking systems and fifth wheel components are also popular targets for knock-off products.

The best operators, like Bill Arthur at LE Walker Transport, already disapprove of distributors who try to push offshore products. He told us he uses four distributors that are committed to offering brand-name parts.

But for fleets and owner/operators running on thin profit margins, it will prove hard not to be enticed by these products when they offer 20% or 30% savings off the regular purchase price for aftermarket parts. They will actually be pushing their suppliers to offer them.

Rather than taking the attitude of "the customer is always right", and moving towards offering such products, I hope suppliers will instead take the time to school fleets and owner/operators on the true LONG TERM costs of cheap offshore knockoffs. Truckers sometimes need to be reminded that while their profit margins may be thin, so is their margin for error.

From the experts we’ve spoken to, these knock-off products may look the same – right down to having the same bubble pack and printing on the box, but they don’t perform the same. Some imported LED lamps for example tested at 50% lower than the minimum intensity. Some have actually been tested at 90% below the minimum requirements.

We’ve heard of knock-off brake valves that look so identical to the established brands that even our own engineers have trouble visually distinguishing the difference between the knock-off part and their own. Yet, a detailed inspection finds wall castings so thin that a rupture could occur in the side of the valve causing the brakes to come on at speed; o-rings made out of lower-quality material that wears out quickly because it can’t handle temperature extremes.

Our own research found that the majority of fleets and owner/operators using offshore tires are not bothering to retread them.

The impact of poor or failed performance extends beyond the knock-off item. A failed knock-off brake valve, for instance, can have a trickle down effect that impacts other components of the brake system. Using a knock-off rebuild kit can void the warranty of the original components.

Ed Roeder of Muir’s Cartage told us he learned to avoid knock-offs because of something as innocuous as a poorly woven rear door strap. The $6 offering broke free just as a driver was using it to support himself – almost sending him into traffic.

Particularly disturbing is when the industry thinks it is buying genuine parts, and in fact it is not. Makers of knock-off parts tend to label them with parts numbers that are the same as on the genuine components. Legally, parts numbers are NOT protected. And even if there is a violation involved with a knock-off, chances are it will go unnoticed. For example, there are about 3,500 manufacturers of trailers, buses and motor homes in Canada. Yet Transport Canada has just seven inspectors.

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In the medical profession there’s a saying used, comparing horses and zebras, when a physician comes up with the misdiagnosis of an ailment.
Something about looking for zebras instead of horses, or horses instead of zebras…
Regardless of the situation, a simpler answer is usually at-hand; I think that’s the moral of the phrase, anyways.
Recently, without much fanfare, Passport Canada made a simple move to ease a problem that has been talked about by government officials for the better part of three years.
Since US Congress passed laws empowering the Western Hemisphere Travel Initiative (WHTI) back in 2004, there’s been growing concern at the Canada/US border regarding security and ease of travel. Government officials from both sides of the border have spent an inordinate amount of time, trying to find a suitable solution to balance both security and expedited travel.
Business and tourism associations have been vocal in their opposition to enhanced documentation requirements at border crossings, claiming that people will be scared away from crossing the border due to the new inconvenience.
Regardless, the WHTI initiatives have pressed forward and near the beginning of the year any person entering the US by air was required to have a valid passport. The passport requirement is expected to be extended to land and sea crossings in the summer of 2008, but some groups have been working diligently to find an alternative to the passport.
Apparently, obtaining a passport is one of the most difficult things a human being will ever have to do during their lifetime.
As a result, the effort of a great number of people has been put to use finding a suitable alternative. There’s been talk of an official identification card, enhanced drivers licenses, biometric capabilities, and it’s possible we were one or two meetings away from having every person in North America implanted with a computer chip, just for good measure.
Thankfully though, Passport Canada came to the rescue. The government agency simplified its renewal process, hopefully easing the burden of passport application and making passports more attainable for the average person.
Although biometrics and enhanced drivers licenses may still work their way into the WHTI initiative, it’s good to know that in the mean time getting a passport will not be so much of a waiting game.
On the other hand, my dreams of finally seeing a zebra may have been dashed.

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As always, the summer of 2007 has been a busy one for show-goers such as myself. There seem to be more and more regional truck shows popping up, and that’s good news for chrome junkies. By all accounts, this year’s Eastern Ontario Big Rig show in Stirling was a huge success and it continues to gain steam after just two years in business.

Fergus represents one of show season’s highlights for myself. It’s a great show to begin with, and it’s made all the better by the fact we get to present our Owner/Operator of the Year Award at the show. As luck would have it, a torrential downpour attempted to dampen our spirits during this year’s presentation, but we persevered through it (and so did the attendees who huddled under the beer tent), and it was a huge success. This year’s winner, Frank Vanderhoeff, is featured in the September issue of Truck News. He was truly a deserving winner. Thanks to our sponsors, Freightliner, Markel Insurance and Goodyear for making this award possible. Trucking can be a thankless job at times, so it’s nice to be able to recognize an exceptional owner/operator each year.

Next up was Rodeo du Camion. What can I say about Rodeo du Camion? That show defies description!

I’ve often been told that you have to attend Rodeo du Camion in person in order to understand what it’s all about. Now I know why. Words simply cannot begin to describe the atmosphere at ‘el Rodeo.’ While the Fergus Truck Show is a celebration of chrome and stainless steel and rubber, Rodeo du Camion is simply a celebration.

I’d guess that a large percentage of the 60-some-odd thousand people who cram into Notre Dame du Nord have no connection to the trucking industry. They are there for the party – and that’s not necessarily a bad thing. Here’s a chance for the industry to showcase all that is glitzy and glamorous about trucking to a fresh audience – a young audience with limited exposure to the industry.

This trip was an adventure to say the least. Being a first-time attendee, I didn’t realize you have to book your hotel about a year in advance. With every room within 100 km booked up, I found myself sleeping in a rental SUV. I’ve attached a picture of the luxurious accommodations I shared with my fiancee. I don’t know if she’ll be back, but I know I will!

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In my past two blogs dedicated to understanding the changes driving today’s motor carriers, we examined the increasing importance of accountability and the greater amount of complexity fleets face today. One thing that has NOT changed is the importance of cost control – yet it’s a major driver nonetheless.

Motor carriers are getting hit from both sides. Consider some of the financial performance numbers I go through every quarter.

· Second quarter 2006: Revenues up 5.7%. Expenses also up 5.7%.
· Third quarter 2006: Revenues up 5.0%. Expenses up 5.5%.
· Fourth quarter 2006: Revenue up 2.3%. Expenses up 2.9%.

That’s the performance for the nation’s largest carriers. If we were to look at small and medium-sized carriers, the jumps in revenues and expenses would more pronounced but the trend would be the same. Costs are rising as fast, and some times faster, than revenues.

If we use 1993 as the base year, power unit costs were up almost 18% and that’s before the impact of the 2007 engines. Trailer costs are up 43%. I don’t need to tell you what’s happened to fuel costs and driver costs.

From the end of 2003 to about the beginning of 2006, carriers were able to absorb these rising costs because they were able to do something unheard of since the industry was deregulated more than 20 years ago. Pass through, wide-ranging significant rate increases, and reduce profit leakage through fuel surcharges and other accessorials.

You have to look at a chart to see just how different those years were. Back in 1999 only one quarter of shippers agreed to an increase in their truck freight. By 2004, it was 80%.
And the size of those of those increases. Back in 2004, one half of shippers were accepting rate increases greater than 4%; a year later almost 2/3 of shippers were doing so.

We know the main reason why. Capacity in both TL and LTL got tight enough that shippers for the first time in a long time became significantly concerned there were not enough trucks on the road to move their goods. So they played a lot nicer at the contract bargaining table.

Some predicted a whole new era for trucking. Some believed the balance in the shipper-carrier relationship had reversed for good. I think it’s important to remember one thing about shippers. Despite their focus on accountability. Despite their focus on complexity, they remain vigilant about costs. Year after year our survey of shippers shows that only do the vast majority – 8 in every 10 -- consider cost control one of their top challenges but that it is the challenge to which they attach the highest priority.

They had their hands tied when there was a capacity shortage; they agreed to some substantial rate increases but that didn’t mean they were going to continue to do that. In fact, soon as capacity started to loosen as the North American economy dipped while carriers were adding capacity through the pre-buy, we saw a marked drop in rate increases. This year, 6 in 10 shippers may still be accepting rate increases for their truck movements but only 40% -- compared to more than two thirds two years ago – are paying more than 4%.

I think this situation will change again as the economy picks up and capacity tightens, but to expect large rate increases year after year is far too optimistic. And to really put the issue in perspective, even during the best of times, when carriers had driven the operating ratio down to 0.92 – so carriers were making 8 cents on every dollar spent – look at how that compares with other transportation sectors. Short-line railways make 8 cents on the dollar, regional railways make 15 cents on the dollar, the Class 1 railways make better than 20 cents on the dollar. Only air freight operators have to live with tighter margins.

Trucking may be the lion of the transportation industry. But it’s not exactly growing fat on its kills.

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In my last blog I began examining the three major trends – accountability, complexity and cost -- that I think drive the success and fuel the fears of motor carriers. The first trend we looked at was the increasing amount of accountability expected from shippers. With this blog I want to examine the increasing amount of complexity motor carriers are expected to deal with. It’s hitting them on several fronts. And I think it will force motor carriers to make changes that over the next few decades that will radically change the trucking industry.

From the carriers I speak to on a regular basis, I get the distinct feeling that it is becoming increasingly challenging for them to understand their customers and to keep up with them. Most of the shippers that motor carriers traditionally dealt with, grew up believing in the power of vertical integration. That to reduce the costs associated with finding the right suppliers and negotiating with them and managing deliveries and storing inventory, it was best to integrate those functions into your own operations.

But our new technology has made that kind of business strategy unsustainable. Technology has made it much easier, much less costly to tap and manage supply networks outside North America. To integrate offshore, low-cost countries into a company’s global supply chain, for both sales and production.

Almost a quarter of Canadian firms already identify low-cost country sourcing as strategically important, according to research currently being conducted by Industry Canada. Eight out of every 10 Canadian companies that are moving production off shore say they have to do it in order to reduce costs and stay competitive. Goods at an intermediate stage of production now constitute 46% of Canada’s imports and 43% of exports.

What’s does all this mean to the Canadian motor carrier?

For carriers, it means FOUR things:

First it means a marked change in shipping patterns. The traditional head haul from the industrial heartland in central Canada to the West is being met by boatload after boatload of product coming in to our West Coast ports from Asia. Did you know that since 2002 domestic freight movements have been growing three times faster than the hauls to the US, that used to be our engine of growth? You are seeing Central-Canada based carriers, such as Challenger Motor Freight and Consolidated Fastfrate, setting up operations in the west.

Second, it means that key Canadian or US shipper contacts that motor carriers have being cultivating for decades, are changing. Tomorrow’s freight moves could very easily be routed by some freight forwarder in Asia, that worries about transport in Canada only after he has figured out how to navigate the freight through Asia, across the Pacific, through the port of call and into a warehouse, pic’n’ pak or transload facility.

Canadian carriers will have to identify those new decision makers across the ocean so they can ensure they get to move that freight once it hits our ports. I remember Claude Robert, CEO of Robert Transport, telling us that freight forwarding giants such as Schenker will come to control 50-75% of world wide freight distribution… and our carriers somehow have to get on their radar screen.

That’s why you are seeing a forward-thinker like Ron Tepper of Consolidated FastFrate opening a sales office in Shanghai. That’s why you are seeing him go off to India with a delegation from the Port of Halifax.

Third, it means becoming much more than they are now. This trend already started a decade ago when major shippers like Alcan shifted to core carrier programs, giving all their business to just a few major carriers that had to have both the capacity and the service portfolio to handle the business. The need of shippers to simplify the complexity involved with longer supply chains will drive this even further. In the words of Scott Johnston, head of Yanke Truck Group, motor carriers of the future will have to formulate alliances with other service providers or become more diversified themselves, offering warehousing, transload and pic’n’pak, etc.

That’s why you are seeing carriers like Yanke or Bison offering intermodal services. Why so many carriers are now offering warehousing services. Why Ron Tepper is spending millions building a new cargo distribution and warehouse facility in Dartmouth that can provide not only LTL services but transloading and drayage for international containers.

And finally, it means motor carriers will have to get a lot bigger in order to provide such services.

All of the top CEOs we spoke to a few months ago, believed exactly what Allan Robison, of Reimer Express believes: That the industry will continue to consolidate over the next 25 years until there are just a few major players dominating the majority of the hauls in Canada and niche players that may partner with them.

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The tragic collapse of a Minneapolis bridge this week has demonstrated the need for immediate upgrades to North American infrastructure. The deadly collapse comes just weeks after Transports Quebec announced oversized loads will no longer be allowed to cross 135 bridges in that province.

And just yesterday, officials in Montreal announced a well-travelled bridge in that city is now off-limits to all truck traffic. For years, the trucking industry, through its various associations, has been appealing to government to inject cash into our aging infrastructure. For the most part, those pleas have fallen on deaf ears.

You can blame the public for that. Spending money on roads and bridges generally isn’t as sexy to voters as money spent on health care and education. But the neglect of our roads and bridges is beginning to catch up with us – and with devastating consequences.

Witness the collapse of the bridge in Minnesota where they’re still picking bodies out of the water. And last year’s collapse of an overpass in Laval, Que. that left five people dead. Despite the best engineering efforts of bridge designers, it’s inevitable that all things fail over time. Much of our infrastructure is already more than 50 years old – some of it much older. The Brooklyn Bridge, for instance, was built in the late 1800s and it is crossed by 130,000 vehicles per day. No structure has an infinite lifespan, especially if it’s not properly maintained. Yet we react in shock when a bridge fails and motorists are sent plummeting to their deaths.

Hopefully, the recent bridge catastrophes will serve as a wake-up call to government. Studies have suggested Canada needs to invest $100 billion into its existing infrastructure to bring it up to par. It’s time for all levels of government to open those purse strings.

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I’m sure there has yet to be a generation of young people who have not felt slighted by their predecessors.
And likely, along the same lines, there probably has yet to be a generation of decision-makers who has not wished the younger generation would shape up and perform the way they did in their youth. You know, the lectures that begin with, ‘back in my day…’ or ‘when I was young…’
Among the many issues facing the trucking industry, a severe driver shortage would probably be ranked on just about everybody’s Top 10 list. Numerous articles, discussion groups and management sessions, have been dedicated to tackling the pending problem.
At one point or another, one of the solutions to combating the dwindling employment of professional drivers, is to tap into the youth of today. Raise the profile of the industry and start attracting people at a younger age.
The idea is good in theory, but there seems to be few people willing to put the strategy into practice.
Rather than hearing success stories about hiring a young person and watching them grow into a positive contributor to a company, the stories told focus on not giving young people an opportunity.
Apparently, all young people want to get paid really well to do no work. Also, as the rumour goes, young people do not know anything about the industry and would not know how to handle any situation.
Considering the above paragraph is true for all young people, with no exceptions, it might be best to scratch young people off of any list of solutions for the driver shortage. Instead, replace young people with an actual fountain of youth, so the current aging employees of the industry can continue working forever.
Afterall, I’m sure nobody drove uphill both ways in the snow, just to be replaced by someone younger.

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