This morning, I arrived at the office thankful to see I still have a desk here. For the last two weeks I’ve been travelling – both near and afar – in the pursuit of articles for our November issues of Truck News and Truck West. As is often the case when I’m away from the office for extended periods of time, I began to feel some anxiety about just what would await me upon my return. Fortunately, within a couple hours I’ve been able to catch up on voice mails and regular ol’ snail mail. Thanks to the magic of VPN networks, I’ve been monitoring e-mail the entire time.

So what have I been up to? First was a trip to Brussels, Belgium with Volvo Group. I was fortunate to be included among a small group of trade press editors who had the chance to see, first-hand, seven different truck configurations designed to operate on a variety of bio-fuels. Each of the trucks is completely CO2-free. In fact, Volvo has gone one better and has started producing trucks at its Ghent, Belgium factory with a CO2-free approach, using wind and solar energy to power the plant. It’s quite the accomplishment, one the company plans to mirror at other factories, including those in North America. The ultimate vision is a truck that is produced, operated and then recycled without any CO2 emissions released into the environment. It’s an ambitious target and one that the company is relentlessly pursuing. I’ll have a full report from Brussels in the November issue.

Next up was a trip to Nashville where the Technology and Maintenance Council’s fall meetings are taking place. Cummins took advantage of the opportunity to outline its plans to meet the 2010 emissions standards. I think I can safely say, most of us there in attendance were surprised to hear company officials claim they can meet EPA2010 standards without the use of a NOx aftertreatment system such as SCR. It’s been widely believed that SCR would be required to meet the NOx emissions standards in store for the industry in 2010. Again, a full report of just how Cummins plans to accomplish this will be available in the next issue.

Finally, it was back-to-back-to-back trips to the Doubletree Hotel here in Toronto for two important conferences. The Canadian Recruiting and Retention Conference hosted by Over the Road magazine was held there Tuesday and Wednesday. Attendance was down from past years, but the organizers did an excellent job keeping the material fresh and relevant. Yesterday, Markel Insurance held its latest Let’s Talk seminar, discussing the best results for claims and losses as well as how to develop a claims protocol.

Now, I would like to hop up on my soap box and take a moment to emphasize the importance of continuous learning for managers, dispatchers and drivers in the trucking industry. The three days of seminars I attended this week featured an abundance of useful tips, tools and networking opportunities for attendees. Yes, there are a lot of these events and yes, they can be time-consuming and costly. But the information shared at these types of events can easily justify the expense and time away for the office for any sized trucking operation. For those of you who didn’t attend, you can read about them in upcoming issues of Truck News and Truck West. But admittedly, the whole story cannot be told in 800 to 1,000 words. For that experience you need to be there in person.

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For a few years now our research team has been tracking the perceptions and acceptance of the new offshore tires among both fleets and owner/operators.

Our latest research, completed this summer, found that the general perception of the quality of these new tires (we looked at products such as Double Coin, Triangle, Woosung, Double Diamond and Aeolus) remains low. Asked to rate these products on a scale of 1 to 5, fleet managers scored no product above a 1.65 while owner/operators, although a bit more generous, did not give a score above a 1.9. In other words, all these products received failing grades from owner/operators and fleet managers alike.

Yet use of these products is on the increase. This year we found that 18% of managers said their fleets had experimented with the new offshore brands. The same percentage of owner/operators said likewise. Double Coin was the brand used most often by fleets and Aeolus the brand most used by owner/operators. Both fleets and owner/operators predominantly use these brands in the trailer position. But about a quarter of both fleets and owner/operators are using them in the drive position and 16% of owner/operators and 9% of fleets are using them in the particularly challenging steer position.

Perhaps the biggest surprise was how much they’re paying for these tires. Although the vast majority are paying between $200 and $400 for offshore trailer tires, 18% of owner/operators and 4% of fleets actually reported paying above $400.

In my next blog I’m going to look at how use of these tires is affecting retreading practices.

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Statistics Canada’s report this week that manufacturing shipments heated up in July – they rose 2.3% -- should be taken with a distinct grain of salt for two reasons.

First, most of the strength in July came from a return to more normal shipment levels by motor vehicle manufacturers following a sharp decrease in June. Excluding the motor vehicle and parts industries, shipments advanced just 0.4% in July for the fifth gain in the last six months. As I wrote in a blog earlier this month, the increase in auto shipments is more a reflection of the Big Three becoming concerned that they had allowed their inventories to drop too low than indication of promising prospects for the rest of the year.

Second, as noted Export Development Canada economist Steven Poloz warned this week, the spending ability of the US consumer remains in doubt. as the US housing sector remains in trouble.

Since the summer there have been signs that the American consumer – stung by the collapse of the housing market and therefore their equity – is beginning to reconsider his spending.

Poloz points out that auto sales have drifted down to just above 16 million units annually, after spending some three years fluctuating around 17 million. Retail sales growth has dropped into the 3-4% range, whereas a year ago they were closer to 5-6%. Excluding autos, retail sales growth has fallen from the 8-9% range in early 2006 to 4-5% in the last six months. And net job creation has also dropped.

While it’s too early to be certain, if the American consumer does indeed become more cautious in his spending the boost in shipment levels carriers have been anticipating may still be months away.

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I had the pleasure of getting behind the wheel of a medium-duty hybrid truck and going for a little test drive during the Great American Trucking Show in August.
It looks like a truck, handles like a truck and pulls like a truck.
There’s a noticeable pause in acceleration at around 30 mph, when the engine shifts its function from electric to diesel. The engineer assured me that little snag is being worked out and will be dealt with completely when full-scale production begins.
But that wasn’t even my problem with the hybrid vehicle. This other – definitely more serious problem – will also need to be worked out before full-scale production, if the trucking industry has any hope in saving the world from an environmental disaster.
The problem is the name. Hybrid.
The name – hybrid – makes sense on the surface. It’s the combination of two species of engines: diesel and electric. There’s nothing more unimaginative than naming something by describing it.
And, when it comes down to it, hybrid is just a fancy way of saying mutt.
The truck that is destined to save the environment should have a sleeker name, a purebred name.
Mostly because I lack imagination, but also because it sounds futuristic, the trucking industry should just steal a page from NASCAR marketing and rename all hybrid trucks – Truck of Tomorrow.
Now, I understand NASCAR’s Car of Tomorrow was built more for safety reasons than environmental concerns, but the name is still futuristic and fun; and definitely worth a try in the trucking industry.
If there’s a pause in acceleration in a hybrid truck, I’m asking questions and they better get answered. But, if there’s a pause in acceleration in the Truck of Tomorrow, I’m completely fine, it’s futuristic and everything is better in the future.
The only downside, really, is it’s kind of a long name. It’s alright though, in this wonderful world of acronyms we live in today, I’m sure we can all agree to call the new truck TOT – once it catches on of course.

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Revenues for Canada’s largest motor carriers shrunk in the second quarter, decreasing 1.3% on average. To me that’s further indication that trucking, and transportation in general actually, is now on the wrong side of a growth hump pattern that has been playing itself out the last three years.

Strong shipment levels combined with a strong concern about capacity among shippers helped transportation and warehousing players push through strong rate increases in 2004 and 2005. As a result, transportation and warehousing revenue growth peaked at 8.7% but has been in decline since. It’s the same pattern experienced by the oil and gas extraction sector and the mining sector.

Our annual survey of more than 700 shippers of all sizes across Canada clearly indicates two things: Shippers today face a lot of supply chain challenges. The need to improve supply chain management execution and information and the need to boost customer service rank among the challenges cited by most.

But there’s no question which challenge hits home with most shippers. Almost 8 out of 10 tell us they are challenged by their need to reduce costs.

The research shows that cost control is not only a challenge for most shippers but that it is their most IMPORTANT challenge. Asked to indicate the importance of their top four challenges on a scale of 1 to 5, shippers rated the need to reduce costs a 4.5 – considerably ahead of their other major challenges.

So the downward pressure on rates we’ve seen over the past year could only be expected. The rate levels of 2004 and 2005 did not represent the new normal, much as many industry players hoped that they would. But I believe they did represent a window into future volatility in rates whenever capacity concerns trump shippers' need to keep a lid on transportation costs.

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Mark Richards, a professional driver based in Windsor, says he’s being punished by the MTO for simply doing the right thing. The trucker admits that last year he was signed on with a rather unscrupulous carrier. He says the company was one of those fly-by-night operations you hear horror stories about, its owner well-known to Ministry of Labour officials who say he made a habit of starting up new trucking companies and then shutting them down, leaving a string of unpaid debts in his wake.

Having had his fill of endangering his life and the lives of others while driving unroadworthy equipment, Richards pulled into a MTO inspection station last July and asked for a voluntary inspection to be conducted on his company-owned truck. The results were predictable: An oil leak, a brake system leak, excessive tire wear, dead light bulbs…you name it.

However, despite the fact Richard took the truck in and had it inspected voluntarily, he insists his abstract is now blemished by the MTO’s findings, hindering his ability to find work with a more reputable carrier.

“I hate the government for what it’s doing to me,” a frustrated Richards told me on the phone. “They’re affecting my life and all I’m trying to do is my job.”

Richards has come to accept the fact he’s stuck with a scarred driver’s abstract for the next five years. But what really irks him is that he’s still owed several thousand dollars – and he says the owner has since launched yet another trucking company.

It’s amazing that people can get away with stunts like this. Richards says the Ministry of Labour has been sympathetic towards his plight, but they still have not been able to help him recover unpaid wages. And the MTO has refused to wipe his record clean. The moral of the story: Be careful who you work for. There are still some rogue operators out there. And doing the right thing doesn’t always pay, but at least you can sleep well at night.

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Anyone feeling optimistic about what the summer’s rise in automotive shipments from the Detroit Three indicated about the future, should be sobered by this week’s news from General Motors about significant layoffs. That development, I believe, is more indicative of the short term future of those automotive clients than the summer’s boost in shipments.

Sales for the Detroit Three are down about 4% so far this year and economists such as Steven Poloz of Export Development Canada believe this picture is likely to persist, given the uncertainties that U.S. consumers face from the housing market. Even with the more successful offshore manufacturers included, auto sales are down about 1.6% this year. (True, Canada’s car sales have been solid, but since they account for only about a tenth of the North American market, they’re not a reliable indicator.)

So how can shipments be up when sales are down? The Detroit Three became concerned during the summer about their inventories of unsold vehicles. As Poloz recently pointed out, inventory levels, ideally around 60 days of sales, fell from 91 days last January to about 51 days in May. So despite still weak sales, the Detroit-Three have been ramping up production, on both sides of the border.

Also all three companies were at the start of contract negotiations with their workers and their concern about strike action created another reason to build up their inventories, thus boosting shipments.

But this mini-boom is only a temporary reprieve. The impact from the bursting of the housing market bubble in the US has still not worked itself out.

It would also be wise to remember the concerns voiced by the major manufacturing representatives in Canada at the close of last year.

“We are in for another challenging year in manufacturing,” was the dour outlook provided by Jason Myers, senior vice president and chief economist with the Canadian Manufacturers and Exporters.

Although manufacturing in Western Canada is booming, Ontario accounts for about half the country’s manufacturing output and it is smarting from the combined pressure of high energy costs and a high Canadian dollar which reduces the attractiveness of our manufactured products on the US market. Over the past decade Ontario’s manufacturing sector has outperformed that of every other western country in terms of growth, according to Myers but the pace has cooled down since 2004.

Mark Nantais, president of the Canadian Vehicle Manufacturers Association, expressed concern the current shift in sourcing from plants in the US, Mexico and overseas will be compounded by inefficient border crossings.

“During production vehicle parts and components and subassemblies can cross the border up to seven times a day due to the integrated nature of the automotive industry. If there isn’t a reliable, predictable border, it gets factored into investment decisions,” Nantais said. “The border has become layered with overlapping and inefficient regulations. It continues to get stickier. We are going in the wrong direction. It’s very clear that if we don’t do something, the next event will have a significant impact on how we move products across the border.”

On a more positive note, motor carriers best able to tap into the growth in Western Canada have much to look forward to. Over the next 10 years there may be as much opportunity serving the western boom as spending 80 years chasing the current volume of business from our trade with China, according to Myers.

And while the Big Three automakers are having their troubles, the offshore manufacturers who have set up production in Canada are booming. Japanese automotive manufacturers, for example, have increased their market share from 24% to 35% since 1999 while the Big Three’s market share has dropped from 71% to 53%, according to David Adams, president of the Association of International Automobile Manufacturers of Canada.

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