Yesterday I attended Markel’s Let’s Talk seminar on profitability, which provided one of those rare opportunities to hear shippers and carriers voice their concerns under the same roof. Representing shippers during a panel discussion were Allan Kelly, director of logistics with food company Casco and Neil McKenna, vice-president of transportation with Canadian Tire.

They spoke candidly about what a carrier must do to gain a piece of their business.

“It is difficult to crack Canadian Tire’s supply chain as a regular carrier,” admitted McKenna. His company uses about 20-30 carriers as well as its own private fleet. Most carriers who haul for a desirable shipper such as Canadian Tires have gone to great lengths to understand - and keep - their business, he noted.

Kelly said companies that hope to woo some freight from a top tier shipper should first research that shipper’s requirements. He said a fleet won’t get very far into a discussion if they haven’t done their homework and demonstrate an understanding of the shipper’s products and their handling characteristics.

Kelly also said “We’re looking for more sophistication” from carriers and he suggested they arrive at the table with statistics, such as on-time delivery percentages and lead-time requirements. He also prefers dealing with carriers that keep him informed about what’s happening in the trucking industry.

In Canadian Tire’s case, McKenna said it’s best not to try to pull the wool over their eyes. Since the company operates its own trucks, he pointed out “We know the cost to move our freight. We know the cost of equipment, fuel and labour.”

As an aside, it was interesting to note that Kelly said his company is diverting more of its product from rail to road. He recently switched a London-Chicago lane from rail to truck because as the railroads continue to increase rates, the savings are no longer worthwhile. And of course, rail still can’t touch trucking’s superior service. He urged other shippers who use short-line railways to give trucking a closer look.

My first reaction was that it was frightening that there’s a trucking company out there that can make a London-Chicago run for the same price as a railway. But in listening to Kelly speak further, it was clear he’s not one of those shippers who would make a modal switch or carrier selection based on the lowest bid. He made it clear he’s not interested in contributing to a carrier’s demise by insisting they haul his product at or below cost.

With north-south freight volumes drying up, it’s encouraging to hear the railways may be pricing themselves out of some of this business.

And speaking of quality shippers, here’s a tip from MacKinnon Transport’s Ray Haight which could serve as a useful tool for other fleets. His company surveyed all its drivers to determine their three favourite shippers to haul for as well as their three least favourite. The top three were rewarded with a plaque and a big ol’ thank-you. The bottom three received a visit from MacKinnon Transport execs, aimed at getting to the bottom of driver treatment issues and resolving them. Talk about looking out for your drivers. No wonder this company recently won a driver retention award.

Future issues of Truck News and Motortruck Fleet Executive will contain further coverage of this interesting event.

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The Ontario government has once again suggested it will consider banning handheld cell phones while driving. In fact, it has hinted any legislation will encompass not just phones – but also the use of other gadgets that cause driver distraction as well, such as portable GPS systems.

However, I have to wonder if such a rule would really improve road safety? Laws banning the use of handheld cell phones while driving are already on the books in Newfoundland, Nova Scotia and Quebec. In Nova Scotia and Quebec, the bans are still too recent to determine whether they have positively impacted road safety. In Newfoundland, however, there seems to have been a modest improvement since the ban was implemented in 2002.

Between 2003 and 2005, statistics show the number of collisions dropped 8% in Newfoundland. That’s a pretty impressive figure, but let’s not forget that overall road safety has also improved in many other provinces in recent years – even without a cell phone ban. Just how much of that 8% improvement can be traced back to the cell phone ban is subject for debate.

I get as annoyed as anyone when I see a motorist gabbing on the phone, which is almost always accompanied by unsignaled lane changes and other careless behaviour. But if such a ban is put into place in Ontario, I can’t help but envision dozens of cars pulling onto the shoulders of the 400-series highways each kilometre so drivers can place or receive that urgent phone call. (After all, we can’t expect such important discussions as what to pick up for dinner to be postponed, can we?)

Having cars routinely pulling over to the side of the road, and then sitting there while traffic whizzes past at over 120 km/h before having to get back up to speed and safely merge back onto the highway would seem to me to pose a far greater safety risk than had the driver simply placed the call while at speed. If Ontario proceeds with the ban, I hope it also takes this into consideration and includes some accompanying restrictions which would prevent cars from simply pulling onto the shoulders of high-speed highways to make or receive calls.

But then that would create an enforcement wrinkle wouldn’t it? ‘No officer, I was just calling a tow truck because my engine light came on – yeah, that’s it! But it's off now, so I'll be on my way.’

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If it sounds too good to be true, it probably is. Sage old advice that should always be taken into consideration, especially when dealing with unknown vendors or associates. It’s unfortunate to hear about a fuel tax scam that’s been preying on Canadian trucking companies. You can read the full story here.

As if fleets don’t have enough to worry about these days, they’ve also got to be aware that there are scoundrels out there looking to take advantage of their desperation. Who can blame them for leaping at the chance to cash in on a seemingly legitimate fuel tax refund?

Sadly, at least two fleets have shelled out tens of thousands of dollars as a result of the scam and even their lawyer says it’s unlikely they’ll be able to recover that money. In this country, it’s too easy for anyone to throw a shingle out, misrepresent themselves as a legitimate business and then close shop and run after they’ve duped honest companies into falling for their scheme.

The latest fuel tax scam should serve as a warning to all trucking companies. Be sure to do your homework when dealing with new associates, such as accountants. There are some great accounting services out there that know the trucking industry inside out. If approached by a company that’s offering pie in the sky rebates, it’s well worth the time and money to have their promises validated by a reputable accounting firm that knows the business as well as a lawyer. In this case, any lawyer worth their salt would have seen through the scheme and realized the Canadian trucking company was not entitled to the rebate.

For now all we can hope is that the perpetrators of this latest scam are caught, forced to pay up, and punished to the full extent of the law.

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The Canadian Taxpayers Federation (CTF) has launched its tenth annual Gas Tax Honesty Campaign, aimed at reminding us all how much we are taxed at the pump – like we need a reminder! The federation is warning that the threat of a national carbon tax (floated recently by federal Opposition leader Stephane Dion) will force prices even higher than they are today.

The CTF points out the price of gas has risen 17 cents/litre since this time last year, and taxes account for about 28% of the cost of gas. In Ontario, that number is even higher, with taxes accounting for 31% of the cost of gas.

In total, Ottawa will collect about $5 billion in gas and diesel taxes this year, with another $1.1 billion raised through the GST portion of the fuel taxes, according to a release by the CTF. Of that, only 37% will be reinvested back into national highway infrastructure. That number will increase to 52% next year.

It’s a huge jump from the 7% of fuel tax revenue that was being reinvested back into infrastructure by the feds just four years ago. But there’s still room for improvement. The CTF is calling for 100% of fuel tax collected to be spent on infrastructure. It’s a lofty target, but one that needs to be achieved if we hope to keep our goods flowing across the border and from coast-to-coast.

At the recent Transpo 2008 summit, David McFadden, chair of the National Energy, Infrastructure and Industry Group with Gowling, Lafleur, Henderson LLP, made some sobering points. He pointed out Canadian manufacturers are experiencing a 6% cost increase just due to delays at the border.

"Think about that for a moment. That's just from delays at the border and at a time when our manufacturers are being hammered," McFadden said. "It's quite clear there are big costs imposed on our economy because of delays and congestion."

He also pointed out the last significant upgrade to Ontario’s transportation network was the ETR407 toll road, which was completed in the late 90s. That was the first substantial infrastructure upgrade in the province since the 1950s.

"All major infrastructure projects are in the discussion stage. There are no contracts. It's likely Ontario's population will go up by another million before anything gets done...We have a real serious issue in Ontario. We are just not keeping up," McFadden said.

Those are some startling facts. Canada’s infrastructure needs a facelift and the most logical way to fund it is to divert 100% of fuel taxes towards building new roads and bridges, improving efficiencies at border crossings and alleviating congestion.

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Whether it be local dump truck drivers, long-haul owner/operators or soccer moms – everyone’s been griping about the cost of fuel lately. And for good reason, it’s costing all of us more money – at the pumps and now even in the stores. But scratch beneath the surface and I think there’s even more reason for concern when taking a look at the big picture and the larger impact the cost of fuel is having on our economy.

Looking at the issue from the perspective of a consumer, there are two causes for concern. For one, the cost of fuel is heightening transportation costs for the goods we consume and is already driving up store-shelf prices. Signs are popping up in store windows justifying cost increases and attributing them to increased transportation costs. It was only a matter of time before this started happening and now it has begun.

Secondly, and perhaps more importantly, a higher percentage of our disposable income is being diverted towards the purchase of gasoline, which means at the end of the month, there’s less left over for non-essential purchases, such as dinners out, a night at the movies or household items. In North America, it’s this type of spending that drives our economy. With gas prices surging by 50% or more, we are effectively removing millions – maybe even billions - of dollars of consumer spending and directing it towards the cost of gas. That money is literally going up in smoke. I think this is very disconcerting and often overlooked when considering the true impact of rising fuel prices.

I haven’t been able to dig up a Canadian equivalent, but consider this: According to an Oil Price Information Service study, the percentage of income the average American now spends on gas has doubled since 2002 (from 1.9% to 3.8%). That report was released late last year - it has likely increased even more in early 2008.

Removing 1.9% of consumer spending from the economy is going to have a major impact. Less consumer spending = less demand for trucking services. It also means less business for store-owners, restaurants and other entertainment providers. Maybe I’m over-simplifying the issue – I’m not an economist. In fact, some economists argue that directing a higher percentage of income on gas doesn’t necessarily mean a reduction in consumer spending. But I question their logic. It costs me about $20 more today than it did two years ago to fuel up my reasonably fuel-efficient Corolla every time I pull into the gas station. That’s $20 that doesn’t go to Cineplex, or Boston Pizza or Canadian Tire – or a personal savings account for that matter.

I reside in a middle-class neighbourhood (I also fear the once seemingly all-encompassing middle-class is evaporating and leaving in its place a widening gulf between the ‘haves’ and the ‘have-nots’ – but that’s a subject for another blog). My personal observations suggest that people are reeling in unnecessary spending (driving less is rarely an option, at least for those of us in the ’burbs). The alternative is to tap into credit sources and home equity and that could prove to be even more disastrous long-term.

If the cost of gas doesn’t soon subside, I predict we’ll begin to see store closures and more job losses in the months ahead. So what’s the solution? That’s the multi-billion dollar question. I don’t think there’s an immediate fix. But in the short-term, I think we need to find environmentally-sensitive ways to tap into North America’s vast supply of oil. That should be enough to tide us over until we make further gains towards developing vehicles which can be operated electrically or via other sources of power.

It’s a lot to ask of auto manufacturers – to develop cost-competitive vehicles which don’t require fossil fuels to operate. However, I look to our industry for inspiration. In 2002, 2007 and again in 2010, truck engine manufacturers have had seemingly impossible challenges placed before them by the EPA. Each time, they have risen to the occasion. Hopefully auto makers can be equally successful in their pursuit of a solution that will lessen our dependence on fossil fuels for personal transportation.

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What has been most disappointing during the past couple of years is seeing the discussion about speed limiters become polarized and degenerate to mudslinging.

How else can I categorize last month’s remarks from Joanne Ritchie, head of the Owner-Operators Business Association of Canada (OBAC), that in considering speed limiter legislation the Ontario Ministry of Transport was “pandering to a handful of carriers who are either too cheap, too lazy or too greedy to compete fairly” and that “rather than pay their drivers a decent rate, invest in training and anti-idle technology, and implement internal safety and compliance regimes, those carriers have bamboozled government into taking these responsibilities off their shoulders.”

Come on Joanne. Aren’t you going overboard with those comments?

We both know which carriers are pushing for this legislation. They include some of the safest operations in the country. In fact one of the most vocal proponents of the legislation was recently voted the safest carrier in North America. Not only have these carriers invested in anti-idling technology, often before it was in vogue to do so, they’ve also spent millions implementing the latest training technologies. How much more do they need to invest, how many more safety awards do they need to win, to convince you that they care about safety, the environment and their drivers?

They’re so lazy they need the government to do their work for them? In many instances these are the same carriers that keep getting named to the list of the 50 Best Managed Companies in Canada year after year. It would seem they’ve figured out how to compete pretty well.

And from the carriers I know, most seem to have figured out how to compete successfully without breaking the rules on speeding or otherwise. They’re most often the ones that demand their drivers adhere to the rules, including hours of service, rather than expecting their drivers to speed and lie in their logbooks to deliver a shipment. Seems to me these are exactly the kind of carriers that if I was a driver or owner/operator that I would want to work for.

It also seems to me that while the issue has become politicized and polarized, these carriers are the only ones that have not lost sight of what’s most important: the reality that trucking is one industry of many competing for image, funding, and favorable legislation. Its perception among government and the public as a good corporate citizen willing to take the lead on issues such as safety and the environment will determine how the industry is treated in the future.

Joanne your intelligence and hard work have been a credit to both OBAC and our publication (your award-winning owner/operator column in Truck News is testament to that) but I think on this occasion you have let emotion run ahead of reason. For the sake of an intelligent debate on the speed-limiter issue and continued productive and respectful relations between owner/operators and carriers I hope you would consider retracting your remarks.

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As I write this, hundreds of dump truck operators are planning rolling protests throughout the GTA. They plan to slow down traffic on well-travelled routes to bring attention to their concerns: stagnant rates; dangerous working conditions; and escalating costs.

While I can certainly empathize with their plight, members of the Ontario Dump Truck Association are making a terrible mistake.

According to the drivers, they are routinely overloaded and given no opportunity to resist, as they are not allowed to exit their cab while being loaded. Those who do protest are banned from the work site, dump truck operators say. They are worked long hours at rates that haven’t changed in five years, despite surging fuel costs. They say they’re subjected to “inhumane” working conditions, according to an article in the Toronto Star. However, all these issues are business issues, which need to be resolved with their employers.

They will not find the motoring public to be very sympathetic if they choose to cause major traffic disruptions. These drivers are already walking a very fine line with the public, which has villainized them in recent months following some high-profile accidents involving unsafe dump trucks.

If you really want to get the public’s support, don’t cause them to be late for work, or their doctor’s appointment, or getting home to their family. What does this accomplish? If you really want to get them on-board, then it’s important to educate them through other means. Let them know that the practices of the companies you’re working for are putting them and their families at risk. There are ways to raise awareness without inconveniencing thousands of people who aren’t to blame for your problems.

And in the meantime, take these issues up with your employers. I would suspect there have been attempts to do this already, but I find it unlikely that all avenues have been pursued. There’s strength in numbers, and this group seems to have some pretty impressive numbers. The Star reported more than 400 trucks congregated in a Mississauga parking lot on Wednesday to talk strategy. If all of those trucks remained parked for a day, or a week, or a month, how long would it take before the companies that rely on their services have to revisit some of their policies? (And think of the fuel you’d save, not having to motor slowly along the 400-series highways).

I’m very hopeful this planned protest is called off. Not because I fear being inconvenienced myself, but because I think dump truck operators will do their cause irreparable harm if they follow through with it. It is a cause worth fighting for, but the battle plan is flawed.

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I would like to spend my next few blogs discussing the risks and opportunities presented by the need to move to more environmentally sustainable supply chains.

But first I want to spend a few moments discussing some of the basics we need to understand about the issue of global warming. Hopefully I can explain it to you in a slightly different way than you may have heard before.

From all we’ve been hearing in the media lately about carbon dioxide levels, you would think there’s tons of carbon dioxide about.

Yet CO2 is actually rare in the atmosphere. Fewer than 4 out of every 10,000 atmospheric molecules are CO2 molecules. But CO2 is the most abundant of the greenhouse gases (others include methane, nitrous oxide, HFC and CFC). And it’s produced every time we burn something and every time something decomposes.

And greenhouse gases are critically important because of their ability to trap heat near our planet’s surface.

If you want a mental picture of greenhouse gases at work, think of trying to sleep on a muggy August night in a Toronto apartment building downtown – without your air conditioner on. Now think of trying to fall asleep in a desert . For those of you who haven’t had the opportunity to do so, I can tell you it can be downright cool.

Yet the only difference between the desert and the muggy night in Toronto is a single greenhouse gas – water vapour – which is capable of retaining two-thirds of the heat trapped by all the greenhouse gases.

To give you an idea of the power greenhouse gases actually have to influence temperature we have to look beyond Earth.

Consider Venus. The atmosphere of Venus is 98% CO2 and its surface temperature is 477C. If CO2 was to reach even 1% of the Earth’s atmosphere – it would bring the surface temperature of our planet to the boiling point

The particular challenge with CO2, of course, is how quickly we are adding to it.

Prior to 1800, there were about 280 parts per million of CO2 in the atmosphere. Today the figure is around 380 parts per million. Scientists figure we can go to about 550 parts per million over the next century before we hit the threshold of dangerous changes. That may seem like a large cushion but if we keep going at our current pace it’s estimated we’re going to hit 680 parts per million by 2100.

In my next blog I’ll look specifically at Canada’s contributions to GHG emissions as well as the contribution by commercial transportation.

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