You would hope, given the hardships currently facing the trucking industry, that those on the front lines would bond together and help each other get through. Instead, there are increasingly worrying reports of diesel thefts from coast-to-coast.

The B.C. Forest Safety Council issued a bulletin this summer, claiming that fuel thieves have been draining truckers’ tanks at a number of places, including: overnight truck stops; long-term parking lots; work sites where equipment is parked; and in trucking yards.

“Almost anywhere there’s a tank and an opportunity to tap into it,” the group surmised.

On the other coast, the APTA released a similar bulletin earlier this summer, warning of an increase in fuel thefts there as well.

“It is advised that you keep fuel cards and pin numbers separate as well as increase vigilance in your facilities," APTA chief Peter Nelson advised in a letter to members. "This is a nasty downside to the rise in fuel prices in that it has created a lucrative black market for diesel fuel."

While I’m sickened by the thought of truckers stealing from truckers, perhaps there’s something even more sinister at play. Maybe the fuel thefts are the work of organized criminals. Somehow that seems easier to stomach. Nonetheless, truckers are getting screwed and it’s even worse south of the border.

A report from the OOIDA publication Land Line suggests that truckers are having their APU covers and battery box lids taken off their trucks and sold for scrap metal. An APU cover that can net about $15 as scrap metal can cost a trucker a few hundred bucks to replace, the story says. Just where is it going to end?

All truckers can do is become extra vigilant during these times and take extra steps to protect themselves from being victimized. Here are a few tips from the B.C. Forest Safety Council on how to protect your fuel: Purchase a locking fuel cap; fill up in the morning rather than the night before; closely monitor the fuel gauge; report all thefts to the authorities so they’re aware there’s a problem; and secure the area your park when possible.

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Navistar has pumped millions of dollars into an unorthodox marketing campaign for its retro-styled LoneStar, which is almost as unique as the truck itself. When the LoneStar was still a mere prototype, the company commissioned Academy Award-nominated director Brett Morgen to spend several weeks on the road with three American truckers and to capture their experiences in a 45-minute documentary.

“I completely fell in love with trucking and with these guys,” Morgen said of the experience during a press conference with the three stars prior to the premiere at the Great American Trucking Show last week.

The cast - three colourful, free-spirited, salt-of-the-earth truckers - enjoyed a rare moment in the spotlight at the press conference, before we were whisked into a packed theatre to enjoy the first public showing of the film. I’m not a movie critic, but I can tell you I was thoroughly impressed with the end result.

While the first few minutes of the film were blatantly commercial (and who can complain, when Navistar forked over $3 million to produce the film?), the LoneStar soon took a back seat to the real stars of the show, the three drivers: Tim Young, Steve Donaldson and Chris LeCount. Each of the characters brought something different to the table.

As Morgan explained before the premiere, Tim was the ‘family guy,’ Chris brought a genuine love of trucking and Steven was in ‘search of salvation.’ These are real truckers. Sometimes they speed, sometimes they work longer than they should and sometimes they just break down emotionally. The film captures all that. But it also digs deeper, and reveals what drives these guys, the likes of which form the backbone of the industry. Downtrodden and often unappreciated, they keep the industry – and the economy – moving.

By the end of the film, I was tempted to call in my resignation from Dallas and head straight down to the nearest International dealer. Why fly home when I could drive some of those same roads and enjoy some of the same sights featured in the film?

But that’s not to say the film glorifies the trucking industry while ignoring its many faults. The film poignantly captured the frustrations of each of the drivers – everything from the difficulty of getting a load, to the impact fuel prices are having on owner/operators, to the challenges of trying to adhere to impossible-to-meet delivery schedules.

However the incredible scenery shots as well as the camaraderie shared by the drivers on the road is a reminder of why truckers do what they do, something one of the truckers admitted in the film ‘nobody else wants to do.’

Each of the three stars has a compelling story to tell – stories that make even the most overtly commercial sections of the film easier to sit through. This is a film that everyone should see. It was developed for truckers, but it has crossover appeal as well and would be equally appreciated by people outside the industry.

The real shame is that, at this point, the film doesn’t have a broader audience. The DVD will be sold by International at www.internationaltrucks.com/shop and through Amazon beginning in October, but it isn’t scheduled to be broadcast on television and due to the commercial nature of the film, there’s no guarantee it ever will be. It would be a shame if this film doesn’t reach a wider audience.

I’m not going to reveal too much about the film, because where there’s a will there’s a way, and those of you who are interested in seeing it will order it online. A portion of the proceeds will go towards a program that helps find jobs in the trucking industry for returning US war veterans.

For a whole lot more info on Drive and Deliver, visit www.internationatrucks.com/film.

Chris LeCount, Tim Young and Steve Donaldson (L-R) stand before an International LoneStar in this promo shot.

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Ontario’s mandatory yearly re-testing policy for A/Z drivers 65 years of age and older is one of the most asinine rules on the books. It punishes some of the industry’s most experienced and safest drivers for turning 65 and unfortunately it squeezes many of the best drivers from the industry. I routinely hear from able-bodied and able-minded senior drivers who have decided to hang up the keys solely because of this ridiculous policy, which exists only in Ontario.

The following, well-documented case from one such driver is sadly a common occurrence in Ontario:

John Dundass, a driver for Arnold Transport whose boss says “does a bang-up job,” recently turned 65 years of age. After navigating through a “maze” of computer and phone answering systems, he finally reached a human and was told he’d have to visit DriveTest to complete three separate tests. The first was a written test; the second was a road test and air brake test for which he’d need to provide a tractor-trailer; and the third was for a written and road test for buses (if he wished to maintain his B licence).

During his first visit on Apr. 15, John voluntary surrendered his bus licence to save himself having to rent a school bus for the road test. He says he was told by the attendant that by giving up his B licence for buses, he could renew his A licence without a road test. He found that claim suspicious, and asked for it in writing.

After passing the written truck and air brake tests, John made his way to the licensing office in Burlington. He filled out and paid for the necessary forms and went on his way. A few weeks later, he received a phone message telling him he needed to book an appointment for a road test.

He waded his way back through the “phone machine maze” and spent quite some time trying to get a human on the line. Finally, he was able to book an appointment for a road test. Arnold Bros. provided him with a tractor-trailer, including the tractor John normally operates.

He showed up for his road test June 26, did the air brake portion of the practical test and then the examiner told him the 07 “state-of-the-art” highway tractor was not adequate for the road test, as it had an automated transmission. John says he was sent home again.

Arnold Bros. agreed to provide him with a truck with an “old school transmission” and John returned to the DriveTest center once again to perform his road test. By now it was early July, he says. “This whole deal was getting stressful. Many drivers would give up by this point,” he wrote.

After 14 phone calls, John finally got through to a voice-mail system and left a message saying he wanted to book a road test. The voice-mail belonged to a supervisor named Steve, who returned his call and set up an appointment for a road test.

On July 11, John showed up for his road test with a highway tractor with manual transmission. He was forced to once again complete the practical air brake test. He passed it again, and passed his road test as well. By now, it had been a four month process.

“No commercial driver should be subjected to such a ridiculous procedure, taking days off the job,” he wrote. “Many drivers give up. Is that what the Minister wants?”

He adds that ironically, he was never asked to complete a doctor’s medical!

This type of incident is not completely isolated. I hear from many drivers who have undergone similar insulting and degrading experiences. And for what? Because they’ve turned 65 years of age. Sixty-five isn’t all that old anymore and I’d gladly ride alongside a veteran driver with decades of experience than a neophyte.

The good news is that lobbying by the OTA, PMTC and OBAC seems to finally be garnering the attention of decision-makers at Queen’s Park. There have been some encouraging signs lately, with the Ontario Transport Department promising to at least revisit its re-resting requirements for senior drivers. A change can’t come soon enough.

John, and many other professional drivers like him, have been discriminated against due to their age. In an industry that claims to be starved for qualified drivers, does it make sense to be turning away some of the best we’ve got? Kudos to John for sticking with it through the entire ordeal. Shame on Ontario’s Ministry of Transportation for continuing to enforce this nonsensical law.

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Over the last few months, the 2010 heavy-duty engine landscape has taken on a vastly different look. First, you have Caterpillar announcing it will not build an EPA2010-compliant on-highway engine for the North American market (yet it will partner with Navistar to build a truck).

Now, you have Cummins changing plans mid-flight and choosing to join the Selective Catalytic Reduction (SCR) camp, which already includes Daimler, Volvo Group and Paccar. This leaves Navistar as the lone SCR holdout – and after extensively criticizing the complexity and uncertainties surrounding SCR, it’s not likely Navistar will make the switch anytime soon.

When the Cummins announcement hit my Inbox first thing Wednesday morning, my initial reaction was surprise. Cummins has been making significant inroads in market share, both in the mid-range and heavy-duty market segments. I figured for them to change course at this point in the game, they must have encountered big-time problems in developing their in-cylinder ‘enhanced EGR’ solution.

However, in a conference call with the media later in the day, Cummins engineers stated this was not the case.

“That product was all set to launch in January, 2010,” said Steve Charlton, vice-president of heavy-duty engineering with Cummins. “The program was performing well, the product was performing well and we were hitting all our targets.”

Cummins decision to abandon its in-cylinder solution was about pursuing optimum fuel economy – it was not due to any technological impossibilities that it encountered along the way.

That bodes well for Navistar, and it also bodes well for customers who want to have an alternative to SCR available to them in 2010. However, the folks at Navistar must be a bit unnerved by the Cummins announcement. The rewards of going it alone could be great – but so too are the risks (look no further than Caterpillar’s ultimate withdrawal from the market after being the only company to really carve its own path in 2002).

Clearly, Cummins shift to SCR has placed a lot of momentum on SCR’s side. However, if there’s a company that isn’t afraid to take a chance, it’s Navistar. Look at the company’s latest product introduction – the unique and incomparable International LoneStar. The truck is a radical departure from anything else on the road today and it seems to have been greeted by the industry with much enthusiasm. Will the same be said about the non-SCR MaxxForce engine in 2010? Only time will tell.

Navistar proved with the introduction of the International LoneStar that it's not afraid to be different.

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In my presentations to several transportation industry groups this summer I floated the idea that we may actually be just an economic uptick away from another serious capacity crunch in the trucking sector and a return to upward pressure on rates – perhaps as early as the next few months.

Based on the perplexed looks I received from many of the shipper and carrier professionals listening to me I could tell they thought I had finally succeeded in tanning my body as well as my brain during my summer holidays.

How could I be talking about a return to the strong upward pressure on rates we experienced from the third quarter of 2003 up to about the first quarter of 2006, when motor carriers right now are scrambling to stay alive, accepting significantly lower rates in many cases just to maintain cash flow?

Some threw the annual statistics our own Transportation Media Research churns out right back at me: Have I not been pointing out for the past year that shippers see both the TL and LTL market to be in excess capacity? Have I not been saying that the number of shippers paying out rate increases above 4% (exclusive of the fuel surcharge) has been getting smaller and smaller since 2006? Did I not in the past note that when shippers switch from truck to rail the main reason is concern over pricing?

Yes, yes, and yes. (And I must admit I’m impressed by those of you able to retain all these statistics). But there really is a reason to my “madness” and it is tied to the catharsis the motor carrier industry is currently undergoing.
The American Trucking Association reported that there were 935 trucking company failures in the first quarter of 2008, a 142.9% increase over last year. These carriers, operated approximately 42,000 power units representing about 2% of that country’s total capacity. To place that in a Canadian perspective, it’s the equivalent of pretty well wiping out the entire British Columbia trucking industry. Then on May 20, 2008, Jevic Transportation closed its doors, representing the largest failure of an LTL carrier since the departure of Consolidated Freightways in 2003.

Canadian motor carrier bankruptcy figures aren’t as up to date as is the case in the US, but the last time we went through a similar downturn in the late 90s, the trucking industry shed one quarter of its small carriers. Of particular concern should be that government figures show that since 2007 motor carrier revenues have been on a consistent decline while their costs have not been keeping a similar pace. That’s a recipe for financial disaster, particularly for asset-heavy carriers caught with too high debt loads thanks to aggressive acquisition strategies. Al’s Cartage was the biggest name to go under this year and garnered the most attention. It wouldn’t surprise me if a few more familiar names joined the ranks of the departed this year but it’s just as important to keep an eye on lower-profile small carriers exiting the market; their contribution to capacity, although not what it once was, is still important.

After 2005, the tight capacity in the motor carrier sector was loosened to a significant degree by the pre-buy (trucking companies moving up their equipment buying cycle so they could purchase trucks prior to the 2007 deadline for new emissions standards that added up to $10,000 to the price of an engine). They will likely do so again to deal with the next emissions standards deadline of 2010.

But there simply isn’t much time to put a pre-buy strategy in place this time around (the trucks must be purchased in 2009) and, more importantly, there aren’t as many Class 8 trucks up for replacement. If we assume a 7-year average life cycle (many US analysts use a 9-year cycle but we prefer a 7-year cycle to take into account the punishment heavier weights and longer travelling distances inflicts on the Canadian fleet) there are only 18,361 trucks up for renewal in 2009. Even if up to a third of motor carriers were to opt for the pre-buy strategy (as they did during the two previous pre-buys this decade), investing in new iron that would pull 2010 and 2011 purchases into next year, the base number of Class 8 trucks due for replacement is just too low to envision Class 8 truck capacity being increased by 35,000 to 39,000 new rigs as was the case for 2006 and 2007.

In short, there are enough significant factors limiting supply that soon as demand perks up we’ll feel an instant impact on truck transportation pricing.

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With the recent bankruptcy filings of Al’s Cartage of Kitchener, Ontario and Alvan Motor Freight of Kalamazoo, Michigan, two more well established family run regional LTL trucking firms appear to have been claimed by the high cost of fuel and the current freight recession. Al’s Cartage was an 80 year old southwestern Ontario LTL carrier while Alvan had been around for 67 years and had terminals in Michigan, Ohio, Indiana and Illinois.

What is interesting is that the demise of each company appears to be tied in part, directly to a business decision to focus on the automotive industry. A traditional LTL and container carrier, Al’s Cartage made a huge mistake by going after auto parts work a few years ago, admitted the company’s President, Norm Frohlich in an interview with Todaystrucking.com. It wasn't long before Al's was "squeezed out" of the cutthroat sector. "It cost us a lot more than it was worth," he stated. Al's tried to revert back to its old lanes, but to little avail. "We were pretty well back to where we started, but we just couldn't get the volume back up fast enough. The expenses were there, but the volume wasn't."

Alvan President and CEO President and CEO James Van Zoeren indicated that the 87 day strike at American Axle, one of Alvan's top customers, was deadly. "The American Axle strike is absolutely killing us because of the trickle-down effect with the closure of General Motors plants and how that impacts our customers who are first- and second-tier auto-parts suppliers," Van Zoeren said.

However, it was clear that there were a number of other forces at work that contributed to the closure of these two companies. "Alvan was quickly becoming a dinosaur. Our ability to compete with much larger carriers than ourselves was becoming compromised. Our costs were higher and we were struggling to keep up on a technological basis," said Van Zoeren. The general state of the economy in the U.S. Midwestern states was also not helpful.

Overcapacity in the trucking industry has also resulted in increased competition, intense pricing pressure and margin erosion. In addition, the financial crisis in America is resulting in reduced liquidity and more limited credit options for trucking companies. For Canadians, the slumping U.S. economy and the high Canadian dollar are limiting exports making it even more difficult for cross-border carriers to find export loads to the U.S.

There appear to be several lessons to be learned from the departure of these two companies.

1. It is important to maintain a diversified customer base to minimize the impact of a downturn in a particular sector of the economy. It can be very risky to bet the farm (or trucking company) on one specific industry no matter how large and attractive it may appear to be.

2. As a small to medium sized regional LTL carrier, it is important to have a strong niche where the company is able to differentiate itself and achieve some economies of scale.

3. If the company cannot achieve critical mass and establish a core competence in a specific industry vertical or geographic area, it may be best to form a strategic alliance or merge with a stronger player before the wolves are at the door.

Clearly there was much more at play than the current freight recession when you peel away a few layers of the onion and look at what contributed to the departure of these two well known industry names.

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In my presentations to several transportation industry groups this summer I floated the idea that we may actually be just an economic uptick away from another serious capacity crunch in the trucking sector and a return to upward pressure on rates – perhaps as early as the next few months.

Based on the perplexed looks I received from many of the shipper and carrier professionals listening to me I could tell they thought I had finally succeeded in tanning my body as well as my brain during my summer holidays.

How could I be talking about a return to the strong upward pressure on rates we experienced from the third quarter of 2003 up to about the first quarter of 2006, when motor carriers right now are scrambling to stay alive, accepting significantly lower rates in many cases just to maintain cash flow?

Some threw the annual statistics our own Transportation Media Research churns out right back at me: Have I not been pointing out for the past year that shippers see both the TL and LTL market to be in excess capacity? Have I not been saying that the number of shippers paying out rate increases above 4% (exclusive of the fuel surcharge) has been getting smaller and smaller since 2006? Did I not in the past note that when shippers switch from truck to rail the main reason is concern over pricing?

Yes, yes, and yes. (And I must admit I’m impressed by those of you able to retain all these statistics). But there really is a reason to my “madness” and it is tied to the catharsis the motor carrier industry is currently undergoing.
The American Trucking Association reported that there were 935 trucking company failures in the first quarter of 2008, a 142.9% increase over last year. These carriers, operated approximately 42,000 power units representing about 2% of that country’s total capacity. To place that in a Canadian perspective, it’s the equivalent of pretty well wiping out the entire British Columbia trucking industry. Then on May 20, 2008, Jevic Transportation closed its doors, representing the largest failure of an LTL carrier since the departure of Consolidated Freightways in 2003.

Canadian motor carrier bankruptcy figures aren’t as up to date as is the case in the US, but the last time we went through a similar downturn in the late 90s, the trucking industry shed one quarter of its small carriers. Of particular concern should be that government figures show that since 2007 motor carrier revenues have been on a consistent decline while their costs have not been keeping a similar pace. That’s a recipe for financial disaster, particularly for asset-heavy carriers caught with too high debt loads thanks to aggressive acquisition strategies. Al’s Cartage was the biggest name to go under this year and garnered the most attention. It wouldn’t surprise me if a few more familiar names joined the ranks of the departed this year but it’s just as important to keep an eye on lower-profile small carriers exiting the market; their contribution to capacity, although not what it once was, is still important.

After 2005, the tight capacity in the motor carrier sector was loosened to a significant degree by the pre-buy (trucking companies moving up their equipment buying cycle so they could purchase trucks prior to the 2007 deadline for new emissions standards that added up to $10,000 to the price of an engine). They will likely do so again to deal with the next emissions standards deadline of 2010.

But there simply isn’t much time to put a pre-buy strategy in place this time around (the trucks must be purchased in 2009) and, more importantly, there aren’t as many Class 8 trucks up for replacement. If we assume a 7-year average life cycle (many US analysts use a 9-year cycle but we prefer a 7-year cycle to take into account the punishment heavier weights and longer travelling distances inflicts on the Canadian fleet) there are only 18,361 trucks up for renewal in 2009. Even if up to a third of motor carriers were to opt for the pre-buy strategy (as they did during the two previous pre-buys this decade), investing in new iron that would pull 2010 and 2011 purchases into next year, the base number of Class 8 trucks due for replacement is just too low to envision Class 8 truck capacity being increased by 35,000 to 39,000 new rigs as was the case for 2006 and 2007.

In short, there are enough significant factors limiting supply that soon as demand perks up we’ll feel an instant impact on truck transportation pricing.

Permalink | Comments (0)

With the recent bankruptcy filings of Al’s Cartage of Kitchener, Ontario and Alvan Motor Freight of Kalamazoo, Michigan, two more well established family run regional LTL trucking firms appear to have been claimed by the high cost of fuel and the current freight recession. Al’s Cartage was an 80 year old southwestern Ontario LTL carrier while Alvan had been around for 67 years and had terminals in Michigan, Ohio, Indiana and Illinois.

What is interesting is that the demise of each company appears to be tied in part, directly to a business decision to focus on the automotive industry. A traditional LTL and container carrier, Al’s Cartage made a huge mistake by going after auto parts work a few years ago, admitted the company’s President, Norm Frohlich in a press release. It wasn't long before Al's was "squeezed out" of the cutthroat sector. "It cost us a lot more than it was worth," he stated. Al's tried to revert back to its old lanes, but to little avail. "We were pretty well back to where we started, but we just couldn't get the volume back up fast enough. The expenses were there, but the volume wasn't."

Alvan President and CEO President and CEO James Van Zoeren indicated that the 87 day strike at American Axle, one of Alvan's top customers, was deadly. "The American Axle strike is absolutely killing us because of the trickle-down effect with the closure of General Motors plants and how that impacts our customers who are first- and second-tier auto-parts suppliers," Van Zoeren said.

However, it was clear that there were a number of other forces at work that contributed to the closure of these two companies. "Alvan was quickly becoming a dinosaur. Our ability to compete with much larger carriers than ourselves was becoming compromised. Our costs were higher and we were struggling to keep up on a technological basis," said Van Zoeren. The general state of the economy in the U.S. Midwestern states was also not helpful.

Overcapacity in the trucking industry has also resulted in increased competition, intense pricing pressure and margin erosion. In addition, the financial crisis in America is resulting in reduced liquidity and more limited credit options for trucking companies. For Canadians, the slumping U.S. economy and the high Canadian dollar are limiting exports making it even more difficult for cross-border carriers to find export loads to the U.S.

There appear to be several lessons to be learned from the departure of these two companies.

1. It is important to maintain a diversified customer base to minimize the impact of a downturn in a particular sector of the economy. It can be very risky to bet the farm (or trucking company) on one specific industry no matter how large and attractive it may appear to be.

2. As a small to medium sized regional LTL carrier, it is important to have a strong niche where the company is able to differentiate itself and achieve some economies of scale.

3. If the company cannot achieve critical mass and establish a core competence in a specific industry vertical or geographic area, it may be best to form a strategic alliance or merge with a stronger player before the wolves are at the door.

Clearly there was much more at play than the current freight recession when you peel away a few layers of the onion and look at what contributed to the departure of these two well known industry names.

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