“For the second half of 2008, we expect freight demand to continue to improve somewhat but to remain less than robust. We also expect industry-wide equipment capacity to remain flat or decrease as poorly capitalized and poorly operated trucking companies shrink their fleets or fail in a difficult environment.''

- Marten Transport, Chairman and CEO Randolph L. Marten

“In 2007 and early 2008 we were dealing with a market that had excess capacity, which resulted in downward pressure on price. Due to increased fuel prices and low freight demand certain large carriers permanently reduced the size of their company iron fleets and many small carriers and single-owner operators have exited the market place, causing somewhat of a reversal in the capacity and pricing environment. Capacity tightened in the second quarter and created pricing power...I believe that tight-capacity trends will generally continue and result in a higher cost of purchased transportation for brokerage capacity. However, it will also result in generally a stronger pricing environment. I anticipate the weakness experienced in the automotive sector and in certain other accounts to continue into the back half of the year. However, that weakness should be offset, totally, by strength in other accounts.”

- Landstar Systems financial statement

“With respect to pricing and rates, the overall rate market has shifted from a rate decrease market to a rate stable market. If freight demand improves in the third quarter, the potential exists to begin obtaining necessary rate increases in the second half of 2008.

- Werner Enterprises financial statement

“The Company anticipates beginning a tractor fleet upgrade in the third quarter. The upgrade is expected to include the purchase of approximately 1,600 International ProStar tractors. Delivery of tractors is scheduled to begin during the third quarter of 2008 and will continue through 2009. The Company will also take delivery of 400 2009 Wabash trailers during the second half of 2008.”

- Heartland Express financial statement

“Conditions in the truckload industry have been challenging, characterized by suppressed freight volumes due to the slowing U.S. economy and record diesel fuel costs. This difficult operating environment appears to have caused an escalating exodus of truckload capacity from the marketplace. Our internal efforts, coupled with diminishing industry capacity, have resulted in a stabilization of our pricing and tractor utilization.”

- Clifton R. Beckham, President and CEO of the USA Truck

A closer examination of Jevic and its operations tells an important story, a story that should be discussed in the boardrooms of trucking companies throughout North America. Jevic had a unique and innovative business model. It was established by Harry J. Muhlschlegel as a carrier providing direct dock to door LTL transportation. It rejected the hub-and-spoke breakbulk way of handling LTL freight. Focusing on large (5000 to 30000 pound) LTL shipments, the idea was to cut order cycle times by as much as three days. The company grew rapidly as a niche player serving shippers seeking superior transit times on shipments that fell within certain weight breaks.

The paradigm of the business at that time was sound. The trucking company could reduce costs by eliminating break bulk terminals and the associated handling costs of unloading and then reloading freight onto specific schedules. The shipper enjoyed the benefit of superior transit times. Jevic grew its business to $350 million in revenue and employed 1500 people.

In recent years, Jevic began to have difficulties as it went through changes in ownership, going from the YRC Group to being part of SCS Transportation to being sold to private equity group Sun Capital Partners in 2006. Why did a concept that seemed so clever and innovative at the time fail?

The most significant change has been in the cost of fuel. The business model was based on a totally different fuel cost / labor cost paradigm. The business was based on a “cheap fuel” foundation. It made economic sense to run essentially an irregular route LTL carrier, making pickups and deliveries over a much broader geographic area than the more traditional LTL players since the costs of driving additional miles were offset by the reductions in terminal and labor costs. This business paradigm has completely changed in recent years.

With fuel becoming the largest operating expense in most trucking companies, the foundation of the business exploded. In addition to the large and irregular routes driven by Jevic drivers, they were forced to buy fuel at gasoline stations at market prices, which made matters even worse. As business deteriorated, Jevic reportedly deviated from their business model by taking shipments less than 5000 pounds.

While this series of events were unfolding a Jevic, its LTL competitors were bypassing some of their own breakbulk terminals and running more schedules direct to destination, reducing their transit times. With their competitors operating in more fuel efficient, condensed pick and delivery areas and being able to purchase fuel more cheaply, the underpinnings of Jevic’s business model collapsed as did the company.

Here are some of the lessons learned. Every trucking company needs to reevaluate its business model. With fuel being such a significant cost, the energy efficiency of a trucking company should fall under the leadership of a VP of Energy Conservation. This individual must be charged with looking at the company’s operations from a fuel conservation point of view.

Every lane must be evaluated in terms of contribution, freight density and energy consumption. Can the company continue to operate in some areas if its freight costs and fuel surcharges do not cover its operating costs? Can Sales secure additional profitable revenues in those lanes to make them compensatory or should the company look at focusing on other regions and corridors of traffic or other businesses (e.g. logistics warehousing etc.)?

Does the company have the KPI’s and management tools to monitor its energy utilization and conservation activities? Does it have the right types of trucks on very lane? Does it have data on miles per gallon on every truck, every day? Does it have a solid speed limiting program? Does it have accurate data on empty miles? Is it ensuring that its freight costs and fuel surcharges cover full operating miles rather than just loaded miles?

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. Many more will disappear before the economy improves. To survive and prosper during this difficult period, trucking companies need to reassess their operating paradigms and learn the lessons from the trucking companies that fly too close to the sun.

Speed limiters are now the law in Ontario and James takes one last shot, writing that the way the law came to be has left him “with a sour taste.” He feels the one-day public hearing was a farce, with practically no advanced notice provided to stakeholders. “It was clear from the get-go that this government was simply going through the motions, with no real intent of making any changes to the proposed legislation,” he writes in his blog and believes the Ontario government got too chummy with the Ontario Trucking Association during the process.

I think we’re making mountains out of mole hills.

Much has been made about the shortness of the public hearings. But let’s put this in perspective. Speed limiters were not an issue that just suddenly surfaced. It has been debated for two and a half years now. Both the Ontario Trucking Association and those opposed to speed limiter legislation, namely OOIDA and OBAC, have had plenty of time to make their opinions known to legislators. Also during this time the trade media have provided extensive coverage of the issue, again providing plenty of opportunity for both sides to present their views. (And I bet if we were to take a count of all the articles written in all the trade media about speed limiters we would find the majority voiced the concerns of those opposed).

Any politician wanting to make an informed decision on how to vote had no shortage of material to read and no shortage of time to make up his or her mind. What would longer public hearings have provided? What evidence would have been presented that had not already been documented over the past two and a half years?

I can’t argue that there should not have been more advanced notice provided about the hearings. But again let’s put this in perspective. Each presenter at the public hearings were asked to speak for just 10 minutes. Now to someone not used to speaking in public that may seem a daunting task, particularly when they’ve been given little advanced notice. But for professional lobbyists, such as OTA, OOIDA and OBAC, being asked to speak for 10 minutes on an issue they’ve known intimately and written extensively for more than two years is not exactly a tough assignment.

And what about the belief that the OTA basically wrote the speed limiter law for the government? For the last time, let’s place things in perspective. Motor carriers, through the OTA, approached the government and asked to be legislated. They actually asked the government to make life tougher for them by giving them one more regulation to follow. So why shouldn’t they have attempted to draft the legislation in a fashion they found to be workable? The OTA certainly made no secret of what it wanted with the legislation and anyone opposed to it had plenty of time to voice their concerns.

Let’s drop the conspiracy theories and stop making mountains out of mole hills. Speed limiters became law in Ontario because when legislators were presented with both sides of the issue over the course of more than two years, they found the pro side made the most sense. It’s as simple as that.

Now, what? Everyone has their own opinions on what this law will mean to truckers in Ontario. Some say safer roads and cleaner air. Others say highway carnage and a mass exodus of drivers from the industry. I stand somewhere in the middle, and have already made my thoughts known. In a nutshell, I think the proposed benefits are greatly overstated and yet I don’t subscribe to the doomsday theories that are out there and that I hear about every day.

In the end, professional drivers are going to have to accept and adapt – that’s all there is to it. It’s not going to be the end of the world. Having said that, the way this law came to be, has left me with a sour taste. The one-day public hearing was a farce, with practically no advanced notice provide to stakeholders. It was clear from the get-go that this government was simply going through the motions, with no real intent of making any changes to the proposed legislation.

Conservative MPP Frank Klees, who I think would agree with me on that point, made the following comments in the Legislature during final debate: “I received an e-mail that, quite frankly, concerned me as a member of this Legislature and as a former minister...I'd like to you listen to this, Speaker, because you will be interested, as will any other member of this Legislature, to know the arrogance with which some stakeholders approach this place: ‘As for the amendments, we have none, and in fact I would go further and say that we would be very strongly opposed to any amendment. This is our bill. Every period, every comma, every semicolon was put there by us, and we would be very, very unhappy were it to be amended in any way’."

I find it disturbing that any lobby group – any organization – was able to write its own legislation and is chummy enough with our government that they could seemingly will it through the legislative process untouched. I find that startling.

But to its credit, the OTA (I should point out Klees did not say which stakeholder sent him the aforementioned e-mail) was bent on making this happen, and they saw it through right til the end. They pushed for this with a united voice that showed no signs of cracking – at least publicly - at any time over the last two and a half years. They got dozens of strong-headed fleet managers to agree on an issue (that alone is amazing) and showed no chinks in their armour at any time in their pursuit of making this law. But in the process, what has come to the surface is the great divide that exists between the carrier community and its drivers. The ongoing debate on this blog and the flood of e-mails and phone calls we’ve received here at Truck News attest to that. Wounds have been created, which may take some time to heal.

Time will tell how this all shakes out.

And on that note, I’m off for a couple weeks. I’m getting married in the Dominican Republic and will be back in early July.

He has teamed up with some bright young scientists to convert his Lincoln Continental into a vehicle that can run on alternative engine sources (likely electricity), ideally getting 100 miles to the gallon (if any fuel is required at all - details are still sketchy).

“Our goal is to inspire a generation by creating a clean automobile propulsion technology that serves the needs of the 21st Century and delivers performance that is a reflection of the driver's spirit,” reads the Web site, www.lincvolt.com. “By creating this new power technology we hope to reduce the demand for petro-fuels enough to eliminate the need for war over energy supplies, thereby enhancing the security of the USA and other nations throughout the world.”

The car has been entered into The Automotive X Prize, which will pit various technologies against each other in 2009 and 2010 during races across the US. Hopefully, the competition will result in various solutions which produce no emissions, use little – if any – fuel and have the potential to be mass-marketed. In a recent blog I wrote that the current fuel crisis will also produce opportunities - opportunities for bright young minds to develop solutions that will lessen our dependence on fossil fuels. This effort, and the Automotive X Prize in general, is a great step towards that goal.

Hopefully, technologies that are developed can be transferred to the trucking industry as well. While the current cost of diesel has this industry against the ropes and on wobbly legs, if the current crisis is the catalyst that spawns the creation of new alternatives to foreign oil, this may well be one of the greatest blessings in disguise we could have asked for.

Australia is the first country I want to consider. Speed limiters have been the law for both trucks and buses there since 1990 and they’re set at 100 km/h.

Those opposed to speed limiters in Ontario say the speed differential between heavy trucks and cars they force will cause accidents. Have the Aussies, after almost 20 years of speed limiters found that to be true? Here’s what Chris Brooks, senior adviser, road safety, Australian Transport Safety Bureau, told us:

“There is no good evidence that a 10 km/h differential between light vehicle and truck speed limits creates a safety problem. If there is any such problem at all, it is small compared to the safety benefits of running trucks at 100 km/h rather than 110 km/h.”

Just as interesting was what Australia’s National Road Transport Commission found when it looked into what motivates drivers to speed. It found that speed choice for truck drivers is largely depended on the prevailing weather, traffic density, police presence and road conditions. While truck drivers are concerned about speed limit differentials between heavy vehicles and the prevailing speeds of other traffic, they consciously trade off speed and risks of prosecution and crashing; regarding fines as a cost of doing business.

In other words, in the real world, the benefits of getting home early or delivering on time too often trump the risks associated with driving too fast.

Speed limiters place everyone on a level playing field and shippers and carriers can’t push drivers to drive too fast to meet a schedule.’

Another concern for the anti-speed limiting lobby is that speed limiting trucks will lead to more overtaking, and hence more serious crashes, as motorists get fed up with being stuck behind lumbering behemoths, particularly on country and regional roads. I find that argument particularly hard to grasp considering the speed limit on country roads is 80 km/h and 90 or 100 km/h on regional roads, both considerably below the proposed speed limiter setting of 105 km/h.

But let’s look at the Australian experience. Have almost two decades of speed limiters (set at 100 km/h) led to carnage in the Outback? Again, we asked Chris Brooks, senior adviser, road safety, Australian Transport Safety Bureau. Here’s what he told us:

“In fact, overtaking-related crashes on rural roads are surprisingly uncommon…It may be that on two-lane roads with a general speed limit of 110 km/h, the presence of speed-limited trucks tends to constrain light vehicle speeds. If so, there may well be a substantial net safety benefit that would be lost if trucks were permitted to travel faster.”

In other words, rather than causing more accidents, speed limited trucks are causing other traffic to slow down and thus reducing the likelihood of accidents.

There are still some in Australia who don’t want speed limiters, of course. But I’ve specifically chosen to use Brooks’ comments because he was not speaking for the Australian Trucking Association, which like the Ontario Trucking Association here, supported speed limiters. He is speaking for the government, which after almost 20 years of speed limiters would be under pressure to change the legislation if there was strong evidence it was leading to more accidents.

The fact there is ongoing support for speed limiters speaks for itself.

In my next blog, I’ll look at the impact of speed limiter legislation in Europe.

The plot, our undercover sources tell us, involves setting up the Ontario transport minister as Supreme Leader and outsourcing the running of the transport ministry to the province’s largest trucking association.

The first course of action by the new Communist leadership would be to mandate speed limiters. This would be the first step towards total domination of everything independent truckers hold dear.

The Communists of course know that installing speed limiters will destroy the Ontario economy. This is exactly what they want to happen because they plan to use the destroyed economy as an excuse to invade neighboring Quebec and Manitoba. The plan also calls on using the fleets of the province’s largest carriers, who were already familiar with speed limiters, to transport war materiel to the front, providing safe transportation and a new way to deal with slumping freight volumes all in one shot. (Commies can be clever, eh?)

Our sources also tell us that secret US operatives have caught wind of the plot and the plan to install speed limiters and are planning to contest it under international law.

However, the US will not be sending its customary international trade diplomats. Instead, the mission will be handled by representatives from OOIDA, due to their professed knowledge and expertise in such matters.

THERE! Isn’t that just what you wanted to hear?

With the exception of a few of my own embellishments, that’s the jist of many of the e-mails and phone calls I’ve been receiving of late about mandating speed limiters.

Come on folks, suggesting that Ontario is about to turn into a Communist society just because legislators are seriously considering mandating speed limiters is a tad over the top, ain’t it?

There are plenty of real issues to debate regarding speed limiters. Let’s not destroy the debate with ludicrous conspiracy theories.

10:20 a.m. – Terry Button, OOIDA. First, let me say OOIDA should be commended for coming up to Canada to present their members’ position. This is a powerful lobby group with 162,000 members. However, both presenters (I’ll get to that in a sec) had trouble making their presentation in the 10 minutes allotted, which caused clarity to suffer a bit and left no time for questions. Written submissions could be equally effective after the hearing. I got the sense that the MPPs on the committee were gaining the most useful information during the Q&A sessions that followed each presentation. Nevertheless, both OOIDA presenters made their position very obvious. Button, who runs trucks from New York State into Ontario, saved his strongest comments for the end: “We believe your good intentions are being taken advantage of,” he told the committee. “If you pass this, we will not sit idly by.” He said he has already discussed the issue with his local representatives and he’s convinced there are NAFTA trade implications. He saved the best for last, but again in my opinion it would have been more effective if there was time for follow-up questions.

10:30 a.m. – Tom Weakley, director of operations, OOIDA Foundation. Foundation? Clever way to get two speakers from the same organization onto the docket! Well, they did travel all the way up from the states – I think they deserved more than 10 minutes. Again, Weakley just had too much ground to cover in just 10 minutes and there was no time for follow-up questions. But he presented some great numbers I hadn’t heard before. Like this: It’ll take an extra five to seven minutes to check the speed limiter during every MTO inspection. That could total 43,000 hours of additional delays each year. Yikes. While the OOIDA reps may have been a bit rushed, they did leave the committee with some useful information sheets.

RECESS TIME! Just when things are getting good. A four-hour recess – not enough time to get back to work and accomplish anything, but enough time to take up my entire day. Oh well, I catch part of a matinee Jays game on TV.

2:30 p.m. – Dr. Barry Prentice, University of Manitoba, transportation guru. Prentice warned against speed limiters for a couple of reasons. For one, he said the safety enhancements will not exist because of the creation of wider speed differentials. He also questioned the environmental savings, since cars would be forced to speed up and slow down more frequently to avoid truck traffic, negating any greenhouse gas emission savings from trucks. He cited some stats that contradicted earlier stats from OTA members. He also cited research which the committee seems eager to take a closer look at. It seemed like Prentice, with his impressive accolades and transportation knowledge, gave the committee some things to think about.

2:40 p.m. – Dorothy Sanderson, professional driver. Kudos to Dorothy, the only trucker who ventured down to Queen’s Park to have her say. She argued vehemently against Bill 41. It was refreshing to see a trucker take to the mic. She even garnered an applause from the NDP members – albeit, it was after slamming Transport Minister Jim Bradley.

2:50 p.m. – Ray Gompf, Canadian Owner/Operators Co-op. The premise of his speech was that engines don’t necessarily emit less when they’re running slower. Lower RPMs mean an engine has to work harder, producing more emissions. He said owner/ops can’t afford to re-spec’ their trucks and said at the very least, existing trucks should be grandfathered.

3:00 p.m. – Jeff Bryan, Jeff Bryan Transport. Bryan held up well on the hot seat during questioning. He raises a good point: If Bill 41’s going to hurt the pocketbooks of fleets and/or owner/operators, why is it that the loudest proponents of the bill, which already govern their trucks, are amongst the most successful and safest fleets? “The policy will improve the image of our industry and it will improve safety on our roads.”

3:10 p.m. – Joanne Ritchie, OBAC. This is where things took a turn for the peculiar. Nowhere to be seen, Joanne called in on her cell phone from the 10 Acre Truck Stop in Belleville. She bemoaned the short notice provided for the hearing and said she’d been up all night preparing her presentation. On her drive in from Ottawa, fatigue caught up with her and she had to pull over to rest. Now, I don’t know if it was a clever ploy aimed at hammering home the point that the notice given for the hearing was inadequate? (The way they rushed this hearing really was a joke – honestly, how many truckers could be expected to attend?) Regardless, her call – and her inability to make the hearing - made an impression. The committee agreed that if she could not make it in, then it stood to reason that most truckers would also have difficulty appearing. They agreed, almost certainly as a result of this call, to extend the deadline for written comments to June 10. They also agreed to accept Ritchie’s presentation at a later time.

And on that odd note, it was a wrap. The MPPs agonized over the fact they had been presented with two vastly different opinions on the subject over the course of the day. They decided to take more time to solicit feedback from stakeholders. For those of you who sent in faxes and e-mails, I can confirm they were distributed to the committee members. You can keep doing so til June 10. See the Headline News item for details. It may make a difference, regardless of where you stand on the issue. The Opposition MPPs in particular seem willing to explore this issue in more detail before proceeding. That’s our democracy in action and it was fun to watch.

9:10 a.m. – Brian Taylor, president of Liberty Linehaul. Not surprisingly, Brian was in favour of the legislation. He had the respect of the committee, having driven some million miles himself. “I feel embarrassed it took fuel prices to motivate this,” he said. He also noted while there’s been driver resistance within his own fleet, owner/operators generally end up thanking him several months later when they see how much less fuel they burn at 105 km/h. Almost immediately, MPP Frank Klees establishes himself as the agitator, questioning Taylor on the need to speed up to avoid collisions in some instances. “I don’t think driving the vehicle faster helps you avoid accidents,” Taylor replied.

9:20 a.m. – Brian Patterson, Ontario Safety League. We all know that the OSL has been behind this initiative since the OTA first announced its policy nearly three years ago. Patterson said Bill 41 is “excellent legislation for this province – it will save lives.” He urged the committee to consider increasing the fine for non-compliance above the currently proposed $250. He added motor coaches should also have to comply with the law, an idea that was warmly received by MPPs on the committee.

9:30 a.m. – Robert Clarke, president, Truck Manufacturers Association. They talked briefly about some of the technical issues and the ability to make the system tamper-resistant. Some time was spent discussing the ability of old trucks to comply, which is a moot point since the law won’t cover trucks built before the mid-90s when speed limiters became standard.

9:40 a.m. – Robert Tremblay, Insurance Bureau of Canada. Naturally, he was all for Bill 41. When asked if it would result in reduced insurance premiums for carriers – he was predictably non-committal, noting the bureau does not get involved in the business practices of its members, the actual insurers.

9:50 a.m. – Dave Osiecki, vice-president safety, security and operations with the American Trucking Associations (and friends). Osiecki commended the Ontario government for showing leadership and explained the differences between ATA’s speed limiter policy and the OTA’s. 1) ATA wants the law to apply to new trucks only while the Ontario law would affect all trucks. 2) ATA wants the speed limiter set by the OEM, not technicians or dealers. And 3) ATA wants its speed limiters hard-coded so they cannot be increased by the truck owner. Osiecki said he hopes one day the US will adopt its own speed limiter law and that it can be harmonized with Ontario’s.

10 a.m. – David Bradley, president, Ontario Trucking Association. I’ve seen Bradley speak countless times, but never have I seen him show so much passion. He must smell the finish line by now. He made a great case for speed limiters and distributed a slick information kit. They’re not messing around. At this point in the proceedings, it seems the momentum is all on the side of the speed limiter proponents.

10:10 a.m. – Doug Switzer, vice-president, Canadian Trucking Alliance and Debbie Virgoe, widow of heroic trucker David Virgoe who died while reckless drivers forced him to make an evasive maneuver last year. Switzer backed the OTA position and turned the table over to Debbie. She once told me that she didn’t believe in the OTA’s position on speed limiters, but she’s entitled to change her mind. She has made highway safety her mission in life since the death of her husband and it would seem natural that she would want the speeds of all vehicles controlled.

Things heat up as OOIDA takes to the microphone. See part 2 of this blog for the details.

Doug Monahan is one of those owner/operators who meticulously tracks his fuel mileage. He spec’d his latest truck with fuel economy in mind. It has a small, 450-hp Mercedes-Benz engine which allows him to average 7.73 mpg even without an aerodynamic tractor. He gets 8.7 mpg on flat ground and about 7.3 mpg through the hills.

Doug hauls into the US where he encounters a lot of these hills, especially through Virginia. While he averages 95 km/h here in Canada, he says he needs the extra juice to get over the hills without burning up too much fuel in the process. He generally approaches the bottom of the hill at 75 mph, which allows him to increase his fuel mileage by half a mile per gallon when all is tallied on the other side, he claims. He says he needs to keep the smaller engine wound up to maximize his fuel mileage in the hills. He has experimented by running his usual 95 km/h through the hills in the US and he says he saw his fuel economy suffer significantly.

“That’s money right out of my pocket,” he insists.

He claims that his smaller engine will put out more greenhouse gases if he’s limited to 105 even through the hills in the US. That's because it will have to work so much harder to get up the hill if he can't build up speed at the bottom. Now, Monahan is a reasonable guy and he knows that slowing down saves fuel. That’s why he spec’d a smaller engine. However, he said his fuel savings will lost if he has to run at 105 through the hills. And he’s not happy about it. He feels the proposed law should apply only to new trucks, since he would have spec’d his truck differently had he known about the proposed law at the time.

He makes a good point. When new regulations are hoisted upon the automotive industry, existing vehicles are usually grandfathered. He’d like to see the Ontario government follow that lead in this case as well.

“Then the owner/operators and the company know what they’re getting into and they can order the truck accordingly,” he points out.

George Desjardins, an owner/operator with 30 years experience, agrees that his fuel economy will suffer in the hills if his truck is governed at 105.

“In the perfect world these pro-speed limiters live in, there mustn’t be any hills,” he wrote to Truck News. “The world I live in there are, and when you are loaded with a gross weight of 130,000 lbs, you must drop gears to climb hills, even little ones. This causes the engine to rev up even though the truck is losing speed. If you can’t increase your speed a little prior to the hill, you will be in a lower gear and running with a higher RPM that much longer, thus spewing greenhouse gases into the air that much longer.”

He adds: “Being that at the present time I can speed up prior to climbing a hill, I can in a lot of cases stay in high gear and not contribute to this problem as much.”

Desjardins spent extra money on a big engine and now feels this legislation will, in his words, “castrate it.”

It’s not easy to determine to what extent fuel mileage may be compromised in hilly regions with the proposed law, if at all. But we mustn’t underestimate the implications the proposed speed limiter law will have on how fleets and owner/ops spec’ their equipment. Perhaps the law would be more readily received if current trucks were exempted from the rule?

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.

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.’

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.

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.

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.