Fleet Executive July August 2015

MOTORTRUCK

JULY AUGUST 2015

CANADA’S BUSINESS MAGAZINE FOR FLEET OWNERS

Sustainability:

Why Vedder Transport is buying Bison’s LNG trucks

Profitability:

Understand this before considering growth by acquisition

SPECIAL INSIDE: Our annual Sizes & Weights Chart

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OF

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Has the economic downturn left you uncertain about fleet renewal? Find out what your competitors are planning.

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Volume 84, No. 04

July/August 2015

contents 20

Cover Story 20 LEAP OF FAITH

Is the downturn in the Canadian economy derailing carrier plans for fleet renewal? Our report investigates carrier purchasing plans for the months ahead

Features 18 MEASURING SUCCESS Trailer Wizards’ vice president Anne McKee on company expansion, metrics and the key role of customers

25 DEALING WITH THE THIEF IN THE NIGHT, PART II In the conclusion of our series on sleep apnea, legal, insurance and medical experts share their insights in their own words

16

29 KEY CONSIDERATIONS IN THE “TARGET”

Departments 4 WHAT’S ON 7 MAILBAG

M&A expert Doug Nix on what you need to understand before considering growth by acquisition

32 SLICING THROUGH THE WIND How paying attention to aerodynamics and narrowing the trailer gap helped Kurtz Trucking achieve its fuel efficiency goals

9 THE VIEW WITH LOU

33 LNG LOVERS

10 THE BOTTOM LINE

Why Vedder Transport jumped at the opportunity to buy Bison’s LNG trucks

34

12 RISKY BUSINESS 13 TAKING CARE OF BUSINESS 16 THE HUMAN EDGE 34 GEARED UP 38 INSIDE THE NUMBERS

trucknews.com

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FLEET EXECUTIVE 3

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WHAT’S ON TRUCKNEWS.COM Brought to you by the editors of Truck News, Truck West and Fleet Executive

BLOGS

FEATURES

> T riton Transport: One colossal company making major moves

Triton Transport’s motto may as well be “go big or go home” because if its drivers don’t haul the big stuff, they can park their rig in the driveway.

ROGER MCKNIGHT When is a pipeline not a pipeline?

When it’s better to move it by truck, that’s when. Even if the economics are not quite right.

> F ull steam ahead for B.C. forestry fleet

Third-generation trucker Greg Munden of Kamloops, B.C.-based Munden Ventures, thinks his business and the log market at large are poised for growth over the next few years and he plans to be there to help.

> A lberta forestry companies becoming power players

With a green-focused new government in power, some members of Alberta’s business sector may be gun-shy about making new investments, but that doesn’t appear to be the case with the province’s forest industry.

> S askatchewan’s hot economy extends to forestry

Road conditions, lack of qualified drivers remain issue for log haulers and producers in Saskatchewan.

CAROLINA BILLINGS So you have a great business idea If the itch and the inner voice is telling you it’s time, listen to it.

RAY HAIGHT Ode to the safety manager Laying the framework and a set of rules for all the safety personnel we depend on.

Web TV:

Transportation Matters STRAIGHT TALK How Challenger Motor Freight is tackling sustainability issues for the betterment of the environment and its profitability.

RECRUITING FOR THE FUTURE Fleet Maintenance Manager of the Year Chris Iveson explains how he recruits and manages Gen-Y technicians.

KATHY CONQUERS MAKE-A-WISH ROPE FOR HOPE CHALLENGE Truck News’ associate publisher Kathy Penner rappelled 30 storeys from Toronto’s City Hall for Make-A-Wish’s Rope for Hope charity event.

SOCIAL MEDIA FIND US ON FACEBOOK facebook.com/trucknews

4 FLEET EXECUTIVE ❙ July/August 2015

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FOLLOW US ON TWITTER @FleetExecutive | @TruckNewsMag | @JamesMenzies | @LouSmyrlis @JuliaKuzeljevic | @KathyPenner | @SoniaStraface trucknews.com

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Straight T

VOLUME 6

STRAIGHT TALK SMART STRATEGIES The latest update on GHG regulations and the most effective fuel saving practices • Learn how to get your drivers onboard with fuel efficiency programs

STRAIGHT TALK SMART IES STRATEG VOLUME 5

most effective Your guide to the es fuel saving practic

• How much can retreading save from your tire costs?

• What Phase 2 of the EPA/NHTSA fuel economy standards will mean for your future truck purchases

editors of Produced by the West Truck News, Truck & Fleet Executive Michelin In partnership with (Canada) Inc. North America

Download your FREE copies in the Knowledge Centres section of www.trucknews.com

Produced by the editors of Truck News, Truck West & Fleet Executive In partnership with Michelin North America (Canada) Inc.

Whats On.indd Straight Tab mag5page.indd 1

15-08-12 9:25 4:03 AM PM 15-08-12

Fleet Safety Council Conference Cost $150.00 (Includes HST)

24 Annual th

Educational Conference October 2, 2015 8am - 4:30pm

The 2015 Annual Educational Conference will consist of a new one-day format along with another outstanding agenda of session topics of key interest to the Transportation industry.

Topics include:

• Commercial Vehicle Enforcement/Education Mark Bonner - Ministry of Transportation • Secrets of the Best Fleets to Drive For Mark Murrell and Jane Jazrawy - CarriersEdge • Personality Dimensions Patsy Marshall - University of Guelph • Driving as a Task- What are the Human factors?

Brett Carson - O.P.P. Officer Acting Staff Sergeant Orillia

For more details, use your smartphone’s scanning program to access this code and get additional details about the conference.

For more information, please visit fleetsafetycouncil.com or follow us on Twitter@FleetSafetyConf or contact IHSA at 1-800-263-5024 ext. 7944 Centre for Health & Safety Innovation (CHSI), Mississauga Ontario

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MAIL BAG

Who’s watching who’s watching you?

Our trucknews.com story “Who’s watching who’s watching you” about a veteran driver who nearly had his reputation ruined by a fly-by-night carrier elicited several responses. Here are a few: This story is very familiar to us. We had a driver that was laid off due to downsizing but he re-applied when a position became available. He was up front with us stating that he had been involved in an accident that was the other driver’s fault (a 4 wheeler trying to sneak past him as he made a right hand turn) and no charges were against him, they were against the car. When we submitted the information to our insurance company for approval, they said he has 0 rating and we cannot hire him. Even though he was not charged, the company he was working for knew he was in the process of looking for another job and he is now effectively black listed with insurance as non-hirable unless with a larger company he can be absorbed into the pool for the next 3 years. Yes, there was an accident; from what I have been told, no, it was not the driver’s fault and he was not charged. But it really gets me that a company can be that vindictive and do that to a driver because he was planning on leaving and looking for steadier work/more hours/miles than he was getting there.

Heather

again and one says they wouldn’t, then the problem is NOT with the perspective employee. I dare say, I rarely hear about trucking companies being shut down for this kind of manipulative behaviour. Sadly, some of them can’t see where disrespect is or what it looks like, but I’ve noticed over the years that “Right does make Right” and the great companies get the best drivers.

Drivers are hard to please and that’s the other side of the coin to driver turnover because there are certainly drivers who didn’t choose trucking , but rather ended up in trucking.

They never enjoy what they do and some even see it as only a stepping stone to better things.

There are more good companies than bad ones and a good driver can write his/her own ticket… And they do.

Angelo D

What good is badly paying growth?

Regarding your trucknews.com story “US truck freight volumes grow 29% over next 11 years”, what good is it to grow 29% if the freight keeps getting cheaper? With no regulations on freight rates, owner/operators will continue to suffer with cheap broker rates. I did not make money in the last year, and it’s getting tough to stay afloat. I am making less today than I made back 10 years ago. Unless someone steps in, this is going to be get worse!

Berge Star Logistics

I think you have laid the template to deliver more stories like this. I’ve spoken to many drivers with similar circumstances.

Mr. Jones had shared his 30 year career with me where he covered and migrated to in excess of 18 companies coming up with with many great relationships and leaving solid bridges everywhere except one that gave him a bad review. Luckily most employers saw through this because the rest of his resume was rock solid.

There’s more than just one bad apple out there as companies go that contribute to the migration of truckers.

Mr. Jones had also worked for a huge multi-national corporation where he managed to pull 3 trailers that had just been safetied off the road- not for repairs, but straight to the scrap yard.

This is a big part how and why drivers migrate often. The dissatisfaction from companies who bend the rules and expect drivers to do so by reading between the lines.

The lines where you’re reminded that you’re still scheduled on the midnight run even though you were called in at 6 am to work the yard and have been there for 12 hours.

The physiological manipulation is subtle and flies under the radar because the burden of proof is verbal and in private, but a driver’s resume stands for itself if a legitimate quality future employer can read it properly – and they can if they are reputable.

If 10 employers on a resume say they would hire this driver trucknews.com

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More training answer to brake blitz results Regarding your trucknews.com story “Brake blitz takes 14.2% of trucks off the road for brake-related issues” this is evidence that more training by carriers needs to take place. Companies are more concerned about making money than the safety of the motorists on our roads. It is a shame how few drivers actually know how to do a thorough CVSA inspection. Who’s fault is this? If a driver does not know how to do one then it is not their fault, but the company needs to check this and correct what is lacking. The older drivers may not be the ones that know how to perform one simply because that was never expected years ago like it is today, so companies and drivers need to work together to overcome the lack of knowledge necessary for a CVSA inspection. I have driven for many trucking companies and never did a company have a qualified person to teach a full inspection; that would cost money! It is more than just driving a truck these days! Companies need to take blame for the majority of these issues.

Brad

To read and comment on our industry blogs, visit blog.trucknews.com.

July/August 2015 ❙ FLEET EXECUTIVE 7

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Fleetexec 08_06_2015.pdf

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inGauge® ESSENTIAL PERFORMANCE FOCUS insurance & claims (% of revenue)

inGauge is the only dedicated online Performance Benchmarking Service for the North American Trucking Industry. underperforming areas of your business, or 2) Validate your operational success and management. Some of these the wheels of your operation can’t turn. Due to the importance of insurance to the health of the industry, it is unforeseen circumstances, while also balancing the shareholder’s appetite for risk (deductibles and self-insurance) .

insurance & claims (% of revenue)

inGauge’s database of Trucking Companies totals 78 Truckload Carriers throughout North America (evenly dispersed geographically). Included in this total are 9 publicly traded represents the current range among our Population in terms of this equation represents the amount of self-insurance the Motor Carrier has assumed (deductibles and higher

5.77% 8.73%

2.81%

average and the values to the left and right are the worst and top perfomers in the population respectively. Although there are a number of the publicly-traded companies in the Top Quartile of the Population, the number 2 and 3 companies in the population are privately owned and have less than 100 power units, with 6 month averages of 2.98% and 3.1% respectively. It shouldn’t be a surprise that these two companies also have Top Quartile Operating Ratios (net of FSC) as well! We had had detailed conversations with these two companies, the result were the tips below:

1. Give the Safety Department all the tools they need drivers, as well as proactive Safety Monitoring and Management tools. Clear Safety policies and procedures are the conerstone of a well managed program.

2. Quantify your Appetite for Risk - many companies simply accept the standard deductible options presented by their insurer. If the company has built a well managed Safety Department, the corresponding risk of higher deductibles should decrease. Compare the premium savings of a higher deductible with a 24-36 month historical review of claims paid, while taking into account the proposed higher deductible(s).

3. Consider Captive Insurance - going a step beyond higher deductibles, is the consideration of a captive insurance facility to reduce costs. By nature, these arrangements typically recruit only the those companies with a strong Safety program and claims history. However, many companies assume they aren’t big enough to qualify for inclusion in a captive. In our 4. Make Safety your Culture - Safety is one of the few areas in a business in which the interests of all employees of a company are aligned. It’s not only the right thing to do, but also a great business decision!

Member/Ca Business P

Sign up for a demo today @ tcaingauge.com View.indd 6

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THE VIEW WITH LOU

MOTORTRUCK

Take the leap of faith

is written and published for owners, managers and maintenance supervisors of those companies that operate, sell and service trucks, truck trailers and transit buses.

JULY/AUGUST 2015

VOL. 84 NO. 04 PUBLISHER & EDITORIAL DIRECTOR

Lou Smyrlis (416) 510-6881 lou@TransportationMedia.ca GEARED UP EDITOR

James Menzies (416) 510-6896 jmenzies@trucknews.com FEATURES EDITOR

Julia Kuzeljevich (416) 510-6880 julia@TransportationMedia.ca CONTRIBUTING EDITOR

Sonia Straface (416) 510-6890 sstraface@TransportationMedia.ca CREATIVE DIRECTOR

Roy Gaiot rgaiot@bizinfogroup.ca ADVERTISING CREATIVE DIRECTORS

Carolyn Brimer Beverley Richards CONTRIBUTING EDITORS

Ken Mark Ian Putzger John G. Smith Carroll McCormick Harry Rudolfs ASSOCIATE PUBLISHER

Kathy Penner (416) 510-6892 kpenner@trucknews.com NATIONAL SALES MANAGER

Don Besler (416) 699-6966

ACCOUNT MANAGER

Brenda Grant (416) 494-3333 PRODUCTION MANAGER

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(416) 510-6779 CIRCULATION MANAGER

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Jim Glionna Head Office: 80 Valleybrook Drive Toronto, ON M3B 2S9 Motortruck Fleet Executive is published by Newcom Business Media Inc. The contents of this publication may not be reproduced or transmitted in any form, either in part or full, including photocopying and recording, without the written consent of the copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without prior written consent. Motortruck Fleet Executive is indexed by Micromedia Limited.

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Sticking to your investment plans is the surest way to get the economy back on track Lou Smyrlis

MCILT, Editor • lou@transportationmedia.ca

B

y the time you’re reading this you may have already received the unsettling news that Canada is back in recession. As I write this, the unfortunate reality is that we’ve had negative growth in each of the first five months of 2015 and the numbers for June are not yet available. But, let’s face it, it would take a June GDP miracle to avoid slipping into recession – defined as two consecutive quarters of negative growth.

For those of you who have worked so hard to climb back from the financial black hole created by the Great Recession what does this mean to your company growth plans for the rest of the year and into 2016? Is it time already to hunker down yet again and watch expenses, delaying investments in new equipment, facilities, staff and services?

I don’t think that would be wise. Here is why.

Based on what I’m seeing in the North American economic data and listening to what the economic experts are saying, it’s too early to be hitting the panic button.

The Canadian Manufacturing Purchasing Managers Index is a good indicator of future expectations of economic growth. Put simply if purchasing managers are optimistic about future demand growth, it is reflected in growth in the index. For the first five months of 2015, the index was a mirror of the downward trend of the Canadian economy. But in June it showed its first sign of life climbing back into growth. July was the same (and the optimist in me will choose to ignore the fact July’s growth was not as strong as June’s.) If we get one more month of growth in the index it’s hard to see how this could be a long recession for Canada.

Take what Carlos Gomes, senior economist with Scotiabank and a speaker at our upcoming Surface Transportation Summit, had to say: “If you look at domestic activity, it remains very resilient. Consumer spending is doing well.

Auto sales are at record highs. Housing activity is buoyant. Employment conditions have actually accelerated over the past year to about an average of 16,000 jobs created each month. That’s trucknews.com

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a significant improvement from an average of about 10,000 during the previous two years. One part of the economy is doing well, however there is significant weakness on both the business investment side and the export side. That’s really the concern.”

Interestingly enough it is that lack of investment that can derail the Canadian economy for good. If at the first sniff of an economic downturn we essentially go on an investment strike – cancelling equipment renewal plans, laying off drivers, etc. – in anticipation that future demand won’t be there we end up being directly involved in creating the very downturn we fear. Or as John Maynard Keynes described such investment decisions: We devote our intelligences to anticipating what average opinion expects average opinion to be.

I think a wiser approach would be to cautiously proceed with investment plans, keeping in mind that economies growing at less than 3% GDP are bound to run into several bumps in the road, some more pronounced than others. As you will read in our cover story this month, Canadian carriers so far are not abandoning their equipment renewal plans. Only 6% of large carriers and 9% of medium-sized carriers have no plans to purchase new trucks next year, which is similar to their responses from the previous year.

But small carriers are showing a considerable difference in their future purchasing plans with 55% having no plans to purchase new trucks in 2016.

The Loonie’s downward spiral is of no help.

Just over a year ago, when the Loonie was worth 89.09 cents US – at that time its lowest point in four years – Mackie Moving Systems manager of fleet services Derek Varley told us in an interview that every cent the Loonie drops adds about $6,750 to the cost of a $135,000 truck.

It will take some forward thinking indeed to take the leap of faith during the economic downturn and stay true to investment plans. But that’s exactly the action that will keep us from a prolonged recession. FE July/August 2015 ❙ FLEET EXECUTIVE 9

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BOTTOM LINE

YOU-INC.com Would you do business with yourself based on your experience with your own website?

By Mike McCarron

T

he panic set in two weeks before the industry seminar on personal branding I was scheduled to moderate. While reading some promotional material on the event I saw that my bio didn’t include a web address for my new company.

Then came the sudden realization that my new company didn’t have a website, period.

Knowing what an idiot I would look like in a few short weeks, I quickly moved into DEFCON 1-mode to rectify things.

My personal brand needed some attention!

A website is the delivery system of your business’s brand.

A good website attracts and increases traffic over a sustainable period of time, converting suspects into prospects into customers.

The last time I thought a peep about website strategy was back when I was still using a Blackberry 850. My company had a team of people who could put a site together and keep it up and running. It was their full-time job.

Now I’m on my own. It was time to bone up on things.

Once I realized that the color of the navigation bar is not the place to start, here is what I learned about building my new website: Mike McCarron is the president of Left Lane Associates, a firm that specializes in the “monetizing” of transportation companies.

A 30-year industry veteran, he founded MSM Transportation which he sold in 2012.

Follow Mike on Twitter: @AceMcC.

Is it Mobile?

Americans spend an average of 2.5 hours per day on mobile devices accounting for 60% of total digital media time; 57% of them will not recommend or use a company that looks bad on their mobile device.

Make sure your site is mobile- and tablet-friendly. Every person who has an interest in your company will eventually visit you on the fly. If your site doesn’t look good or function well on a phone, people are going to turn off your brand and there’s little chance they will return soon.

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SEO Rules

Your website should make it easy for people to find you.

Search Engine Optimization (SEO) is a way of using code, text, graphics to increase the odds that your company is at the top of the list when someone searches the internet.

SEO is a very complicated puzzle and no one piece can guarantee you high industry rankings. Since 90% of buying decisions are now based on internet research it’s important to piece together an SEO plan. Higher rankings plus more site visits equals more customers.

Domain age is one factor that will affect your SEO rankings. Search engines give preference to old domains so it’s critical to keep the one you’re currently using. Changing your domain address is like starting from scratch, like I am doing.

Let’s continue the conversation Mike McCarron is one of more than 25 transportation industry leaders speaking at the 2015 Surface Transportation Summit this Oct. 14 at the Mississauga Convention Centre. To find out more and to register, go to www.surfacetransportationsummit. com. Early bird specials currently in effect. trucknews.com

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Converting Your Guests Converting website suspects into sales leads is no easy task. It takes time, patience, and mucho perseverance. Most of all, you need to know who’s knocking on your door.

Very few people have individual IP addresses so it’s almost impossible to know precisely who is visiting by looking at traffic statistics alone.

If your site doesn’t look good or function well on a phone, people are going to turn off your brand and there’s little chance they will return soon.

You need content-rich landing pages that encourage people to give a little information about themselves—an email address—in exchange for something valuable like a white paper or access to a compelling industry blog. The day you hook them is the day they become prospects.

Minding the Store At minimum, I’m hoping everyone reading this will do a quick audit of their website strategy by simply asking some basic questions. How often is your content updated? Is there any reason for a visitor to come back to your site a second time? Do you know what pages people are looking at and for how long? Would you do business with yourself based on your online experience?

Ask who is minding the store? In too many cases it’s Frank the IT Intern who isn’t remotely qualified to manage the

epicenter of your brand. Managing a company’s website strategy is a huge job even for the seasoned marketer.

I quickly realized it was impossible to get an effective website up and running in two short weeks. I also realized that since the business is less than three

months old a “Coming Soon” landing page would suffice as a “brand band aid” until I got my act together. It allowed me to downgrade from DEFCON 1 to DEFCON 5 but it didn’t let me off the hook. On my agenda now: website design! FE

HE PO AL WE TH RE Y DB FL Y EE T

Keyword Shuffle Effectively managing your site’s keywords will give it a boost in its search rankings.

I went through a few hundred words before settling on the 25 I am running with.

Like everything else SEO-related there is no perfect number of key words.

It’s also savvy to think like your customers when picking keywords. Google AdWords is a good place to start determining the strategic keywords for your site and SEO copy.

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RISKY BUSINESS

Dispatching for Profit Dispatchers carry enormous responsibilities and exert enormous influence over your company’s profitability

By Rick Geller

M

aintenance-free drivers are the dream of every dispatcher. Provide the driver with a load assignment and be confident that they will make it happen!

In reality, though, it is usually just that…a dream.

And, at the end of the day, is it fair, or reasonable, to download responsibility for utilization, compliance, and customer service to the driver when they are not in a position to access all of the information they need to make informed decisions?

All too frequently, this is exactly what happens when contact and communication between dispatchers and their drivers is infrequent or prompted only when there is a problem.

To be clear, dispatchers carry enormous responsibilities and exert enormous influence over whether your company operates profitably. Their responsibilities include: onitoring personnel and equipment locations, as well as »M utilization, to coordinate service and schedules. » Preparation of daily work and run schedules. » Oversight of all communication with customers, supervisors, and drivers. » U nderstanding the implications of new information for both current and future problem-solving and decision-making. » A bility to tell when something is wrong or likely to go wrong.

Dispatchers supervise the driver and Rick Geller, CRM, load from the point of loading to unloadserves on the board ing each and every day. This includes of directors for both efficient dispatching, booking driver timethe Truck Training off, positive resolution of personnel chalSchools Association lenges, turning trucks effectively, and proof Ontario (TTSAO) active response to late loads and potential and the Professional claims. Consequently, it is imperative that Truck Driving they know the location of every load, evInstitute (PTDI). He ery day, and whether or not the driver will is also the incoming be able to legally meet the service expecchair of the Toronto tations of the customer.

Chapter of the Fleet Given the daily demands on their time Safety Council, and viewed through that lens, it is easy to as well as an executive committee understand the temptation to skip over drivers that seem capable of running on member for both their own. The thought process is that these the Ontario and drivers will call if there is a problem. The Toronto Regional flaw in that theory is that the driver does Truck Driving not have all of the information and may Championships.

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not be in a position to recognize that something is going wrong.

The job of dispatching is much like that of the log-jammer, jumping from log to log to keep the boom flowing. Miss one log and something is bound to go wrong!

Efficient dispatching starts with the trip plan – what is the basis for determining how many hours are allowed for the trip to be completed. Oftentimes, trucking companies rely on dispatch software but are unaware of the business rule that is being used to make this determination. If, for example, the business rule is that the truck will average 65 mph, then the plan is likely doomed before a wheel is even turned.

A better business rule would be to plan on the basis that the truck will average 45 mph. The difference can be huge. On a trip from Toronto to Dallas (1415 miles), for example, it makes the difference between allowing the driver 22 hours or 32 hours, a difference of 10 hours!

Yet, time and again, I visit carriers that simply “know” how long it takes and allow drivers 48 hours to complete this trip. That’s 22 hours of drive-time. Can the driver do it? Not legally and this failure usually results in the HOS Basic being in Alert Status.

From the driver’s perspective, trip planning often is limited to typing an address into a GPS device. While this might provide an overall view of the trip, it does not adequately segment the trip and facilitates planning “on the fly”.

A daily discussion between the dispatcher and the driver facilitates planning for that day or that segment of the trip.

Where are you headed for today? Where are your fuel stops and meal stops going to happen? Where are you going to take the 30-minute break?

Armed with this information, it becomes easier for the driver to execute the trip plan and easier for the dispatcher to determine whether or not service can be made on the load.

Similarly, the decision to max out hours and use the 36-hour restart or control daily hours and simply recap on a daily basis can make a tremendous difference. Using the re-start rule guarantees the loss of 36 hours in a 7-day cycle. Capping hours at 8.5 per day costs 17.5 hours in the same 7-day cycle but also means the driver will not run out of hours.

Circumstances differ for every trip and the driver is not well positioned to make that call. Dispatchers have the information.

In today’s business and legal climates, it is imperative that trucking companies pay more attention to their dispatch processes. It can be a matter of survival. FE trucknews.com

15-08-12 1:18 PM

TAKING CARE OF BUSINESS

Crude Feud Why oil prices are falling, and will continue to fall

By Mark Borkowski

C

hanges in oil prices impact Canada’s resource-heavy economy significantly, as the nation is still feeling the pernicious effects from the oil shock earlier in the year. Governor Poloz has expressed his expectation of export-led economic recovery, but recent trade data has been incongruous with this sentiment, as May’s mercantile trade report showed exports falling for the fifth straight month.

According to Rahim Madhavji, the President of KnightsbridgeFX.com, a currency exchange company that helps Canadians get better exchange rates than the banks, change is coming.

A changing international landscape has catalyzed oil’s recent decline. News from several countries has transmuted the global picture for supply and demand of oil. Here is how several major oil players are impacting oil prices: IRAN

It’s estimated dissolving Iranian trade sanctions would lead to a supply increase of 1 million barrels a day, and it has been posited that Iran is in possession of at least 50 million barrels of oil ready to “sell and sail.”

An influx of Iranian oil will increase global supply, without a commensurate increase in demand. Iran is unlikely to impose production restrictions, as they will be looking to capture global market share at all costs. Other oil producing nations will be unlikely to surrender market share amidst falling prices, which will serve to drive prices even lower.

CHINA

Although Greece has continued to dominate headlines in the Western world, Chinese economic conditions have a significant impact on oil prices. The Chinese economy has shown tapering growth, with 2014 GDP growth failing to reach 8%, the slowest growth rate the country has experienced in the last 24 years. The International Monetary Fund has predicted that China’s GDP would grow at a rate of 5.9% per annum over the next six years, markedly slower than rates of the past few years. Chinese equity markets have also experienced sharp monthly declines throughout June and July, forcing Mark Borkowski is the president of the government to intervene. It’s clear that Mercantile Mergers the Chinese economy is in flux. & Acquisitions Furthermore, China is the world’s secCorp. Mercantile is ond largest importer of oil. In May, Chia mid-market M&A brokerage firm. na’s year-on-year oil imports fell by 10%. trucknews.com

TCB.indd 13

Soft oil import data for May implies that Chinese demand for oil in the future could be potentially weaker than expected, which will serve to drive down oil prices even further.

UNITED STATES

US oil-drilling rigs grew for the first time in 29 weeks in early July, rising by 12 to 640 rigs. Rig count acts as a proxy for oil industry activity in the country, and there has been a steady decline in operating rigs since the oil shock of last year. The uptick in oil rigs could signify the US shale industry becoming more competitive, allowing them to continue production despite depressed oil prices.

Globally, oil remains in oversupply. A continued reduction in US oil production is essential to cauterizing bleeding oil prices. One week’s increase doesn’t signify a rebound of US oil production, but should this level of production be sustained, it will be difficult for oil prices to rebound.

OTHER OPEC NATIONS

OPEC oil production in June climbed to its highest monthly level since August of 2012. OPEC nations are unlikely to cut production in reaction to the impending influx of oil supply. OPEC nations will be unwilling to surrender production volume to non-OPEC nations, which will further pressure oil prices.

Then there is the precarious political tension between Iran and Saudi Arabia. The two are at odds in many political ventures, and this would likely impact global oil supply. If sanctions are lifted against Iran, they will begin to export more oil, and subsequently have more resources at their disposal to pursue military and political ventures. Resultantly, Saudi Arabia would be unlikely to lower production to accommodate new Iranian oil supply. The lower oil prices will limit the economic benefit to Iran.

FUTURE OUTLOOK

Based on the aforesaid text, it is evident that oil prices are poised to fall further, driven by a combination of softening demand and an uptick in supply. This bearish outlook will profoundly impact the Canadian economy, with the possibility of spiralling into a recession not out of the question.

In the short-term, this certainly puts pressure on the Bank of Canada to cut interest rates. Another rate cut would further depress the Canadian dollar, which would soften the harsh effect lower oil prices would have on the economy. FE mark@mercantilema.com | www.mercantilemergersacquisitions.com July/August 2015 ❙ FLEET EXECUTIVE 13

15-08-12 1:19 PM

ON OCTOBER 14th 2015, PLEASE PLAN ON JOINING CANADA’S TOP TRANSPORTATION EXECUTIVES FOR A DAY OF EDUCATION & NETWORKING. We have created an agenda that truly addresses the many challenges facing both Shipper and Carrier executives.

2015 SUMMIT AGENDA THE ECONOMY IN 2016: Leading economic experts provide their projections for the coming year & industry executives outline their strategic response.

THE VIEW FROM THE TOP: The transportation executive’s perspective on the major trends driving transportation in 2016 and beyond.

SHIPPER-CARRIER ROUNDTABLE: How should shippers and carriers react to the challenges shaping the transportation industry? Leading shippers and carriers participate in a frank and open discussion.

THE FUTURE OF RETAIL DISTRIBUTION IN CANADA: E-commerce, omnichannel distribution, smart apps, same-day delivery are all profoundly changing the way retailers do business and impacting every facet of logistics and transportation. How should transportation professionals adapt?

CARRIER BENCHMARKING: Do you know how your company stacks up against the competition on key variables such as cost per mile & revenue per mile? How to find out without breaking competition laws.

Douglas Nix

Anne McKee

Vice Chairman Corporate Finance Associates

Executive Vice President Trailer Wizards Ltd.

Ginnie Venslovaitis

Jason Dubois

Director, Transportation Operations Hudson’s Bay

President Len Dubois Trucking Inc.

Car

Seni S

Ra

Co-Fou S

BEST PRACTICES IN MERGERS & ACQUISITIONS: Hear from the experts on the best way to go about buying a trucking company, freight broker or full service logistics provider.

SHIPPER & CARRIER SCORECARDS: Straight talk on the metrics and measurement tools used to see how shipper and carrier goals and expectations align with each other.

IS OUTSOURCING TO A 3PL THE RIGHT STRATEGY FOR YOUR BUSINESS?: Learn what the latest research reveals about 3PL utilization and effectiveness and hear first hand from a major shipper who embarked on an exploration and evaluation of 3PL services.

Registration: 7:30 am Presentations: 8:20 am sharp

Brian Ware

VP, Marketing and Business Development Lakeside Logistics

Douglas Davis

Co-Founder & Partner StakUp Inc.

#sts15

MISSISSAUGA CONVENTION CENTRE 75 Derry Road West, Mississauga, ON

For more information and to register, please visit www.SurfaceTransportationSummit.com

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15-08-12 1:40 PM

Ale

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SURFACE TRANSPORTATION

ummit

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Introducing the 2015 team of presenters...

McKee

e President ards Ltd.

Dubois

dent ucking Inc.

Davis

& Partner Inc.

Senior Economist Scotiabank

Co-Founder & President, StakUp Inc.

Chris Henry

Dan Einwechter

Ray Haight

Kelli Saunders

Kimberly Wildenmann

Carlos Gomes

Co-Founder & Partner StakUp Inc.

Alex Boxhorn

Logistics Manager Loewen Windows

President Morai Logistics Inc.

Joe Lombardo

CEO Challenger Group of Companies

Traffic Coordinator Lantic Inc.

Serge Carestia

TRANSPORTATIONMEDIA Vice President Director, Transportation Supply Chain and Terminal Operations The Home Depot Canada Purolator TRUCK NEWS

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Dave Zavitz

Robert Wiebe

Doug Munro

Senior Vice President, Sales & Marketing Canada Cartage

Senior Vice President Supply Chain Loblaw Companies Limited

President / Owner Maritime-Ontario Freight Lines Limited

Mark Lerner

Mike McCarron

John Ferguson

Assistant Vice President Intermodal Sales CN Rail

Steven J Brown

Partner, National Consumer & Industrial Products Industry Leader, Deloitte

President, Left Lane Associates

Wesley Armour

President & CEO Armour Transportation Systems

President & CEO SCI

Roger Poirier

Managing Director Investment Banking Cormark Securities

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15-08-12 15-06-11 1:40 9:45 PM AM

THE HUMAN EDGE

Diverse Decisions Protect your business by looking beyond traditional labour pools

By Angela Splinter

F

ew professional recruiters would keep their jobs if they openly admitted to turning their backs on qualified candidates for no valid reason. A decision like that would leave a fleet at a competitive disadvantage. It would increase recruiting costs, leave driverless trucks parked in the yard, and further expose the business to threats of a growing shortage of qualified workers.

Yet many fleets often do this very thing – returning time and again to the same shrinking labour pools they have always used.

A growing number of fleets have found ways to break free from this vicious cycle by enhancing the diversity of their workforces. And, it’s a strategy that delivers real economic returns. In 2008, a Harvard Business Review case study discovered that the top 50 “diversity organizations” across Canada and the US reported higher profit margins and returns than their peers. Diversity policies were also an emerging practice among businesses recognized in Trucking HR Canada’s 2015 Top Fleet Employers program.

Luckily, under-used labour pools can be found all around us.

Retiring military personnel Consider the thousands of military personnel who are returning to civilian life each year. Many of them have extensive experience operating heavy equipment and would make ideal job candidates for trucking companies.

Ontario recently announced a change that makes it easier for Canadian military personnel and veterans to secure civilian licences. Since July 1, Department of National Defence (DND) 404 Military Driver’s Permits have been recognized as being equivalent to several of the province’s commercial licences, after research demonstrated that the military training and testing requirements meet or exceed the provincial standards.

A national charity known as Canada Company is among the resources that are helping to connect these available workers to employers.

These people served their country well. One of the best ways to honour Angela Splinter that service is to support them by recogis the CEO nizing the skills they established while of Trucking HR in uniform.

Canada 16 FLEET EXECUTIVE ❙ July/August 2015

Human E.indd 16

Aboriginal people Another growing labour sector includes Aboriginal people.

The 2011 Statistics Canada Census shows that the nation’s Aboriginal population has soared 20% since 2006, reaching more than 1.4 million people.

Their role in the available workforce will continue to grow.

Digging deeper into the demographics, 646,620 Aboriginal people were under the age of 25. A full 28% of the population was under the age of 14, while a mere 16.5% of Canada’s remaining population fell into that age group.

At a time when the trucking industry struggles with an aging workforce, the median age of Canada’s Aboriginal population is 27.7 years. The remaining workforce is 40.1. In contrast, a typical Canadian truck driver is now 46, and that average age continues to creep higher as a large number approach their retirement years.

Need another reason to consider this group? About 89% of surveyed CEOs said in an Aboriginal Human Resources Council survey that diversity was a competitive advantage when it comes to retaining employees, 85% said it helped position their businesses as an employer of choice, and 80% even align diversity goals with larger corporate goals.

Women While women are clearly under-represented in the trucking industry – accounting for a mere 3% of drivers, mechanics and cargo workers – the issue is now getting more attention. Trucking HR Canada’s Women with Drive initiative has sounded the alarm, and has drawn together executives from across the industry to find more ways to attract, recruit and retain more women in all industry occupations. trucknews.com

15-08-12 2:15 PM

People with disabilities Some roles in the trucking industry represent obvious restrictions for people with disabilities. The visually impaired, for example, would not be able to work behind the wheel. But there are many occupations that, with a few minor accom-

Human E.indd 17

modations, could employ people with disabilities. Fleets already do this by finding roles for drivers who have been injured on the job, or retaining aging workers who are limited in terms of physical capabilities.

The group is simply too large to ignore.

About one in eight Canadians has a disability that affects mobility, hearing, vision or learning. In B.C. alone, people with disabilities account for 355,430 working-age people.

They are also anxious to get to work.

People with disabilities often report that they are looking for the social and economic advantages that employment provides, helping to build existing skills, and increase confidence and self worth.

These are just a few examples of largely untapped labour pools that we should not overlook. The fleets that work to recruit and employ them will certainly have a better chance to thrive in the face of an increasingly competitive labour market. FE

15-09-03 11:22 AM

LEADERS

MEASURING SUCCESS

By Julia Kuzeljevich

Trailer Wizards’ executive vice president Anne McKee on company expansion, metrics and the key role of customers. we lease, rent and maintain, Trailer Wizards continually test drives new products to see how they succeed in real life applications. It is to our benefit, and our customers’, to provide quality, durable, and cutting edge options for Canadian trailers.

As environmental standards become more restrictive, new materials and technologies are how we as an industry are going to be able to meet these evolving guidelines. Testing them in real applications allows us to understand how the new technology works, how it stands up to the Canadian environment and what true benefits they offer our customers.

FE: CONGRATULATIONS ON BEING RECOGNIZED AS A WINNER OF CANADA’S BEST MANAGED COMPANIES PROGRAM. IN 2013 TRAILER WIZARDS CELEBRATED MORE THAN 50 YEARS IN BUSINESS. WHAT CONTRIBUTES TO THE LONGEVITY OF A COMPANY SUCH AS TRAILER WIZARDS?

FE: TRAILER WIZARDS HAS ACQUIRED COMPANIES SUCH AS BRYANT TRAILER SERVICES INC. AND WESTERN STORAGE, ADDING INVENTORY, TOOLING, MOBILE TRUCKS, CUSTOMERS, DRY VANS AND CONTAINERS, AMONG OTHER ASSETS. HOW HAS THE PROCESS ROLLED OUT SO FAR?

MCKEE: First and foremost, we attribute our success to our customers. We don’t just measure ourselves on revenue but on what we hear from our customers and on our ability to respond.

Our customers are at the heart of our approach to sales, the composition of our fleet, our commitment to safety, managing our yards, branch operations and the level of employee training.

As well, we pride ourselves on our organizational structure and believe it is key to our success. Local service, nationwide – Our organization is structured to provide great autonomy to our regional centres as regional competitiveness is a key success factor in the trailer rental business. We can then effectively address customers’ needs based on regional requirements.

FE: WHAT ARE SOME OF THE TOP TRENDS YOU HAVE BEEN OBSERVING AROUND TRAILER TECHNOLOGY AND CUSTOMER DEMAND?

MCKEE: Our strategy over the last 15 years has been aggressive acquisitions, and organic growth, allowing us to grow over 1000% to a national footprint consisting of five regions with nearly 30 locations. In assets, it means that our fleet has grown from two thousand trailers to over 20 thousand.

The acquisition of Crailin Leasing Inc. in Cornwall is a shining example of the success of our approach to integration. Ninety percent of the staff were hired on as employees and began immediate ‘Wizardization’ of operations: swift implementation of our operating and safety practices along with our systems facilitated through our extensive e-learning curriculum. Staff were happy with this structured approach as it solved many issues that existed in the previous entity.

The new hires were provided with ample training, equipment and resources to perform their roles effectively within the Trailer Wizards organization.

MCKEE: The need to conserve fuel and maximize weight capacity leads innovation in the trailer business. Whether it is addons, materials, or technology, the industry is continually introducing innovative solutions. With over 20 thousand trailers that

FE: WHAT IS THE COMPANY PHILOSOPHY AROUND GIVING BACK TO THE COMMUNITY AND HOW DO YOU FEEL SUCH PROGRAMS BENEFIT?

18 FLEET EXECUTIVE ❙ July/August 2015

Leaders.indd 18

trucknews.com

15-08-12 2:55 PM

MCKEE: Giving back to the communities that we live and work in is core to who Trailer Wizards is as a company. Our philanthropic initiatives are driven by our ownership group through a formal foundation, our organization and our employees throughout the regions. We have a mix of national, regional, and personal initiatives that we support; including Food Banks Canada (and local food banks), Trucks for Change Network and many other community and environmental causes. We don’t just donate over one million dollars each year; we also donate our time and our expertise.

FE: WHAT ABOUT INITIATIVES SUCH AS CONTESTS FOR YOUR TECHNICIANS?

MCKEE: In addition to extensive training with our Wizards of Work (WOW) E-leaning program, which ensures technicians are trained consistently across the country, and Wizards Working Wisely Safety program, which enables robust safety practices, we offer the Super Wizard annual competition for technicians. This three-tier national competition builds a collaborative, effective team and celebrates technician excellence. Winners are compensated at the shop, regional and national levels.

MCKEE: As we all know, there is a consolidation of both shippers and suppliers across the country and there is a greater need for nationwide processes, systems and contacts. It is also important, both on the shipper and supplier side, that companies understand the nuances and requirements of the regional markets. Trailer Wizards is well positioned to address customer needs in this type of market. FE

Let’s continue the conversation Anne McKee is one of more than 25 transportation industry leaders speaking at the 2015 Surface Transportation Summit this Oct. 14 at the Mississauga Convention Centre. To find out more and to register, go to www.surfacetransportationsummit. com. Early bird specials currently in effect.

FE: WHAT MAKES FOR BETTER CUSTOMERS?

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500,000+ views

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Leaders.indd 19 TMTV 1-2H mag.indd 1

15-08-12 15-08-10 1:002:55 PM PM

COVER STORY

LEAP OF FAITH

By Harry Rudolfs

20 FLEET EXECUTIVE ❙ July/August 2015

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espite the apparent downturn in the Canadian economy and the gloom surrounding activities in the oil patch, truck and trailer manufacturers are busy filling orders and many carriers expect to keep on purchasing rolling stock and power units in 2016.

On the whole, Canadian carriers are either standing pat and replacing ageing equipment, or actually stepping up their purchases of trucks and trailers. Ayr Motor Express of Woodstock, NB started with two trucks in 1990 and has positioned itself as a major Canadian carrier. The company is currently awaiting delivery of 120 fifty-three foot dry van trailers and 80 highway tractors. According to Seth Keenan, director of operations, 50 of the trailers represent new additions to the fleet as do 10 of the tractors. And Keenan expects they will be ordering more in 2016. “Our business is growing and so are our customers,” he says.

However, the slumping Canadian dollar certainly isn’t helping carriers looking to expand. Jaswant Nagra, president of Wawa Transport of Mississauga, Ont., would consider buying more equipment but feels handcuffed by the prohibitive exchange rate. “Last year I ordered four trucks and fifteen trailers, but the dollar was at $0.94. These were plated, vented trailers with a hard roof and they would cost me considerably more today.”

Caravan Transport Group Inc. of Oakville, Ont., has also experienced tremendous growth since its founding in 1997. The company is in the process of adding another 100 trailers and 30 tractors this year. General manager Derek Koza estimates that Caravan has been growing by 10% over the past few years and his equipment purchases reflect that.

“We’re budgeted for 15% growth in the coming year and I’m going to push for that responsibly,” says, Koza. “We’re an international carrier so we collect some US dollars, but I feel sorry for those guys running back and forth between Toronto and Montreal and getting paid in Canadian funds. I have a feeling some manufacturers are holding back on their price increases.” trucknews.com

But George Cobham Jr. of Great Dane Mississauga, Ont., says price adjustments are currently in effect across the board. “You can expect to pay $7,500 more for a dry van trailer and $20,000 for reefers.”

Even with the higher pricing, Cobham is selling more trailers than he did last year and demand has been brisk the last two years resulting in longer wait times for bulk orders. “With the exchange rate and other increases people need to think further ahead when ordering trailers. At least in the near term, I don’t see things easing up.”

What’s even more interesting is who is buying the trailers. “Major carriers are continuously renewing their fleets,” says Cobham. “But a lot of the increased demand is coming from small fleets that are new entrants in the business, buying small orders of five to ten trailers. We haven’t seen that kind of thing since 2008. These are new people getting into trucking.”

But Koza thinks some caution would be advisable when buying new equipment. “I just found out that there’s a one year waiting period for new trailers, and four to six months for new trucks. So if you make the decision today to buy 200 trailers, they’re going to hit your lot in 2016. Will you ready for them? Will the work still be there? You’ve got to be very careful right now when ordering trailers.”

Mac McGill, president of McGill Transport of Orillia, Ont., a local and regional carrier, bought two daycab tractors and two trailers this year to augment his fleet. He saved “a bit” by buying his trailers from a Canadian manufacturer, but he finds the steeper prices might keep him from placing any orders for next year, even though he is expecting revenues to increase about 5%. “I usually replace my tractors every five years and my trailers every eight to ten years,” he says. “But a trailer that cost us $25 K last year is now costing $39K, so I might wait a year before buying.”

Pro North Transportation of North Bay, Ont., is also experiencing growth of around 10%, according to fleet manager, Milt Miller. The company is in the middle of accepting delivery on 75 new tri-axle trailers (they’ve received 50 and are awaiting on another 25 due in September of 2015).

July/August 2015 ❙ FLEET EXECUTIVE 21

15-08-13 9:41 AM

COVER STORY

22 FLEET EXECUTIVE ❙ July/August 2015

Cover story.indd 22

Lease/rental Government

Private

Owner/ operator

15% 2% 3%

32%

32%

20% 28% For-hire

REGION

Eastern Canada Western Canada

18% 36%

14%

46% Central Canada

11%

SIZE OF FLEET

N/A

5%

100+ vehicles

5%

1-9 vehicles

19%

4%

Other

Forestry

10-99 vehicles

Construction

28%

Urban/local

48%

Regional

Our annual Equipment Buying Trends Survey, conducted across Canada earlier this summer, sheds light on the equipment purchasing habits and intentions of the nation’s carriers. The survey includes responses from every region and fleet size. It also includes responses from for-hire, private, government and lease/rental fleets as well as owner/operators. (Responses from the latter are not included in this report.)

Last year carriers of all sizes started re-investing in fleet renewal. It was particularly heartening to see small carriers investing in new equipment to a large extent for the first time since the Great Recession. Yet slumping energy pricing is having a distinct negative impact on the oil patch so far in 2015 and that is having a trickle-down effect on other parts of the economy. It’s possible we may already be in recession if the second quarter turns out to show negative growth as did the first quarter. Is the shaky economic recovery making Canadian carriers rethink their equipment renewal plans?

Class 8 truck sales up to May in the Canadian market have been strong enough to make for the fifth best sales results YTD going back to 1999. But plans for next year’s Class 8 truck purchases appear dependent on fleet size.

Large (over 100 tractors) and medium sized (10-99 tractors) fleets appear to be staying the course on equipment purchases for 2016. Only 6% of large carriers and 9% of medium-sized carriers have no plans to purchase new trucks next year, similar to their 2015 responses. But small carriers (fewer than 10 trucks) are showing a considerable difference from the previous year with 55% having no plans to purchase new trucks compared to 22% who said likewise last year.

34%

Other

Long haul

SIZE MATTERS

FLEET ACTIVITIES

TYPE OF FLEET OPERATION

trucknews.com

15-08-13 9:41 AM

0% CURRENT TRADE IN CYCLE FOR HEAVY DUTY VEHICLES

10%

small

10+ years

30%

>30%

% OF HEAVY DUTY FLEET EXPECT TO REPLACE (BY FLEET SIZE)

2-3 years

4%

20%

medium

large

4-5 years

11%

20%

28%

remainder of 2015

47% 24% 6-7 years

12%

26%

8-9 years

21% % OF HEAVY DUTY FLEET EXPECT TO REPLACE

49%

30%

>30%

4 5 20%

16

39

% of respondents

0% of fleet

% of respondents

remainder of 2015

2% 2% 14% 69%

10% 51%

4%

9% 2%

15%

2%

2% 5%

in 2016

36 10%

in 2016

6 20%

23

23

54%

%

of respondents

42

20%

12% 55% 0%

10% trucknews.com

Cover story.indd 23

9%

0% of fleet

5

% of respondents

30%

39%

6%

>30%

19% 10%

13%

2%

11%

20%

30%

>30%

July/August 2015 ❙ FLEET EXECUTIVE 23

15-08-13 9:41 AM

COVER STORY Historical comparison - YTD May Class 8 truck sales 15,464 12,280

13,759

13,125 10,871 8,313

7,238

12,962

11,910

11,556 11,132

10,702

12,455 10,346

8,722

8,203

7,359 5,953

1999

2000

2001

2002

2003

2004

2005

2006

2007

“We ordered these quite a while ago and that helped with the pricing,” he says. “We had to go with the purchase because most our multi-axle fleet was getting old. When it comes to replacing older equipment, we set a date and everything below that has to go.”

Miller is now looking at replacing part of his tandem trailer fleet in 2016. “I think we’ll be buying about 60 or 70 tandems in 2016. We’ll probably order them in April or May and hope to get delivery by the end of that year.”

Derek Varley, fleet services manager for Mackie Transportation of Oshawa, Ont., would like to park some of his older stock, but for now he can’t afford to. “We’ve got some organic growth happening and we’re getting about ten new trailers this year, most of them reefers. We’re slowly moving our sights away from dry vans and automotive freight to specialty trailers like reefers,” he says. “General freight and automotive is often changeable and unpredictable, but people always have to eat.”

When Mackie does buy trailers, it’s with the full fuel-efficient package: disc brakes on the trailers, along with under-skirts and super-single tires all around. “But we’re really limited by the number of drivers we can get,” adds Varley. “Owner operators like dedicated runs with predictable miles. We’re still doing automotive but not as much as we used to. But if we put an owneroperator on a reefer run, we want to make sure he or she will stick around before we go and buy a trailer for them. Until that time it’s better for us to use rentals, especially if it’s new business.”

Erb Transport of Baden, Ont., is all about refrigerated service.

President Wendell Erb expects to add more equipment in 2016, “But we’re still taking delivery of this year’s order—100 tractors and 200 refrigerated trailers. Erb estimates that about 10% of this is new additions to the fleet while 90% goes towards replacing older stuff.

“There are always opportunities for new growth in our business, but the most important thing is being able to attract and retain drivers,” he says. “But even more important is having the right equipment in place when we need it. A lot of our business is seasonal.”

Moving further west to Winnipeg, Jason DuBois, president of Len Dubois Trucking, says he’s more interested in replacing older equipment than expanding his fleet. He’ll be continuing to swap out his older stuff during 2016. “Right now we’re fo24 FLEET EXECUTIVE ❙ July/August 2015

Cover story.indd 24

2008

2009

2010

2011

2012

2013

2014

2015

5-year avg.

cusing on efficiency and trying to do more with less,” he says.

“I think the economy could go either way,” adds DuBois.

“Business is up and down from week to week and I don’t think we’ll see any large amount growth next year, but it won’t be the doom and gloom that some are predicting. It helps that some of our business is in US funds so we get helped out with the exchange rate.”

Lower prices for crude oil may have had a dampening effect on transportation services in parts of Alberta and Saskatchewan, but Carl Rosenau, president of Rosenau Transport of Edmonton will keep on buying trucks and trailers, “in perpetuity,”he says.

“We’re buying 200 trailers this year, 60% of which is replacement and 40% is a net increase. next August we’re opening up new lanes,” he says. “Optimist that I am, from 2006 on we’ve had growth of 15-20% most years. At one point we had 800 rentals (trailers) in here.”

Rosenau thinks a major part of his company’s growth is the result of mega-companies like TransForce coming into his region and buying up his competitors. “We’re the local hometown boys. When you’ve done business with a company for 25 years and the owner retires and someone new takes over the business, who are you going to go with? “ Rosenau admits that 2015 has been “flat” for his company and he’s had to part ways with his owner-operators but hasn’t had to lay off any of his company drivers. He insists he’s in good position with 750 employees, 24 terminals and over 400 power units, and still expecting 1-2% growth this year.

Looking into his crystal ball, Rosenau forecasts revenues to increase to about 5% next year and he’ll most likely be buying more Kenworths and Freightliners for his highway and city fleets respectively.” We’ll probably be buying 30 tractors this year and probably about 50 next year, and 180 trailers per year for the foreseeable future,” he says. He adds, these units will all have the latest fuel-saving and safety features: discbrakes, full fairings, super singles tires, as well as anti-rollover and automatic tire-pressure monitoring systems.

But one thing Rosenau won’t have to worry about is finding drivers to pull his new equipment. “We’ve got a stack of resumes in our Grand Prairie office that are about a foot thick,” he says. FE trucknews.com

15-08-12 3:00 PM

FEATURE

Dealing with the thief in the night

part II

Northbridge Insurance recently hosted a conference on OSA, moderated by editorial director Lou Smyrlis. In the conclusion of our two part series legal, insurance and medical experts share their insights in their own words.

Dr. Hisham Alshaer, Toronto Rehabilitation Institute

It’s the thief in the night that robs you of a restful sleep, creating a nightmare in which breathing stops and carbon dioxide builds up in the body hundreds of times a night, night after night. It’s sleep apnea and it’s a critical issue in our industry extending beyond the obvious health concerns. trucknews.com

Cover story.indd 25

We have I think the strongest body of research when it comes to the relation between Obstructive Sleep Apnea or sleep apnea in general and cardiovascular disease. One of the important research aspects we have been working on at the Toronto Rehabilitation Institute is the mechanism of sleep apnea. People have been always thinking that obesity (because when you’re obese, there’s more fat around the neck) causes the upper airway tract in the neck to be narrower and then you choke during sleep, which will cause Obstructive Sleep Apnea. However, what we’ve discovered at the Toronto Rehabilitation Institute is that there is a very fundamentally different mechanism, called the fluid shift mechanism, that is involved.

What happens is that when you sit for extended periods of time, water fluid accumulates in your legs. When you go to sleep this fluid shifts basically upwards. It collects in different parts of the body including the neck and the neck vessels contributing to narrowing of the upper airway. This narrowing of the upper airway causes the obstruction to happen and the apnea will take place in people who are susceptible to it.

Therefore, sedentary lifestyle, office work, extended hours in the office and also, extended hours behind the wheel will cause fluid to accumulate in the legs and the result is sleep apnea.

Additionally, we have shown that exercise and movement during the day will alleviate this problem. This is good news for people who want to alleviate their sleep apnea as well and have some home remedy to sleep apnea. If you are overweight,

July/August 2015 ❙ FLEET EXECUTIVE 25

15-08-13 9:44 AM

FEATURE

I don’t say that if you exercise, you will get rid of sleep apnea totally because there will still be fat built around the neck but it will improve the sleep apnea condition.

I would add diet to that as well. Truck drivers spend long hours outside their home and they eat in restaurants. You can imagine that this is not the best quality of food as compared to what they eat in the home. Sleep apnea can be also augmented by poor sleep hygiene, so waking early in the morning, short sleep durations, shifts and so on. The circadian rhythm problems in addition to respiratory problems can be additive.

Treatment of sleep apnea most likely, if done properly, will prevent severe consequences and will cause very significant improvement in the quality of life. At the Toronto Rehabilitation Institute, we have also been at the edge of creating newer technology for the diagnosis of sleep apnea. For example, we have developed a new device to diagnose sleep apnea. It basically uses breathing sound acoustics. The device analyzes the sound to find breathing interruptions and chokes and detect exactly how many of these events you have per hour.

said, “Wait a minute, you’ve got to do more serious testing”.

Essentially, the FMCSA will develop a rule but it may take a number of years. This year as a result of trying to get some clarification, it issued a guidance to certified medical examiners.

The guidance doesn’t carry any legislative weight. It is a guide only to doctors, but obviously, people are very concerned that the doctors are going to identify or misidentify a sleep apnea.

We are waiting for some formal rule to come forward.

In terms of the impact on Canada, if the US sets out a number of factors that you have to look at to determine whether someone has to be tested for sleep apnea, Canadian drivers going into the US are obviously affected. If you have the five factors that are set out by the US as what is reasonable to test, that’s going to be important into Canada, whether it’s going to be imported through legislation or whether it’s just done through the court system when they say, “Well, that’s the standard,” because when we’re looking at negligence and how people determine liability, you’re looking at the reasonable and prudent driver and the reasonable and prudent company.

The fact that we don’t have any current legislation that specifically mandates testing is going to be irrelevant because once there’s an accident and you’re being crossexamined they’re going to say, “Well, why didn’t you do any testing?”

Rui Fernandes, partner, Fernandes Hearn LLP Why is sleep apnea important all of a sudden? Ten years ago we’d probably never heard of sleep apnea and the legal implications of sleep apnea. In the 1990s a number of studies were done. In 1999, for example, a study by the University of Pennsylvania on trucking and drivers determined there is a percentage that suffer from sleep apnea, whether light, moderate or severe. The question then became how did any degree of sleep apnea impact driving? The study also looked at accidents. It looked at 5,400 accidents and determined that approximately 1,400 were related to drowsiness and potentially sleep apnea.

The cost for the average accident in the US is $75,000 for property damage. If you have a personal injury in the US, the average is $3.4 million. If you add up all those accidents, it’s a lot of money with respect to potential sleep apnea accidents.

Obviously, there is a causal connection that has to be determined.The fact that you have sleep apnea doesn’t mean that the accident was caused by sleep apnea. That became the focus in the US. How do we determine? What are the factors that we can look at to determine and say, “That person has sleep apnea.

That person has to be tested.”

As a result of a lot of the testing, the Federal Motor Carrier Safety Administration (FMCSA) put out some guidance. It had a list of factors – neck size, BMI, etc. Everybody went crazy and 26 FLEET EXECUTIVE ❙ July/August 2015

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In the US many companies are already testing for sleep apnea.

They foresee that they’re going to have to test in the future, so they’re testing now. The result of those companies testing already sets the standard. There are companies testing in Canada too.

The fact they’re testing it becomes the new standard in Canada.

Companies that do not test are going to fall behind. They’re going to have a higher probability of being found negligent by the courts. The fact that we don’t have any current legislation that specifically mandates testing is going to be irrelevant because once there’s an accident and you’re being cross-examined they’re going to say, “Well, why didn’t you do any testing?”

Let’s look at the case law in Canada and the US, what little exist at this point. There is a 2004 case in Alberta, where sleep apnea was used as a shield to defend the driver of a dangerous driving charge. Because the driver didn’t know in advance that he had sleep apnea and he had these microsleeps, the court said, “Well, you didn’t have the requisite intention for dangerous driving.” So he was acquitted.

On the other hand, we see in 2008, the Ministry of Transport taking away someone’s license because the medical examiner determined that he may have suffered from sleep apnea. His own family doctor said he doesn’t have sleep apnea and he was tested, but it took two or three months to get a reinstatement of the license. trucknews.com

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Annual Conference on Transportation Innovation and Cost Savings

Wednesday, September 30, 2015 9 a.m.- 6 p.m The Bram & Bluma Appel Salon Toronto Reference Library 789 Yonge Street 2nd Floor, Toronto M4W 2G8 www.transportconference.org Featured Speakers

John Anderson, Advisory Director, Greenbriar Equity Group, New York “Transport Company Valuations - a Private Equity Perspective” Bruce Bowen, Sr. VP, Scotiabank “Economic Forecast” Captain Stephen Brown, President, Chamber of Shipping of British Columbia “Western Canadian Port Development - Opportunities and Challenges” Ron Cuthbertson, Chief Operating Officer, Luxury Life Brands, former President & CEO, The Source “Retail Challenges for the Logistics Industry” Evan Garner, Sr. VP, Marsh & McLennan “Insurance Liability for the Canadian Transportation Industry” Claude Jolicoeur, Director Regulatory Affairs, McKesson Canada “New Pharmaceutical Logistics Regulations” Vee Kachroo, VP, Supply Chain Solutions, CN “Railway Challenges 2015-2016” Robert Lande, CFO, FXCM Inc., New York “Foreign Exchange Currency Forecast” Anthony Lannon, Director, Supply Chain and Logistics, Sun Products Canada “Do More With Less: A Shipper’s Perspective on the Fight to Stay Competitive Greg Simpson, President/ CEO Simpson Seeds Inc., Saskatchewan “Supply Chain Innovation - A Western Canadian Perspective Mark E. Samis, Vice President, Environmental Sciences, Pario “Environmental Issues with Transportation Spills and Cargo” Catherine Pawluch, Partner, DLA Piper & Simon Casimir, “Drones - Applications in the Transport Industry”

Food Safety Breakout

Transport Law Breakout

Mark Andrews, Partner Strasburger Attorneys at Law, Hasan Afroz, President, Approved Cold Storage Washington “U.S. DOT vs. Trucks “Refrigerated Warehousing Challenges” A Report from the Regulatory Battlefront” Mark FeDuke, Director of Operations, VLM Foods Tom Keast, Partner, Watson Goepel, BC “Recent CFIA & FDA Regulations for Transport of “Recent Rail Transport Jurisprudence” Food Between Canada and US” Ron Maurice, Senior Partner, Maurice Law, Alberta Pamela Johnston, Esq., VP Financial and Risk “Railway Expropriation of First Nation Lands” Services, Transplace, Arkansas “US Food Safety Modernization Act - Impact on the Carlos Sesma Jr, Lawyer, Sesma, Sesma & McNeese, Mexico “Mexico-North American Transportation Regulations” Supply Chain”

Automotive Breakout

Mike Riggs, CEO, Jack Cooper Holdings, Georgia “North American Automotive Industry Trucking Review” Jon Haselwood, Assistant VP, Auto, CSX, Florida, “Automotive Industry Rail Review” Chuck Clowdis Jr., Managing Director, Transportation, IHS Economics & Country Risk, New York “Automotive Volume Forecast & OEM Service Report” Mark Anderson, COO, United Road Services “Inefficiencies in the Car Hauling Sector”

Moderators The Honorable David Collenette, PC, Senior Counselor, Hill+Knowlton (Former Canadian Minister of Transport) Doug Munro, President, Maritime Ontario Freight Lines Ltd. John Fiorilla, Chair, Transportation Department, Capehart & Scatchard, New Jersey Greg Keenan, Auto & Steel Industry Reporter, Globe & Mail Dave Corcoran, Director, National Transportation & Distribution, Nestles Canada Hank Seaton, Seaton & Husk LLP, Virginia Christine Brown, Consultant

Shipper - Carrier Breakout Check our website regularly as we add the names of the manufacturers who will be participating in this popular networking forum This one day conference has become the largest educational event for shippers and supply chain practitioners in Canada.

The cost of the event is $1,050 plus HST or $2,000 for two. Booth space is available. For more information contact Richard Lande at 905-319-1244 or e-mail rlande@cogeco.ca

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FEATURE

In the US, there was a case in 2011 where the driver actually died two weeks after the crash. The claimant said, “they suffered from Obstructive Sleep Apnea, and it probably caused the accident.” Of course, the driver had passed away so you couldn’t test him for sleep apnea. The claimant sought to get a physician and another expert on sleep disorders to testify that he likely had sleep apnea, and the court accepted it despite the fact that there was no real historical evidence that he had sleep apnea. The court was basing it on his physique, his neck size and the fact that there was an accident.

Peter Aumonier, SVP claims national litigation and technical management, Northbridge As a motor carrier, if you know that within the population of drivers there is a large percentage that could suffer from sleep apnea, and it’s something that is easy to diagnose and treat, then what are you doing about it? The bar has been raised and the job of the plaintiff lawyer (in a sleep apnea related accident) is to inflame and inflate. Inflame the jury to inflate the award. That is what the whole goal is to do from a plaintiff’s perspective.

When you get to pre-claim risk management, all the things that you do around sleep apnea – the diagnosis of it and the treatment of it, the way you approach it, the records that you keep, the communications that you have with your drivers, – come into play. And if you’re not going to do those things, a good plaintiff lawyer is going to inflame and inflate.

Medical screening amongst all the other things that you do with your risk management is a hugely important component.

It’s really simple. If a driver is in a substantial accident, and his medical records indicate sleep apnea, a plaintiff’s lawyer may argue that the company employing him failed to protect the public, and they will say, “It’s a very easy thing to diagnose and a very easy thing to treat. Now, we want double, triple damages, whatever it may be.” So it’s very, very important that we get ahead of this.

The other thing is when you inflame to inflate, it leads to things like punitive damages, not necessarily a big issue in Canada but a huge issue in the States.

You’ve all been counseled over the years and run your businesses from a risk management perspective to report claims timely. We at Northbridge would prefer to get the claim reported right from the scene. The sooner we get to it, the better.

It’s all about preserving evidence, witnesses, photographs, diagrams, drive cams, all of those things are coming to play. Com28 FLEET EXECUTIVE ❙ July/August 2015

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pany records around driver screening, about safety screening, about logs, all of the things that you would do before an accident from a risk management perspective become real when an accident occurs.

Particularly, if the National Transportation Safety Board gets involved and they take jurisdiction over an accident investigation. Then they really get into the records review and it’s very, very important that compliance is there because beyond the accident itself, they have other powers that they can use in a discretionary fashion which can impact your ability to operate

Many of our trials are still heard by judges particularly in Western Canada, but when you get in the United States you don’t have the protection of caps on damages. You can get runaway juries, you can get things that make no sense, whatsoever. your company. So very, very important that all of this is documented and that the sleep apnea issue is addressed head on.

The awards in Canada are getting larger and larger. It’s not unusual to see claims go in excess of $10 million dollars, but it’s still relatively easy to contain claims. We have caps over general damages. We have caps on punitive damages. We have courts that are more amenable to listening to what experts actually have to say about future care cost and income cost.

Many of our trials are still heard by judges particularly in Western Canada, but when you get in the United States you don’t have the protection of caps on damages. You can get runaway juries, you can get things that make no sense, whatsoever.

People ask me, “What are the judicial hellholes in the States?”

I think they all are. It’s just that some are worse than others. You got California, West Virginia, Madison County, Cook County, New York City, Albany, New York, Baltimore, Maryland, Philadelphia, South Florida, New Jersey, Nevada and Louisiana. A lot of places where all of us go and a lot of your companies go.

Very, very difficult places to have claims.

The thing that you have to be very concerned about is that in these jurisdictions, a plaintiff lawyer is going to take that accident and take it beyond the accident. It’s no longer a trucking accident. It’s no longer about personal injuries. It’s about how can I inflame and inflate a claim. The best way to do that is to attack your company and it’s done by attacking your practices or creating a perception that you don’t have any risk management.

So now that this issue is well-known to our industry we have an obligation and responsibility obviously, to our employers, our customers, our drivers, to make sure that we deal with this head on. If we don’t the great trial lawyers and the great American juries are going to ensure that we do. FE trucknews.com

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PROFITABILITY

KEY CONSIDERATIONS IN THE “TARGET” What you need to understand before you consider growth by acquisition

By Doug Nix

Y

our own company may seem a strange place to start the discussion on successful acquisition strategies. However, defining your company’s own corporate strategy is actually the first step to take when looking at target companies: a successful acquisition isn’t just a financial transaction; it’s a strategic fit with your own company. Over the next few issues we will examine six critical rules that must be considered. We start with the first two this issue.

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Rule #1: The most important factor to consider in a target is its fit with your company.

Its incredible how many companies out there are looking to acquire companies, without ever defining what their corporate strategy is. This means really getting to the core of what your company’s goals are – in specific rather than general terms.

Once the strategy has been defined, key considerations that any potential target should have become a lot clearer.

Broadly speaking, there are five strategic reasons for acquisitions: financial, improving cost structure, protect market share, expand or change the company’s market position, changing the industry and disrupting the industry (see chart below). It’s not that an acquisition is going to fit into one of the boxes – there will be overlap between the categories. But it’s useful to consider which boxes your target fits into.

Be aware when looking at potential acquisitions that certain acquisition strategies in the chart are nearly always difficult to execute. Too often, managers fall into the “buy something cheap” column, which means they’re looking for a deal regard-

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PROFITABILITY PROFITABILITY

Aquisition strategies Extend the Business

Disrupt

Financial

Improve cost structure

Expand/Change/ Acquire/Protect market position

Change the industry

Disrupt the industry

Pick winners and back them

Improve capacity utilization

Accelerate market access

Consolidate to remove excess capacity

Decommoditize products

how you view the acquisition. And is the combined company capable of what we think it’s going to do?

• Will it build management or other capabilities?

• Is the combined company capable of delivering the results?

These questions can bring a lot of clarity to why you’re considering purchasing a firm and whether it’s an acquisition that you should be considering Improve Acquire new skills Access new Consolidate to Transform the at all. If, in answering them, you’re coming up with performance and technology markets, products, change market business model some compelling answers, the target may be a cheaper than customers, channels, behaviour good choice. If not – it’s back to the drawing board building geographies to consider other options.

Roll-up Acquire new Enhance existing Create a The acquisition process, however, is nothing processes products to protect new value with­ out good targets. These targets generally don’t or increase price proposition just appear on the horizon - Management has to be Buy cheap Economies of scale Create new products proactive in searching them out and creating a long PE model Improve logistics Protect market list of potential targets or a database of targets. The critical mass, / optimize supply position companies in this database can come from tip-offs multiples, chains from people you know, small companies you heard improvement about or just old fashioned research. But as is often Diversity risk Access new Improve channel the case, a pro-active approach is far more effective suppliers / materials utilization than a passive one: the best acquisition opportunities often aren’t immediately obvious. And owners less of whether or not it’s a good fit for their company; not un- of companies you would like to buy seldom come knocking like the man who walks out of a suit store after buying a suit on your door asking you to buy their company.

Some of the companies we’re in touch with keep an active six sizes too large but he is happy with it because it was cheap.

Any target that falls inside the first four columns in the chart database of around fifty to one hundred companies that might will extend your business. The fifth column, “disrupt the in- become acquisitions at some stage. One hundred companies dustry”, is for those targets that will to shift the paradigm for isn’t an excessive number. Keeping a list of at least this size is your business. This is typically found where an industrial firm good practice for any management looking to execute a strategic takes on a millennium generation firm which is heavy on tech- M&A program. The best acquisitions are often opportunistic. But opportunistic shouldn’t be confused with nology – Imagine if Indigo Books back in 2000 had taken over catch as catch can: Preparing a long list of Amazon instead of Chapters Books, for example. potential targets allows firms to be opporThe case of Amazon.com is the textbook example of a distunistic – to be ready for good acquisitions ruptor arriving on the scene and not being given due attention as opportunities open themselves. but there are similar examples in just about every industry. The There is no wrong time to make an aclesson for managers is this: don’t ignore the new companies quisition. If a target firm provides a comwhich arrive offering lower costs or a radical business model.

Douglas Nix, pelling answer to why the company would These companies are looking to eat your lunch so they must be is vice chairman want to acquire it, any time there’s an opon your acquisition radar. of Corporate portunity to buy that target, the company Disruptors are the ones that have the potential to transFinance Associates, should be doing everything in its power form your business – the ones that are going to shift your a top 10 ranked to acquire it. There just isn’t a bad time to business model. However, if you want to extend your busimid-market North ness without changing your business model, focus on the American investment acquire a firm which is a good strategic fit.

The Body Shop, a cosmetics retailer heavresource part of the target. This distinction is crucial when banker. Corporate ily promoted the phrase “extinct is forevlooking at potential acquisitions.

Finance Associates er”, and the same could be said for missWhen you get to this stage, there are some questions we is a founding ing out on a target which is a good stratetell clients they have to ask themselves: member of ICFG, gic fit. Once the opportunity to purchase the 14th largest that company has passed, the chances are, •Is the proposed acquisition strategically logical? global mid-market it’s not ever going to rise again.

• Are we acquiring to extend or transform? This will change investment bank.

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v

Rule #2: A good target always provides a good answer to “Why?” Why is always the over-riding question when considering a specific target. If management can’t answer this question when looking at targets, the likelihood is that it’s not a good target for the company. At some point during the search for companies or even during the negotiation process, the CEO is going to ask “why are we doing this?” In the most simplistic terms, management will know they’ve found a good company when the answer to this question is compelling – essentially, an acquisition that meets the strategic objectives of the acquiring business. The companies in your database should answer the question why for you as soon as you see their name on that list.

Once your database has reached a good size, you’ll begin to apply “filters” – it’s highly unlikely you’ll approach every one of those firms. These filters should be driven by an M&A framework, which I plan to discuss in a later article. The framework is driven by your firm’s strategy and how the target you’re looking at fits in with that strategy. There are broad ‘dos’ and ‘don’ts’ here, such as not betting your firm on any acquisition and avoiding acquisitions which have the potential to detrimentally affect the reputational value of your company.

But the framework will address these questions.

Finally, I’m often approached about the statistic which says that around 70% of acquisitions fail. This is based on academic studies which have been carried out to look at the share price of acquiring firms in the days after an M&A deal has been completed. If the stock prices of the acquiring firm goes up, the deal ‘created value;’ if not, ‘value was destroyed.’ Is this really how we should be assessing the value of M&A? Of course not – it misses so much of the value which is inherent in the deal and the strategy behind it. By identifying a target that’s a good strategic fit for your firm, there’s no reason the acquisition cannot be a long-term success. FE

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Let’s continue the conversation Douglas Nix is one of more than 25 transportation industry leaders speaking at the 2015 Surface Transportation Summit this Oct. 14 at the Mississauga Convention Centre. To find out more and to register, go to www.surfacetransportationsummit. com. Early bird specials currently in effect.

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15-08-13 9:46 AM

GREEN to GOLD

Slicing through the wind Aerodynamics, narrowing the trailer gap, key to helping Kurtz Trucking achieve its fuel efficiency goals

By James Menzies

I

n a customer service-driven business like trucking, when a customer suggests you look into something, you had better look into it. That’s how Brian Kurtz Trucking first came to discover the SmartWay Partnership Program.

“It started with a suggestion from a customer,” said general manager Trevor Kurtz. “But then, when I started looking into it, it was obviously about fuel savings and reducing our carbon footprint and just becoming more environmentally-friendly.”

It didn’t take long to realize the environmental benefits the customer was looking for aligned with Kurtz’s desire to reduce its operating costs. Operating 72 tractors and 130 trailers out of one terminal in Breslau, Ont., hauling mostly temperaturecontrolled freight, Kurtz set out in 2007 to get on-board with the SmartWay program. Trevor Kurtz said it was initially a time consuming process to complete all the paperwork, but it proved to be a worthwhile exercise in self-awareness.

“There was enough information needed that it was really eye-opening to go back and figure out our tonnage and all that kind of stuff,” Kurtz said. “It’s something we had never really looked at really close.”

Through this data submission process, Kurtz also learned about the harmful emissions his fleet was putting into the air and how they could be reduced. Kurtz also discovered the fleet was already employing many of the technologies and techniques that SmartWay promotes.

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Nothing really changed dramatically since Kurtz became a SmartWay partner however; he said “Just improving little by little each year has kept us in good standing.”

When it first joined the SmartWay program, Kurtz Trucking was already operating the most aerodynamic tractors that it could find. However, it gained further fuel savings by closing the trailer gap - something as simple as shifting the fifth wheel forward, coupled with the spec’ing of shorter frame rails.

Although using SmartWay-verified technologies is not a requirement for participation in the program, companies can save fuel, which means reduced emissions rates and a better ranking in the program against peers.

“It still has to be feasible, we are a refrigerated carrier, so we still need the room in there (for the refrigeration unit),” Kurtz explained. However, bringing the trailer tighter to the rear of the cab allowed air to flow unimpeded over the tractor and along the roof of the trailer rather than becoming trapped between the tractor and trailer and creating an opposing force for the vehicle to overcome.

Another way Kurtz achieved its objectives was to reduce idling time and to educate drivers that today’s diesel engines don’t need to be warmed up as they did in the past. Telling drivers not to idle is a sure way to get their backs up, but Kurtz said most drivers shared the company’s goals.

“We’re lucky, we’ve got a very smart group of guys,” he said. “The majority of the guys realized very quickly that if they benefited financially, it was worth doing. So it was a little challenging in the beginning, but I think now pretty much everyone’s bought in. Especially when fuel was $4/gallon, they bought in really fast.”

Sharing in the savings helped ensure buy-in from drivers.

Kurtz offers a bonus for drivers who keep their idling low.

Kurtz noted reducing idling goes a long way towards improving fleet-wide fuel economy.

New equipment continues to be spec’d with fuel economy in mind. One of the most significant advances Kurtz has noticed is that engines can now be specified to run at lower rpm, which provides big savings. Engine manufacturers claim that for every 100 rpm slower the engine turns at highway speeds – a powertrain strategy referred to as downspeeding – fuel savings of 1% to 1.5% is achieved. “We definitely gear them to run at much lower rpms than we did in the past,” Kurtz explained. “We spec’ them to run slow, but we are also getting the engine rpm in the right location at the right time.”

Kurtz Trucking was also among the first Ontario-based carriers to begin equipping its trailers with trailer tails. The province legalized the use of full-length trailer tails, which are said to provide fuel savings of greater than 5% at highway speeds, in 2014. “Pretty much everything is spec’d to be as smooth as it can be in the wind,” Kurtz affirmed.

Running a modern fleet with the newest equipment has ensured Kurtz Trucking is getting the fuel economy benefits of the latest and greatest technologies. “We’ve always tried to run the best equipment,” Kurtz said. “Because if we run the best trucknews.com

15-08-12 3:34 PM

equipment, I believe we get the best drivers. Our guys have pride in what they do. So that really takes us down the road of staying on the cutting edge of equipment. Our newer trucks are getting far better fuel economy than our old ones. It’s definitely the right move in my mind.” FE Founded in 1980 by Brian Kurtz, Brian Kurtz Trucking currently operates 72 tractors and 130 trailers out of its Breslau, Ont. terminal. It hauls mostly temperature-controlled cargo in Canada and the US. It also specializes in LTL freight and operates a warehouse that was built in 1985 and expanded in 1995.

What a catch Why Vedder Transport jumped at opportunity to buy Bison’s LNG trucks

By James Menzies

W

estport may have discontinued production of its 15-litre liquefied natural gas engine, but that hasn’t prevented one of its biggest fans, Vedder Transport, from adding to its LNG fleet.

Vedder has acquired all 15 LNG-powered Peterbilts owned

by Bison Transport. When Bison made it known that it wanted out of its LNG trucks, the timing couldn’t have been better for Vedder, which had just received an offer for an additional dairy contract if it could be served by its LNG fleet.

Vedder already had 50 trucks in service with the Westport 15-litre engine and president Fred Zweep said he couldn’t be happier with their performance.

“We’re always looking at continuing to expand our 15-litre LNG fleet simply because of the success we’ve had with it,” Zweep said in an interview with Truck News. “The success comes in a few forms. The technology is bulletproof. In our one 15-litre fleet we operate at 140,000-lb GVW in both directions and we’re pushing almost 850,000 kilometres on 15 of the vehicles in that fleet and from a technological trucknews.com

G2G.indd 33

perspective, the engine has been robust, the technology related to the LNG has been robust and any of the maintenance issues we’ve seen are typical wear and tear issues related to the terrain we’re going up and over.”

Zweep said Vedder’s customers appreciate the environmental benefits of running LNG trucks and have come to request their contracts to be serviced by those vehicles.

“Going back about 90 days ago, one of our large dairy clients offered us an opportunity to expand our business and one of the requirements was, they really wanted us to expand our natural gas presence within that footprint. So when Bison made it known to the Peterbilt organization that they were looking to divest themselves out of their existing fleet of 15-litre LNG engines, we took the opportunity to have a long look at their equipment and made the purchase of it,” Zweep explained.

Those trucks have been on the road for nearly three years and Vedder plans to run them for another five years or more before redeploying them within the Vedder organization.

While the 15L Westport engine has been discontinued, Zweep said he’s confident the engines can be rebuilt and their life expectancies extended.

“Most people in the trucking industry look at the life of a vehicle at 560,000-850,000 kilometres and they are looking to move that equipment out of the fleet because of the maintenance spike that typically occurs within that range. We want to keep this equipment far longer. The expertise of being able to rebuild that engine is certainly there, the technology is available to us. We’re looking at two engines essentially – the diesel block and the LNG components – and the diesel block we’re not concerned about and the LNG components we’re not concerned about,” Zweep said. “Peterbilt Pacific maintains our LNG fleet and they have a robust workforce that has embraced the LNG technology. We’re not concerned about rebuilding that engine whatsoever. We feel we have relationships with the appropriate people to rebuild our engines.”

The trucks also will be refurbished at about a million kilometres so drivers will continue to enjoy a comfortable vehicle to operate, Zweep added.

But before they’re deployed into the Vedder fleet, the trucks will have to undergo a significant reconfiguration. Vedder likes to relocate the wiring harnesses to prevent issues it has encountered on its existing LNG trucks and the trucks also have to be configured to accommodate the hydraulic systems required within the dairy operations.

“We have to move the DEF tank and we have to move the 50-litre diesel tank to create frame rail space to enable us to put hydraulic pumps onto the frame rail,” Zweep said. “We’re going to paint them and they’ll come out looking brand new.”

While the Cummins ISX12 G is the natural gas engine receiving the most attention of late, Zweep said it’s not an option for the heavy payloads and challenging terrain the company runs.

“The 15-litre where we operate here in Western Canada is certainly a requirement,” he said. “The 12-litre being produced today doesn’t hit the horsepower we would require to move 140,000-lb GVW.” FE July/August 2015 ❙ FLEET EXECUTIVE 33

15-08-12 3:34 PM

GEARED UP

Caterpillar ends truck deal with Navistar; will bring production in-house

By James Menzies

C

aterpillar and Navistar are splitting up, but both manufacturers say their future in the vocational truck market remains bright.

Cat plans to bring production of its vocational trucks to its own plant in Victoria, Texas. Previously, the truck was built

by Navistar at its Escobedo, Mexico truck plant. Navistar responded almost immediately, announcing it will introduce its own severe-service vocational truck in 2016, drawing on “intellectual property and technology” developed during the partnership.

But Caterpillar truck executives indicated the split is amicable.

“We’ve been working cooperatively for some period of time to reach this point. We both walk away with good experience from the venture, but we’re heading in slightly different directions now,” said Chris Chadwick, Caterpillar’s director of the global on-highway truck group.

He said he’s not concerned about a new competitive product hitting the market, even if it is built by a potentially jiltedfeeling former partner.

“There are plenty of strong competitors out there, but we believe we are well positioned to continue to grow our business, and grow our market share as we add new products and features to the product line,” Chadwick said.

Officials said the company is excited about taking over complete production of its trucks, and managing that process from cradle to grave within the Caterpillar organization.

34 FLEET EXECUTIVE ❙ July/August 2015

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“From the onset that wasn’t the main goal,” Ron Schultz, sales and product support manager with Caterpillar said of the change. “But as we got further into our development of the truck and with our customers it became evident that for us to take this to the next level, it’s a very positive move for Cat to bring the design and manufacturing in-house. We felt to take it to the next level, bringing it in-house is the right way to go.”

He said there weren’t any production-related issues under the previous arrangement, but added “With the move to Victoria, we have a world-class facility that produces our excavators at the highest quality levels around the world. So we felt this location, from a quality perspective, is the right one to choose.

Then we coupled that with the supply base and the logistics and it became evident that this was the right location to choose.”

The fruits of the joint venture will live on, including the bold, stylish design of the truck, which will be retained, as well as the CT13 engine, which was built upon the Navistar N13 platform.

Cat also is continuing with plans to offer a 15-litre engine later this year. It should be remembered that when Caterpillar joined with Navistar to build this truck, a 15-litre Navistar engine was in development. When Navistar shelved that program, it left Caterpillar without a 15L offering in a market segment that, especially in Canada, really demands a 15-litre option.

Dave Schmitz, product manager for the on-highway truck group, said the plan to introduce a 15L engine later this year remains in place, but he wouldn’t divulge further information. trucknews.com

15-08-12 3:38 PM

Planning on using your dump truck year round?

“We are still on track for that,” he said. “We’re not in a position now to comment on the 15L.” With the 15-litre in place, Caterpillar feels good about the segment coverage it will achieve with its current line, which consists of the CT660, CT680 and CT681.

“With our set-forward axle and set-back axle complete line with a 13- and a 15-litre product, we feel that will serve the needs of all the vocational truck customers,” said Schultz. Chadwick added Caterpillar will soon be adding a sleeper cab to its lineup as well.

The transition to production at Victoria will begin immediately, with trucks scheduled to roll off the assembly line there in the first half of next year.

“I think the choice of Victoria is very strategic for us,” Chadwick explained. “It’s an excellent plant. It’s a facility that has gone through a start-up very recently and did it in a flawless manner. So it’s got the right infrastructure and the right mentality to give us a really high quality start-up and really to replicate the work they did in excavation. We’re extremely excited about that choice and very positive about what the team down there can bring to us as we enter into the truck business as a full-line OEM.” Schultz added bringing production in-house also offers Cat the opportunity to better differentiate itself in the market.

“We feel our large differentiating factor is our dealer network that has served these customers so well in the construction industry and bringing a full line to them from an end-toend Cat product perspective will be our key differentiator,” he said. “From a product perspective, we see initially the product is going to be the same as we’re getting today, just built in a Cat factory. Over time, we’ll start to see our focus is on this transition in the short-term. The next 18 months, beyond that, we will start to update the product with other features and benefits that our customers desire.”

Cat executives wouldn’t reveal how production costs or pricing would be affected by the change.

“The key perspective of the move is (to gain) more control over the manufacturing process,” Schmitz said. “We have what is called Caterpillar Production Systems in the facility and it’s something that Caterpillar has been working on with machinery that has a great reputation for quality throughout the world. We want to leverage that as much as possible. Just gaining control over that whole process – we just see so many benefits to that.”

“There is a capital investment required,” Chadwick added.

“So, obviously we have got to make that pay. We’ve got more direct control over the entire end-to-end business, so I think that gives us more ability to directly influence the cost and do so in a higher-velocity manner.” FE

Cat CT680

trucknews.com

Geared.indd 35

You might only need a 350 horse power engine, but the front ends have to be heavy – 22,000 lbs – because of the extra weight of the plow harness and plow blade sitting ahead of the front axle. It’s also important to have enough room behind the cab to mount a hydraulic reservoir and controls.

Read more tips from industry experts in the newly released:

STRAIGHT TALK, SMART STRATEGIES A guide to growth and profitability for construction fleets and fleets serving the Oil Patch.

GROWTH RECRUITMENT SPEC’ING SAFETY MAINTENANCE STATISTICS Download your FREE copies in the Knowledge Centres section of

www.trucknews.com Brought to you by Transportation Media in partnership with Michelin North America (Canada) Inc.

July/August 2015 ❙ FLEET EXECUTIVE 35

15-08-13 9:48 AM

GEARED UP

Dealers and customers benefiting from DTNA’s Elite Support program

By James Menzies

I

t takes more than investments in bricks and mortar to expand the capacity and maximize the efficiency of a dealer network.

Investments must also be made into new processes if dealerships are to make the most of their existing space and improve their throughput. Friedrich Baumann, senior vice-president, aftermarket with Daimler Trucks North America, said the biggest of these investments within the DTNA organization is Elite Support. It’s a voluntary program that recognizes dealers that meet more than 123 performance criteria. Dealers must also re-certify each year, meeting continuously tougher standards.

Participating dealers meet each year to refine the entry requirements and add new criteria. So far, 179 North American dealers belong to the program and they are offering an elevated service level to customers and achieving some valuable internal benefits as well. One of the new requirements, added just this year, is that Elite Support dealers will soon need to be able to provide customers with information that will allow them to make decisions regarding their truck, driver and freight within two hours of a service event.

“This is really important for many reasons that directly impact the customer,” said Catherine Auckland, director, aftermarket marketing with DTNA. “It allows the customer to make a decision about the big three (driver, truck and load) within two hours and enables improved throughput at the dealership because every truck’s issue is known before it arrives.”

Brad Fauvre, president, Velocity Vehicle Group with 24 locations in California, Nevada and Arizona, said becoming an Elite Support dealer has been beneficial in many ways.

“For those of us who have implemented it, it has fundamentally changed how we go about the business,” Fauvre said. He noted the average throughput at one of Velocity’s locations was five days before becoming an Elite Support dealer; it has

36 FLEET EXECUTIVE ❙ July/August 2015

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been reduced to less than three days. Fauvre said a sidelined truck costs its owner about $1,000 a day in lost revenue. “If we can save them a couple days, it really drives to their bottom line,” he said.

Part of the process of becoming certified involves cleaning and organizing facilities. “Tools can clutter and you might have a bay that’s used to store jacks and other types of tools,” explained Rick Reynolds, president and dealer principal of Peach State Truck Centers. “A dynamic of this program has been a lean systems approach. See where clutter is, eliminate waste, bring better order to our shops. That brings additional capacity to our shops.”

“My facility is 50 years old,” added Scott Pharr, president of Western Star dealer Piedmont Truck Center in Greensboro, N.C. “It took a big effort to get it cleaned up. Our people are more proud of it today.”

Customers, it turns out, do care about a shop’s cleanliness, confirmed Ray Hufnagel, president of truck fleet Plastic Express.

“We do care about how clean the shop is,” he said. “If you don’t have a clean shop, you’re probably not running an efficient shop. We walk through and look at things.”

Elite Support dealers also aim to provide a consistent level of service, even for transient customers. A fleet based in Edmonton, Alta. should receive the same quality service at an Elite Support dealership in Florida as it does at its local shop, dealers claim.

“That’s the beauty of the Elite Support program; there’s a level of quality and consistency not only in the way customers are treated, but the process the truck will follow to get repaired,” said Reynolds.

Fauvre said about 80% of the work done at some of his locations are for transient customers. They don’t get treated any differently than locals, he insisted.

“We’ve always seen it as terrific business,” he said of transient customers. “We have to execute well on all of it.”

Elite Support dealers who took part in a panel discussion said becoming certified has helped them retain technicians, who see their earnings increase due to improved efficiencies and take more pride in their cleaner, better-organized workplace.

And as customers learn about the program, some are seeking out Elite Support dealers. “Our customers understand they get a higher level of service from an Elite Support dealer than they would get from a non-Elite Support dealer,” said Baumann.

For Hufnagel, who once changed his entire fleet over to Freightliner from another brand because a dealer refused to cover a clutch job that Hufnagel said should’ve been under warranty, improvements at the dealer level have been critical in helping him run his business. “You lose a truck for a day, that’s revenue you’ll never replace,” he said. FE trucknews.com

15-08-12 3:38 PM

GEARED UP

aving recently taken a minority ownership stake in tech company Zonar, Daimler Trucks North America ( DTNA) is already making the most of that arrangement and transferring to Zonar aspects of its telematics offerings.

Detroit Connect’s Visibility Fleet Software and On-Board Tablet brands will be transferred to Zonar. Visibility will now be known as Zonar’s Ground Traffic Control fleet tracking system. The Tablet will be referred to as Zonar’s 2020 tablet. The reorganization won’t affect customers, DTNA says.

Meanwhile, DTNA’s Detroit Virtual Technician remote diagnostics platform will retain its current branding, but Zonar will handle the management of subscriptions.

“There’s a significant opportunity to gain important insights through connectivity to ultimately provide a more dynamic customer experience,” said Matthew Pfaffenbach, director of

telematics for DTNA. “Our arrangement with Zonar ultimately strengthens our telematics capabilities.”

DTNA invited Zonar executives to attend an aftermarket and telematics-themed press event here this summer. The recent purchase (terms of the deal or the percentage of Zonar DTNA now owns, haven’t been disclosed) allows Zonar to maintain its autonomy and continue providing its services to other OEMs. It also allows DTNA to bring in-house further telematics expertise.

“Zonar has always been a valued supplier of ours, but there’s something to be said about having a vested interest together,” said Pfaffenbach. “While it’s a minority stake, the percentage of ownership is not as critical as the level of collaboration we have.”

DTNA CEO Martin Daum now sits on the Zonar board under the current arrangement.

The two companies are already working together to develop the next generation of Virtual Technician.

Also in the works is a new “Vehicle Connectivity Platform,” which Pfaffenbach said will combine an on-board device with a back office system that will “provide a new level of connectivity to customers.”

Zonar and Daimler will also work together to make remote diagnostics more predictive. Brett Brinton, co-founder, president and CEO of Zonar said the company has already done prototype tests that can determine, for example, when a turbocharger is likely to wear out. “We can tell when the failure is going to occur with the DPF system. That’s an example of what’s possible in the future,” Brinton said.

Currently available today, Virtual Technician allows fleets to appropriately respond to fault codes generated by the engine and aftertreatment system. About 20% of all fault codes generated are “driver actionable,” meaning the driver can solve the problem on his own without taking the truck out of service. This allows the operator to reduce downtime, or when repairs are required, to expedite the process since nearby dealers will be notified in advance of the issue, giving them time to ready a bay and ensure the required parts are available.

Getting parts to dealers quickly is another area of focus for DTNA . It is currently running overnight delivery services in some regions. Parts ordered by 4 p.m. are delivered overnight by dedicated drivers who have access to the facility. The parts are Zonar 2020 Tablet in the dealership by 5 or 6 a.m. so that repairs can begin as soon as the facility opens.

By the end of this year, more than 50% of DTNA dealerships will have access to overnight parts delivery, said Friedrich Baumann, senior vice-president, aftermarket, DTNA. FE

trucknews.com

July/August 2015 ❙ FLEET EXECUTIVE 37

Zonar Ground Traffic Control System

DTNA working with Zonar on next-

generation telematics offerings

By James Menzies

H Geared.indd 37

15-08-13 9:51 AM

INSIDE THE NUMBERS

GET USED TO IT

Seven in 10 Canadian carriers have opted to purchase used trucks when looking to add to their fleets, our annual Equipment Buying Trends Survey indicates. The latest survey, completed this summer, found 15% of Canadian fleets have plans to purchase used trucks in 2015 and 16% have plans to do so next year. The research also includes details on what they look for when making their used truck purchases.

Buying used trucks is a viable option for Canadian Fleets. Here’s what they look for.

PLANS TO PURCHASE USED TRUCKS Remainder of 2015

PURCHASED A USED TRUCK BEFORE

IN 2016

YES

YES

15%

16%

NO

NO

30% YES

NO

85%

70%

84%

MOST IMPORTANT FACTORS IN USED TRUCK SELECTION Based on a scale of 1 to 5

Age of truck/ mileage

4.13

GVW/Payload capacity

4.09

Availability of parts

4.18

History of truck

4.00

Type of transmission

4.02

Horsepower

3.95

Availability of preferred engine brand

3.95

14%

16%

20%

BRANDS CURRENTLY IN FLEET

22% 15% 4%

8% 1%

TYPE OF TRANSMISSION PREFERRED

25%

44%

21% 10%

Automatic 38 FLEET EXECUTIVE ❙ July/August 2015

Inside.indd 38

Manual 18-speed

Manual 13-speed

Manual 10-speed

trucknews.com

15-08-13 8:02 AM

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Inside.indd 39

15-08-13 8:02 AM

A truck just drove off with your profits.

You didn’t notice its most recent tune-up. Or how much you’re paying in contract maintenance. In fact, this truck has been hiding all sorts of costs from you. But with our Total Cost of Ownership tool, you see exactly where every cent is going in your operation. Be Ever Better. Discover how our TCO tool, created in partnership with Ernst & Young, can help you optimize your fleet and eliminate hidden costs at Ryder.com.

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(TCO) - A Truck Just Drove Off With Your Profits_Truck on Highway (Motor Truck).indd 1 Inside.indd 40

2015-08-06 3:46 PM 15-08-13 8:02 AM