Motortruck MayJune 2011

Motortruck

Fleet Executive C A N A D A ’ S

B U S I N E S S

M A G A Z I N E

MAY/JUNE 2011

F O R

F L E E T

O W N E R S

THE BOTTOM LINE MSM’s Mike McCarron begins his new column with a look at RFQs LEGAL How to counter the most successful strategies being used to sue you

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contents May/June 2011

Volume 80, No. 3

COVER STORY

The next generation of maintenance ��������30 An approach known as “condition-based maintenance” may boast the perfect balance between corrective and preventative maintenance – measuring the health of equipment at a specific point in time, and scheduling maintenance only when it is absolutely necessary. And it may be a game-changer in the world of maintenance.

FEATURES

19

STAYING AFLOAT

The Digby-Saint John ferry has received a funding extension, but its future remains in doubt. Will the service, and the fishing industry that depends on it, be able to keep its head above water?

22

REMAKING UNCLE SAM

24

FIGHT BACK

Would reindustrializing America be the spark needed to produce stronger freight flows?

The trucking industry is under legal attack with plaintiffs’ attorneys basically treating trucking accidents as ATM machines. We outline the most successful strategies used against trucking companies and how to counter them.

26

READY FOR REGS?

28

DEALING WITH DPFS AND DEF

Canadian fleets will soon be subject to the same fuel economy regulations as in the US. What challenges lay ahead?

We offer an outline of the care requirements of both items, detailing how drivers and maintenance managers can ensure they get the most out of their costly aftertreatment systems.

32

SAFE SHOPS

34

KING CONCRETE

We offer 10 steps to protect your employees from hazards in the service bay.

Canada Building Materials’ Les Wakeling takes up his throne as the 2011 Canadian Fleet Maintenance Manager of the Year.

Page 30

DEPARTMENTS THE VIEW WITH LOU . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Want to grow? Responsible and steady rate increases with increased shipper collaboration are the better way to go, says editorial director Lou Smyrlis.

COMPETITION WATCH. . . . . . . . . . . . . . . . . . . . . . . . . . 8 Eclipse Distribution Solutions acquires Cathcart Trucking; Transforce and DHL Express Canada announce 10-year strategic alliance to integrate domestic, international shipping, logistics offerings; Manitoulin Transport picks up the LTL business of Penner International; Hub Group purchases Exel Transportation Services; and more.

THE BOTTOM LINE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 MSM Transportation’s Mike McCarron launches his new column with a look at how to respond to an RFQ. The answer?

Perhaps not at all.

MY HR SPACE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 There are pros and cons to every leadership style. Which one should dispatchers adopt?

TAKING CARE OF BUSINESS. . . . . . . . . . . . . . . . . . . . 12 When dealing with confidential information, the age-old adage applies: “an ounce of prevention is worth a pound of cure.”

EQUIPMENT WATCH . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Cummins president shares insight on how to thrive in vertically integrated world; MaxxForce 15 makes Mid-America debut; aerodynamics boost fuel efficiency for Pinnacle tractors; Great Dane takes weight out of Classic Truckload reefer; and more.

DASHBOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Spot market freight volumes breaking records, Transcore’s Canadian Freight Index indicates; modest drop in base rates offset by significant increase in fuel surcharges, CGFI shows; and US truck tonnage posts 1.7% gain in March.

INSIDE THE NUMBERS . . . . . . . . . . . . . . . . . . . . . . . . 38 How many Canadian shippers consider themselves “captive” in their rail options? Plus: is Canadian rail finally back on the right track?

MAY/JUNE 2011

3

what’s on trucknews.com?

Blogs • MSM Transportation’s Bob Murray shares his insights on how to remain profitable during times of intense fiscal difficulty and how to approach the new growth period in a Q&A session with editorial director Lou Smyrlis.

• Caravan Logistics’ Kevin Snobel discusses what carriers should do when equipment is damaged after spotting or dropping at a shipper or receiver.

• The history of trucking in Canada is important and worth preserving, says on-road editor Harry Rudolfs in his latest blog.

• Palmer Markerting president Lee Palmer lauds the benefits of thinking big as a small company, and getting back to one’s entrepreneurial roots as a big company.

The result, Palmer finds, just might help your bottom line.

Web TV: Transportation Matters • TOP SHOP BOSS:

Canadian Fleet Maintenance Manager of the Year award winner Les Wakeling of Canadian Building Materials talks about what makes a great shop boss.

• ARE THE BIG ABOUT TO GET BIGGER?

Many large motor carriers are actively exploring opportunities to consolidate the industry. Hear first-hand about the type of M&A activity we can expect.

• IT’S A WOMAN THING:

What’s suddenly turning women on to transportation and logistics and how they’re changing the industry.

• CN’S NEW CHASSIS:

CN is set to launch its new environmentally-friendly container chassis for the North American intermodal industry.

You Said It . . .

“We have seen a good surge in confidence for owner/operators and micro-fleet owners (ie. 10 trucks or less – this is the business we cater to).

They have said business has steadied and one key denominator of the successful ones is proper reinvestment back into the company, emphasis on cash flow and knowing when to say NO to bad or marginal business propositions. The good thing, however, about a downward economy, recently, is that it has weeded out the bad in the industry that, in the end, raises costs for everyone else.

We are confident that there will be a cautious, yet comfortable growth period in the next few years for the entire industry.”

– Perri of Trademark Capital Finance responding to Lou Smyrlis’ blog:

The economic recovery is here and it’s real.

Now what?

4

We now TWEET! Follow us on Twitter Twitter.com/AdamLedlow Twitter.com/JamesMenzies Twitter.com/LouSmyrlis

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Motortruck

Fleet Executive

The View with Lou Want to grow?

Responsible and steady rate increases with increased shipper collaboration are the better way to go

A

fter two years of unprecedented pressure on margins, maximizing profitability during the upturn in demand tops the agenda for most shippers. Dr. Alan Saipe and I presented our annual look at transportation trends during the recent SCL-CITA annual conference and that was one of the main points made by Dr. Saipe.

Reducing costs was the second highest item on shippers’ agendas, Lou Smyrlis, which is not a surprise considering MCILT the focus on maximizing profits. But Editor lou@transportationmedia.ca increasing customer satisfaction was considered just as important, which makes for some interesting decisions in the years ahead since those two goals may not be mutually compatible. Dr. Saipe’s research, conducted on behalf of the Canadian Industrial Transportation Association, also found that 8 in 10 shippers believe customer requirements are becoming more demanding and three quarters believe the transportation function is growing in complexity as a result.

Are most Canadian companies truly capable of meeting demand growth that is becoming more complex while warding off costs that eat into profitability?

I don’t think so.

Three-fourths of respondents to a global supply chain trends survey I recently read considered demand and supply volatility and poor forecast accuracy to be the biggest roadblocks they currently face. Yet as the publishers of the survey, PRTM Management Consultants, pointed out many companies failed to do their homework during the downturn and surging demand now increases supply chain deficiencies in scope, scale, and speed.

Not only did many companies not implement strategies to prepare them for the upturn and future volatility but in the worst hit sectors companies put in place short-term survival measures to tightly manage inventories, costs, and cash flow that may be harder to transition from than one may think. That may be especially so with companies where key members of the supply chain team were laid off as a cost saving. A substantial number of survey participants said that problems with the supply chain organization prevented their companies from capturing the benefits of the economic recovery. Nearly one-fourth

of survey respondents pointed to their organizations’ inability to make quick decisions in response to sudden changes in demand or comparable challenges.

Clearly shippers wanting to improve profitability while at the same time deal effectively with demanding customer requirements have their work cut out for them. I see great opportunity in this for motor carriers ready to once again work in collaborative relationships with their shipper customers.

Both LTL and TL carriers as well as couriers would enter such discussions from a position of strength because shippers believe their service levels from these modes improved over the past year. In comparison, marine, rail and intermodal service was thought to decline over the past year, according to Dr. Saipe’s research. Motor carriers also score well when assessed on areas such as operation effectiveness, knowledgeable and helpful customer service, straightforward administration and quickly dealing with any problems that may arise.

Motor carriers often have visibility and insights into shipping patterns that are invaluable to shippers looking to boost their profit margins while at the same time improve customer service. Unfortunately, over the past couple of years many shippers set aside such discussions in favor of aggressive rate cutting.

Long-term relationships were severed as shippers pursued short-term cost savings by placing their freight on the spot market.

If capacity tightens, as most transportation experts suggest it will as the economy heats up, the easiest and most expedient thing for motor carrier executives to pursue is aggressive rate increases in return. But simply pushing the pendulum the other way for a few years does not address the bigger picture of ensuring the long-term viability of shipper clients by addressing both their profitability and customer service concerns.

It’s also a risky strategy as our own research clearly shows if rates rise sharply over too short a time span, shippers who do have options become much more likely to consider switching modes. Prior to the recession almost 50% of shippers were reporting they had switched modes for at least part of their shipments in response to higher rates and surcharges.

This is the time for motor carrier executives to show the maturity of their company and their industry by pursuing responsible, steady rate increases in conjunction with transportation practices that help shippers keep both their customers and shareholders happy. mt

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

MAY/JUNE 2011

VOL. 80

NO. 3

Editorial Director Lou Smyrlis (416) 510-6881 lou@TransportationMedia.ca Managing Editor Adam Ledlow (416) 510-6890 adam@TransportationMedia.ca Features Editor Julia Kuzeljevich (416) 510-6880 julia@TransportationMedia.ca Creative Director Mary Peligra mpeligra@bizinfogroup.ca Advertising Creative Directors Carolyn Brimer Beverley Richards Contributing Editors Ken Mark James Menzies Ian Putzger John G. Smith Carroll McCormick Harry Rudolfs Publisher Rob Wilkins (416) 510-5123 National Sales Manager Don Besler (416) 699-6966 Account Manager Brenda Grant (416) 494-3333 Production Manager Kim Collins (416) 510-6779 Circulation Manager Mary Garufi Video Production Manager Brad Ling Research Manager Laura Moffatt Vice President Publishing Alex Papanou President Bruce Creighton Head Office 12 Concorde Place, Suite 800 Toronto, Ont. M3C 4J2

Motortruck Fleet Executive is published by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd., a leading Canadian information company with interests in daily and community newspapers and businessto-business information services.

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.

PUBLICATIONS MAIL AGREEMENT 40069240 Return Undeliverable Canadian Addresses to: Circulation Dept. – Motortruck Magazine, Suite 800 – 12 Concorde Place, Toronto, ON M3C 4J2 USPS 016-317. US office of publication, 2424 Niagara Falls Blvd., Niagara Falls, NY. 14304-0357. Periodical Postage Paid at Niagara Falls NY USA. Postmaster send address corrections to: Motortruck, PO Box 1118, Niagara Falls NY 14304.

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6

motortruck Member/Canadian Business Press

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04/03/11 10:53 AM

CompetitionWatch

CATHCART TRUCKING has been acquired by ECLIPSE DISTRIBUTION SOLUTIONS, but will continue to operate under its existing name out of its existing location, the companies announced to local media. Cathcart will continue to own the facility where the company is operated out of as well as sister company Apsley Peterborough Transport. The Peteborough Examiner reported Eclipse will continue to operate the company under the Cathcart banner and will retain its employees.

Woodbridge-based trucking company TITANIUM TRUCKING SERVICES has acquired Bolton, Ont.-based carrier FLEXMOR INDUSTRIES. The Flex-Mor transaction will expand Titanium’s fleet to more than 90 trucks and more than 400 trailers with larger service capability, the companies announced.

MULLEN GROUP has announced it has entered into an agreement to acquire Drumheller, Alta.-based LTL carrier HI-WAY 9 and its subsidiaries. The deal includes Hi-Way 9 Express, Load-Way, Streamline Logistics and 1006213 Alberta Ltd. Hi-Way 9 is a privately held, family-owned LTL carrier that’s been in business since 1969 and is a fixture on the Alberta trucking landscape. The Hi-Way 9 operation will continue to be managed by current president Dean Kohut, while Darrell Kohut will remain as vice-president, operations and Heather Colberg as vice-president, administration. Mullen expects the acquisition to add about $50 million to its consolidated revenue with margins consistent with its other trucking companies. The cash and share transaction is expected to close June 1.

TRANSFORCE and DHL EXPRESS CANADA have announced a 10-year strategic alliance that will see the two companies integrate their domestic and international shipping and logistics offerings. TransForce will purchase the assets of DHL Express Canada’s domestic business and will take over its domestic operations through Loomis Express, a newly formed subsidiary of TransForce, the companies announced. DHL Express Canada will focus exclusively on the Canadian international shipping segment. Under the agreement, the companies claim Loomis Express and DHL Express Canada will offer Canadian businesses a fully integrated international and domestic suite of shipping and logistics services.

MANITOULIN TRANSPORT has acquired the less-than-truckload (LTL) business of PENNER INTERNATIONAL. Representatives of Steinbach, Man.-based Penner say the carrier made the decision to focus on its truckload business and has concluded an agreement with Manitoulin to purchase its LTL book of business. The LTL business segment operates through seven terminals: Toronto, Winnipeg, Edmonton, Calgary, and Surrey in Canada, and Minneapolis, Minn. and Fargo, N.D. in the US. The primary consolidation points are Winnipeg and Minneapolis. Manitoulin says the additional freight to and from the US will allow the company to provide direct service coverage between Minneapolis and Winnipeg, improving service times to all of Western Canada.

Freight transportation management giant HUB GROUP has purchased EXEL TRANSPORTATION SERVICES (ETS) for $83 million, before post closing adjustments. Exel is now a wholly-owned subsidiary of Hub Group, operating independently under the name Mode Transportation. Mode Transportation consists of about 300 independent business owners who sell and operate the business throughout North America, with corporate offices in Dallas and Memphis, a company-managed operation in Dallas, and a temperature-protected services division, Temstar, located in Lombard, Ill. Mode Transportation’s sales for the year ended Dec. 31 were approximately $717 million. The largest components were: intermodal revenue of $294 million, truck brokerage revenue of $279 million, and LTL revenue of $85 million. Key leadership, including president Jim Damman, will continue in their current roles with Mode Transportation. Mode Transportation will remain headquartered in Dallas, Texas.

BISON TRANSPORT is set to acquire Grand Forks, N.D.-based BRITTON TRANSPORT. Britton is an asset-based and non-asset-based transport provider providing van, flat bed, step deck and bulk hopper truckload services primarily in the continental US. The transaction is subject to customary closing conditions and is expected to be completed in late May. Financial details concerning this transaction have not been disclosed.

For daily COMPETITION WATCH news go to www.trucknews.com or subscribe to our bi-weekly e-newsletter.

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motortruck

march/april 2011

9

TheBottomLine

How do you respond to an RFQ? Perhaps not at all

R

esponding to bids is one of the many things we do to fill trucks.

Call them what you like – tenders, RFQs, RFPs – really they amount to nothing more than an auction of a company’s loads. We get tons of them.

Until now, our response to an RFQ has always been the same. We spend gobs of dough and resources to create a detailed proposal with every compelling reason why that company’s freight should be on our truck.

It hit me as hard as an open-ice Scott Stevens body check when I realized that we’ve been doing it wrong for the last 25 years. I finally got it.

I received an RFQ from a company that apparently has never heard of blind cc’ing its email. To my utter shock, the RFQ was distributed to 173 other industry players. It wanted numbers on more than 300 lanes and gave me a week to complete the task.

The magnitude of this request made me sit back and take stock of the RFQ process and whether it’s time to end this age-old practice.

When you’re one of 173 bidders, what are the chances that a thoughtful, well-constructed response will “win” or even be noticed? In fact, I can’t remember the last time we picked up a good piece of new business from an RFQ. The only time we had any luck was as the incumbent, which automatically grants you the last kick at the can.

I wrote Joe Prospect a response that I almost guarantee was different from anything he would have received from the other 172 transportation “providers” invited to participate. There would be no numbers this time around. Instead, I told him he should consider a few points as he leafs through all those proposals looking at prices: Cost Drivers: Customers control their

prices almost as much as we do. Payment terms, days of the week you ship, consolidation of shipments, and use of technology are good examples of factors that impact costs. By working together, shippers and carriers can identify and eliminate inefficiencies that drive costs and rates up.

Alone, truckers can only get rates to a certain level. We need lots of help to find the gravy that isn’t on page four of the annual bid package.

“Glass House Syndrome”: Your wife insists that the outside of your house needs painting. Taking the cheap and easy approach, you measure the square footage and fire off a tender to 15 of your favourite painters. It’s fun picking the cheapest price.

The family CEO certainly is going to be happy with the bundle of green Daddy’s saving. When your painter arrives he is ecstatic to realize the job requires nine fewer gallons of paint. You forgot to tell him the love shack is all windows.

Nothing is more important for driving costs out of the transportation equation than quality information. Without it, you have little choice but to quote high to cover your butt. Unfortunately, there’s no faster way for your proposal to find the “reject” pile.

Sustainable Relationships: Long-term freight solutions aren’t as cheap or easy to find as they once were. Try moving loads from the US to Canada these days.

It’s going to get worse. Most truckers aren’t sprinting to the bank to borrow the cash to add capacity. We’ve learned that having 20 extra loads a week is more profitable than having 20 extra trucks a week. In the current market, it’s not possible to provide a sustainable solution when the shipper is looking for the lowest-price option.

All the Rules: Every bid has verbiage

Mike McCarron is the managing partner at MSM Transportation (www.shipmsm.com) in Bolton, Ont., which specializes in moving products from Canada to and from the rest of the world. He can be reached at mmccarron@shipmsm.com. In coming issues, he’ll examine cost drivers, Glass House Syndrome, and other keys to sales management for truck fleets.

that explains the rules of engagement – the commitments you have to make if you want any chance of getting invited to the prom. Shippers may think these binding obligations help control costs when in many cases they do just the opposite.

These days many truckers are sourcing loads on one of the many on-line boards that pay better coin with no rules. It seems to be working for them.

Not long after I sent my “Dear Johnny” letter, I received a reply and was pleasantly surprised. The Ivory Tower arranged a factfinding meeting with the lady at the Toronto plant who is “paid to implement their decisions.” Ironically, she pays no attention to the routing guide, gives the freight to whomever she wants, and does it all in a language in which I am fluent.

Kudos to those who find RFQs to be an effective way of getting business. I prefer the fact-finding meetings where it’s me and my prospect talking about what we can do for one another. My chances are far better sitting there than in Johnny Prospect’s inbox.

I finally got it. And it looks like I finally got one. mt may/june 2011

9

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the human edge

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Leading the Way There are pros and cons to every leadership style.

Which one should dispatchers adopt?

S

uccessful dispatchers display a number of traits whenever they are on the job. They need to be well-organized, analyze situations which can change with every load, and make the decisive calls that reflect customer needs and industry regulations alike. Even in the midst of a stressful situation like an unexpected delay in a just in time shipment, they need to be able to understand the context of every decision.

Above all, they need to demonstrate the qualities of a leader – motivating staff, planning activities, delegating work and more.

The challenge is that different workplace dynamics will require different leadership approaches along the way, according to the Dispatcher Interpersonal Skills Course, a self-directed training program from the Canadian Trucking Human Resources Council (CTHRC).

A leadership approach should be determined with an understanding of a specific situation, the members of the team involved, and even the dispatcher’s personal preference. The look at the situation itself will involve balancing the impact of the decision and any deadlines that exist. And when considering members of the team, what kind of personalities are involved? What is the general attitude in the workplace? For that matter, does this group of drivers have the knowledge and skills to help make an effective decision?

For example, one of the more direct leadership styles is to be autocratic, maintaining all of the control and decision-making powers in a situation. This approach is appropriate when working with employees who feel more comfortable in a structured environment, dealing with a time sensitive crisis situation like a collision or spill, or guiding drivers who have a limited amount of experience.

But decisions like these cannot be made in a vacuum. For this style of leadership to be successful, dispatchers will need to have the confidence of the team. This can be established by demonstrating an in depth knowledge of regulations and fleet policies alike and offering frequent feedback about satisfactory or unsatisfactory performance.

Without that strong foundation, there is a danger of being seen as too pushy or uncaring about other ideas. It is an approach that can stifle initiative or even lead to employee turnover as drivers look for the chance to have a greater influence over their jobs.

There are other times when a more democratic approach will be required, such as when a manager is working with drivers and

To find a HR Essentials workshop in your region contact:

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motortruck

fellow dispatchers to solve a problem or introduce a lasting change in the workplace.

In these cases, the dispatcher will need to help the group come to a consensus. An added advantage of this approach is that members of the team will be more committed to achieving a goal that they helped develop.

But the leadership approach will not apply in every case. The final decisions of the group will not necessarily be in the best interest of the business, and the method can even support a leader who wants to avoid taking personal responsibility for different actions.

A third approach is to be a consultative leader, inviting employees to participate in the decision-making process without actually relinquishing the power to make the final decision. The advantage here is that employees can still feel comfortable sharing their thoughts about a situation without worrying about any consequences.

This process allows the leader to gain valuable information and even a higher level of commitment from employees who will need to comply with the ultimate choice. It can enhance workplace policies and identify ideas that will make the fleet stronger than ever. And it can certainly be a valuable approach when implementing a change that requires buy-in from members of the team but still needs final approval from upper managers.

Granted, this style presents some challenges of its own. The consultations will take time, and that will involve additional resources. Members of the team involved in the consultation might even feel that they need to sell an idea, inflating the potential benefits of their preferred tactic along the way.

But above all, there is always a value in leading by example.

When decisions are based on a fleet’s value and mission, coworkers will begin to display those attitudes in their own work. Positive support will also help to develop the cooperation and teamwork in the workplace that will lead to a smoother working environment for everyone involved.

For more information on the Dispatcher Interpersonal Skills Course, visit www.cthrc.com. mt Funded by the Government of Canada’s Sector Council Program, the Canadian Trucking HR Council (CTHRC) is an incorporated not-for-profit organization that helps attract, train and retain workers for Canada’s trucking industry. For more information, visit www.cthrc.com.

AMTA www.amta.ca

PEI Trucking Sector Council www.peitsc.ca

Ontario Trucking Association www.ontruck.org

Trucking Human Resources Sector Council, Atlantic info@thrsc.com

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inside the numbers

Demand for Drivers

Reasons for Driver Shortage Quality of life is poor/ long hours/away from home Drivers are not paid enough “Truck driver” is not an attractive occupation for youth

Importance of having a say in management decisions

Overall aging workforce (on scale of 1 to 5)

43.5% 38.5%

35.9%

35.8%

Increase or changes in regulation 24.0% for drivers

Rating of supervisor

(on scale of 1 to 5)

WHAT DOES IT TAKE TO ATTRACT AND RETAIN DRIVERS?

The demand for drivers rose steadily prior to the recession and is expected to resume its strong upward movement during the recovery, according to CTHRC estimates. An additional 37,000 drivers may be needed per year. In fact, attracting drivers is the “single largest challenge” most trucking companies will face, according to David Bradley, head of the Canadian Trucking Alliance. Prior to the recession, over 70% of fleets noted the driver shortage had affected their ability to move freight in a timely manner.

Of course, attracting drivers is only half the battle. Retaining them is the other half. Our own research shows that while pay and benefits play important roles in retention, other factors come into play as well. For example, drivers have a strong interest in being given the opportunity to influence management in several areas, including maintenance, customer service and cost cutting. Companies providing their drivers with opportunities to do so help boost job satisfaction because being able to provide input on management decisions implies responsibility, achievement and recognition.

Any positive corporate steps taken to improve driver relations can be quickly undone, however, by unsatisfactory relations drivers may have with an immediate supervisor. In our annual Driver Satisfaction Survey, conducted in partnership with CTHRC, we ask drivers and owner/operators to rate their immediate supervisors. It’s important to note that in our latest survey they gave managers their highest marks for treating them “with respect”. But it’s also important to note that no category was marked above 3.7 out of 5. And the lowest score was given to supervisors when it came to asking for drivers’ opinions. Are we missing out on something that costs little to implement but would mean a great deal to company drivers and owner/operators?

Saskatchewan Trucking Association www.sasktrucking.com

British Columbia Trucking Association www.bctrucking.com

Manitoba Trucking Association www.trucking.mb.ca

Camo-route www.camo-route.com

Or Contact the Canadian Trucking Human Resources Council, info@cthrc.com or 613 244 4800 MAY/JUNE 2011

11

Taking Care of Business

an ounce of prevention How to protect confidential information

C

ompetitors often acquire confidential information such as customer lists through former employees of a business. If an employee leaves a business and discloses confidential information to a new employer who is a competitor, it can be very difficult to prove in court that confidential information was in fact disclosed.

When dealing with confidential information, the age-old adage applies: “an ounce of prevention is worth a pound of cure”.

Ralph Kroman, partner at the law firm WeirFoulds LLP (rkroman@weirfoulds.com) believes that “many companies have confidentiality agreements in their files which are signed by employees but often they overlook the importance of employee entrance and exit interviews. During an entrance interview, each new employee should be reminded of his or her obligations regarding the company’s confidential information.

The information which the company considers confidential must be clearly identified to the employee. A company policy regarding confidential information should be reviewed with the employee and a receipt obtained from the employee”.

A wise employer also tells the employee during the initial interview that the employee must not disclose confidential information of former employers. The confidentiality agreement which is signed by the employee should contain a representation and warranty to this effect. Legal cases have shown that, if an employer turns a blind eye to the disclosure by an employee of confidential information of a former employer, the directors and officers of the new employer may be held personally liable.

Ralph Kroman advises that “If an employee signs a confidentiality agreement after employment has commenced, it must be 12

motortruck

structured properly or else the agreement will be unenforceable. The courts like to see that the employee gave consideration for the agreement and the lack of consideration may make the agreement unenforceable”.

It is imperative that employees who depart employment are given proper exit interviews where their legal obligations regarding confidential information are explained. Employees will likely be more reluctant to disclose confidential information to a new employer if they know that the former employer is serious about protecting its interests. It should be confirmed by the employee that no copies of confidential information remains in the hands of the employee.

If, after an employee departs, the employee will be employed with a competitor under suspicious circumstances, an appropriate letter should be sent to the new employer. This letter does not need to be adversarial but is intended to put the new employer “on notice” that the new employer must not use confidential information disclosed to it.

One of the best ways to protect confidential information is with a “confidential stamp” which is placed on each electronic or hard copy of a document. It is preferable that this stamp appears on each page. Many companies simply stamp “confidential” but the stamp is more effective if it includes the name of the owner of the confidential information, states that copying is not permitted without the consent of the owner, and confirms that the document and all copies of the document are the sole property of the owner.

It is common practice today for businesses to exchange confidential information in order to further the negotiation of a business deal. It is a typical practice that

Mark Borkowski is president of Mercantile Mergers & Acquisitions Corporation. Mercantile specializes in the sale of mid-market companies.

Mark can be contacted at www.mercantilemergers­acquisitions.com.

“standard form” non-disclosure or confidentiality agreements are signed. However, the fine print should be reviewed. Some agreements require that confidential information, which is disclosed orally, must be confirmed in writing within a certain number of days. If it is not feasible to comply with this obligation, the agreement should be amended.

Kroman advises that “When a company discloses confidential information to a third party, the company should maintain a file which contains proof of the delivery of the confidential information including an exact copy of all information disclosed, the date of the delivery, and the identity of the recipient. The cover letter should list the enclosures and highlight the confidential nature of the information”.

On the whole, it is important for a company to recognize that protecting confidential information is not simply a matter of adopting a “cookie cutter” approach. A protection plan should be customized to reflect the type of information and the commercial realities of the business. Unfortunately, many companies do not focus upon a plan until after it is too late. mt

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EquipmentWatch Cummins on how to thrive in a vertically integrated world Cummins president and COO Tom Linebarger shared some insight prior to the Mid-America Trucking Show on how the independent engine manufacturer plans to remain relevant as OEMs move towards greater vertical integration.

Cummins’ strategy, which appears to be working, may come as a surprise. Linebarger said Cummins is bringing its OEM partners closer, even when those very companies are taking bread off Cummins’ table by aggressively promoting their own engines.

“Most of our customers make their own engines too,” Linebarger acknowledged.

“How are we going to survive vertical integration? That’s an issue we face strategically and something we think very seriously about.”

Linebarger said Cummins’ threepronged strategy involves: technical leadership; partnerships; and focus.

“It’s a very simple strategy,” Linebarger said. “As an independent engine manufacturer, we have to have the best set of technologies, the best products to offer. We can’t be the same, we can’t be equal, we have to be better - and that’s the fundamental starting point for Cummins.”

That means sourcing the world for parts and components and taking advantage of its position as a global manufacturer to draw from innovations achieved elsewhere.

“The other thing being global gives you is the ability to look at different markets and get technical innovations in a bunch of different ways,” Linebarger said. “We are developing SCR systems in China that have to come in at half the cost of the SCR systems in the US. We don’t know what the standard is going to be (in China) but we know it needs to cost half as much. So, when we come up with a system that costs half as much, if it gets pretty close to the standard that we have here, maybe taking that one and developing it upwards might give us a whole new innovation on how to build SCR systems.”

14

motortruck

Perhaps most surprisingly, Linebarger said Cummins is taking steps to work more closely with its OEM partners, even if it means sharing trade secrets and helping their competitors build better engines themselves.

“We are learning how to integrate with customers better,” Linebarger said. “We have to be like an internal engine division of our customers, since that is what they’re going to compare us to. We have to be as good or better as their internal division. We have to make it as easy or easier to do business with us as it is to do business with their internal engine division.”

That means taking an interest in the success of its OEM partners, even when they are promoting their own engines. And it even means teaching them how to build better engines themselves – a counterintuitive approach that Linebarger says is working.

“We have to be thinking every day about how to make them more successful,” he said, “which puts some new burdens on us, in terms of how our product works. Just to give an example: technical collaboration.

We have always said we want to be the technical leader, so you want to keep your technical things pretty close to your chest.

If you give them to them, they’re equal.

What we figured out is, we can’t be their partner if everything we come up with, we give to them one piece at a time. If they’re making their own engines, we help them with their engines too. We bring in our components group and say ‘You’re making engines, we’ll help you with those too. We have SCR systems, turbochargers and filtration systems, so we’ll help you with yours too.’ It sort of feels a little weird, but if we don’t do that, we’re not like that internal engine division.”

So far, Cummins approach is paying dividends, Linebarger said.

“What has happened is, we’ve built trust with those partners. We’ve drawn them more to Cummins technology. Integration with their vehicles is easier and it’s now

easier to do business with us because we have some common components and common interfaces,” he said. “This cooperation is different now than it was before, but that’s going to be fundamental to our success going forward.”

MaxxForce 15 makes Mid-America debut At the behest of Canadian customers, Navistar International has come out with a 15-litre MaxxForce engine for high-horsepower applications.

The company also is coming out with a higher rated MaxxForce 13 - with up to 500 hp and 1,700 lb.-ft. of torque available - in hopes 13-litre power will be sufficient for the majority of applications. But for those customers who demand big power, the MaxxForce 15 will fit the bill, Jim Hebe, Navistar’s senior vice-president, North American sales operations, announced at the Mid-America Trucking Show. With the industry shift towards 13-litre power, Hebe admitted it would be easy to ignore the severe service market.

“The obvious question is why bother?” he asked. “It’s real simple. We have customers in Canada and customers in the US in certain applications who just demand an extreme engine with extreme power in the most severe applications.”

Development of the MaxxForce 15 began in 2006 when Cummins diverted from its in-cylinder EPA2010 emissions strategy and announced it would pursue selective catalytic reduction (SCR) along with all other heavy-duty engine manufacturers. That decision, Hebe said, left Navistar in a bind, with essentially four options: following Cummins down the SCR path; developing a 15-litre engine from scratch; finding a European engine partner; or finding a North American solution.

“We chose what we thought was the best possible solution out of all the

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above, and chose the Cat C15 for the foundation of what is now the MaxxForce 15,” Hebe said.

Navistar married the Cat C15’s block and crankshaft with its own fuel and air systems and its Advanced EGR technology.

The new engine can be paired with the International ProStar+ with ratings up to 500 hp and 1,850 lb.-ft. of torque while the vocational PayStar can be mated with a MaxxForce 15 with up to 550 hp.

Hebe said the ProStar+ comes in a 125inch BBC to accommodate the larger engine, adding “we increased our BBC without compromising aerodynamics.”

Navistar execs also promised at the MidAmerica Trucking Show that they will deliver the most complete line of alternative fuel vehicles, including an International ProStar+ powered by a liquefied natural gas version of the MaxxForce 13.

MERCANTILE MERGERS & ACQUISITIONS Mercantile Mergers & Acquisitions Corp­ oration are a mid-market m&a brokerage firm. The company specializes in the purchase and sale of mid-market companies, including the transportation industry. In ad­­dition, the company advises on business valuations, mezzanine, and equity financing, management buyouts, restructuring of debt, family business re-capitalization and workouts.

Contact (in confidence): Mark Borkowski, President at: (416) 368-8466 ext. 232 or mark@mercantilema.com Mercantile Mergers & Acquisitions Corporation

16

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A prototype version of the vehicle was on display at the show. Hebe noted the LNG MaxxForce 13, available with 430 hp and 1,550 lb.-ft. torque, runs on a mixture of 15% diesel and 85% natural gas.

“Be assured, we are going to be the industry leader in natural gas technology,” Hebe vowed. “Not just offering a one-sizefits-all solution, but our engine, purposely designed to fit your applications from medium-duty to heavy-duty.”

Aerodynamics boost fuel efficiency for Pinnacle tractors Mack Trucks, Inc. unveiled an assortment of product enhancements, including new, optimized roof and chassis fairings for the MACK Pinnacle models, additional fuelefficient Econodyne ratings for its Mack MP engines and interior enhancements to improve driver comfort and productivity.

Mack rolled out redesigned roof fairings for its Pinnacle 70-inch high-rise, 70-inch mid-rise and 60-inch mid-rise sleepers. The company also debuted stronger, lighter, longer chassis fairings, covering up to a 140 gallon fuel tank – yet costing considerably less than the previous option. Customers ordering Mack Pinnacle model sleepers with improved aerodynamics can expect up to a 6% fuel efficiency improvement, according to Jerry Warmkessel, marketing manager, highway products said.

“The new roof fairings are optimized for the lowest possible coefficient of drag and a much smoother transfer of air from the truck to the trailer,” Warmkessel said. “The design of the new chassis fairings is simpler, and more aerodynamic. The fuel efficiency improvements achievable with these optimized aero aids and the proven performance of our MP engines with ClearTech SCR positions the Mack Pinnacle among the best in highway fuel efficiency.”

Warmkessel placed the fuel savings possible by this combination of features at 12.5% and said he believes such savings at a time when fleets are so concerned about rising diesel prices will lead to greater interest in the Mack brand.

“We will be in double digit figures in market share in the very near future. I absolutely guarantee it,” he said.

Building on the fuel saving performance of its EPA 2010 certified MP engines, Mack also announced the addition of four new Econodyne ratings – MP7-405E, MP8415E, MP8-445E, MP8-505E – optimized for fuel efficiency without sacrificing power. Through an enhanced fuel mapping strategy, Mack’s EconoBoost intelligent torque management system offers an extra 200 lb-ft. of torque seamlessly through the system command.

“We found that drivers can significantly increase fuel efficiency by remaining in the top gear as much as possible,” said David McKenna, Mack director of powertrain sales and marketing. “EconoBoost initiates at 1300 RPM, providing additional power that allows drivers to remain longer in the top two gears. The engine torque reverts back to the lower profile when the engine senses situations with zero torque input, such as cresting a hill.”

Further enhancements to the Mack Pinnacle series include an optional onepiece windshield, and an updated Grand Touring trim package with button-tuck vinyl and ultraleather seats that provides drivers comfort and a welcoming environment, at no extra charge over the previous trim offering.

Mack also introduced a new twin-steer package for its Granite model heavy duty Class 8 conventional straight truck.

Available in axle-forward or axle-back packages, the twin-steer now offers vertical back-of-cab aftertreatment – DPF and SCR. Mack’s vocational trucks now also

EquipmentWatch

feature Body Link III. Designed with extensive input from body builders, the new Body Link III provides a conveniently located under-cab 29 pin connector, cab pass-through boot for a quick and reliable body hookup, and assignable in-cab switches.

Great Dane takes weight out of its Classic Truckload reefer Great Dane has redesigned its Classic Truckload refrigerated trailer.

Through engineering and testing, weight was trimmed out of the Classic Truckload, while maintaining strength. Its bonded roof construction reduces weight while increasing durability and maintaining thermal efficiency through the lamination process. And its lighter, yet stronger lining is designed to withstand everyday operational wear and tear and protect cargo in the process.

A computer-controlled urethane injection process insulates roof and sidewall components completely, but the addition of Great Dane’s ThermoGuard, thermoplastic liner, further enhances the trailer’s efficiency. Great Dane says that testing has shown that the thermoplastic liner maximizes the useful life of a trailer by significantly reducing the thermal degradation that occurs with conventional reefer linings.

Recent testing of some of the first production line ThermoGuardequipped reefers indicated after nearly five years of service, a loss of thermal efficiency comparable to just one year. Earlier evaluations after six, eight and 20 months of service revealed an almost insignificant reduction in thermal effectiveness.

ThermoGuard’s patented construction includes a metallized film that virtually eliminates the outgassing through the liner, which allows the insulation to perform effectively over a longer period of time, according to company officials. By helping to maintain insulation performance over the life of the trailer, the cooling unit will not have to work as hard each year to make up for degrading insulation performance.

Along with ThermoGuard, the Classic Truckload includes CorroGuard, an exclusive spray-in-place thermoplastic elastomeric coating applied to suspensions and landing gear that provides complete coverage for long-term protection from road abrasion and corrosion.

This new Heavy-Duty Bottom Rail (HBR) lightweight model includes new options that provide added protection and weight savings without sacrificing strength and durability, the company claims.

The new HBR option has a 21-inch high, one-piece aluminum extrusion that replaces the standard 11-inch bottom rail and eliminates the need for a 6-inch integral steel scuffband.

This taller bottom rail adds rigidity to the trailer, reducing sidewall bulging and damage to composite walls. An added bonus is the ease of repair this design offers. Should the bottom rail be damaged, it can be repaired more easily than sidewall panels.

The Composite HBR is also available in a lightweight package option designed specifically for heavy floor loaded operations that also require maximum gross payloads. This spec’s weight-saving features include a composite front wall, aluminum crossmembers, and lightweight side wall panels. For added durability, this lightweight package is available with a heavy-duty 24,000 pound rated floor.

The reduced maintenance afforded by The Composite HBR’s durability is further enhanced with the addition of CorroGuard with Technology by GatorHyde, Great Dane’s exclusive spray-in-place thermoplastic elastomeric coating applied to suspensions and landing gear that provides complete coverage for long-term protection from road abrasion and corrosion.

Great Dane unveils composite van spec’s for heavy hauls Great Dane has expanded the spec’s on its Composite dry freight van to address the needs of specialty hauls, such as those in the beverage industry and others with frequent heavy floor loads. may/june 2011

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Digby-Saint John ferry receives funding extension, but its future remains in doubt

By Carroll McCormick

W

ith just two months to go before funding was to have run out, on Nov. 30, the federal government announced a 38-month extension to a funding agreement for the Princess of Acadia ferry service between Digby, N.S. and Saint John, N.B. Dollar figures were not revealed.

Unfortunately, politicians did not go beyond the words: “Transport Canada is committed to working with the provinces and local communities on a long-term approach” on the subject of whether the service would be funded beyond March 31, 2014.

Whether the funding would be extended beyond the Jan. 31, 2011 expiry date must have been a cliff-hanger for the provinces and businesses that rely on the ferry. After having gradually become a money-losing operation, the ferry service received subsidies to the tune of $23.1 million between 2006 and Jan. 31. It seemed unthinkable that governments would let the service sink, but after watching them scuttle the CAT ferry between Yarmouth and Maine in 2009, another sinking was obviously possible.

Yet, it’s not as though the marine route is that different a burden for the public to bear than a highway. “The cost of maintaining the infrastructure is about the same as maintaining an equal stretch of highway. We’ve got really solid numbers,” says Mike Gushue, managing director of the Annapolis Digby Economic Development Association.

The biggest loser, had the ferry been lost, would have been the fishing industry, Gushue says. “The whole fishing industry in southwest Nova Scotia is based on fresh fish. The only way to get it to the eastern seaboard is by the ferry. We put a 5-10% price tag on the value lost to the fishing industry if fish is not delivered ‘just-in-time’ in its freshest state. Some say it is 30-40% or even more if the only option is the highway. It is twice the distance of the ferry [and includes] the additional cost to truckers of an extra driver, fuel and maintenance.”

For years, Northumberland Ferries profitably ran the CAT and Princess of Acadia, after taking over the money-losing opera-

tion from Marine Atlantic in 1997, according to Don Cormier, vice-president of operations and safety management at Northumberland Ferries/Bay Ferries. “We reduced fuel consumption by 25% and labour costs by 40%. We are innovative and creative with our marketing.”

But then the tide turned against Bay Ferries, largely due to the collapse of the forestry industry and a drop in truck traffic from an historic high of 26,000 to just 10,000 tractor-trailer operations in 2009.

Still, says Cormier, “Despite a huge spike in the cost of energy, we [were] within the reference amounts of the contribution agreement to fulfill our obligations. The money from the governments included $1 million for the 2010 Atlantic Canada Opportunities Agency (ACOA) study [of the transportation system and economy of South West Nova Scotia] at least $1.5 million in terminal infrastructure and $3 million in Princess of Acadia ship upgrade project alone. The service now requires some infusion of public funds to sustain it, but the investment today is still quite a bit less prior to our taking it over.

“Currently, the company and service is meeting expectations in a very different business climate. There is a recognition from governments that this service requires public monies to operate.

We don’t want handouts. We are proud of our accomplishments.

[Taking handouts] is not how we want to do our business. But from a matter of public policy, if a private company cannot sustain this route, it is a good public policy to support ferry infrastructure. They are public highways; they are lifelines to communities the same way as asphalt highways.”

Carriers that use the ferry heartily agree. “I think it is a vital piece of transportation in this area which we do not want to lose. There is a lot of product going back and forth,” says Brent Chamberlain, manager of Acadian Wipers in Digby.

The Nova Scotia fishing industry is worth $300 million or more a year. Many companies depend on the ferry to get their catch to Continued on page 36 may/june 2011

19

Ferry Service a Net Benefit

A

detailed analysis of the transportation system and requirements in southwest Nova Scotia (SWNS) prepared for Atlantic Canada Opportunities Agency (ACOA) concludes that the Yarmouth-Maine and Digby-Saint John ferries provide a large net benefit to the local economy.

(In 2009, the Yarmouth-Maine high-speed CAT ferry discontinued service after governments declined to continue funding it.

By 2008, passenger-related vehicle traffic had declined by 70% from its historic high of more than 300,000 in 2001.)

“The consultants found that despite declining demand over the past number of years, local communities and industries feel that the ferry services are an integral part of the regional transportation network and economy,” the report, made public this summer, reads.

The 223-page South West Nova Scotia Transportation Study, prepared for ACOA by CPCS Transcom Limited in association with Opus International Consultants (Canada) Limited, examines what comprises the region’s economy and the supporting highway and marine transportation systems. The main concern of the study, however, was the effect on the economy of shutting down either ferry.

Since there never was any commercial truck traffic to speak of on the CAT, the importance to SWNS industries supported by

commercial trucking – forestry, fishing, agriculture and general freight – centres on the operation of the Digby-Saint John ferry, currently the Princess of Acadia. Of all the elements of the economy, including tourism, commercial trucking stands the most to lose between 2010 and 2019 – $54.5 million – if there are no ferries, according to the report.

The Digby-Saint John ferry is a shortcut to New Brunswick and the US. Without it, trucks must add 570 kilometres for the drive around the Bay of Fundy to reach US destinations. This extra driving time would have a big impact on the quality of fresh seafood that is delivered to US markets. The study explains: “It is critical to the $600-million commercial fishery, which is increasingly a ‘fresh fishery’ and requires quick and reliable transportation to reach early morning markets in Boston. Of all sectors in the SWNS economy, seafood has the most extensive backward linkages into the regional economy, i.e., boat building, fishing gear, fuel sales, trucking, provisioning, etc. It is also increasingly interlinked with the (estimated) $100-million mink industry, which provides backhaul cargo to seafood shippers (via the ferry service).”

The study noted that, “In the case of the fishery, depending on the commodity carried and the time of year, it is not uncommon to have eight to 10 truckloads of fresh seafood onboard the Princess of

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Acadia, representing upwards of $2 million worth of product on one sailing.�

The problem is that demand for the ferry service has declined in the past decade. It gradually became a money-losing commercial operation for Northumberland Ferries/Bay Ferries Limited, which took over operation of the service from Marine Atlantic in 1997.

Since 2006, the Nova Scotia, New Brunswick and federal governments have subsidized the Princess of Acadia. Money already given and money pledged, $23.1 million in all, kept the ferry running until Jan. 31.

Passenger-related vehicles peaked in 1999 at 54,337, and declined by 39% to about 33,000 in 2008. Commercial-related vehicles peaked in 2000 at 28,945 units, but tailed off by 57% to just more than 10,000 in 2008. Most of this decline was due to the collapse of the forest industry, but the fisheries industry also lost a lot of ground: total fish harvested in SWNS dropped from a peak of about 190,000 tonnes in 2003 to around 140,000 tonnes in 2008.

Between October 2008 and September 2009, 74% of the Digby-Saint John commercial traffic was generated by the fisheries, 20% by general freight and 6% by forest products.

The study looked at the possibility of recovery in traffic volumes and their potential effect on a ferry operation’s balance sheets. Fisheries growth is considered to be limited beyond 2011; the forest products sector will only rebound to one-third of historic levels and is unlikely to be a large driver of transportation demand in SWNS in the future; and tourism will recover only slightly in the next 10 years. Upgrades planned for the NB Southern Railway will provide shippers with an intermodal rail alternative and a stimulus for drop trailer traffic for the ferry. Truck traffic is expected to peak at 14,500 in 2019.

The study calculated the cost, and net benefit to the economy, of a number of capital investment and operating scenarios for continuing the two ferry services from 2010 to 2019. Looking at the Digby-Saint John service, one scenario puts the cost of operating the service, including the purchase of a used ropax (roll on/roll off passenger vessel) at $91 million dollars. Buying a new ropax would increase the 10-year cost to $116 million. The net economic benefit to the region runs between $141 and $160 million, depending on the operating scenario. mt

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Profitability

remaking Uncle Sam Would reindustrializing America be the spark needed to produce stronger freight flows?

BY DAN GOODWILL

F

or many years America has been the envy of the world. Its powerful, diverse economy helped generate consistent freight growth and produce a very vibrant freight industry.

But America’s success ignited an escalation in the value of the greenback and a shift of production to lower cost sources of supply. A recent issue of Logistics Management contains some amazing statistics that capture the impact of these changes.

• The US has lost approximately 42,000 factories since 2001.

• The US has lost about 5.5 million manufacturing jobs since October 2000.

• Today 12 million Americans work in manufacturing jobs, the lowest level since 1941.

• The percentage of people working in manufacturing jobs has dropped from 28% in 1959 to 9% currently.

• The US has lost 32% of its manufacturing jobs since 2000.

In a separate study reported on Canadian television, over the decade 2000-2009, US-based multinational companies have cut 2.9 million manufacturing jobs in America while they created 2.3 million jobs overseas.

During this same time frame a set of other powerful forces were unleashed. Certain countries became very proficient in manufacturing particular products (e.g. cars, television sets, smart phones, clothing etc.). There was also the miniaturization movement that resulted in shrinking the size of so many technology based products.

Then the great recession hit in late 2008 and 2009 driving out more manufacturing jobs and causing a significant decline in freight volumes across all sectors.

An economic recovery is underway but is hitting a number of headwinds brought on by rising fuel costs, the CSA driver safety program and new (reduced) driver hours of service. However, the good news is that as the US dollar has fallen to its lowest level since August 2008, manufacturing jobs have risen for the first time since 1997.

According to IHS Global Insight and Moody’s Analytics, US manufacturing jobs are expected to grow by 330,000 or 2.5% this year. Thomas Runiewicz, an economist with IHS Global Insight recently told the Wall Street Journal that the economic rebound is being driven by three factors: • Quality – US workers produce superior products • Onshoring – US manufacturers are rediscovering the value of producing goods in America 22

• Excess US Capacity and Infrastructure – Unused plants and real estate exist throughout the United States that can be retrofitted for specific purposes.

The Logistics Management article highlights three companies (Whirlpool, Dow Chemical and Caterpillar) that are expanding production in America. The plunging US currency is also providing a boost in revenue for many US-based exporting companies. Vincent Delisle, Scotia Capital strategist , says a combination of healthy economic growth and a weak greenback represent “a sweet spot” for US profit growth.

Nearly one-third of S&P 500 revenues come from non-US sources. Peter Gibson of CIBC World Markets points out that roughly one-fifth of the companies on the S&P 500 are what he calls “valueadded exporters” – US multinationals that get more than half of their revenues from outside the US. Analysts said that the US sectors that stand to benefit the most from the weaker currency because of their large exposure to foreign markets are consumer goods, information technology, industrials, energy and materials.

Of course, what goes down may and likely will go up. America cannot live forever on a low value dollar. What will it take to sustain America’s growth? The Harvard Historian Niall Ferguson, who has just written a book, Civilization: The West and the Rest, offered this historical context: “For 500 years the West patented six killer applications that set it apart. The first to download them was Japan.

Over the last century, one Asian country after another has downloaded these killer apps. Competition, modern science, the rule of law and private property rights, modern medicine, the consumer society and the work ethic. Those six things are the secret sauce of Western civilization.”

Recent studies now indicate that America has slipped back on where it ranks on these variables. As an example, in a 2009 study, American 15-year-olds ranked 17th in science and 25th in math out of 34 OECD countries. America must refocus on these six killer apps as part of a process of reindustrialization to create expanded domestic and international freight flows. mt Dan Goodwill, president of Dan Goodwill and Associates, has over 20 years of experience in the logistics and transportation industries in both Canada and the US. He can be reached at dan@dantranscon.com.

MOTORTRUCK

MTFE_Retre

retreading has always been smart. lately, it’s been downright brilliant.

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MTFE_RetreadInstead_CAN_May/June2011.indd 1

4/26/11 9:56 AM

LEGAL CORNER

Profitability

fight back The trucking industry is under legal attack with plaintiffs’ attorneys basically treating trucking accidents as ATM machines.

In this final installment with lawyer Douglas Marcello of Marcello & Kivisto LLC, who was interviewed by editorial director Lou Smyrlis at a Driving for Profit seminar, we outline the most successful strategies used against trucking companies and how to counter them.

BY LOU SMYRLIS

MT: What are the most effective strategies and tactics currently being employed to sue trucking companies after an accident?

Marcello: Each year our firm spends a couple thousand dollars buying the books and DVDs from the plaintiffs’ attorneys; you have got to love them as they’ll do whatever for money, even sell their own secrets. To get that insight allows us to both defend the cases and prepare people for depositions. There are two main strategies right now: 1) Rules of the road – Attorneys would go into court and the judge would tell the jury, “you are to decide if what happens is reasonable under the circumstances”. The jurors would look and say, “that could happen to anybody and that is reasonable” and the attorneys were losing cases so they said let’s take out the nebulous undefined character of this. If someone runs a stop sign there is no black or white there; that’s a violation. Let’s try to make other things along that line and set them up like the rules of the road. So they are going to look at federal law, your own manuals, books and procedures, and things that are written by the company, and set them up 24

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called the reptile theory. It’s not truth in advertising by plaintiffs’ attorneys, but instead it is a thought based upon the premise that human beings, like reptiles or any other species, are looking for the preservation of the species. It says to gear the evidence to make it come home more to the jurors. You put these two together, develop a list of rules of the road that the trucker or the trucking company have allegedly broken and you fashion those in a way that make it look like it is more of a threat to the community, and jurors think that if they do not do something in that case with a large reward of money, then this could happen to us or to others that we know and love.

as rules and make it look black and white.

Did you violate that or did you comply, and if you violated it, were you negligent and thus liable? 2) Another theory is that jurors will be most reactive to those situations in which they see themselves and their community threatened or exposed by similar risk if it were to happen someplace else. It’s

MT: Those are two very interesting and significant strategies. How do you prepare an effective defense against them?

Marcello: One of the primary ways, and it sounds rather basic in terms of the rules of road, is compliance. The greater your compliance with federal regulations, your own standards and procedures, the less of a target that you will be. The second thing is

Profitability

look for your own rules of the road to apply to the motorists (the 4-wheelers) and hold them accountable for their actions and responsibilities. The third thing is to look at new and aggressive means of attacking the situation and proceeding with the case itself. Too often I get a file and the accident will have happened 18-20 months ago; some material was taken early on and nothing has happened since then. They give me the case and say, “now do something with it”. We try and we do, but at the same time there are things that we can do right after the accident in our “golden period” in order to effectively defend these cases. These things include looking for and considering the new technologies that are out there.

When you go to the scene, look to see if there is any surveillance video in the area.

We recently had a case that involved an intersection accident involving a tractor trailer (one of my clients) and a police car.

You start with presumptions not only of a truck but a police car, and who is at fault on that. I was familiar with the intersection and told the investigator to check the convenience stores around there and see if they could lock down the video. They were able to and we turned it over to the state police, and as a result of the video we were able to preserve that night before it was written over, our driver didn’t even get a ticket for the accident. Implement early surveillance, don’t wait until they file suit. Consider when you get a letter from the plaintiff’s attorney, not just putting it in the file and acknowledging it, but fire back. When we get a letter from a plaintiff’s attorney we say “We need to investigate this. Enclosed please find a medical release and an employment release. Please have them returned to us signed, as well as with a list of employers and medical providers.”

Consider also requesting that the plain-

tiff submit to an independent medical examination or vocational examination before suit is filed. This gives us a couple of advantages. What legal basis do you have to do that? You have none, but think about it – if you submit to the examination now it allows us to evaluate it and perhaps we can give you a fair resolution to this case early on. If you don’t and you wait a year or two and file suit, then our response at that point is going to be, “we asked to have you examined within 2 months after the accident and you refused to do so.” What does that tell you about the validity of their claim?

One of the other things we have looked at that has been effective recently is when we see that there is a possibility that a rural accident in a conservative jurisdiction is going to go to the hands of an attorney that is going to file it in what we can say is a more liberal jurisdiction – has a history of greater rewards – we will file suit first if we have a basis for liability either on the cargo or the PD claim. Let’s lock in the jurisdiction where it should be – where the accident happened – instead of letting the plaintiffs dictate the pace.

And there is also what I call self-surveillance. One of the first things that we do is to check the plaintiff’s Facebook and MySpace pages right after the accident. I had a trial in Cincinnati a couple of years ago and a fellow claimed that, because of an accident, he was socially disabled; couldn’t go out with his friends at all and couldn’t participate in the sports he used to. It was my turn for cross-examination and he did not know it but I possessed photographs that he was kind enough to provide me off his Facebook page. There were pictures from a list of activities that he did – mixed martial arts, hunting and fishing. There was also a video on there called “Johnny on fire” where he had a cousin of his spray his back

in his initial ‘J’ with insect repellant and light it on fire while he went running and flailing across the woods.

You’ve got to be aggressive, quick and prompt.

MT: There is some legislation coming through that is probably going to have a large impact on what we are discussing here. First of all is the introduction of EOBRs. Tell me what kind of impact you can see that having.

Marcello: I think the EOBRs will be interesting. They will reduce significantly potential exposure for a lot of companies.

Where I see companies run into trouble is where they do not, for whatever reason, compare their logs to their satellite tracking systems. I often tell carriers with the Detroit engines in particular, if you give me a d-deck report and a satellite tracking, all your log is going to tell me is how truthful you are. I think the EOBRs will bring that in line and reduce exposure in the hours of service area which is a key area.

MT: What about CSA? What kind of impact do you see that having?

Marcello: CSA is basically a score card.

It provides a new transparency to our industry that will give plaintiffs’ attorneys more to leverage in terms of responsibilities of the company and where they are at. To deal with that we need to recognize the transparency, realize it is out there, and work to address the issues we have. When you consider that speeding and the apparent equipment violations that compose 80% of the points are basically in the control of the drivers, it gives us a basis to start and to try to control those numbers.

MT may/june 2011

25

GreentoGold Canadian fleets will soon be subject to same fuel economy regs as in the US

By James Menzies

C

anadian regulators are planning to mirror the impending fuel economy regulations for heavy-duty trucks in the US, presenting it as a greenhouse gas emissions-reducing program here at home.

That nugget came from Steven Laskowski, senior vice-president of the Canadian Trucking Alliance, who was speaking at the Canadian Fleet Maintenance Seminar.

The US fuel economy regulation is expected to be finalized this summer, at which time Environment Canada will post a duplicate regulation in the Canada Gazette, Laskowski revealed.

While Canada’s version will focus on emissions rather than fuel consumption, both sets of regulations will call for the use of SmartWay-approved technologies to meet the new standards.

“The SmartWay program is your regulation,” Laskowski said. However, unlike previous engine emissions regulations in 2002, 2007 and 2010, this time the burden of compliance will fall partially on the end user.

“This whole regulation is based on consumer behaviour,” Laskowski said. “Unlike in 2002, 2007 and 2010 where you didn’t have a choice, with regards to greenhouse gas regulations, you will have choices on

what you buy. It will be up to you to choose and up to the manufacturers to manage.”

Also, unlike most previous emissions mandates, there will be an obvious payback in complying with the new fuel economy regs. While Laskowski said the US EPA has estimated tractor costs may go up as much as 6% as a result of the new requirements when all is said and done, fuel economy is projected to improve as much as 20% by 2018. The regulations will be phased in between 2014 and 2018 model year tractors. Trailers are so far exempted from the

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regs, despite the obvious fuel saving opportunities they present.

“In 2014-2015, we won’t see a heckuva lot of difference the way the rule is written, because at the end of the day it’s up to you what you decide to buy,” Laskowski said. “By 2017 and 2018, if consumer behaviour hasn’t changed, what are the manufacturers going to do?

They may need to limit sales of certain models of tractors. It’s an interesting dilemma if that’s what happens.”

Josh Lepage, senior sales specialist, big bore engines with Navistar, said that’s precisely what OEMs may be forced to do under the impending rules.

“You may not be able to get Model A anymore, you’re going to have to buy Model B which is a SmartWay model,” Lepage warned.

The 2014 standard should be achievable using existing SmartWay technologies, chiefly low rolling resistance tires and aerodynamic fairings coupled with SmartWayapproved aerodynamic tractor models.

Other options that may be on the table include: speed control, idle control and driver training. Laskowski says challenges will be encountered in Canada, where weight limits are still placed on wide-base

GreentoGold

tires in some jurisdictions, full-sized boat tails are not allowed and many types of low rolling resistance tires aren’t winter-rated.

So, what exactly does a SmartWay truck look like? Lepage said an on-highway SmartWay tractor would typically have: a high roof fairing, side fairing, gap reducers, fuel tank fairings, an aerodynamic bumper and mirrors, a no-idle solution and low rolling resistance tires on aluminum wheels. A SmartWay trailer has side skirts, a front gap reducer, low rolling resistance tires and eventually, maybe a rear fairing or boat tail (increasingly popular in the US but not yet approved for use here in Canada).

Failing to include trailers in the impending regulation seems like a major oversight, since fuel savings of 5-6% have been proven in linehaul applications using trailer side skirts alone. However, Laskowski noted the trailer industry is highly fragmented – comprised of many small manufacturers – and it would be difficult to regulate them.

Brent Larson, president of Wabash Canada, said fleets and owner/operators can still achieve significant fuel savings on the trailer. When spending a majority of time travelling at highway speeds, Larson said side skirts can provide fuel savings of 5-6%. Coupled with low rolling resistance tires that can provide another 1-1.5% fuel savings, a trailer can be made SmartWaycompliant relatively easily.

”If you’re travelling at highway speeds for certain distances, generally we’re seeing a payback in about 12 months (on side skirts),” Larson said.

Navistar’s Lepage, however, pointed out skirts can obstruct access to certain components and may increase servicing time. This is particularly important for reefer operators who may find the reefer fuel tank obstructed by some skirt designs. Larson said when choosing a side skirt supplier, “make sure the product you’re buying is intuitive to use.”

For instance, he pointed out some side skirt designs don’t work well on declining dock ramps. ”Some side skirts are less favourable as you get into docks that are declining,” he warned. “The side skirts can rub on concrete and cause damage and wear to the side skirt, so you want to be aware of those issues. We’ve had situations where customers were less than happy with the way the product performed when they went down into those dock configurations.”

He also suggested asking side skirt suppliers for data that indicates how well their products flex when contacting snow and ice and other objects.

Besides the obvious benefits of consuming less fuel, there’s another reason fleets should be interested in improving fuel economy and reducing emissions, Laskowski noted. While not much has been made lately of carbon credit cap-and-trade

systems, he said the issue has not gone away and will eventually present an opportunity for truck fleets to benefit. Laskowski said while the trucking industry itself will be impossible to regulate under a carbon capand-trade model, carriers should be allowed to collect credits and sell them to industries that exceed their carbon output limits.

Under SmartWay, Laskowski contended, it’s relatively easy to identify fleets that have taken steps to improve their fuel efficiency and GHG output, which should entitle them to carbon credits they can then sell on the open market to big polluters such as coal plants. ”If you’re going to have to buy these trucks and reduce your greenhouse gas emissions whether you like it or not, why not capture credits for it and bank them?

And as the years go by, you may find they are worth something on the open marketplace,” he pointed out.

Lepage agreed, noting the movement is already underway in the US. ”In the States, a lot of industries’ and companies’ carbon footprints are going to be looked at. They’re going to be given a score that will determine if they have to purchase carbon credits or if they have a surplus of carbon credits, and then those credits will be offered on the open market,” he said.

Getting green for going green? Now that’s something fleets could buy into. mt

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GreentoGold Dealing with DPFs and DEF Both relatively new requirements are designed to eliminate emissions, but the similarities end there

By James Menzies

T

heir acronyms may sound alike, but the care and attention required of DPFs and DEF are very much different.

Diesel particulate filters (DPFs), of course, have been on all new trucks since 2007. Their job is to trap and then burn off particulate matter at high temperatures. Diesel exhaust fluid (DEF) is a new requirement on 2011 model year trucks using selective catalytic reduction (SCR) to eliminate NOx emissions. The new fluid is housed in a separate tank on the frame rail and is injected in small doses into the SCR catalyst, where it sparks a chemical reaction that converts NOx into harmless water and nitrogen.

Both DPFs and DEF are pollution-busting tools, but the similarities end there.

The recent Canadian Fleet Maintenance Seminar included a working session on the care requirements of both items, detailing how drivers and maintenance managers can ensure they get the most out of their costly aftertreatment systems.

Dealing with DEF Unless you’re buying an International, any new truck you purchase from here on out will come with SCR and require DEF to function properly. Contrary to early rumours, DEF isn’t a toxic substance. You don’t need rubber gloves, HazMat suits or gas masks to handle the fluid. It’s a mixture of urea and demineralized water that must 28

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be injected in small doses into the exhaust stream to trigger the chemical reaction that breaks NOx into harmless vapour.

While the fluid is not hazardous, Mack Trucks Canada’s Steven de Sousa, said there are things drivers and maintenance managers must be aware of.

They say cleanliness is next to godliness, and the same holds true for the SCR system. The biggest mistake a driver or maintenance manager can make is to put something other than DEF into the DEF tank. OEMs have gone to great length to prevent this, including putting a universally-coloured blue cap on the inlet, making the inlet too narrow into which to fit a diesel pump and in Mack’s case, magnetizing the opening so it will only accept the appropriate fluid from dispensing equipment. ”Make sure you don’t put anything other than DEF into the tank,” de Sousa warned. “No straight water, oil, gas and don’t use unapproved containers. That’s what’s going to kill us here in the industry,

if you use an old funnel you used for coolant or oil, that’s going to cause issues.”

Most DEF is currently sold via plastic tote jug that comes complete with its own singleuse funnel.

Another thing to keep in mind is that DEF is corrosive, which is why all truck makers provide plastic DEF tanks.

If dripped, “it will stain aluminum fuel tanks,” de Sousa warned. “Just wash it off with soap if you spill it on yourself, it’s not going to hurt you. If you spill it on paint, don’t scrub it off. Dab it off lightly and rinse with water and soap. It will damage the paint if you leave it on there.”

If left to dry on its own, DEF will turn into a white, powdery substance, which is a good indicator of a DEF leak and something drivers should watch for when conducting their pre-trip inspections. ”Drivers, on their pre-trip should just have a look for leaks,” de Sousa suggested.

“Look at the pump, the pump connections, the injector, the exhaust connection from the DPF to the SCR catalyst and look for leaks around the band clamps. Look for a wet stain around those areas or for the white stuff.”

The only maintenance item on an SCR system is a filter underneath the inlet cap, which needs to be replaced every 3,000 hours or 100,000 miles. The filter costs about $30 so de Sousa recommends erring on the side of caution and replacing it early

GreentoGold

until there is more experience with the filter in real-world operating conditions.

There’s also a rock screen in the fill neck, which should be monitored and cleaned as required.

DEF dilution should not be an issue, but if for some reason old DEF that’s past its best before date is added to the tank throwing the dilution off and triggering the trouble light, customers should take their truck in for service and have the dealer measure the concentration. They’re equipped with special tools for just this purpose and in most cases, the problem can be solved by topping the tank up with fresh DEF. In a worst case scenario if something other than DEF is put into the DEF tank, de Sousa said there’s a drain plug underneath the tank. ”Drain it on your lawn and you’ll have a nice new patch of grass there next summer,” he said. “If nothing else, it’s a very expensive fertilizer.”

After draining the tank, it should be washed with non-sudsing detergent and rinsed until the water is completely clear.

Drivers may notice a pump running for about four minutes after they shut down an SCR-equipped truck. Upon shutdown, the system reverses the flow of the fluid, drawing it back into the tank to prevent it from freezing in the lines. DEF freezes at -11 C, but as long as it’s in the DEF tank it won’t cause any damage and it will quickly thaw when the engine is restarted.

The other potential mistake - which seems unthinkable but actually became problematic in Europe where SCR has been used for years - is the use of home brew DEF. ”In Europe, some guys thought they could make their own stuff,” de Sousa said.

“They got a buildup of residue with non-API certified DEF. You get deposits and the catalyst is useless and you’re basically looking at a replacement cost of about $6,200 each.”

It should go without saying that APIcertified DEF is a must and you can identify it by the black seal of approval on the jug. If you come across DEF that isn’t labeled with the API seal, de Sousa suggests asking some questions of the supplier.

Inside the cab, drivers will notice a new gauge indicating DEF fluid levels. On Mack trucks, it’s directly across from the main fuel gauge. ”Make sure drivers know that,” de Sousa said. “We’ve had drivers think it was the left hand (fuel) tank and right hand (fuel) tank and they didn’t get too far with it.”

If DEF levels reach less than 12% of the tank’s capacity, a dash light will appear along with an audible alert and a warning will appear on the in-dash message centre.

Numerous other warnings will occur before DEF levels reach 0.1%, at which time the engine will be derated by 25%, which should get the driver’s attention.

When DEF runs out completely, a new set of warnings will appear to let the driver know the engine speed will soon be limited to 5 mph. If the driver, for whatever reason, fills up with fuel but doesn’t add DEF, the truck will be limited to 5 mph, just enough speed to limp to a DEF supply. ”It’s nothing to be afraid of,” he said.

“Keep it clean and stay on top of the maintenance of the filter and this thing is going to save you fuel like you wouldn’t believe.”

Dealing with DPFs Truckers already have several years’ experience with DPFs, so by now they should be comfortable with the filters, which are responsible for the elimination of particulate matter or soot.

However, even after three years in the field, Norm West of DPF Cleaning Specialists warns many DPFs are being grossly neglected.

Engine OEMs have promised cleaning

intervals as long as 320,000 kilometres, however West says they should be cleaned once a year in over-the-road applications and every nine months in vocational applications that involve lots of low speeds and stops and starts. ”We recommend (cleaning) from what we see from the end user’s point of view once a year, that’s minimum,” he warned.

“If running vocational, maybe every nine months because they are being abused.”

As a third-party cleaner of particulate filters, West has seen all types of damage.

Much of it was avoidable. For starters, he advises customers to get on top of DPF issues early. He says customers should keep an eye on the condition of connections to ensure they’re in good shape. Using a Krown T-40 on connections will help eliminate corrosion and other damage, he noted.

West also said owner/ops or maintenance managers should take resistance readings across the temperature sensors and look for consistency. If the readings vary, “there’s something wrong with the temperature sensors.”

Drivers may be able to detect potential DPF problems from behind the wheel. ”The first indication they’ll give you is ‘I’ve gotta drop a gear,’” West said. “That’s the first complaint you will get from a driver. If they have to drop a gear going up a long hill, they’re going to complain. By the time he does that, the DPF and the oxidation catalyst are already failing.”

Other symptoms of DPF problems may include poor fuel mileage and black smoke being emitted from the smokestack. If there’s an underlying cause of DPF damage, it should be fixed before the filter is cleaned and replaced. ”It’s not advantageous just to take the filter out, fix it and put it back in and have the same thing happen again,” West pointed out. mt MAY/JUNE 2011

29

Maintenance:

the next generation

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M How additional sensors and databases will transform our shops

By John G. Smith

aintenance programs often seem to involve compromises. A focus on corrective maintenance may fix out-of-service components, but it also leads to the added costs of roadside repairs, excessive downtime and fines. And Preventive Maintenance (PM) programs can involve replacing parts that have yet to reach the end of their useful service life.

An approach known as “condition-based maintenance” may offer the perfect balance – measuring the health of equipment at a specific point in time, and scheduling maintenance only when it is absolutely necessary.

“Wouldn’t it be great if a truck could send you [data to announce] there was fuel in the oil, or the alternator was putting out 12 volts?” mused Glen McDonald, director of maintenance for Ozark Motor Lines in Memphis, Tenn., at the TMC annual conference earlier this year. “Wouldn’t it be nice to get a notification when the starter circuit is failing, before it’s dead in the parking lot?”

Real-time data from a sensor could even be used to schedule different maintenance resources, directing the truck to a shop that is equipped with the right tools, parts and experts to conduct a specific task.

“Frankly, this sounds too good to be true,” admitted Guy Rini of GTR Development. But everything from additional vehicle sensors to communications technology and databases may be on the verge of transforming the way the trucking industry could approach maintenance. McDonald’s wife owns an SUV that will already generate an email if the oil begins to degrade. Couldn’t trucks offer the same feedback?

“It’s maintenance evolution,” Rini said. “Condition-based maintenance is the next major advancement in maintenance, and we have the technology to do that. These vehicles are very sophisticated.”

That may be an understatement. A 2010 Cummins engine includes no fewer than 28 sensors and 15 actuators, watching over everything from pressure to temperature and positions, and the number of sensors is bound to rise. Yet most of the data is largely ignored by a fleet until it generates a fault code.

“Maybe you don’t have to wait until it breaks. Maybe it’s possible to use condition-based maintenance technology to reduce maintenance costs,” Rini said, noting how it is possible to combine an engine ECU’s data with the readings on everything from anti-lock brakes to transmissions, instrument clusters and other computers that have emerged on a truck. “You’ve already bought everything.

It’s there,” he told the crowd of maintenance supervisors.

While it would never replace corrective or Preventive Maintenance efforts altogether (there is no substitute for visual inspections when looking for a leak, crack or frayed wire), conditionbased maintenance could add a new dimension to every decision in the shop. The concept has certainly interested NASA and various branches of the U.S. military, who are looking to the approach as a way to ensure that “mission critical” components do not fail.

The Society of Automotive Engineers has also established a subcommittee that is looking at tools such as statistics, histograms, Continued on page 36 may/june 2011

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safe shops J

oan Spencer admits it can be difficult to convince some managers that safety should be seen as an investment rather than an expense. “They don’t understand the cost that comes with an injury or illness,” says the compliance assistance specialist with the Occupational Safety and Health Administration (OSHA), which carries the hammer of health and safety regulations in the U.S. But every dollar invested into health and safety tends to generate a $4 return for the business, she told maintenance managers during a meeting of the Technology and Maintenance Council (TMC).

One business roundtable even suggested that the returns can be as high as $10.

Consider the costs that can emerge in the wake of a workplace injury. Related news reports can tarnish the company’s reputation, damaged property needs to be repaired, and shops need to deal with the loss of a trained worker. Every time someone needs to be retrained to fill the role of an injured co-worker, the business is actually paying two people to do the same job.

But many of these injuries could be avoided with a careful look around the service bay.

10 steps to protect your employees from hazards in the service bay

By John G. Smith

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1.

Here are 10 tips that could make a difference: Choose the best plan for each hazard – Many hazards could be addressed a number of different ways. The first question should be whether or not the hazard can be eliminated altogether. If that isn’t possible, it is time to turn to an engineered control such as a guardrail that will offer protection without any added thought by the worker. The next option is to change the work practices around a specific task. Personal Protective Equipment (PPE) is actually the last resort because there is always a chance that it will not be used.

2.

3.

4.

5.

Develop a complete inventory of all hazardous chemicals in the shop – In each case, these fluids will require properly labelled containers, Material Safety Data Sheets (MSDS), and the related training. It is also an ongoing process. “Who is reviewing the Material Safety Data Sheets to make sure you’re not bringing a more hazardous substance into your workplace?” Spencer asks.

Parts washing machines can present their own fluidrelated mysteries since solvents can come in the form of mineral spirits or something that is more caustic. But the contents could be identified by simply placing the MSDS data in a plastic sleeve and attaching it to the machine, said Ronald Vaughn, a senior loss consultant with Gallagher Bassett Services.

When reviewing the safety practices in a shop, Vaughn also asks mechanics to get the MSDS sheet for a specific chemical, and then asks them to identify the first aid practices or Personal Protective Equipment that are required. “Make sure they know how to read it,” he says.

Guard against injuries – “If it shakes, rattles or rolls, you’re going to guard it,” Spencer says. Something like an unguarded grinding wheel can also be low-hanging fruit for a compliance officer during a workplace inspection.

The restraining devices used to hold single or multipiece wheel rims in place offer a perfect example of why the protection is so important. “Do we have fatalities?

You bet. And they’re gruesome fatalities,” Spencer says.

“If they’re not using [the devices], it could be your employee that gets hit ... don’t let them get away with the idea that they can step back from that tire.”

Limit the Coke bottles to Coke – “Never put a chemical in a container that once held a consumable,” Spencer says. Fluids should be stored in the bottles they came in, complete with the appropriate labels. A mechanic may know exactly what was poured in a generic container, but they may not be around when a thirsty coworker decides to take a drink.

Keep up with the housekeeping – Spilled fluids or tripping hazards such as cords can all play a role in workplace injuries. “The main thing we cite in mechanic shops are housekeeping. Simple as that,” Spencer admits. “If you don’t keep up with it every day, it can get out of hand very quickly.”

Vaughn, for example, regularly finds shop exits blocked by everything from parts to fans. Employees may argue that the door will still open, but the path needs to be clear. “When stuff happens and people start bumping into each other, they need to know where to go,” he says. The simple addition of some painted lines on the floor can identify which areas should always be

free of obstructions.

While oily rags should be stored in a metal container, Vaughn has also seen them tossed into everything from plastic buckets to canvas bags. And a pile of items in the basin of a parts cleaner may also keep the lid from closing in the event of a fire.

6.

7.

Set lockout and tagout procedures for every piece of powered equipment – In each case, the locks should only be removed by people who put them in place. The only exceptions are emergencies.

Avoid temporary electrical repairs – Someone could stick their finger through a strip of duct tape that covers the blank space in an electrical panel, and a missing faceplate can present a challenge of its own.

“Any time you have a wet area, we need to have Ground Fault Circuit Interrupters,” Vaughn adds.

8.

Limit extension cords to temporary uses – Extension cords are no substitute for permanent wiring. Vaughn wants to see outlets close to every piece of machinery.

For that matter, every extension cord that is used should also be designed for a shop environment. Those designed for home use, or even lacking a ground prong, have no place in a service bay.

Power strips that are meant to protect data equipment are not designed for a heavy-duty environment, either, he adds, noting how the amperage draw of five tools plugged into a single receptacle can lead to a fire hazard. Even if a surge strip is built into a tool box, users will need to be aware of the related ratings. Its outlets may be fine for something like a laptop or radio, but could fall far short of the need for different power tools.

9.

10.

Keep the household appliances at home – Many ungrounded household appliances such as box fans can be housed in metal, creating a potential shock hazard.

Maintain the safety – Every professional tool has been designed to meet a variety of safety standards. But as soon as a tool is modified or bent, the engineered safety disappears. The same can be said for those that are missing guards, or machines that don’t have any bolts running through their anchor holes.

John G. Smith is an award-winning writer based in Ajax, Ont., and has been covering the trucking industry for more than 15 years. He is the former editorial director of Motortruck’s sister publication Truck News, and now president of WordSmith Media Inc. may/june 2011

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KingConcre Canada Building Materials’ Les Wakeling takes up his throne as the 2011 Canadian Fleet Maintenance Manager of the Year

By Adam Ledlow

L

es Wakeling has cemented his place in the Canadian Fleet Maintenance Seminar history books with his selection as the 2011 Canadian Fleet Maintenance Manager of the Year.

Wakeling, who serves as Canada Building Materials’ director of operations, ready mix, was honoured during a special luncheon at the annual Canadian Fleet Maintenance Seminar in Markham May 10. The award, sponsored by Volvo Trucks Canada, goes to a Canadian fleet maintenance manager who stands out based on their scheduled maintenance program, quality and frequency of training programs, major accomplishments or innovations and contributions to their industry or community.

“I always thought that it was a great achievement, particularly when it’s your peers and others in the industry that actually choose the winner of the award,” Wakeling told Motortruck Fleet Executive. “A lot of people that aren’t involved in maintenance on a day-to-day basis don’t understand what it takes to maintain equipment.”

With a career in maintenance spanning about 35 years, Wakeling got his start as a mechanic, before being offered a 34

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supervisory role at a young age. Today, he oversees 20 maintenance facilities in southern Ontario and Quebec, maintaining 416 pieces of equipment consisting of Class 8 trucks, straight trucks and trailers.

But despite more than three decades in the industry, including 32 years at CBM alone, Wakeling is still always seeking out better ways to do things. In fact, just recently, Wakeling invited a consulting firm to suggest ways for the company to improve its processes.

“I think when you have confidence in your ability…you’re more open-minded,” Wakeling said of the decision to bring in outside help. “We’ve been trying to drive efficiencies for a number of years. It’s a very competitive business. To get better and to be more efficient, you need to find out where your gaps are, and that’s what they helped us do.”

Despite having “no idea how to fix a truck,” the consulting firm was able to look at CBM’s workflow and help introduce some Key Performance Indicators to measure how efficiently the company’s garages were operating.

Among the stats now being tracked is mechanic

Staying afloat – continued from page 19

Coverstory – continued from page 31

US markets without delay. “We bring in boats in the morning and process and pack the fish. It is ready to ship by four o’clock. It is on the New England market by five-thirty the next morning,” says Denny Morrow, executive director of the Nova Scotia Fish Packers Association, which has 59 member companies. “The Princess of Acadia is part of our business plan. We put $200 million worth of seafood a year on the ferry.”

Had the ferry ceased operations, trucks would have been forced to drive around the Bay of Fundy. That, however, takes six to eight hours extra travel time and requires either a rest stop or an extra driver. This is no way to bring fragile produce to markets that demand freshness. “Once lobster is out of the water, it is on life support,” Morrow says.

It’s about 69 kilometres from Digby to Saint John as the crow flies. It’s unthinkable that Transport Canada would shut down a 69-kilometre section of the Trans-Canada or any other highway for failing to survive some cost-benefit analysis – not that highways are ever subjected to such life or death analyses – but this very attitude, in the absence of a long-term funding commitment, threatens the Princess of Acadia and other ferry services in Eastern Canada. Still, notes Cormier, “I think governments recognize, to some extent, that analogy,” that ferries, like all highways, need public support, regardless of any particular stretch’s profitability.

Governments have expended plenty of effort and funds trying to figure out what to do. In 2007, Transport Canada issued a Request for Expression of Interest (REI) to see who might be interested in running the service. Seven companies, including Bay Ferries, responded. “The REI was a process by which the government could answer the question whether anyone has a credible business plan to offer this ferry service without public funding. None of the other participants in the REI had a privately-funded, viable business plan with a positive bottom line,” Cormier says.

There was talk of returning the service to public ownership, but would that have been wise? In the last fiscal year that Marine Atlantic operated the Princess of Acadia, it lost $7 million, according to Cormier. “The only logic to contemplating that is if public ownership was required to access a different source of funding. We believe the private sector-driven model is the preferred one.”

With the ACOA study in government hands, Fleet Executive asked Transport Canada last October whether it would keep or scuttle the ferry. The reply: “The federal government understands the importance of the Saint John/Digby ferry service to the local communities and economy. The [ACOA] study will be one of a number of inputs to a broader assessment of the regional transportation system and economy for Transport Canada’s consideration. No decision has been made yet on the next steps regarding the Saint John/Digby ferry service.”

Well, a decision was made and the boat continues to float.

Now the question is whether federal politicians plan to put everyone through the wringer again in the run up to the expiry of this funding extension in 2014. mt

probability and distribution functions, and trend analysis, measuring the time to failures and the time between them.

“Condition-based maintenance is basically a superset of what we already have. It pulls it all together,” says Ken DeGrant of DG Technologies. The challenge is that most of today’s technologies focus on components rather than the overall vehicle. “It’s a shotgun approach...we don’t have the data to pinpoint that bullseye.”

Transforming the streams of data into information that predicts maintenance needs is no small task.

A condition-based maintenance model would likely involve added sensors and real-time data, crunching all of that information with the computer algorithms that can translate the details into the condition of a component.

One of the first steps in preparing for the shift will be to clean up the data that is being loaded into a shop’s database. Rini suggests that this begins with accurate Vehicle Maintenance Reporting Standards, which offer codes to classify equipment, labour tasks, parts and brands.

Fleets will also need to decide where the additional sensors and information can make the biggest impact. “Identify and prioritize the right components or systems for CBM adaptation,” Rini says, referring to work in the early days of the transition. The leading items on his list includes more data about the condition of oil, batteries, air filter systems, charge air cooling systems, crankcase pressure, fuel filters, wheel bearings and corrosion.

In each case, the benefits will need to outweigh the costs. There will also need to be the right combination of data that will lead to a specific component, rather than generating the multiple fault codes that leave mechanics “chasing ghosts”.

“The future of vehicle support requires more and more data. In fact, it requires the data more often,” suggests Mark Zachos of the Dearborn Group. That can mean reporting the data back to a central location, expanding onboard computing systems, and offering the continuous connection that can be used for inspections and maintenance. “Somehow we transfer it to a server someplace, and we mine it and process it.”

This will also require faster connections and networks, which could make it possible for vehicles to communicate in real time.

“If you have lots of data and can’t move it around, it’s not that useful,” he adds.

McDonald stresses another challenge: Individual solutions are emerging, but they are coming from too many different vendors, making it difficult to tie everything together. “I need a total truck solution,” he says. “I need a smart truck.”

It may not be there yet, but it’s coming. The emerging maintenance trend could even lead to options that have yet to be conceived.

Besides maintenance, says Zachos, “some smart people, someplace, will also use that data for other purposes.” mt

Carroll McCormick is an award-winning writer who has been covering transportation industry issues and technologies for more than a decade. He is based in Quebec.

John G. Smith is an award-winning writer based in Ajax, Ont., and has been covering the trucking industry for more than 15 years.

He is the former editorial director of Motortruck’s sister publication Truck News, and now president of WordSmith Media Inc.

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motortruck

DashBoard

TransCore Canadian Spot Market Freight Index 2007-2011

2007

2008

2009

2010

2011

Percent Change Y-O-Y

Jan

173

214

140

171

222

30%

Feb

174

217

117

182

248

36%

Mar

228

264

131

249

337

35%

Apr

212

296

142

261

May

280

316

164

283

Jun

288

307

185

294

Jul

219

264

156

238

Aug

235

219

160

240

Sep

206

203

180

234

Oct

238

186

168

211

Nov

227

143

157

215

Dec

214

139

168

225

TransCore Canadian Spot Market Freight Index 2007-2011

Spot market freight volumes breaking records, Transcore’s Canadian Freight Index indicates

TransCore’s Canadian Freight Index set a new all-time record in March, topping the previous record from May 2008. Volumes in the Canadian spot market for March were up 35% from the previous year and 36% from the prior month.

For the first quarter 2011, volume was up 34% compared to the first quarter of 2010 and saw an extraordinary 250% increase from March 2009.

While load volume reached an all-time high, equipment postings remained at the same low levels recorded for the prior few months. From a historical perspective, available posted equipment was down 24% from the lofty capacity levels of March 2009 and at the lowest level for the month since 2008.

TransCore’s Loadlink freight matching database constitutes the largest Canadian network of carriers, owner/operators, freight brokers and intermediaries and has been available to Canadian subscribers since its inception in 1990. More than 13 million full loads, LTL (less-than-truckload) shipments and trucks are posted to the Loadlink network annually. As a result of this high volume, TransCore believes its Canadian Freight Index is representative of the ups and downs in spot market freight movement and provides a historical account of the domestic and cross-border spot market.

The first five columns in the adjacent table include monthly index values for years 2007 through 2011. The last column indicates the percentage change from 2010 to 2011. For the purpose of

establishing a baseline for the index, January 2002 (index value of 100) has been used.

Modest drop in base rates offset by significant increase in fuel surcharges, CGFI shows

The cost of ground transportation for Canadian shippers remained essentially the same in February when compared to January, while fuel surcharges assessed by carriers rose significantly during the same period, results published by the Canadian General Freight Index (CGFI) indicate.

The CGFI Total Freight Cost Index decreased by a nominal 0.1% in February when compared to January, while the Base Rate Index, which excludes the impact of fuel surcharges assessed by carriers, decreased 1.1% during the same period. The CGFI is still 2.3% above the April 2010 low point and 1.9% above last year’s result for the same period.

In February, fuel surcharges reached their highest point in more than two years and averaged 17.4% of base rates, compared with 16.4% in January.

“In February, overall freight costs remained flat after successive months of decline,” said Doug Payne, president and COO of Nulogx.

“The reduction in base rates was offset by increases in fuel surcharges, and with rising fuel prices we expect total freight costs to increase in the near future.”

The CGFI is sponsored by Nulogx, a leading transportation management solutions provider, and is used by shippers and carriers to benchmark performance, develop business plans, and secure competitive agreements. It was developed with the assistance of Dr. Alan Saipe. The most recent results are available at the CGFI Web site: www.cgfi.ca.

US truck tonnage posts 1.7% gain in March

US truck tonnage rose 1.7% in March, after falling a revised 2.7% in February, according to the latest data from the American Trucking Associations (ATA).

March tonnage reached the highest level since January of this year.

Compared to March 2010, seasonally adjusted US truck tonnage was up 6.3%, better than February’s 4.4% year-overyear gain but below the 7.6% y-o-y jump in January, the ATA reports.

For the first quarter of 2011, tonnage was up 3.8% from the previous quarter and 6.1% compared to Q1 2010.

“Despite my concern that higher energy costs are going to begin cutting into consumer spending, tonnage levels were pretty good in March and the first quarter of the year,” said ATA chief economist and vice-president, Bob Costello. “While I still think the industry will continue to grow and recover from the weak freight environment we’ve seen in recent years, the rapid spike in fuel prices will slow that growth.” may/june 2011

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28%

InsidetheNumbers

28%

Rail track & equipment 2000-2009

That’s the percentage of

Year

Canadian shippers who

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

consider themselves “captive” in their rail options because they have access to only one rail provider and either limited or no other shipping alternatives, according to a shipper survey prepared for the Rail Freight Service Review.

Track operated Kilometres

46,491 46,591 46,811 46,893 49,167 48,893 48,243 47,816 47,258 45,322

Index (2000=100)

100.0 100.2 100.7 100.9 105.8 105.2 103.8 102.9 101.7 97.5

Freight cars in service

Locomotives in service

103,976 102,790 98,001 97,039 99,141 101,606 99,946 92,373 83,984 75,836

3,115 3,142 3,129 3,170 3,234 3,253 3,271 3,165 3,046 2,742

Carloads originated by commodity grouping Rail freight carloads & tonnes 2000-2009 15% Agriculture 23% Intermodal

9% Coal

3% Manufactured & Misc.

12% Minerals

1% Food Products 5% Paper Products

12% Fuel & Chemicals

9% Metals

6% Forest Products

Year

Carloads originated (000)

Tonnes originated (000)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

4,157 4,017 3,992 4,092 4,212 4,290 4,260 3,196 3,984 3,367

297,718 291,326 287,974 296,768 306,563 311,590 307,897 306,623 289,114 244,062

Tonnes per carload 72 73 73 73 73 73 73 73 73 73

5% Machinery & Automotive

IS CANADIAN RAIL BACK ON THE RIGHT TRACK?

Historically, Canada has been controlled by the two major Class 1 railways, CP and CN, with only a handful of short line and regional railways.

That changed considerably, however, in 1996 when Ottawa introduced the Canada Transportation Act and paved the way for the transfer of more than 5,200 track miles (8,500 kilometres) from CN and CP to short line operators. These short lines provide localized rail services to communities and industries across Canada and are often partnered with the Class 1 railways. The short lines have been vital in retaining rail infrastructure and rail freight service in areas where it may have otherwise disappeared. However, as the 10-year statistics published by the Railway Association of Canada in its Rail Trends annual report and reproduced above indicate, this restructuring process continues to evolve.

Some track continues to be abandoned even though the Class 1s have been reacquiring some light-density trackage in recent years. Also, the depth of the freight recession’s impact on rail is clearly illustrated. After hitting a peak for carloads and tonnes originated in 2005, rail volumes began to decline and are only now starting to rebound. Consequently, the total number of rail cars and locomotives in service is down significantly from the numbers posted prior to the recession. Agricultural products, fuel and chemicals and minerals make up almost 40% of the freight hauled by rail.

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