Motortruck March/April 2013

Motortruck

Fleet Executive B U S I N E S S

M A G A Z I N E

F O R

F L E E T

*NEW*

C A N A D A ’ S

MARCH / APRIL 2013

O W N E R S

LEADERS Insights from industry leaders starting with MTA’s Dolyniuk EQUIPMENT Investigation finds widespread tampering of emissions systems

Experience Maintenance managers are struggling with emissions equipment.

Will the 2014 model engine bring relief?

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”

March/April 2013

Volume 82, No. 2

COVER STORY 30 Exhausting Experience

contents

Maintenance managers are struggling with emissions equipment. Will the 2014 model engine bring relief?

Features 24 THE WHOLE WIDE WORLD Are your trucks ready for the switch to wide-base tires?

26 DUE NORTH

30

Can our northern road infrastructure keep up with development?

27 SAFE BET Gambling on the future still a smart move, largest carriers believe.

28 LUNCH ANYONE? Why you may be losing your appetite for an outside sales force.

Departments 6 THE VIEW WITH LOU Why SmartWay program information sessions are worth your time.

10 COMPETITION WATCH Vitran CEO resigns; Canadians clean up at TCA safety awards; Manitoulin acquires Cratex; and more.

24

12 THE BOTTOM LINE What can be gained by working from home – besides 15 pounds.

14 RISKY BUSINESS Can insurers separate meaningful telematics data from the noise?

16 TAKING CARE OF BUSINESS Tips for transport entrepreneurs who want to start their own business.

17 THE HUMAN EDGE The driver shortage: a new report, US fleet insights, and MTA’s take.

20 LEADERS *NEW*

33

MTA’s Bob Dolyniuk offers insights to key industry issues.

33 GEARED UP With an investigation finding widespread tampering of emissions systems, the industry is calling for a crackdown on the cheats.

36 DASHBOARD TransCore’s Canadian Freight Index pulls back in February; total freight costs for 2012 finish down year-over-year; and more.

38 INSIDE THE NUMBERS A sobering new look at the truck driver demand gap. trucknews.com

March/April 2013 ❙ FLEET EXECUTIVE 3

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

BLOGS

Dan Goodwill examines two freight brokerage companies looking to transform the industry though innovation and technology.

You said it...

“It isn’t necessarily the concept of safety but how it is administered that makes the difference. And far above all those things, the most important factor for any carrier to focus on is the quality of its driving staff. Areas of driver selection, ongoing training, turnover, incentives and the like all contribute heavily to the quality of the operation. Creating a culture of safety is not an idea that one can steal from their competitor, you either have it or you don’t. The safest and most profitable carriers will be the ones that attract and retain the best drivers. CVOR and CSA scores are important, but are only a part of the equation. If you want a competitive advantage, be the carrier that the best drivers want to drive for.”

- DAVE ROTH’S COMMENTS ON JAMES MENZIES’ BLOG, “THE RISK IN MAKING SAFETY A COMPETITIVE BATTLEGROUND.”

Web TV: On-road editor Harry Rudolfs goes undercover and finds shops across Canada unapologetically tampering with emissions systems.

Principal at Renbor SalesSolutions Tibor Shanto outlines the three ‘A’s of sales success.

Transportation Matters GOOD VIBRATIONS: The Bose Ride Team’s vibrationcancelling seat has struck a chord with Bison Transport, which will be using the seat as part of a pilot project this year.

HOW DO YOU STACK UP?: Find out what two of Canada’s top carriers look for when evaluating their customer base.

ERB PULLS ITS WEIGHT: Erb Transport reps talk about winning a recent weight-loss competition and their ongoing focus on health and wellness.

CN’S NEW INTERMODAL TERMINAL: CN has opened a state-of-the-art facility for containerized goods at the Calgary Logistics Park.

SOCIAL MEDIA FIND US ON FACEBOOK facebook.com/trucknews

FOLLOW US ON TWITTER @TruckNewsMag | @AdamLedlow | @JamesMenzies @LouSmyrlis | @JuliaKuzeljevic | @KathyPenner

Fleet Executive editors are now on the radio! For a list of stations and on-air times go to truckerradio.com.

4 FLEET EXECUTIVE ❙ March/April 2013

trucknews.com

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Motortruck

Fleet Executive

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

THE VIEW WITH LOU

MARCH/APRIL 2013

VOL. 82 NO. 2 EDITORIAL DIRECTOR

Get smart about SmartWay The information sessions about the fuel saving program are worth your time

W

ith fuel being such a large and volatile part of every carrier’s costs, can there be any better strategy than striving towards the best fuel efficiency your fleet can reasonably attain? What if pursuing such a strategy also helped your fleet stand out from the more than 10,000 for-hire carriers currently doing business in Canada, potentially opening doors to new accounts?

Those are the opportunities presented by the arrival of SmartWay into Canada for carriers progressive enough to grasp them.

Originally launched by the US Environmental Protection Agency in 2004, SmartWay is now administered in Canada by Natural Resources Canada. It works by linking shippers with an interest in greening their supply chains with SmartWayrecognized fuel-efficient carriers. The program offers a wealth of information, resources and services designed to help you save fuel – and it doesn’t care if you’re doing it for the environment or because you want to ensure your profits aren’t literally going up the smokestack. In fact, sustainability projects work best when they combine environmental stewardship with good business sense.

I’m taking part in a national information tour launched this spring by Natural Resources Canada and the Supply Chain and Logistics Association of Canada. The tour, which has already touched down in Vancouver and Toronto, aside from providing a great deal of information about what it takes to be part of SmartWay, also lets you hear first-hand from a panel of stakeholders who are already part of program.

Consider what carriers involved in SmartWay south of the border have achieved since 2004: •R educed fuel consumption by 55 million barrels of oil; • Saved $6.5 billion dollars in fuel costs; and •R educed emissions by 23.6 MMT CO2, 478,000 tonnes NOx, and 22,000 tonnes PM. There are more than 3,000 shippers, logistics companies and freight carriers currently in

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

SmartWay, including almost 300 Canadian companies. There are large purchasers of transportation services for whom being part of SmartWay is becoming key to getting their freight, and that trend will grow. Consider what David Patterson, director of transportation management at Ryder, and one of the participants on my stakeholder panel, had to say. Ryder, one of the continent’s largest purchasers of transportation services, has been part of SmartWay since 2004 and promoted the program to its clients.

Ryder managed 1.6 billion miles in 2011, the most recent full year of data. The 499 SmartWay carriers doing business with Ryder averaged 2,867,773 annual miles with the 3PL. The nonSmartWay carriers averaged less than 123,000 annual miles. In fact, a staggering 91% of all freight miles managed by Ryder are now contracted with SmartWay carriers.

Tammy White, business development executive at XTL, was also part of my panel at the Toronto session and what she shared about XTL’s savings was impressive. Prior to 2011, XTL’s reefers were on manual start/stop and basically ran constantly. Last year, the company invested in Intelliset technology, which provides programmable start/stop on each unit at various temperature intervals. By doing so, it reduced 150 hours of use per unit per year and cut its energy costs 36% per unit per year. In another fuel saving initiative, it reduced its acceptable idling time for its tractors to five minutes. With the cost of idling a tractor calculated at $4.50/gallon, the potential savings in fuel could amount to $50,000 per year if drivers are properly educated and the program is properly controlled.

And those are just two of several fuel saving projects at XTL. The next sessions are scheduled for May 30 in Winnipeg, followed by Cornwall June 4 and Calgary, June 6. They are worth your time. For more information go to: www.SmartWay.nrcan. gc.ca. FE Lou Smyrlis, MCILT, Editor • lou@transportationmedia.ca

Roy Gaiot rgaiot@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

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ACCOUNT MANAGER

Brenda Grant (416) 494-3333

PRODUCTION MANAGER

Kim Collins (416) 510-6779

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Mary Garufi

VIDEO PRODUCTION MANAGER

Brad Ling

RESEARCH MANAGER

Laura Moffatt

VICE PRESIDENT PUBLISHING

Alex Papanou PRESIDENT

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Head Office 80 Valleybrook Drive Toronto, ON M3B 2S9 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.

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Small fleets; large worries – and some insights In my blog “Small fleets; large worries,” I commented on the shape of Canada’s small carrier base and why there is reason to worry about their future. Our research is showing they are running into serious difficulties.

Several readers commented on the blog. Some of their comments are included below: Lou Smyrlis, editorial director I fit in the “under 10 trucks” category, and I completely agree with the statistics that are presented. I’m not sure the numbers are as bad as they may appear, an unfortunate side effect of stats being studied by percentages only. I’m surprised that as high as 17% of small carriers are buying new trucks.

Large carriers need new iron to attract drivers, while the small carriers have found it far more economical to rebuild older, more reliable trucks.

All the other stats, I think, show that smaller carriers didn’t see nearly the decline during the recession that larger carriers did. This would explain why 11% less of us expect volumes to grow; we really didn’t lose as much to start with. Same reason why a much lesser percentage of us expect rates to climb. We don’t have the huge truck numbers to support cutting freight rates and still remain profitable, so our rates had to stay somewhat static.

The slight drop in small carrier volumes between fall 2011 and 2012 I think is indicative of the economic climate. With the economy still stagnant, even more “creative pricing” was done, but again, smaller carriers couldn’t or wouldn’t.

I treated the recession as a good way of trimming deadwood, either customers or less than desirable staff, so although our numbers may be lower, the one that really matters – profit – is still where it should be.

Bill Cameron, owner, Parks Transportation

Lou Smyrlis accurately highlights some of the challenges small for-hire carriers in Canada are facing in his blog “Small Fleets; Large Worries.” As a small carrier (my fleet has 35 trucks; a bit bigger than the fleets of 10 or fewer trucks that Lou was focused on, but still small) I know far too well how hard it is out there.

But, like Lou, I also strongly believe small carriers have an important role to play in our industry and always will. One 8 FLEET EXECUTIVE ❙ March/April 2013

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thing that I disagree with Lou on is his comment that large carriers “drive trucking association policy.” As the latest small carrier to serve as chairman of the Ontario Trucking Association, I can assure you the notion that trucking associations only represent the views and concerns of the “big boys” is, based on my experience, an outdated stereotype usually held by those who are unfamiliar with the association and what it offers. In my view, those that invoke the “OTA only represents the views of large carriers” refrain too often do so when they disagree with a policy position taken by OTA and have no real arguments to bring to bear on the issue.

Jeff Bryan, president, Jeff Bryan Transport and OTA chairman

The game of “fill the trailer” is changing – and so should you In his column by the title mentioned above, published in the previous issue of Fleet Executive, Mike McCarron addressed how much B2B sales is changing and how slowly our industry is adapting.

Great article! So pleased to see someone addressing sales/ and marketing today in our business. It has changed dramatically in the past four years. I share your frustration and amazement at the number of sales professionals who truly don’t get this today. When you lead with what I call the “all about you” syndrome and a glossy brochure, you’re going to fail. Business managers don’t have time for that, but they always need solutions, so try the “What do you need?” approach. And never forget that people buy services and products for some kind of personal need. Find that need and now you’re selling. With tools like LinkedIn and the Internet, there is no excuse for not knowing something about someone’s business and not knowing is an insult. Another fact: people buy from who they like, so how well-liked will you be by starting off with an insult? I find not only do many sales people not get this, but neither do the companies who employ them. It’s time for an overhaul before you are left in the dust by those who do get it.

Kelly Winters, vice-president, intermodal/US operations Vision Transportation

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

13-04-08 9:46 AM

On October 16th 2013, please plan on joining Canada’s top Transportation Executives for a day of education & networking.

We have created an agenda that truly addresses the many challenges facing both Shipper and Carrier executives.

2013 Surface TranSporTaTion SummiT agenda

Introducing the 2013 team of presenters...

Angelo Sarracini

President, Bailey Metal Products Limited

Grace Tomaszun

Manager, N.A. Transportation McCormick & Company

Carlos M. Gomes Senior Economist, Scotiabank

Neil McKenna

V. P. Transportation, Canadian Tire Corporation

FREIGHT BIDS: IS THERE A BETTER WAy FOR CARRIERS AND SHIPPERS TO WORk TOGETHER? CARRIER PERFORMANCE MANAGEMENT: METRICS THAT DELIVER RESULTS INTERMODAL TRANSPORTATION: EXPANDING BEyOND ITS NICHE

Keith Reardon

V. P. Intermodal Services, CN Rail

Mike Owens

Jeff Lindsay

V. P. Physical Logistics, Nestlé Canada Inc.

President and CEO, Canada Cartage

Doug Munro

Michelle Arseneau

Anna Petrova

Senior Supply Chain Leader, Ferrero

THE VIEW FROM THE TOP: THE CEO’S PERSPECTIVE ON MAjOR TRANSPORTATION TRENDS DEDICATED TRANSPORTATION: OUTSOURCING FLEET MANAGEMENT TO A THIRD PARTy CROSS-BORDER FREIGHT TRANSPORTATION: BEST PRACTICES TRANSPORTATION SALES: CAN yOU ADAPT TO THE NEW NORMAL?

Charles W. Clowdis, Jr. Managing Director, North American Markets, IHS Global Insight (USA), Inc.

President and Owner, Maritime-Ontario Freight Lines Limited

Tibor Shanto

Tom Coates

Ron Tepper

Managing Partner, GX organization

Executive Chairman & CEO, Consolidated Fastfrate

Jeff Pries

Oryst Dydynsky

MERGERS & ACQUISITIONS IN TRANSPORTATION: HOW BIG ARE THE OPPORTUNITIES? LOOKING AHEAD: ECONOMIC FORECASTS FOR 2014 Registration: 7:30 am • Presentations: 8:30 am sharp

Principal, Renbor Sales Solutions

VP and COO, Lakeside Logistics

V. P. Sales & Marketing, Bison Transport

Jonathan Wahba

Mike McCarron

Principal, DAP International Trade Consulting

Mississauga Convention Centre, 75 Derry Road West, Mississauga, ON 2013 Summit Sponsor

Jacquie Meyers

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

President, Meyers Transportation Services

V. P. & General Manager, Canada, Schneider National Inc.

Consolidation Consultant, Wheels Group

Douglas Nix

Vice Chairman, Corporate Finance Associates (CFA) Chairman of CFA’s Transportation and Logistics Industry Practice Group

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COMPETITION WATCH

VITRAN CORP. has announced its president and CEO Rick Gaetz has resigned from the company. He was replaced by the board of directors with Bill Deluce, who will serve as interim president and CEO until a permanent replacement is found. “On behalf of the board of directors, I want to thank Rick Gaetz for his many contributions to Vitran over the years and to wish him well in his future endeavours,” said Richard McGraw, board chairman, in a statement. Deluce has been a director with Vitran since 2004, and has served as CEO for various corporations before, the company announced. Meanwhile, the company is immediately commencing a search for a permanent president and CEO. Canadian carriers pulled off a clean sweep of the top National Safety Awards presented at The Truckload Carriers Association conference. The 2012 grand prize winners of TCA’s National Fleet Safety Awards are BRIAN KURTZ TRUCKING of Breslau, Ont., and BISON TRANSPORT of Winnipeg, Man. The 37th annual awards, sponsored by Great West Casualty Company, were presented during TCA’s Annual Convention held at the Wynn Las Vegas March 5. Brian Kurtz Trucking, represented by company president Brian Kurtz, won the award for truckload companies in the small carrier division (total annual mileage of less than 25 million miles), while Bison Transport, represented by executive vice-president and COO Rob Penner, won for truckload companies in the large carrier division (total annual mileage of 25 million or more miles). Both carriers will be recognized again during TCA’s upcoming Safety and Security Division Annual Meeting, to be held at the Westin Indianapolis in Indianapolis, Ind. May 19-21.

MANITOULIN GROUP OF COMPANIES has acquired CRATEX INDUSTRIES, an Edmonton-based crating, packaging and export services company. The acquisition is Manitoulin’s fourth since May. Headquartered in Edmonton, with a facility in Calgary, Cratex has been providing professional packaging for the shipment of manufactured goods since 1989. A supplier to Alberta’s oil and gas technology services sector, the company’s offerings include: crating, skidding, poly wrap, container loading and unloading, mobile site teams and project packaging. Manitoulin officials say the company intends to retain all Cratex employees, with Ron Holdinga, its former owner, staying on as president.

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BISON TRANSPORT has been recognized by Walmart Canada as its Overall Store Delivery Carrier of the Year for the second year in a row. Bison was presented with the award at the annual Walmart Canada Carrier Awards banquet held in Mississauga in March. Bison Transport was the only carrier to be nominated in all trucking award categories at the awards banquet. The award is based on-time performance, commitment to excellence, innovative approach, and customer service. Bison’s on-time performance for Walmart Canada in 2012 was in excess of 99%, successfully delivering more than 50,000 shipments. Bison handles general merchandise, groceries, and perishable food item deliveries to Walmart stores across Canada.

AYR MOTOR EXPRESS has been named Purolator’s 2012 Long-haul Carrier of the Year. The award, established in 1996, is based on a carrier’s on-time performance, peak season performance and customer service. Carriers are also evaluated on “carrier fitness,” which includes fuel efficiency, security, contingency plans, and safety and standards performance. In 2012, Ayr moved more than 2,600 loads on behalf of Purolator.

CHALLENGER GROUP has announced it is rebranding CAM HILTZ TRUCKING and LODWICK TRANSPORT. Beginning March 1, Lodwick will be known as Challenger Climate and Cam Hiltz Trucking will be named Challenger Bulk.

The company said the rebranding will “reinforce a more cohesive public image as the Challenger Group of Companies.” Last year, Challenger refreshed its corporate logos, transitioning to a sleeker, more modern design. The rebranding provides “a fresh new name and renewed focus to be more in line with the other members of the Challenger family, and to be a one-stop shop for the shipping public,” said Geoff Topping, general manager of Challenger Climate and Challenger Bulk. “Challenger Climate will continue to operate climate-controlled trailers, offering customers the ability to transport their goods fresh, frozen, or heated, and Challenger Bulk will specialize in moving bulk commodities, primarily in the waste management and recycling industries at this time.” Challenger is also bringing staff from the two divisions into its Cambridge headquarters. The group will maintain an office and yard space in Mississauga, at 1906 Shawson Drive. FE trucknews.com

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Delo works in the toughest conditions.

Just like us.

Larry Frazier

Carlile Fleet Maintenance Manager

Tony Molesky, Phil Kromm and Jack Jessee

Carlile drivers featured on History Channel’s Ice Road Truckers

“Carlile has used Chevron products for more than 30 years in all of our equipment from trucks to forklifts and everything in between.

We operate in some of the toughest conditions, including temperatures to minus 60 degrees. At one point we tried a different product for a short six months and noticed immediately that our tractors were burning twice the amount of oil, so we went back to Chevron Delo 400 and we won’t stray again.”

© 2013 Chevron Canada Limited. All rights reserved. All trademarks are property owned by Chevron Intellectual Property LLC.

®

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NORTHERN METALIC SALES (GP) 9708-108 St. Grande Prairie AB T8V 4E2 Tel: (780) 539-9555

HUSKY ENERGY CORPORATION 707-8th Ave. S.W. Calgary AB T2P 1H5 Tel: (403) 298-6709

UFA 4838 Richard Rd. S.W. Suite 700 Calgary AB T3E 6L1 Tel: (403) 570-4306

CHRIS PAGE & ASSOCIATES 14435-124 Ave. Edmonton AB T5L 3B2 Tel: (780) 451-4373

RED-L DISTRIBUTORS LTD 9727-47 Ave. Edmonton AB T6E 5M7 Tel: (780) 437-2630

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THE UNITED SUPPLY GROUP OF COMPANIES 2031 Riverside Dr. Timmins ON P4R 0A3 Tel: (705) 360-4355

TRANSIT LUBRICANTS LTD 5 Hill St. Kitchener ON N2G 3X4 Tel: (519) 579-5330

R. P. OIL LTD 1111 Burns St. East Unit 3 Whitby ON L1N 6A6 Tel: (905) 666-2313

CREVIER LUBRIFIANTS 2320 Métropole Longueuil QC J4G 1E6 Tel: (450) 679-8866

NORTH ATLANTIC PETROLEUM 29 Pippy Place St. John’s NL A1B 3X2 Tel: (709) 570-5624

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BOTTOM LINE

What I gained by working from home A new appreciation for a corporate environment

By Mike McCarron

Y

ahoo CEO Marissa Mayer surprised people when she recently decreed that the tech company’s employees would no longer be allowed to work from home. Never one to miss a chance to grab a headline, Richard Branson, the founder of Virgin Group, reacted by calling her decision “old school thinking.”

He boldly predicted that in 30 years people would wonder why offices ever existed.

In the transportation industry, the topic of working from home seems to start and end with the sales department. In most organizations, salespeople are the only employees with the leeway to wake up in the morning and decide whether to work from their backyard patio or their cubicle that day.

Frankly, there are no clear winners in the worker mobility debate. Ultimately, employers have to decide what’s best for their own organizations. A few years ago, I had the notion that I could be more productive chasing skids by spending less time on the commute and more time working from home.

Here’s what I learned when I put on my tie and ventured down to my basement office:

Who’s home?

At the time of my “experiment,” I honestly believed I had the perfect setting: a quiet, empty house because my three teenagers were at school all day. I quickly discovered that school days are shorter than I thought, holidays and “test-itus” days are plentiful, and kids eat lunch in large packs. Bottom line, my darling children were a massive interruption to my workday. It’s hard to accomplish anything when your kids think they have a taxi, bank machine, referee, and tutor at their beck and call. And I can’t even begin to fathom working with an infant at home. A wailing baby in the background is not very endearing to the customer on the other end of the phone.

Homework rules Given the price of dirt these days, very few of us have an extra room that we can turn into dedicated office space. For me, Plan A – working from the kitchen table, the epicentre of my family’s existence – quickly proved to be a mistake. Plan B was to spend some dough and convert my basement “man cave” into a workspace. Within weeks, however, my office became everyone’s office, with a distinct pecking order: kids’ 12 FLEET EXECUTIVE ❙ March/April 2013

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homework first, Dad’s business work second. I went back to Plan A and my limited productivity at the kitchen table.

The technology devil I was naïve to think I could easily replicate the reliability and speed of the office “machinery” at my house. LMAO! I’m now convinced there is a computer devil that puts curses on every piece of office equipment I own. I dealt with one technology crisis after another, usually on days when I had the luxury of a vacant office. I learned that cell phones don’t work in basements, and when they do, the reception stinks. Since I was too cheap to get a second phone installed (a must), getting an available line became the highlight of my day.

New age of collaboration Today, selling involves a team of “experts” collaborating and working as one. It’s essential that you draw on every ounce of expertise within your organization to educate your customers and provide innovative, compelling, win-win solutions for them.

Sales reps don’t have the expertise, facts, or often the proper incentives to drive the company sales bus alone.

Working from home further isolates them and builds barriers between themselves and the rest of the team. It’s hard to collaborate with people whose names you can’t remember because you have zippo relationship with them.

If I gained anything by working from home – aside from an extra hour of sleep and 15 pounds – it is a new appreciation for a corporate environment. An office is more than simply a place where you can do your job. It’s a tool that supports your sales efforts with reliable technology, dedicated space, and a collaborative environment.

Great ideas still stem from informal meetings around the coffee maker. When it’s just you, the drip-drip-drip of a pot brewing won’t help you get a stick of freight. FE

Mike McCarron was one of the founding “M”s in MSM Transportation before the company was purchased by the Wheels Group. Based in Toronto, he currently works for Wheels in mergers and acquisitions and can be reached at mmccarron@wheelsgroup.com. Follow Mike on Twitter @AceMcC. trucknews.com

13-04-08 10:08 AM

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13-01-28 10:48 AM 13-04-08 10:08 AM

RISKY BUSINESS

A new column offering common sense, cost-effective (or just plain simple) solutions to help carriers turn safety into a profit centre.

RETHINKING RISK Telematics will revolutionize risk assessment, but can insurers separate meaningful data from the noise?

By Rick Geller

A

s regulators restrict the kinds of data insurers use for pricing models, the data-centric insurance industry is turning to a potentially revolutionary new source, User-Based-Insurance (UBI) or Telematics, in an attempt to more accurately reflect the actual risk that individual customers present.

In no small way, this initiative is being fuelled by the explosion of new data that is being made available by various technologies. But is the insurance industry ready to handle the velocity and volume of data that UBI plans promise to generate, and can they separate pertinent data from all the noise that will be generated? Equally important, how prepared is the trucking industry to leverage UBI to their advantage?

User-Based Insurance and Telematics have been used interchangeably, but they really are two very different entities.

Pay-As-You-Drive (PAYD) is the foundation of User-Based Insurance. It is by far the simpler of the two, referring simply to the mileage that is driven. The presumption behind PAYD is that crash potential rises with the number of miles that are driven. This ignores other data that suggests that low-mileage drivers have higher crash rates.

Often there are qualifiers added to PAYD plans, such as the time of day that driving occurs (rush hour, late night, etc.) or jurisdictions in which the driving occurs (claims costs tend to increase in tort jurisdictions v. no-fault jurisdictions).

Pay-How-You-Drive (PHYD) is a more sophisticated plan that relies on GPS devices to track a number of factors – date, time, location, speed, acceleration/deceleration, hard-braking applications, fuel consumption, and cornering are just a few of the factors being considered.

PHYD plans can provide real-time feedback to both the carrier and the driver based on customized parameters. In turn, this can provide a strong incentive for drivers to improve their driving habits.

Telematics tracking devices include embedded navigation systems, on-board diagnostic devices, standard black boxes, smartphones, and tablets.

The allure of telematics is enormous. For the commercial fleet segment, it enables insurers to better align pricing with the actual risk presented.

The challenges, too, are enormous. Leaving aside technology issues like data interfaces and how to manage the volume of data that will be coming at them continuously, there are two key challenges insurers must overcome.

The first issue revolves around establishing benchmarks by which carrier and driver performance is going to be measured.

14 FLEET EXECUTIVE ❙ March/April 2013

This aspect can be further sub-divided into two issues.

Using “big data” analytics, insurers must first determine the relationship between the data and crash causation, as well as how strong the relationship is.

Next, insurers are going to have to determine the levels of acceptable deviation and how those levels are impacted by equipment usage. Fundamentally, for example, most would agree that hard-braking applications have a relationship to crashes. What remains to be determined is how many hardbraking applications are acceptable and is that number impacted by whether the equipment is being used for local P&D work in the GTA or running the highways of Saskatchewan?

The second issue that will need to be addressed is ownership of the data. For the trucking industry, the question becomes will you be able to take the data with you, if you elect to change insurers?

These challenges will be overcome and the potential rewards associated with telematics are simply too great for the trucking industry to ignore.

Telematics can reduce crash costs, fuel consumption, and insurance costs. Given the increasing levels of scrutiny that carriers are being subjected to, telematics provides a measurable means to demonstrate how safe they are, creating competitive advantage.

The challenge for carriers will be to convert the standards established by telematics into performance standards and to adopt a behavioural-based driver management system.

Telematics, in some form, is coming. Don’t lose the opportunity to improve your profitability by reducing your losses. FE

Learn how behaviour links to crashes and how to influence safer behaviour. Attend the Fleet Safety Council Conference, Oct. 24-26 in Kitchener, Ont. For more info, visit www.fleetsafetycouncil.com.

Rick Geller, president of Trucksafety.ca, has been providing innovative and cost-effective solutions to the trucking industry for more than 30 years.

He is the recipient of the Canadian Trucking Human Resource Council’s “Champion of Human Resources” award, vice-chair of the Toronto Chapter of the Fleet Safety Council, vice-chair of the Fleet Safety Council Conference Committee, and serves on the executive committees for both the Ontario Truck Driving Championships and the Toronto Regional Truck Driving Championships. Rick can be reached at solutions@trucksafety.ca. trucknews.com

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13-04-09 8:37 AM

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13-04-09 8:37 AM

TAKING CARE OF BUSINESS

SO YOU WANT TO START YOUR OWN BUSINESS? Tips for the new – and not so new – transport entrepreneurs

By Mark Borkowski

I

f you’re reading this column, you already work in the industry, likely in a management function. But perhaps you’ve thought of starting your own business some day? Please read on.

I would like to introduce you to Wendy Eustace. Wendy is referred by successful professionals, executives and entrepreneurs as an excellent coach and facilitator, who has made a lasting difference in the lives of her clients and colleagues. For more than 20 years, she has developed business programs, coached and been an entrepreneur. In fact, most of her friends are or have been entrepreneurs.

Is your idea a great hobby or a feasible business? How do you really know? Wendy has many clients come to her with an exciting idea that made sense to them. However, it’s important to do research, crunch numbers and talk to people with knowledge who will be honest with you.

If you’ve watched Dragons’ Den, you see how passionate entrepreneurs can be about a scheme that might look ridiculous to you. At the Business Advisory Centre, Wendy interviewed potential entrepreneurs and had them bring information to support their idea. Then, as advisors, her group “pitched” the candidates they were convinced had a viable idea to a roundtable of experienced business people and colleagues. After a process of elimination, 12 to 15 new entrepreneurs were selected to go through a two-week mini-MBA. Then, these budding business owners were supported for a year. They were obliged to create a

16 FLEET EXECUTIVE ❙ March/April 2013

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business plan, present it to bankers, accountants and respected business leaders. Each month, a profit and loss statement was sent to their advisor and was part of a discussion on their progress, challenges and future vision.

All of the advisors had operated successful businesses. Each had facilitated a couple of days of the workshops so that they had some idea of the people who were going to be running the businesses they supported.

Feasibility isn’t just about the business concept. At least as important, and arguably more important, is ensuring that you are the right person to operate this kind of business. Even if your concept is viable, consider that you need to be aware of your own strengths and weaknesses. In the beginning, it may not be feasible to hire those that can do what you really don’t do well or enjoy. You need to be aware of your soft spots. For example, Wendy was very successful at an early age in taking floundering restaurants and turning them around. However, she knew that her interest in administration was minimal. While she learned how to do all of the administrative functions, she built in checks and balances to ensure she didn’t miss details. Wendy also trained her assistant to do all the paperwork to ensure they could back her up and provided another set of eyes. Who can provide that back-up for you? Do you have a coach, mentor or advisor? Every business has success indicators. What is going to indicate whether you are on-track or off-track?

Are you excited about starting a business? Then please talk to someone who can be objective, kind and has expertise in the type of business you want to start. Next, do some research into your idea, ask questions of experienced business owners, go online to research and seek a variety of informed opinions.

Probably best not to ask cousin Fred who has many opinions on a variety of topics and little or no background or success in your chosen field. First, ensure that your idea is sound. Next, make sure you are a good fit for this type of business. FE Wendy Eustace can be reached at wendy@claritycf.com. The Clarity Web site can be found at www.claritycf.com.

Mark Borkowski, is president of Mercantile Mergers & Acquisitions. Mercantile specialize in the sale of privately owned Canadian companies.

He can be contacted at mark@mercantilema.com or www.mercantilemergersacquisitions.com trucknews.com

13-04-09 8:49 AM

THE HUMAN EDGE

PREPARE FOR THE DEMOGRAPHIC TSUNAMI

A report from the Conference Board of Canada paints a sobering picture of the looming truck driver shortage in the forhire sector. Here are the highlights.

By Lou Smyrlis DROPPING NUMBERS There were 304,890 truck drivers in Canada as of 2006 when looking at both the for-hire and private fleet sectors.

Approximately 180,000 of these were employed in the for-hire trucking industry. While the overall trend indicates the driver population increased to 310,000 drivers by 2011, the number of drivers employed in the for-hire fleet sector decreased to 173,100 with private trucking making up for the decline.

RISING AGE The Canadian truck driver labour pool is aging more quickly than the total labour force. The average age increased 3.7 years between 1996 and 2006, while the average increase was just two years across all occupations. The average truck driver age was 44.2 years, compared with an average of 40.2 years for the total labour force. More than 20% of the driver population was over the age of 54. Although the truck driver population is not the only occupation faced with an aging labour force, other similar occupations do much better in attracting young workers. For example, nearly a quarter of delivery and courier service drivers are under the age of 30 as are almost half of railway and motor transport labourers. In contrast, only 12% of truck drivers are under the age of 30.

STAGNANT WAGES When adjusted for inflation, truck driver wages overall have grown at less than 1% per year since 1998. Wage growth has been strongest in Alberta, Saskatchewan, and Newfoundland and Labrador. Weekly wages topped $1,200 in Alberta in 2011, a considerable jump from the $800 or less average wage for Eastern Canada.

TROUBLING SUPPLY-DEMAND GAP Due in large part to the aging work force, the driver supply for the for-hire sector is forecasted to increase only slightly to about 178,000 by 2020. Without a significant number of new entrants, the growing pending retirements will barely be replaced by the number of new entrants. Demand for truck drivers is expected to hit 202,700 by 2020. As a result, the gap trucknews.com

Human Edge Apr.indd 17

between supply and demand is expected to be 25,000 and could get as high as 33,000. The demand forecast is based on for-hire trucking having to adjust to GDP growth averaging 2.7% per year from 2012 to 2016. This will create an immediate expectation for growth in demand for trucking services as more economic activity generally means more goods needing to be shipped. Over a longer period of time, this relationship will be tempered slightly due to Canada’s aging population shifting household expenditures towards services.

PRODUCTIVITY THREATS For-hire trucking’s productivity performance to date may have masked its human resource challenges. For example, the industry increased output from 2007 to 2011 by 3.3% while the number of employed drivers decreased by about 6,000. This translates to a 1.7% annual increase in labour productivity.

In the past, productivity gains in for-hire trucking have been quickly passed on to customers. About 87% of productivity gains have been used by for-hire carriers to hold down output prices in the face of rising fuel, capital, labour and other costs rather than increase profit due to the intensely competitive nature of the industry and lack of consolidation. However, the industry faces significant challenges to its productivity in coming years. Congestion, changes to Hours-of-Service in the US, and restrictions on size and weight regulations will affect the industry’s ability to maintain productivity at current levels.

DIRECT IMPACT ON ECONOMY An inability to solve the truck driver demand gap will have a direct impact on the Canadian economy. Trucks move 90% of all consumer products and foodstuffs within Canada and about 60%, by value, of our trade with the US. Efficient freight transportation improves export competitiveness and results in more goods being available at lower prices for consumers. In addition, a significant portion of Canada’s growth industries rely on truck transportation for inbound and outbound freight movements. As these industries continue to grow, they will need the for-hire trucking industry to grow with them.

March/April 2013 ❙ FLEET EXECUTIVE 17

13-04-08 10:37 AM

THE HUMAN EDGE

NEW HOS IN THE US WILL BE

“FINAL NAIL IN COFFIN” OF TRUCK CAPACITY A looming driver shortage, which could prove the “worst

we’ve seen” is already manifesting in a significant drop of applicants for driving jobs and enrolments for driving schools, according to executives from three large US fleets.

“We think a lot of drivers have left the industry to go into construction and other sectors and that is going to intensify,” Max Fuller, chairman and CEO of U.S. Xpress Enterprises said during a panel entitled Repaving Truckload’s Road to Success at the Truckload Carriers Association’s annual conference.

Fuller said he has seen a 25% drop in job applications over the past month.

Fuller was joined on the panel by Derek Leathers, president and CEO of Werner Enterprises, and Dan England, chairman of C.R. England. The session was moderated by Lana Batts, copresident of Driver iQ. Leathers confirmed he has also seen a double-digit decrease in applications since last year and noted enrolment in driving schools is also on the decline.

“I think the driver shortage is upon us,” Leathers told the large crowd in attendance, adding that he is seeing million-mile drivers throwing up their hands and throwing away the keys.

Leathers said it’s critical for carriers to keep raising with shippers the issue of the driver shortage and the higher wages necessary to attract newcomers to the industry. The fact that some private fleets are paying 20-30% more than for-hire carriers is a signal that shippers understand the need for better pay, he said.

But England, who has been a member of TCA for 35 years, wondered if there is really anything new about these developments.

“We’ve been having these exact same discussions for all these years. We’ve talked about getting more money to our drivers and I think we’ve largely failed,” he said, pointing out that when inflation is taken into account, drivers today may actually be making less than they did in the 1980s.

Fuller countered that unless shippers are willing to accept higher rates, it’s difficult for carriers to raise salary levels.

The impact of pending new Hours-of-Service regulations will further damage the situation, all three agreed. Fuller said older drivers may decide to retire early because they feel the new Hours-of-Service, which require more rest and allow less driving time, amount to “harassment” and less pay.

Moderator Batts wondered how carriers plan and manage their operations during times of uncertainty over how Hoursof-Service will be dealt with in the future.

18 FLEET EXECUTIVE ❙ March/April 2013

Human Edge Apr.indd 18

“We have a Plan A, Plan B and Plan C,” acknowledged Fuller. “You don’t know which contingency it’s going to be, but you have to be ready for it,” Fuller said.

Leathers said he is planning based on the new Hours-ofService legislation being ready as of July 1. He believes there is as high as a 70% chance this will happen. All three executives considered it ridiculous that the government has refused to postpone Hours-of-Service legislation until the current court challenge of that legislation has been decided.

“It’s so unreasonable to take that sort of direction,” England said.

Leathers argued it’s illogical to change Hours-of-Service without first doing a better job at enforcing the current rules.

As reported on trucknews.com, Federal Motor Carrier Safety Administration (FMCSA) rejected a request from the American Trucking Associations to postpone implementation of the new US Hours-of-Service rules.

As a result, significant changes will go into effect as scheduled July 1, barring a court ruling to the contrary before then. Annette Sandberg, a former FMCSA administrator and now principal of TransSafe Consulting, said carriers shouldn’t count on a delay or the courts overturning the new rules. Sandberg said carriers should begin training drivers on the implications of the new rules now, so that they’re prepared for the roll-out in July.

If the new law goes into effect, come July 1 drivers in the US will only be able to use the 34-hour reset provision once in a seven-day period, and they will have to take off two overnight periods between 1 and 5 a.m. during that reset. In addition, drivers will require a 30-minute, off-duty rest break within their first eight hours on-duty, limiting their total onduty time to 13.5 hours.

Fuller believes the new legislation could cause an 8-10% loss in productivity. “The more efficient that you are, the more of a hit that you are going to take,” Fuller said.

Leathers’ estimate was about the same, but he said he hoped that could be worked down to a 4-5% loss through fine tuning. He explained that it’s somewhat of an unknown at this point whether there is driving time in the system not being properly utilized because drivers do have more time.

If there is one positive to the new Hours-of-Service legislation, it’s that it will be “the final nail in the coffin” for excess capacity, according to Leathers.

“If these (loss of efficiency) numbers are anywhere close to accurate, it will lock up capacity in a hurry,” Leathers said. trucknews.com

13-04-08 10:37 AM

”

WE NEED TO SEE THE BIG PICTURE AND ACT NOW ON DRIVER SHORTAGE, BLAGDEN TELLS MTA The province’s trucking industry is heading towards a “cri-

sis in the very near future” as a result of the shortage of new people entering the industry, according to Norman Blagden, president of the Manitoba Trucking Association.

The Manitoba trucking industry itself, although not forecasted to be as badly off as most of the rest of the country, is expected to be short about 1,000 drivers within seven years, Blagden stated in his president’s report at the MTA’s Annual General Meeting.

Blagden said a number of factors, most notably lifestyle issues, are keeping young people from entering the industry as drivers. Some of these factors include the inability to predict pay from one week to the next and the guesswork involved in determining home time.

“Until changes are made, we will not be able to attract new drivers in the numbers we need,” Blagden said. “We cannot take the approach of waiting to figure it out when the time comes...We need to see the big picture and act now.”

A Conference Board of Canada study released last month forecasts the Canadian trucking industry could be short 25,000 to 33,000 drivers by 2020. It also pointed out that the average age of the truck driver has increased from 40 years in 1996 to over 44 years in 2006 (the last year for which Census information is available.). More than 20% of the driver population was over 54. Yet only 12% are under the age of 30.

Blagden noted the MTA has been very active over the past year in trying to address the driver shortage issue. One of its most significant undertakings has been trying to create a trucking industry sector council. The council’s goals would be increased industry investment in skills development to promote a quality workforce; a learning system that is informed of, and more responsive to, the needs of the industry; and enhanced ability for the industry in recruiting and retaining its workers.

MTA has also been working on having “commerial driver” recognized as a designated occupation in Manitoba. An applitrucknews.com

Human Edge Apr.indd 19

cation has been sent to Apprencticeship Manitoba for review.

“The anticipated result of this is that, in order for an individual to be recognized as a professional driver, they will have to meet certain minimum training standards. The skills and expertise possessed by our driving population cannot be underestimated...Professional driver is a skilled trade and it is time that the skills and abilities of our commercial drivers are given the respect they deserve,” Blagden stated in his report.

The MTA has also focused on relationship-building and reaching out to different sources of employees. Its Careers Committee has presented to a variety of organizations, including employment agencies, the military and secondary and post-secondary institutions.

The MTA is also working on an “English at Work” program, which is designed to improve the English language skills of the province’s drivers.

“This program will not only improve the quality of life of those in the program, but it will also improve the overall safety of our industry,” Blagden commented.

One positive development Blagden pointed to was the upswing in enrolment in the Professional Truck Driver Training Program, sponsored by Manitoba Public Insurance. In 2012, almost 100 new participants joined the apprenticeship-like program for professional drivers, which provides training in an accredited driver training school as well as on-the-job experience.

MTA’s emphasis on the driver shortage seems to have caught the ear of Ottawa. Steven Fletcher, minister of state for transport, who spoke at MTA’s AGM, encouraged motor carrier executives to continue the dialogue on the driver shortage.

“If not addressed, it could put a break not only on your industry, but also on the entire eonomy,” Fletcher said, pointing out that about 90% of all consumer goods move by truck.

The transportation and warehousing industry employs 5.7% of Manitoba’s labour force, and makes up 6 to 7% of the provincial GDP. FE March/April 2013 ❙ FLEET EXECUTIVE 19

13-04-08 10:37 AM

LEADERS

A new department highlighting the insights of industry leaders on key industry issues.

MTA’S BOB DOLYNIUK

By Lou Smyrlis

For years, Manitoba Trucking Association executive director Bob Dolyniuk has stressed the point that Manitoba, and the motor carriers that serve it, can’t fulfill their full potential if they’re not supported by meaningful investments in the province’s transportation infrastructure. Manitoba has since committed to spending $4 billion over 10 years on its infrastructure. Is it just what the trucking industry has been asking for, or too little too late?

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13-04-09 8:53 AM

FE: TRADITIONALLY, MANITOBA HAS HAD ASPIRATIONS TO BE A TRADE GATEWAY FOR NORTH AMERICA. WHAT ROLE CAN MANITOBA PLAY IN CAPTURING NORTH AMERICAN TRADE TRAFFIC? CAN IT BECOME, AS SOME SUGGEST, A GATEWAY TO THE CONTINENT?

Dolyniuk: Most of the traffic that comes inland from offshore, comes by container, which is moved by train. The trains from the West Coast basically go to Toronto and Chicago for distribution. If we are talking about train traffic, it certainly isn’t happening in Manitoba. That is the reality. If we could get the container traffic that rail is moving to Chicago and backhauling it to the Midwest, you would have to think of the inefficiencies and emissions. Why do we accept this wasted activity? It would make sense moving that traffic to Winnipeg and distributing from Winnipeg, whether it be south into the US or to Northwestern Ontario or Saskatchewan.

If we are talking east-west traffic in Canada, there is what there is, but you don’t have the flow. If you go back to the ’80s, Winnipeg was a distribution point to Western Canada and that’s because the goods came up from the northeastern US to Toronto and Montreal and west across Canada. That doesn’t happen as much anymore.

FE: DOES THE PROVINCE HAVE THE INFRASTRUCTURE NECESSARY TO MEET SUCH AMBITIONS?

Dolyniuk: When it comes to infrastructure to service that, in my mind there are three key highways: Highways 1, 16, and 75.

Highway 16 is a single-lane highway from the TransCanada to the Saskatchewan border. It is heavily used by trucks travelling to Saskatchewan and, to a certain extent, Alberta. With the increase of Rocky Mountain doubles running across the Prairies, all that traffic runs over the TransCanada Highway and while that highway is in a better state in Manitoba, it still needs some serious upgrades. We have a bridge outside of Brandon that has to be replaced, a bridge outside of Portage that has to be dealt with, and a bridge on the east side of the province on the TransCanada that has to be dealt with – so we have some significant infrastructure challenges just on the TransCanada.

If we are talking about trade to the US, the major lane used is Highway 75 from Winnipeg south. We’ve been vocal about that highway since the flood of 1997. The province has spent millions upgrading the highway and raising the level of it. That’s great, but they haven’t dealt with the crux of the issue, which is when there is flooding on Highway 75, it happens around Morris and there is a bridge there over the Morris River that, until it is dealt with effectively, on certain years, we are still going to

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5/15/12 1:25 PM 13-04-09 8:53 AM

LEADERS

“

Bridge life is somewhere between 40 and 50 years. We have hundreds if not thousands of bridges reaching the end of their life span. Some of them haven’t been inspected in over a decade.

have detours. And the detours add 100 kms one way every time that happens. We continue to question how we can promote ourselves as a gateway when we can’t ensure an efficient roadway 365 days of the year.

FE: AN UNFORTUNATE REALITY IS THAT UNLESS ROADS AND BRIDGES ARE COMPLETELY CRUMBLING, IT HAS PROVEN DIFFICULT TO MAKE INFRASTRUCTURE SPENDING A PRIORITY. WHAT CAN THE TRUCKING INDUSTRY DO TO RAISE AWARENESS TO THE POINT THAT POLITICIANS FEEL THEY HAVE TO ACT?

Dolyniuk: That’s a good question. We are fortunate that our current minister lives in Thompson, Man. There is one highway to get to Thompson and the minister knows that if that highway is closed, you don’t get in and out unless you can afford a plane ticket. There is major industry there with mining and the majority of the supplies come up by truck. If they don’t have that access, the community doesn’t exist.

Our highways have been deteriorating since the great building spurts of the ’60s and early ’70s. All governments in Manitoba share in the responsibility for the state of our infrastructure today. I can remember years when the capital budget was less than $100 million. Now this government has committed $4 billion over 10 years to infrastructure. That is significantly more than we were putting towards infrastructure before as a province.

Unfortunately, and I hate to say it, it’s almost too little too late. You are talking about a province that has somewhere between 3,000 and 4,000 bridges. Bridge life is somewhere between 40 and 50 years. We have hundreds if not thousands of bridges reaching the end of their life span. Some of them haven’t been inspected in over a decade.

Although there has been a significant increase in infrastructure capital funding, it is not going to get us out of the hole we are in. If you have not maintained your infrastructure in 30 to 40 years, you’re not going to save it in 10 years by doubling or tripling your investment. The longer you allow something to deteriorate, the more it costs to repair it or you may get to the point where you have to tear it down and start all over again.

We probably need to spend double what we are spending now.

And I’m not sure there are the resources within the province to maintain that sort of pace of rehabilitation.

INVEST IN INFRASTRUCTURE, WE STILL CAN’T INVEST ENOUGH. WHAT’S THE SOLUTION? IS THERE A SOLUTION?

Dolyniuk: If trade is the priority, you have to identify what the primary trade routes are and make sure they are protected and then move to the secondary and tertiary routes. You are going to have to prioritize. There are going to be some people who won’t like the priorities. I think the government is thinking in this way to some extent. You don’t see a lot of new highways being built. If we saw the federal and provincial government announcing new highways rather than trying to fix what we already have, we would have some serious concerns. The only major project we have is the Centreport Way in the northwest quadrant of Winnipeg and it will be good for us because it will give the trucking industry a more direct route to the TransCanada highway.

Beyond that, you don’t see governments announcing major new highway developments, which is good. If we don’t put more dollars into the infrastructure rehabilitation, we have to, at some point, consider downgrading highways. That could mean that you have to take smaller trucks into certain areas, which creates inefficiencies. It’s not a good situation, but what other alternatives are there?

FE: SPEAKING OF ALTERNATIVES, THERE HAS BEEN A MOVE AMONG GOVERNMENTS AT ALL LEVELS IN CANADA AND THE US TO HELP FUND INFRASTRUCTURE PROJECTS BY TURNING TO PRIVATE ENTERPRISE TO BUILD AND THEN PAY FOR CONSTRUCTION BY TOLLING. WHAT IS THE MTA’S VIEW ON THIS APPROACH TO BUILDING INFRASTRUCTURE?

Dolyniuk: I don’t know many people in the trucking industry who are pro-toll roads. We’ve had a number of public-private partnerships in the Winnipeg area with a slightly different model where the developer pays for the cost upfront and sells it back to the city or province at a certain point in time and that has worked well for a couple of roadways. Certainly, that’s a possibility. The MTA board has talked about how to pay for roads. I don’t think our industry in Manitoba would have difficulty supporting an increase on fuel tax as long as there was a legal commitment to put that into road and bridge infrastructure.

FE: WHY IS THERE SUCH A DISTASTE FOR TOLLED ROADS?

FE: SO WE SEEM TO BE IN A VERY DIFFICULT SITUATION WHERE WE RELY ON TRADE TO PROSPER AS A COUNTRY, BUT TRADE REQUIRES EFFICIENT INFRASTRUCTURE. YET, EVEN WITH A GOVERNMENT SUCH AS MANITOBA’S WHICH IS WILLING TO 22 FLEET EXECUTIVE ❙ March/April 2013

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Dolyniuk: Only once in my life have I seen a situation where the toll came off a road once the road had been paid for, albeit long after it was paid for, and I’m not a young fellow. FE trucknews.com

13-04-09 8:53 AM

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13-04-08 3:53 PM

GREEN to GOLD

UNDERSTAND THE WHOLE

WIDE

WORLD

Wide-based tires can promise fuel savings, but are your trucks ready for the change?

By John G. Smith

W

ide-base single tires are often called “super singles” for a good reason. Goodyear may have trademarked the phrase for its own products – and Michelin was the first to bring these wider tires to market – but the product category as a whole offers a number of “super” promises.

The combination of lighter wheel ends and fewer flexing sidewalls can improve fuel economy by 2-5%, and the tires are expected to play a role in helping some truck manufacturers meet 2014 standards for lower greenhouse gas emissions.

“The fuel savings is real. It’s big dollars,” said CR England maintenance head Greg Kitchen, during a presentation for the American Trucking Associations’ Technology and Maintenance Council.

The potential advantages are not limited to fuel economy. The products end the worries about mismatching dual tires, a known cause of premature tread wear, and the designs can save 1,272 lb. when coupled with aluminum wheels across a tractor-trailer. Wider tires also make it easier to move dollies around fleet yards, and this could prevent back injuries, said Peggy Fisher, president of TireStamp.

“The ride is better,” she added, likening the experience to riding on bias tires, and describing how the wider versions will not fall into the ruts on a highway.

24 FLEET EXECUTIVE ❙ March/April 2013

Gold.indd 24

Most of the designs – officially known as Low Profile Metric Wide Base Radial Tires – come in the form of 445/50R22.5 sizes rated at 10,200 lb. at 120 psi, but some buyers opt for the 455/55R22.5 designs rated at 11,000 lb.

Still, despite their promise, widebase designs represent a mere 5% of the tire market.

CR England has actually put its related tire program on hold because of challenges with retreading. When using the widebase tires on tractors, the fleet lost eight traditional casings which could otherwise be retreaded for use on trailers. And while traditional tires could be retreaded three times, the fleet questioned how many times the wider casings could be reused.

The fleet has also been reluctant to mount wide-base tires on trailers because that’s where most of its on-road tire failures occur.

If a wide-based tire blows out, the truck cannot limp home, and the wheels are usually damaged in the process.

“They’re very susceptible to irregular trucknews.com

13-04-08 3:55 PM

wear if they’re over-inflated or under-inflated,” Fisher added. Then there’s the additional cost. “The cost of one widebase tire is more than two dual tires.

These are expensive tires, and the wheels are expensive, too.”

Of course, that’s if the tires can be found: “Availability can still be a problem, depending where you are.”

Then there are unique maintenance needs to consider.

A negative camber or flexing axle can cause the shoulder to wear prematurely, and the latter might be a bigger issue for those hauling higher weights, said Guy Walenga, director of engineering for Bridgestone Americas. Those who find both shoulders wearing away are likely over-inflating the tires, while excessive wear on the inside shoulder usually involves a negative camber angle.

Shops also need to take the care to properly seat the brake drum on its pilots.

And operating pressures can differ when the tires are compared to traditional sizes.

This means checking load/inflation tables before reaching for a compressor.

“Fleets can achieve the best overall wear on wide-base trailer tires with consistent inflation pressure maintenance, trailer alignment, proper bearing preset, and, when possible, tire orientation,” Walenga said. “When spec’ing trailers, incorporate wider axles and zero-offset wheels at a minimum, and confirm that the axles do not start out with any negative camber.

“Operate trailers at the maximum load as often as possible. Lightly loaded trailers contribute to free-rolling wear,” he added.

The shift could affect the choice of a fleet’s retreading shops as well. “Do they have the right equipment, and are they following the right process?” asked Ed Steck, director of franchise business services for Michelin Retread Technologies. “With shortcuts, you’re going to end up with problems out on the road.”

The shop’s probes should be 12.1” long, about double the length of a probe used for traditional tire sizes, to reach from one shoulder to the other. Otherwise, punctures in the shoulder could be missed. Rotation speeds also need to be slowed, and buffing should not begin

until pressures are running between 18 and 22 psi. Those who are too quick on the trigger will expose steel. And an expandable rim of 14.5” rather than 13-3/8” will be needed.

“Tread table rollers should be completely cleaned before each build series,” Steck added, noting how this will keep the tires from picking up contaminants from the rollers.

The impact of wide-base tire choices is not limited to tires, either.

The tires can be run in three different outsets, explained Al Cohn, director – new business development and product support at Pressure Systems International. A 2” outset will have a 92” total width, 1.13” will have a 90.4” width, and 0” will have an 88.2” width.

“There’s a big, big difference in the scenarios,” Cohn said. Those who simply swap standard dual wheels with a single wheel can alter the stresses in the bearing’s spindle and hub. The bigger the outset, the higher the loads on the outer bearing. This can reduce bearing life and wear the spindle.

Parallel systems use a larger outer bearing to resist the increased stress, Cohn added. “The wider axles, together with the wide-base, 0-offset wheels, will avoid bearing issues.” And housings will need to be thick enough to counter the increased bending caused by outset wheels.

But each bearing supplier will set its own standards for bearing geometry and profiles. Timken says there will be little difference in bearing life between duals and wide-base tires, regardless of 0” or 2” outset negative camber s. Meritor, meanwhile, reports excessive spindle wear with 2” outsets. Dana has not seen any difference.

“There is a big, big factor in reducing bearing life when you mix cones and cups,” Cohn added, noting how Timken and Meritor have quantified this at 80%.

“Never mix cups and cones.”

He also cautions against jumping for a cheap source of offshore bearings. The hardness of a trailer’s spindle ends, and the quality of steel in the bearing, will make a difference.

There are plenty of hard decisions to be made. FE

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trucknews.com

Gold.indd 25

13-04-08 3:55 PM

GREEN to GOLD

CAN THE CHALLENGES OF OUR NORTHERN ROAD INFRASTRUCTURE KEEP UP WITH THE OPPORTUNITIES FOR DEVELOPMENT?

T

he opportunity for developing Canada’s north has finally come, according to transportation industry experts speaking at Transport Institute’s Northern Exposure 2 conference in Winnipeg. But can the infrastructure keep up with the opportunities this presents and overcome the challenges it poses?

Aggressive mining and energy exploration and development combined with population growth and environmental uncertainties are the new realities for the country’s traditionally isolated northern communities. For example, there is $130 billion worth of mining investments projected over the next five years for Canada, most of it in the north.

“We have not seen this degree of growth since the 1950s.

There is more exploration going on in Canada than in any other country in the world. The bottom line is that Canada is on everyone’s radar,” said Guy Ginter, who is currently working with the Moose Cree First Nation as the director of impact and benefit agreement (De Beers) and is also on the board of Kimesskannemenow Corp., the company responsible for building the James Bay Winter Road.

At the same time, the population of remote northern communities is growing at 4-5% while the rest of Canada is growing at about 2%.

Such potential for business combined with population growth will place increasing demand on building the north’s road infrastructure, traditionally comprised of winter roads and service by plane or ship. As Amar Chadha, director of the Manitoba Transportation Division with global engineering firm SNCLavalin pointed out, “There is a very clear message from northern communities: They are seeking all-weather roads.”

Yet building all-winter roads to remote northern communities is fraught with challenges. Roads need to be built on firm ground consisting of granular material or bedrock. Much of the north, however, includes predominantly organic deposits, wetlands, fens, peat plateaus and permafrost. In fact, about one-sixth of the land is covered by lakes and rivers, and building bridges is expensive work – amounting to about $12,000 per square metre, according to Chadha.

In many cases, road construction involves dealing with pristine nature areas with sensitive ecosystems. Road work is often done in winter to minimize the impact on the environment which enjoys a very short growing season.

By Lou Smyrlis

“These aspects of the environment have to be greatly respected in construction for the north,” Chadha said.

Such considerations, plus lack of access and a shortage of a qualified workforce, make new roads very expensive to construct and maintain in the north. Construction costs average about $1.3 million/km for a gravel road and maintenance costs are in the order of $5,000/km per year. That’s about double the cost it takes to build and maintain such roads in southern Canada.

And global warming is raising other concerns. Melting is causing the soil to move, affecting the stability of engineered structures.

“It’s a major engineering challenge. We have to take the longterm impact of global warming into account,” Chadha said.

The winter of 2011/2012 was Canada’s third warmest since we started keeping such records in 1948 and the northern part of the country is feeling the impact of global warming the most, according to Dr. Danny Blair, associate dean of science at the University of Winnipeg, and the conference’s luncheon speaker.

Ginter gave examples of winter roads becoming unusable within a couple of days due to sudden spring warming.

Mike Sorobey, vice-president of logistics at The North West Company, sees the impact of climate change as a huge hindrance to northern development and believes “a lot of money” will have to be spent just to maintain the existing infrastructure.

All these factors make for a long development process for building roads in northern communities – from the initial drafting of government policy to feasibility studies, environmental assessments and producing a detailed design.

“You could be looking anywhere from 10-15 years before building a road. You can understand the frustration from people wondering why the road is not being built,” Chadha said.

With so many challenges, building all-weather roads may not be the best option for the north.

But John Spacek, assistant deputy minister, Manitoba Infrastructure and Transportation, challenged conference attendees to think of roads in a broader context. Roads, he said, provide mobility and access to the rest of Canada for remote communities. They are what is needed to bring more goods, better communications technologies and energy options. “Transportation is key to socio-economic well-being,” he said. FE

26 FLEET EXECUTIVE ❙ March/April 2013

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13-04-08 3:55 PM

PROFITABILITY

SAFE BET Gambling on the future still a smart move, largest carriers believe

D

By Lou Smyrlis

espite the uncertain political and economic environment, trucking executives should be excited about their industry’s short-term future, according to the heads of three of the largest carriers in North America.

Max Fuller, chairman and CEO of U.S. Xpress Enterprises, Derek Leathers, president and CEO of Werner Enterprises, and Dan England, chairman of C.R. England all shared a positive near-term outlook while participating in a panel entitled Repaving Truckload’s Road to Success at the Truckload Carriers Association’s annual conference. They told panel moderator Lana Batts, co-president of Driver iQ, that there are signs already of the turnaround.

“The next couple of years will be pretty exciting,” Fuller said. “We’ve gone through the economy’s destocking phase.

Consumption will increase, housing is improving and employment is improving. As we get into 2014, we ought to be a lot more excited about our industry.”

Major food hauler England said that while the last half of 2012 was soft, consumer confidence appears stable.

“We are seeing improvements in demand. It has not been reflected yet in rate increases, but we are optimistic about that.”

Leathers told the large audience of trucking executives in attendance that trucking capacity is tightening “even as we speak” and that is certain to pave the way towards higher rates. He added, however, that even if freight tonnage doesn’t increase enough for capacity to tighten the way he believes it will, motor carriers need to be talking to their

customers about rate increases because trucking costs are on the rise. He cited the rising price of new trucks as an example.

Fuller chimed in that his company is seeing costs rise at 6% per year while rates are rising at only 3%.

“To not have that conversation would be placing your company in a difficult position. We have to reinvigorate ourselves,” Leathers added.

Leathers said Werner is taking a “very selective” approach to purchasing new trucks, opting instead to consider alternative capacity strategies such as moving more freight to intermodal. The company will need to achieve its target of 11% operating margin before considering heavy investments in new trucks, he said.

“To be perfectly blunt, with current returns in the industry, I don’t think it’s to our advantage to be purchasing new trucks,” Leathers said.

Small carriers have had a difficult time emerging from the recession. Moderator Batts asked whether the future favours one size company over another.

“I think a smaller carrier has a greater advantage in being closer to its drivers and knowing them personally. On the other hand, being a large carrier there are efficiencies we can take advantage of. I think we can be successful regardless of size,” England said.

Fuller said his company operates as “one large company with six individual companies under it” because he has found that smaller companies are better focused on their markets and execute better. Having a large parent, however, allows them to get into accounts they would not otherwise have been able to access due to the limited capacity of smaller carriers. FE

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13-04-08 3:56 PM

PROFITABILITY

LUNCH ANYONE? D

Why you may be losing your appetite for an outside sales force

uring my early days in the trucking industry, I spent a number of years directly or indirectly managing sales teams. At the time, the sales process was largely focused on number of personal calls per day and on customer entertainment. While service was (and still is) important, there was a heavy emphasis on face time with customers and prospects, through a combination of lunches, traffic club dinners, sports events and golf outings. One company I worked for had a policy of five customer lunches per week and two entertainments a month. Representatives were encouraged to be “out in the field” making their designated number of calls per day.

The world of transportation sales is going through drastic changes in 2013.

These changes are being driven by three key factors: economics, technology and customer requirements. Let’s take a look at each of these changes to understand their impact on the sales process.

ECONOMICS: During the Great Recession, every trucking company was forced to

carefully scrutinize the productivity of each sales person in order to justify their value to the company. As part of this process, many companies began to realize that expensive car allowance programs, entertainment allowances and travel expenses, coupled with salaries, perks and bonuses made the value proposition of some street sales people quite unattractive. Poor producers were downsized. In addition to layoffs, detailed cost analyses showed that inside selling, which keeps sales people off the road, can be as much as 10 times cheaper than street sales personnel. Industry estimates show that each contact made by an inside sales rep may cost $25 to $30 while a face-to-face sales call can cost $300 to $500.

TECHNOLOGY: Technological advances are making it much easier to sell without the face-to-face component. The Internet, combined with tablet computers and smartphones, is creating a revolution in sales processes. With virtual meeting software such 28 FLEET EXECUTIVE ❙ March/April 2013

Profitibility Apr13.indd 28

By Dan Goodwill as GoToMeeting and Webex, communication tools such as Skype and FaceTime, social media sites such as Facebook, LinkedIn, YouTube and Twitter, it is becoming easier to sell with fewer or even no face-to-face calls.

The technology is also having a profound impact on the cost of employee office space. An employee equipped with the technology can work from home and does not need costly office space. This increases the savings even more. According to statistics compiled by consultants at Bridge Group, 46% of sales people are working at company headquarters, 37% work at both the office and at home and 17% work fully at home.

CUSTOMER REQUIREMENTS: The third change is coming from shippers and logistics service providers. As transportation departments were downsized, there were fewer people and less time to meet with or even receive telephone calls from carrier sales reps. Transportation managers became more accessible via e-mail trucknews.com

13-04-08 3:56 PM

?

rather than by telephone or personal visit.

In addition, over the past five years, the famous (or infamous) RFP or freight bid has become extremely popular with shippers. In some companies, the bids are done completely or extensively via technology. An actual face-toface call may only be required if the carrier is short-listed and/or during the implementation stage.

While each of these forces is quite powerful individually, collectively they are driving a major change in the process of transportation sales. These types of changes are being experienced across a range of industries.

Of course, there are risks in having sales people work from home in an unsupervised environment. Years ago, I remember finding one of our sales people, who was based several hundred miles from the home office, living a double life.

He sold our services while working with another firm during his workday hours.

As a result, there is a requirement to employ another technological advance to provide visibility and accountability.

This is where CRM or customer relationship management software comes into play. Using this type of software allows a manager in a remote location to see the number of sales calls being made and the stage of each prospect in the sales pipeline. Of course, the integration of CRM with actual sales data (and periodic spot checks), ensures that there is a high level of integrity and performance.

Does this mean that it’s time for carriers to cut loose their street sales teams?

Not yet, since there is still a requirement to visit certain clients, in some situations, at various stages in the sales process. But these changes require sales leaders to challenge their current sales structure and their ratio of inside to outside sales personnel. It also requires sales leaders to examine how effectively their companies are employing the latest technology. It should be noted that every conversion from outside to inside sales necessitates a change in recruiting and training. To be successful, inside sales personnel require a high level of

Profitibility Apr13.indd 29

product/service knowledge and excellent computer/communications skills.

The need for customer entertainment skills are much reduced.

Where does your company stack up?

Here is a short quiz: • How productive is your sales team?

• Does your trucking company have the right mix of inside and outside sales personnel?

• Does your sales team have extensive training in the latest computer and communications technologies?

• Is your sales team equipped with the most effective tablets and smartphones?

• Is your team using a quality CRM system?

• Has your trucking company changed its ratio of inside to outside sales personnel over the past five years?

How would you score yourself? Maybe it is time to take another look at your sales operation. FE

LET’S CONTINUE THE CONVERSATION

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Join us at our next Surface Transportation Summit, Oct. 16 at the Mississauga Convention Centre as we feature “Transportation Sales: Can you adapt to the New Normal?”.

This session, led by a sales executive with a leading trucking organization and a respected sales trainer, will examine how transportation companies should adapt to the changing environment to maximize sales productivity and revenue growth.

Dan Goodwill, president of Dan Goodwill & Associates has more than 30 years of experience in the logistics and transportation industries in both Canada and the US. He writes a regular blog for www.trucknews.com.

13-04-08 3:56 PM

COVER STORY

EXHAUSTING EXPERIENCE Maintenance managers are struggling with emissions equipment.

Will the 2014 model engine bring relief?

By John G. Smith

30 FLEET EXECUTIVE â?™ March/April 2013

Engines.indd 30

trucknews.com

13-04-09 9:07 AM

G

s avid McKenna joked about pulling the shortest straw when it came time to address a standing-room crowd of maintenance managers, and the crowd laughed with him. Other members of his Technology and Maintenance Council panel were discussing emission controls to come, but the director of powertrain sales at Mack Trucks had the unenviable task of listing equipment problems linked to earlier decrees by the US Environmental Protection Agency (EPA).

It was a long list.

The last 11 years have seen the biggest changes in diesel technology since Rudolf Diesel created the first engine of its kind, McKenna said, referring to EPA mandates that came in October 2002, 2007 and 2010. First came Exhaust Gas Recirculation (EGR) systems to lower smog-producing NOx created in the combustion process. Diesel Particulate Filters (DPF) followed those, capturing lung-clogging flakes that would otherwise be released from an exhaust stack. Selective Catalytic Reduction (SCR) and the related tanks of Diesel Exhaust Fluid (DEF) were introduced to transform remaining NOx into nitrogen and water.

New maintenance challenges emerged every step of the way, and with every nameplate.

“Exhaust Gas Recirculation challenged us all,” McKenna said, referring to his fellow manufacturers. Coolers cracked in the face of demands to lower exhaust gases from 1,000 Fahrenheit to 300 Fahrenheit in a space of just 24 inches. Valves failed. Pitot tubes plugged.

The most common hardware-related complaints these days seem to be traced to DPFs. Delta pressure sensors have cracked, trucknews.com

Engines.indd 31

filters are plugging ahead of schedule, and fleets report unwanted spikes in the regeneration processes which transform trapped soot into ash. Many shops are cleaning the filters ahead of schedule – after as little as 325,000 km of service – largely to spot emerging problems while the equipment is still under warranty. Meanwhile, engines are being de-rated to sloth-like speeds when “drifting” NOx sensors generate faulty engine codes. No clean air? No speed for you.

Engineers have hardly been sitting idly by. The diameters of pitot tubes were enlarged to keep them clear. EGR coolers have been remounted to protect against cracks, and new software and upgraded sensors are addressing DPF challenges. The addition of Diesel Exhaust Fluid has also allowed earlier EGR rates to be lowered, reducing the strain caused by that process.

The experience with 2010 mandates was probably the smoothest because manufacturers were able to draw on past experience in Europe and Japan, McKenna added. Then again, Navistar ultimately had to abandon its plans to create an EGR-based system that would meet these emissions standards without SCR. Why did these problems happen in the first place? The EPA’s October 2002 deadline forced manufacturers to rush new components into production ahead of an original 2004 schedule, but there was plenty of testing behind the systems which followed. “There was a lot of learning,” Detroit Diesel engineer Chuck Blake explained in an interview. Sometimes, equipment which performed well during many miles in test fleets would struggle in a wider rollout, requiring further upgrades. On Series 60 engines, for example, the EGR valve was moved from the hot side of the engine to the cold side and back again, largely in a bid to keep it free of blockages. Detroit reprogrammed engine software to switch specific components on and off to force unwanted blockages out of the system. And if coolant temperatures appear to climb too fast, a fan might turn on at 205 Fahrenheit rather than 225 F. Other engine makers have examples of their own.

As much as the equipment has evolved, many Canadian fleet managers continue to struggle with components introduced in the name of cleaner air. When asked about the overall experience, several laughed outright.

“I’m very frustrated with the engines,” says Tim Harkness, director of maintenance with Cavalier Transportation Services in Bolton, Ont. In one week alone, five of his trucks broke down because of failing DEF lines. “Everything to do with emission controls is what causes us the problems nowadays,” he says.

Steve Sharpe, Cooney Transport’s manager of fleet maintenance, refers to engine failures involving everything from EGR valves to coolers, DPFs and turbochargers. Oil change intervals at the Ontario-based fleet have dropped to 40,000 km compared to the 60,000 km enjoyed before the air-clearing mandates emerged. “I’m still pushing that out farther than the engine manufacturer would like it to be,” he says.

Steve Haus, service manager for the Erb Group of Companies in New Hamburg, Ont., describes his experience in three words: “Frustrating as hell.” Every time one emission-related March/April 2013 ❙ FLEET EXECUTIVE 31

13-04-09 9:07 AM

COVER STORY

Compared to their 2010 counterparts, 2014 engines will need to be 3% more fuel-efficient; the 2017 models will need to better the 2010 models by 5% challenge is addressed, another seems to emerge. First, EGR valves and coolers were failing. Then problems emerged where cooled exhaust was fed back into the engine. Drivers also had to be discouraged from a long practice of topping up any low coolant. “If you’re adding antifreeze and you don’t see a leak, it’s going internally, and [then] it’s messing up sensors,” Haus says.

One of the biggest challenges of all has come in the form of added weight. The latest SCR-era equipment is adding about 450 lb. to the truck. Coupled with the weight of tools like chains for northern routes, it can be tough to fit 43,000 lb. of cargo in the trailer, he says.

Mullen Trucking’s biggest issues tended to involve failing sensors. Luckily, maintenance director Kelly Scheer says the components linked to SCR systems have been relatively trouble-free, other than a batch of trucks that had problems with heated lines used to deliver the DEF, causing engines to de-rate.

The latter issue bothers Gary McLean most of all. “The units that work seem to work well,” says the maintenance supervisor with Steinbach, Man.-based Penner International. “When they have a problem, you are up the creek.” Stuck with a de-rated engine that can barely limp off a highway, drivers can face long delays to address issues like a split DEF line – especially in areas where shops are stretched to the limit. “It would be nice if that de-rating would start after 2,000 km,” he muses. “If [a driver has] to spend five days in Edmonton when his home base is somewhere in Manitoba ... you’re looking at a big cost.”

32 FLEET EXECUTIVE ❙ March/April 2013

Engines.indd 32

Outside of cracking EGR coolers, XTL Transport’s maintenance director, Jason Wood, struggles with drivers who ignore the warning lights that call for a DPF to be manually regenerated. The solution has come in the form of added inventory and a pair of extra DPF units for each model of truck. But now he’s worried about what the fleet’s experience will be with SCR. “It’s not so much the cost. It’s giving the driver a responsibility to make sure the tank is full.”

As much as components have evolved, there’s no mistaking that fleets shoulder new responsibilities with every new piece of exhaust-handling equipment.

McKenna stressed several times that fleets need to watch for updates to the engine software stored in Electronic Control Modules. Service bulletins also need to be monitored for advice on caring for everything from delta pressure sensors to seventh injectors. Coolant must be free of any air, and the related pressure cap needs to have the proper rating and sit securely in place. Diagnostic trees also have to be followed to the very last step, addressing any underlying causes of different symptoms, he added.

Even the quality of the fluid needs to be monitored. “A $150 refractometer will give you a very good idea of the water content in the DEF,” McKenna said.

In the meantime, fleets are cautiously waiting for the 2014-model-year engines, which promise to reduce greenhouse gases (GHG) and improve fuel economy – a welcome step given that some fleets have only recently recovered fuel economy lost in the name of cleaner exhaust. Compared to their 2010 counterparts, 2014 engines will need to be 3% more fuel-efficient; the 2017 models will need to better the 2010 models by 5%. Canada recently agreed to adopt the same rules.

These engines could carry some new maintenance needs of their own. A label inside the driver’s door on every GHGreducing truck will include every piece of equipment used to meet the standards. Fleets are expected to maintain every related component, whether it is an aerodynamic device or fuelefficient tires, although enforcement strategies have not been set. Some engine parameters – like speed limiters that top out at 65 mpg, or automatic shutdowns that kick in after five minutes of idling – may also be in place.

They will hardly replace today’s systems. Aftertreatment systems like DPFs and SCR are here for the “foreseeable future,” says Vic Meloche, manager of technical sales and support for Detroit Diesel.

It will be up to maintenance managers to decide if this is a reason to breathe easy. FE trucknews.com

13-04-09 9:07 AM

busted!

By James Menzies

Investigation finds widespread tampering of emissions systems. Industry calling for a crackdown on the cheats.

A

n investigation by our sister publication Truck News has found that engine tampering to defeat emissions controls mandated on new trucks over the past decade is widespread and easily attainable.

Frequently advertised as DPF Delete or EGR Delete kits, service providers offer to remove the emissions-reducing devices and then reprogram the engine for better performance at a cost of thousands of dollars, which shops claim will quickly be recovered through improved fuel economy and reliability. The procedure, however, effectively reverses the environmental gains resulting from the advent of EGR and DPF systems introduced in 2007, and essentially restores the vehicle to EPA02 pollution levels.

An EPA02 engine had a regulated output of 2.5 grams NOx and 0.1 grams per brake horsepower hour of particulate matter. The current EPA10 limits are 0.2 grams NOx and 0.01 grams of particulate matter. That means an EPA10 engine is 12.5 times and 10 times cleaner than an EPA02 engine in terms of NOx and PM emissions, respectively.

In the US, there is enforcement at both the federal and state levels, which would impose massive fines on companies providing EGR/DPF Delete services or the operators who have the work done to their trucks.

Need proof of enforcement? Look no further than a $500,000 fine levied by EPA in January against Edge Products, an American company that sold more than 9,000 devices allowing owners of model year 2007 or later diesel pick-up trucks to operate without their factory-installed diesel particulate filters.

“The Department of Justice will continue to vigilantly protect America’s health and environment through the enforcement of the Clean Air Act standards governing emissions from vehicles

trucknews.com

Geared Up.indd 33

and engines,” Ignacia Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division announced in a press release, clearly intended to scare providers of such services.

“This settlement holds Edge Products accountable for selling devices that allow consumers to disable the emission controls on their vehicles by requiring the company to pay a penalty, buy back the devices, and perform a project to offset the air pollution resulting from the Clean Air Act violations.”

Here in Canada, however, the feds and provinces have, until recently, been at loggerheads just to determine who should be enforcing clean diesel regulations. The recent consensus was that the provinces are responsible, but enforcement to date has been non-existent. This black hole of enforcement has spawned the creation of a rapidly growing underground – and in some cases, not so underground – industry, which is profiting at the expense of the environment.

“This is a major concern to us at Mack because during a physical inspection of a potential trade-in, a removal of the Diesel DPF should become immediately apparent and adjustments in trade values can be determined. However, with some of the newer defeat devices, specifically bootlegged software, codes are written to ignore warnings from the various onboard electronic control units that are signaling emission faults. This means that there might be what looks like a DPF installed, but it may be nothing more than an empty canister, which results in an expensive repair after the fact,” said David McKenna, Mack director of powertrain sales and marketing.

Tampering is not limited just to the DPF, McKenna added. There is tampering software available that will close off the Exhaust Gas Recycling valve and ignore the high NOx warning.

“Unfortunately, I do not believe that these are isolated cases, nor do I believe that these will go away. Just think of computer viruses,” McKenna said.

The Canadian Trucking Alliance (CTA) is calling on the provinces to begin enforcing anti-tampering laws and would like to see the feds do their part as well.

March/April 2013 ❙ FLEET EXECUTIVE 33

13-04-09 9:13 AM

Let’s not go on a witch hunt at the scales throughout Canada, lifting up hoods and looking for things. Go after the guys that are offering this service and shut them down.

“The issue here from a CTA perspective is twofold. One, this is an image issue for our industry. It has come with a heavy cost, but we now have smog-free, near zero emissions engines,” Stephen Laskowski, vice-president of the Canadian Trucking Alliance said. “There are societal benefits to that and image benefits over time. If we’ve made that investment, we’re all forced to make that investment. The second aspect of that is a competitive playing field. If we are all using these engines, and these engines come with fuel efficiency restraints, if the restraints are shared by everyone, then that’s the reality of the sector. What we don’t want to have is folks who not only ruin the image of our industry but also compete with a tractor that’s more efficient because he’s tampered with his engine. You can’t have an economic advantage by going to a lawless carrier.”

The way the laws are currently written, Environment Canada relinquishes its authority over the vehicle once it’s manufactured to federal standards and delivered to the dealer or end user.

“It’s then left to the provinces to enforce,” Laskowski said.

“We would ask: why wouldn’t you have joint federal penalties along with the provincial penalties for these types of offenses to discourage it even more? That’s an issue we’re raising in Ottawa.

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34 FLEET EXECUTIVE ❙ March/April 2013

Geared Up.indd 34

and you’re caught. We don’t have that federal penalty hanging over people, and we ask why not?”

The CTA is calling on provinces to go after the shops that are providing the service.

“The CTA’s position is this: let’s not go on a witch hunt at the scales throughout Canada, lifting up hoods and looking for things. Go after the guys that are offering this service and shut them down,” he said.

To find out just how prevalent and attainable these services are, Truck News’ on-road editor and frequent Fleet Executive contributor Harry Rudolfs conducted an investigation, calling numerous shops across Canada under the guise of an owner/ operator or small fleet owner. He found many service providers openly advertising their services online. Some admitted the practice was illegal, others were of the opinion it’s legal in Canada and still others admitted they were “bending the rules.” The inconsistencies should not come as a surprise, given the lack of clarity from Ottawa.

With no more effort than a Google search and a couple of phone calls, Rudolfs found shops locally and across Canada willing to provide the service. Others provided referrals for shops that would do the job, revealing a broad network of well-connected service providers. Rudolfs also came across shop owners who refused to engage in the “unethical” procedure. The inconsistencies in how the laws are interpreted, even by those performing the services, are understandable.

We polled government officials in Ontario and Alberta to get an idea of the level of enforcement that exists. In Ontario, the Ministry of Transportation referred our questions to the Ministry of the Environment.

Kate Jordan, spokesperson with the communications branch of the MoE, said: “All vehicles must have the emission components that they came with from the manufacturer and these must be connected and in proper working condition. If a vehicle is found to be out of compliance with the ministry’s requirements, enforcement action is taken.”

Jordan said the MoE can issue warnings, tickets, summons and orders to the drivers and owners of the vehicles, and can even go so far as to seize licence plates and remove the trucks from the road. She said Ontario’s Drive Clean program, which requires trucks seven years of age and older to be tested for emissions every two years, should identify any trucks that have had their emissions systems modified.

However, the scofflaw garage owners Rudolfs spoke to boasted of their ability to delete the EGR/DPF systems and still pass the opacity tests conducted through Drive Clean. In Alberta, installing a DPF Delete kit itself is not a regulatory offence, according to Alberta Transportation spokesperson and public affairs officer Trent Bancarz. However, the annual Commercial Vehicle Inspection Program (CVIP) inspections conducted on all large trucks do require an OEM or equivalent exhaust system.

“This CVIP criteria comes from the National Safety Code Standard 11B, which all provinces have adopted,” he said. “If the trucknews.com

13-04-09 9:13 AM

only thing a vehicle owner has done is have a DPF Delete kit nadian officials have had difficulty ascertaining the reach of installed, then the vehicle should fail a CVIP inspection. The 11B such practices. CTA’s Laskowski said: “There’s a smorgasbord as criteria is being reviewed currently. It is expected the criteria per- to what can be done out there. The degree to which people are taining to emission systems will be clearer, and a DPF Delete kit taking advantage of it is unknown, but there are various creative or removing emission systems will be a clear reject criteria. When garages doing various creative things to the environmental the 11B is updated, a commercial truck with a DPF Delete kit equipment in pursuit of improved fuel efficiency.” FE will not pass an Alberta CVIP inspection.”

This could spell trouble for owner/operators or fleet owners who’ve had such work done to their trucks. Reversing the process would also require purchasing a new particulate filter, which costs thousands of dollars on its own. (In some cases, the DPF is removed from the truck, but more often, it’s hollowed out so the truck appears to be in compliance during visual inspections. The hollowing out of a DPF renders it completely ineffective). It’s possible many drivers will be stuck with trucks they can no longer certify under the CVIP, without a costly reversal of the work they paid so dearly to have done.

All indications are that increased enforcement of the regulations is coming at the provincial level. Truck News learned the issue was discussed during a recent Canadian Canadian Council of the Ministers of Environment meeting. A crackAnd is Proud to Sponsor down could be imminent, putting an end to the service offerings or driving providers further underground. OEMs, also, strongly advise against the practice.

Lou Wenzler, technical sales support director with Cummins, said it’s difficult to tell how widespread the issue of engine tampering is. However, he said “Cummins does not condone tampering www.drivingforprofi t.com www.truckingforwishes.com with our products in any capacity at any expert information in an helping dreams come true for children time during the product’s life.” affordable fashion with life threatening illnesses Wenzler said Cummins has a corporate policy preventing its own distributors from engaging in the activity, and added, “Cummins’ warranty policy specifically Disability • Downtime • Buydown states that any failures caused by incorrect engine modifications are not covered

by Cummins. Tampering with or disabling emissions control devices may also impact repair times.”

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Geared Up.indd 35

March/April 2013 ❙ FLEET EXECUTIVE 35

13-04-09 9:13 AM

3 002013.2 TransCore’s Canadian Freight Index pulls back in February

After setting an all-time high record in January, TransCore’s Link Logistics Canadian Freight Index for the spot market saw volumes return to a more normal level for February with a 13% decrease in month-over-month volumes. Year-over-year load volumes were also down 11% from February 2012.

Cross-border load postings accounted for 68% of the data submitted by Loadlink’s Canadian-based customers. Crossborder loads destined for provinces within Canada were down 19% year-over-year compared to February 2012.

However, cross-border loads from Canada to the US increased 3% year-over year. The top states of origin for loads destined to Canada were Ohio, Pennsylvania, Illinois, Indiana and Michigan, respectively.

Overall load volumes for intra-Canada postings averaged 27%. Although, the year-over-year volumes were down 6% from February 2012, the capacity increased year-over year by 6%.

Equipment postings were at expected levels for the month of February. February’s postings decreased 5% from the previous month. In spite of this, postings had a slight increase of 5% from February of the previous year.

The first six columns include monthly index values for years 2008 through 2013. The seventh column indicates the percentage change from 2012 to 2013. The last column indicates the percentage change from the previous month to the current month. For the purpose of establishing a baseline for the index, January 2002 (index value of 100) has been used.

Total freight costs for 2012 finish down 2.95% year-over-year Results published by the Canadian General Freight Index (CGFI) indicate that the total cost of ground transportation for Canadian shippers increased by 1.14 % in December when compared with November results.

The Base Rate Index, which excludes the impact of accessorial charges assessed by carriers, increased marginally by 0.34 % when compared to November.

Average fuel surcharges assessed by carriers have seen a decrease from 20.56% of base rates in November to 19.66% in December.

“Even with a slight uptick in December, total freight costs for 2012 finished 2.95% below December of 2011,” said Doug Payne, president and COO of Nulogx. “Looking at 2012, January and February saw increases in total freight costs, however, those gains and more were lost in March to June and for the balance of the year we saw total freight costs remain relatively flat with a slight uptick in December.”

36 FLEET EXECUTIVE ❙ March/April 2013

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TransCore Canadian Spot Market Freight Index 2008-2013

% % 2008 2009 2010 2011 2012 2013 Change Change

Y-O-Y M-O-M

Jan

214

140

171

222

220

228

-4%

25%

Feb

217

117

182

248

222

198

-11%

-13%

Mar

264

131

249

337

276

Apr

296

142

261

300

266

May

316

164

283

307

301

Jun

307

185

294

315

295

Jul

264

156

238

245

233

Aug 219 160 240 270 235 Sep 203 180 234 263 200 Oct 186 168 211 251 215 Nov

143

157

215

252

215

Dec 139 168 225 217 182 TransCore Canadian Spot Market Freight Index 2008-2013

The CGFI is sponsored by Nulogx, a 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: www.cgfi.ca.

Rail freight continues its upward climb Canadian railways carried a total of 26.0 million tonnes of freight traffic in December, an increase of 0.7% from December 2011, according to Statistics Canada. Freight loaded domestically, as well as traffic received from US connections, both rose during the month, with the US traffic providing the strongest growth.

Domestically, combined loadings of non-intermodal freight (i.e., freight moved via box cars or loaded in bulk) and intermodal freight (i.e., freight moved via containers and trailers on flat cars) rose 0.3% to 23.1 million tonnes.

Non-intermodal freight rose 0.2% to 20.9 million tonnes. Key commodities that contributed to the growth in tonnage were loadings of fuel oils and crude petroleum, and iron ores and concentrates. At the other end of the spectrum, a number of commodities saw declines in tonnage during the month. Colza seeds (canola), coal and iron and steel (primary or semi-finished) were the principal commodities that led the decline.

Intermodal freight increased 1.4% to 2.2 million tonnes. The gain was solely the result of higher volumes of containerized cargo shipments as trailers loaded on flat cars fell during the month. The Western Division accounted for 60.0% of the domestic freight trucknews.com

13-04-08 10:42 AM

DASHBOARD

omist Bob Costello said. “While I think this is a good sign for the industry and the economy, I’m still concerned that freight tonnage will slow in the months ahead as the federal government sequester continues and households finish spending their tax returns. A little longer term, I think the economy and the industry are poised for a more robust recovery.”

Manufacturing sector records strongest expansion in five months: RBC PMI

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Dashboard.indd 37

2011

JAN

OCT

JUL

APR

JAN

OCT

JUL

JAN

2010

APR

The February RBC Canadian Manufacturing Purchasing Managers’ Index pointed to the strongest expansion in Canada’s manufacturing sector since last September, although the rate of growth was only modest.

ATA Truck Tonnage Index The headline RBC PMI – a composite indicator designed to edged higher in February The seasonally adjusted US For-Hire Truck Tonnage Index rose provide a single-figure snapshot of the health of the manufactur0.6% in February after increasing 1% in January, according to the ing sector – indicated a modest improvement in Canadian manAmerican Trucking Associations. (The 1% gain in January was ufacturing business conditions in February. However, at 51.7, the RBC PMI remained below the series average (53.6), despite revised down from a 2.4% increase ATA reported earlier.)

Tonnage has now increased for four straight months, which having risen from the near survey-low of 50.5 in January. hasn’t happened since late 2011. Over the last four months, tonThe RBC PMI found that both output and new orders innage gained a total of 7.7%. creased in February, partly reflecting greater demand and new In February, the SA index equaled 123.6 (2000=100) versus client wins. The rates of growth were stronger than in January, 123.0 in January. The highest level on record was December but weaker than their respective series averages.

2011 at 124.3. Compared with February 2012, the SA index “The Canadian manufacturing sector fended off the February was up a solid 4.2%, just below January’s 4.6% year-over-year blahs with strengthening output and employment growth,” said gain. Year-to-date, compared with the same period in 2012, Craig Wright, senior vice-president and chief economist at RBC. the tonnage index is up 4.4%. In 2012, tonnage increased “Greater demand from United States, Japan and China played a key role in boosting new export work which helped nudge out2.3% from 2011.

“Fitting with several other key economic indicators, truck ton- put growth to the fastest pace of growth in the past six months. nage is up earlier than we anticipated this year,” ATA chief econ- While it would be premature to suggest that the global economy is treading on a much brighter path, these modest improvements hint that better days RBC CANADIAN MANUFACTURING PMI™ may lie ahead.”

Manufacturing sector experiences strongest expansion in five months, The volume of new orders received by though pace remains modest Canadian manufacturers increased for the 58 third month running in February. Firms generally commented on new client wins, al57 though greater global demand, particularly 56 in the US, Japan and China acted to boost 55 Low new export work. Overall, the rise in total 54 50.4 new orders was moderate and the strongest High 53 since last September.

56.9 52 A monthly survey, conducted in association with Markit, a global financial informa51 tion services company, and the Purchasing 50 50 = no change from previous month Management Association of Canada (PMAC), 49 the RBC PMI offers a comprehensive and 48 early indicator of trends in the Canadian manufacturing sector. FE OCT

Source: RBC, Markit

loadings, down 2.8% to 13.8 million tonnes compared to the same month in 2011. The remainder was loaded in the Eastern Division which saw its loadings increase by 5.4% to 9.3 million tonnes. For statistical purposes, cargo loadings from Thunder Bay, Ont., to the Pacific Coast are classified to the Western Division while loadings from Armstrong, Ont., to the Atlantic Coast are classified to the Eastern Division.

Freight traffic received from US connections gained 3.8% to 2.9 million tonnes. Similar to the domestic scene, both non-intermodal and intermodal loadings rose in December compared with December 2011.

2012 March/April 2013 ❙ FLEET EXECUTIVE 37

13-04-08 10:42 AM

INSIDE THE NUMBERS Aging of truck drivers and other professions (average age in years) 1996

2006

Increase

40.5 36.1 34.7 35.6 38.4 40.3 39.9 37.1

44.2 40.9 36.9 33.7 40.3 40.7 41.8 39.7

3.7 4.8 2.2 -1.9 1.9 0.4 1.7 2.5

Truck drivers Delivery drivers Materials handlers

Getting old fast

A sobering new look at the truck driver demand gap The age of the average Canadian truck driver is increasing more rapidly than the age of the average worker due to fewer young workers choosing driving as a profession, according to new research from the Conference Board of Canada. Meanwhile, the demand for truck drivers will increase as industries that rely on trucking continue to grow. By 2020, the gap between the supply and demand of drivers is expected to be 25,000 and could reach as high as 33,000. This raises concerns not only for motor carriers who will have to forego their company growth plans, but also for many Canadian industries whose growth is reliant on efficient truck transportation.

Slower delivery times due to insufficient trucking capacity result in higher in-transit inventory costs and less reliable service destroys JIT shipping strategies and results in higher standing inventory costs.

Railway and motor transport labourers Dispatchers and radio operators Transportation route and crew schedulers Heavy-duty equipment mechanics Motor vehicle mechanics, technicians and mechanical repairers

Estimate of driver demand – for-hire trucking 2013 to 2020 (000s)

Atlantic Quebec Ontario Manitoba Saskatchewan Alberta British Columbia TOTAL

2013

2015

2020

9.8 39.0 65.9 6.7 6.5 24.6 24.4 176.9

10.1 40.2 69.8 7.1 6.8 26.0 26.2 186.1

10.6 42.4 77.3 7.6 7.7 29.4 27.7 202.7

For-hire trucking industry supply and demand gap 2020 (000s)

Atlantic Quebec Ontario Manitoba Saskatchewan Alberta British Columbia TOTAL

Supply

Demand

Gap

8.5 37.2 71.4 7.0 6.1 23.3 24.3 178.0

10.6 42.4 77.3 7.6 7.7 29.4 27.7 202.7

2.0 5.2 5.9 0.6 1.6 6.2 3.4 24.7

Impact of service levels on shippers’ logistics costs ($)

Direct transportation cost Inventory carrying cost Order processing cost In-transit carrying cost Standing inventory cost Total logistics cost

High

Medium

Low

18,000 18,000 1,200 3,945 1,237 42,382

18,000 18,000 1,200 5,260 2,473 44,934

18,000 18,000 1,200 5,260 4,947 47,047

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