Motortruck November December 2013

Motortruck

Fleet Executive

C A N A D A ’ S

B U S I N E S S

M A G A Z I N E

NOVEMBER DECEMBER 2013

F O R

F L E E T

O W N E R S

FUEL Debating the future of fuel surcharges SAFETY Take the next step to accident prevention SUMMIT What’s driving surface transportation?

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Shippers love them; carriers hate them.

What’s the best route towards making them work for both?

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November/December 2013

contents

Volume 82, No. 06

COVER STORY 23 Freight Bids:

Shippers love them; carriers hate them. Can they find agreement on a better way forward?

Features 11 THE NEXT STEP TO ACCIDENT PREVENTION If the object is to climb a tree, is it best to train a rabbit or to use a squirrel? The answer has a lot to do with how effective your safety programs will be from the get go. Read our report from the Fleet Safety Council’s annual conference.

14 LEADERS Toronto Transportation Club’s John Foss on the benefits of belonging and the importance of being inclusive.

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Surface TranSporTaTion 2012

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17 INSIGHTS FROM THE SUMMIT A blue-chip panel of more than 20 speakers dug deep into key transportation issues such as the economic outlook, mergers & acquisitions and rates at our Surface Transportation Summit. Share in the insightful exchange of ideas with our special report.

31 HITTING THE MOVING TARGET ON FUEL SURCHARGES Editorial director Lou Smyrlis leads carriers and shippers in a debate on the future of fuel surcharges and more from the CITT annual conference.

Departments 6 THE VIEW WITH LOU Stop complaining about the bumps on the road and start doing something about them.

Surface TranSporTaTion 2012

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Surface TranSporTaTion 2013

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Surface TranSporTaTion 2012

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8 THE HUMAN EDGE Sure drivers are the backbone of your operations but they need support from others in your organization. And that means an HR plan that goes beyond drivers.

9 THE BOTTOM LINE Hitting the road with your sales reps not in your plans this holiday season? Here is why It should be.

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10 RISKY BUSINESS Managing your driver pool effectively requires clear performance expectations. What should they include?

13 TAKING CARE OF BUSINESS Why sometimes employees SHOULD stay home.

35 GEARED UP Cummins to launch 5.0L V8 diesel engine and we’ve got the scoop.

4 FLEET EXECUTIVE ❙ November/December 2013

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trucknews.com

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For a location nearest you, call 1-800-592-8838.

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Š 2013 Chevron Canada Limited. All rights reserved. All trademarks are the property of Chevron Intellectual Property LLC or their respective owners.

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Motortruck

Fleet Executive THE VIEW WITH LOU

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

SEPTEMBER/OCTOBER 2013

VOL. 82 NO. 06 PUBLISHER & EDITORIAL DIRECTOR

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

Smoother road ahead?

It will be if you stop complaining about the bumps and start doing something about them

O

ur annual Decisions issue aims to forecast the road ahead. I don’t need to tell you that since 2008 that road has been uncharacteristically bumpy, despite the economic recovery from 2010 onwards.

Will that road get any smoother in 2014? To be honest, the best I can say is I’m not sure. I tune in to a lot of economic forecasts and they seem more contradictory than usual this time around. Optimists such as Export Development Canada’s chief economist Peter Hall, Cormark Securities transportation market analyst David Newman, American Trucking Associations chief economist Bob Costello and Carlos Gomes, senior economist with Scotiabank and a speaker at our own Surface Transportation Summit, look at the rise in business orders for goods and services and see a North American and world economy poised for growth. They look at the steady growth in the freight services indices and see further confirmation of their views.

Yet others such as CIBC World Markets economist Emanuella Enenajor are less enthusiastic about North American economic growth ahead and are dismissive about the importance of Canadian manufacturing, a key staple for Canadian carriers. Enenajor sees manufacturing becoming a less and less important part of our economy.

And some are downright pessimistic. Noel Perry, managing director with research firm FTR Associates, is telling motor carrier executives they “should not have high expectations for the remainder of this recovery.” Perry looks at the same numbers that for the optimists signal growth and sees an industrial sector and home sales that are leveling off. He’s even uttering the dreaded R word.

“We are now at the point where historically, you would begin to expect a recession at some point in the next two to three years,” is his somber advice.

Bah Humbug! Well, the best advice I ever received about forecasting came from Mike McCarron a few years ago when he was a managing partner with MSM Transportation and charting his way through the Great Recession. No matter how bad

FEATURES EDITOR

Julia Kuzeljevich (416) 510-6880 julia@TransportationMedia.ca CREATIVE DIRECTOR

Roy Gaiot rgaiot@bizinfogroup.ca

the economic climate, he told me, there is freight that needs to be moved. So better to stop worrying about how much less of it there may be and put your effort towards ensuring more of it moves on your trucks and does so in a profitable manner.

Simple yet effective advice. To that end, I applaud Jacquie Meyers of Meyers Transport, Michelle Arseneau of GX Transport and Bruce Jantzi of Erb International, who tackled the thorny issue of RFPs at our Surface Transportation Summit.

They didn’t mince words. They called it as they saw it. Although RFPs can be effective if shippers take the time to properly vet the carriers they allow into the bidding process, investigating the carriers’ operations and processes and meeting with their executives to ask and answer questions, too often it seems RFPs turn into an impersonal, multiple round attempt to simply drive down pricing.

As Meyers, whose remarks made her an instant industry celebrity, pointed out: the carriers who do “win” these bids are not actually winning. It simply means they are the cheapest or close to the cheapest and giving something up – Driver training? Safety? Security – to be the cheapest.

All three affirmed the only action that makes sense in dealing with such RFPs: Refusing to participate if they seem structured to reduce decision making down to price.

Meyers issued a call to action to both shippers and carriers.

To shippers, she urged “Please invite us to the table. We want to come to the party. Let us be a strategic partner.”

To carriers, she said “When invited to participate in the tender process, start the dialogue. Talk about how you can impact their bottom line without being the cheapest. Invest in collaboration, bring your A-team and find ways to do better.”

Six months from now we’ll know which economist had the better crystal ball. In the mean time, Meyers offers some damn good advice to follow in 2014. FE

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The contents of this publication may not be reproduced or transmitted in any form, either in part or full, including photocopying and recording, without the written consent of the copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without prior written consent. Motortruck Fleet Executive is indexed by Micromedia Limited.

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

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6 FLEET EXECUTIVE ❙ November/December 2013 Member/Canadian Business Press

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THE HUMAN EDGE

THINK FORWARD

Succession planning. It can be as easy as 1,2,3…4

By Angela Splinter, Trucking HR Canada

W

ith an ongoing and increased focus on the driver shortage, I think it is time to shed light on additional HR challenges the industry should be considering. Yes, drivers are the largest occupational grouping in trucking and they are the backbone of trucking operations — but they need support from others in the organization in order to keep freight moving.

A good manager keeps the future in focus, and this should include HR plans for other key and supporting occupations.

In addition to projected driver shortages, consider this: • 1 in 10 dispatchers are over 55 years old.

• 1 in 8 managers, supervisors and foremen are over 55 years old.

• 1 in 6 freight claims and safety & loss prevention specialists are over 55 years old.

• Statistics Canada reports that the retirement rate for supervisors in freight transportation (including rail) is among the highest for all occupations.

• The highest retirement rates (after drivers) in trucking occupations in 2011 were managers/supervisors/foremen, freight claims and safety & loss prevention specialists and dispatchers.

These are all jobs in which it can take up to a few years to develop the skills to be effective.

This is why succession planning should be a key component of an overall strategic business plan. Consider the impacts to your bottom line: • Succession planning reduces time and expense in filling vacancies • It can assist in reducing turnover • It increases appeal to prospective employees and investors • It ensures your business will be better prepared to deal with a sudden loss of key players.

Many highly successful companies focus on “growing their own” — to be sure they can have the right people in the right jobs at the right time. Succession planning traditionally focuses on talent management for leadership and critical positions and is considered to be a subset of overall workforce planning. Succession planning is a key responsibility of the senior leadership team and it should be integrated into the business planning process.

It includes four steps: STEP 1: Review your business Decide which skill sets or positions are most critical for the succession planning effort. The company’s future success will depend on having the right people ready for the right jobs, at the right time. Planning ahead for your company’s key posi-

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tions should be a part of your business planning process. Look at the age profile and capabilities of your firm’s key people.

Think about where your business is headed, what skill sets will be needed, and what risks it might face.

Review your business plan — what will be most important for the company’s future success?

For example, are you planning to innovate and expand into new markets, or consolidate your current customer relationships in the face of rising competition? What challenges do you expect with your workforce — will you need to focus on recruiting young people, retaining your current staff, managing cultural differences, or introducing more efficient practices? In terms of managing the finances, what must the company do very well — cut costs, grow revenues, attract new investments, manage capital, etc.? How might your company’s operations change and what will it take to make those changes succeed?

STEP 2: Review your company’s “bench strength” Identify the people with potential and the development they need. It is important to identify promising individuals who can be supported to grow into senior roles in your organization.

Evaluate everyone’s performance and their potential.

STEP 3: Close the gap Develop those skill sets that will make a difference and work with individuals to create a development plan. Once you have identified the promising individual(s), involve them in the process. Start by asking the employee(s) about their career, their interests, current skills and gaps, etc. This will help to retain and focus key talent during a time of skills shortages in the industry.

STEP 4: Monitor and review succession planning efforts There is a temptation to think that once the succession plan is developed, the work is done. Such thinking can prevent you from identifying and anticipating changes in the environment.

The plan should be a living document that changes with time; expect to update and revise your plan regularly. Check progress and take actions as needed. On a regular basis, review the status and progress of the development plan of the candidate(s) with recognized potential. Review the entire plan annually, and do a quarterly review for the high potential candidate(s) and the highest risk gaps. With a good plan and a committed management team, this discussion might take an hour or two each quarter. Certainly, a few hours each year is a reasonable investment in order to ensure that your firm has the people it needs to support your operations - including your drivers. FE trucknews.com

13-12-03 2:47 PM

BOTTOM LINE

Want to raise your rates?

Hitting the road with your sales reps may not have been in your plans this holiday season. It should be.

By Mike McCarron

P

ricing power—or the ability to raise your rates without losing a customer—is hard to achieve in a commoditized business like transportation.

But a report from Simon-Kucher & Partners gives reason to hope. The firm’s Global Pricing Study 2012, a survey of more than 2,700 executives and managers, noted that profits rise sharply when C-level executives take an active role in pricing.

When the bigwigs commit to owning price from cradle to grave, the result is a whopping 28% increase in EBIDTA. Companies with a dedicated pricing organization are 23% more likely to increase their profit margins as a result of a price increase.

With percentages like that you’d think that every transportation CEO would take control of the pricing power goldmine. Apparently not!

In late November, while attending an industry convention, I conducted one of my patented “HAB Surveys” (Hanging Around the Bar). Over 80% of the leaders I informally chatted with have very little to do with pricing strategy at their company. Almost everyone dabbled in it but very few actually owned the process. The majority relied on middle managers and sales reps to do the dirty work. Not surprisingly, once the truth serum kicked in, not one person was confident about his ability to raise customers’ prices.

With rates that are consistently below expectations in this industry, here’s how I would take control of the pricing power goldmine: 1 | OWN THE GOLDMINE For smaller companies, “owning” pricing can be as mundane as the president approving every rate request before it goes out the door. For larger companies, it could mean making pricing topic No. 1 at every C-level and staff meeting. Regardless of your company’s size, the mere fact that the boss has made pricing a personal responsibility will mean increased attention by the entire staff. When it’s important to the boss, it magically becomes important to every one else!

2 | CREATE STRUCTURE The next step is to build a structure to deal with the complex nature of setting prices. Pricing is far from an exact science. You’re combining internal and external facts with a splash of market intelligence and a dash of industry instincts.

At a minimum, you should communicate your goals as a business, define where the buck stops, and clearly articulate the roles of every pencil that touches the numbers. Establish who within the organization will do the day-to-day pricing

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work to make sure your strategies get implemented. Structure is the only way to add rationale and accountability to an irrational process.

3 | CHANGE THE MESSENGER The most important component of any pricing structure is its delivery to customers. Let’s call a spade a spade: shame on us for allowing sales reps to be the messenger. Pricing is too important to be left in the hands of weak-kneed peddlers who are remunerated on everything but profitability.

Ownership of pricing means getting out of the corner office and hitting the streets. People love dealing with the boss. It makes every customer feel important while sending a strong message that you’re serious about your agenda.

4 | NO KNEE-JERKING While you’re taking ownership of pricing, you still have customers out there whose rates haven’t been increased or even looked at in years. To them, your careful, measured approach is going to feel like a knee-jerk reaction.

Give it time. For example, in my previous life, our C-suite took six months to plan and implement a $17 border surcharge fee. Accessorial charges are a critical leakage point in pricing— more often than not, these are waived by a sales rep taking the path of least resistance—and we wanted to make sure customers understood why we were applying this charge. Yes, I had to make a lot of sales calls. But, with top-level support, the fee added $700,000 of sustainable gold to our bottom line. It’s part of your job when you own the gold mine!

5 | “ME–NOT” Saying “me too” to Sinking Ship Transport’s rate is a common strategy for pricing new business. We’ve all heard the song and dance: “We have to match these rates to get the deal.”

It makes zero sense. Do you really think the customer is switching suppliers because he has nothing better to do?

Instead of getting agitated every time they’re presented with “me too” pricing, your sales reps must have the discipline to uncover the real reason for change.

Hitting the road with your sales reps may not have been in your plans this holiday season. However, it’s the best way to show who’s in charge while making sure there is some gold under the company Christmas tree. 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. November/December 2013 ❙ FLEET EXECUTIVE 9

13-12-03 2:59 PM

RISKY BUSINESS

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

SET TARGETS Managing your driver pool effectively requires clear performance expectations

By Rick Geller

I

f I gave you a bow and arrow, stood you in a field and asked you to shoot the arrow, how would you know how well you had done? What would happen if I were to put a target out in that field and then ask you to shoot the arrow? Would that provide a better method for you to determine how well you had done?

So it goes for many drivers. Carriers often ask their drivers to perform well but fail to set targets or even define what “well” means. This creates environments where individual drivers have to try to figure out for themselves what is expected from them.

What is a driver to do when the carrier tells them they are expected to obey all hours of service rules, but then questions the driver’s commitment when they are out of hours? When I ask a carrier to tell me who their good drivers are and why, I am frequently given a list of names and told that the carrier can “count on them” when that rush load comes in. When I compare that list to the list of drivers having crashes and/or accumulating violations, is it surprising that the names are often the same?

I am a firm believer that people do not fail, processes do!

From a safety management/loss control perspective, what processes can carriers implement that will help them effectively manage their drivers? First and foremost, do you have a formal, written, job description for your drivers? There is more to driving a truck than physical driving skills and the ability to handle the equipment.

A good job description identifies the tasks that the driver is responsible for, the knowledge level that the driver must have, the required skills and abilities, and finally, facilitates appropriate performance measurements. An excellent resource for developing job descriptions can be found on-line at www. onetonline.org. Most of the above information is available for a variety of occupations, including truck drivers, and it is free for the taking.

Once the job description is completed, carriers should then turn their attention to the driver selection process. Put aside the standard minimum number of years experience and the maximum number of violations criteria. Focus on the knowledge, skills, and abilities that the driver needs to have.

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This provides an appropriate benchmark to measure applicants against. It also facilitates determining what on-boarding, refresher, and remedial training is required to set both the driver and the carrier up for success.

A common concern I hear is, “What happens if I put all this training into the driver and they leave me?” The more relevant concern is what happens if you don’t and they stay!

Issues regarding work styles should be addressed in the performance measurement standards that flow from the job description. Are you inadvertently encouraging inappropriate behavior by only measuring the result that is produced?

Performance standards should outline the behaviours you need drivers to comply with in order to produce the result you are looking for. It is important to fully define how the driver can meet the performance expectation and how they can exceed it.

By doing this, you are giving them the answers to the test.

How well they do is then entirely up to them and you have something concrete that you can hold them accountable for.

Round out the process with an annual performance review and check ride process. Having an annual performance review is not to say that you do not deal with the issues as they arise. Rather, the annual review is an opportunity to summarize for the driver things that are done well, things that need improvement, and provide a roadmap on what they can do to improve, as well as the level of support that you are prepared to provide.

Ultimately, I believe that Bison Transport’s Rob Penner said it best when he said that everyone’s mission in life should be to ensure that everyone gets to their destination safely. Every day! FE Rick Geller, CRM has been providing innovative and cost-effective risk management solutions to the trucking industry for more than 30 years. He serves on the board of directors for the Canadian Trucking Human Resources Council, is the vice-chair of the Toronto Chapter of the Fleet Safety Council and vice-chair of the Fleet Safety Council Conference Committee, as well as an Executive Committee member for both the Ontario and Toronto Regional Truck Driving Championships. trucknews.com

13-12-03 3:08 PM

SAFETY REPORT

SAFE PRACTICES START WITH THE HIRING PROCESS

By Lou Smyrlis

If

the object is to climb a tree, is it best to train a rabbit or to use a squirrel?

That’s Dr. Chet Robie’s tongue-in-cheek way of saying that although there is value in training people towards company expectations, it’s much easier when you start with the right people. Wilfrid Laurier University’s Dr. Robie was one of the speakers at the Fleet Safety Council’s 22nd Annual Educational Conference, in Kitchener this fall.

Dr. Robie focused on what motor carriers should consider in their hiring processes to make sure, from a safety perspective, they are placing the right people behind the wheel of their expensive equipment.

Simply checking up on the applicant’s prior driving record doesn’t cut it, according to Dr. Robie. Although important to look at, it falls short of identifying many at-risk individuals.

That’s because you can’t predict the occurrence of specific future accidents based on prior accidents. From a statistical perspective, serious accidents are relatively rare.

“We can only predict the possibility that people who engage in certain behaviors which, if they persist, will make

accidents likely,” Dr. Robie explained. Think improper lane changes, poor speed management, hard braking, being quick to anger under stress, etc.

But Dr. Robie cautioned that before you start analyzing the behavior of job candidates it’s important to look inward first.

The first step in any selection program starts with a proper job analysis, explaining that job analysis should include a thorough outline of the tasks, duties, and responsibilities of the job. He recommended the website www.onetonline.org as a good source to help companies get started on this task.

Dr. Robie also recommended using cognitive testing, such as the standard IQ tests, in prescreening drivers, making the argument that research shows smarter people learn more quickly and get up to company performance standards faster.

The disadvantage to including such tests in your hiring process, however, is that drivers don’t like them and in an industry such as trucking where there is a shortage of qualified drivers that can be a roadblock.

The interview process itself is very important in gauging a candidate’s potential and structured interviews are two to three times more effective than non-structured interviews. Asking all candidates the same questions makes it easier to compare the results. Skinner spoke in favor of “behavioral interviewing”. In the context of safety, such interviewing uses questions specifically designed to elicit responses about past behaviors. The basic premise behind behavioral interviewing is that the most accurate predictor of future performance is past performance in a similar situation.

The interviewing focuses on experiences, behaviors, knowledge, skills and abilities that are job related. Whereas traditional interviewing questions ask job candidates general questions such as “tell me about yourself”, the process of behavioral interviewing is much more probing. For example, you would ask a candidate: What were some of the most important safety rules at your prior job? In what ways did you follow them? This would help determine the candidate’s awareness of safety rules and how he has used them.

OR Tell me about a time when you saw an employee working in an unsafe manner. What did you do? This would determine whether the candidate would speak up and demonstrate concern for fellow employees.

Nor should you ignore the reference check process – even if you want to.

“Everybody thinks that reference checking is BS and it’s a pain in the ass and that people don’t get back to you. But if the candidate spent time working for five or six companies and they don’t want to say anything about him, that should be telling you something,” Dr. Robie said.

He also recommended the option of using standardized, Web-based reference checking systems as a way to make reference checking both easier and more effective. FE

Transportation Media is the media sponsor of the Fleet Safety Council’s Annual Educational Conference. trucknews.com

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13-12-03 3:09 PM

SAFETY REPORT

TAKE THE NEXT STEP TO ACCIDENT PREVENTION, URGES SAFETY EXPERT

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he rising cost of lawsuits, increasing government scrutiny and penalties for unsafe operators, and easily accessible technology that can turn any bystander at the scene of an accident into a star witness can mean only one thing for an industry as visible as transportation: Bad decisions when it comes to safety cost a huge amount of money these days. That’s part of the reason why motor carriers need to move beyond being incident reactive to being prevention proactive, according to Mark Skinner of the Infrastructure Health and Safety Association. For Skinner, who spoke at the Fleet Safety Council’s 22nd Annual Educational Conference, that means moving beyond mere compliance with safety regulations towards predictive behavior analysis – the science of analyzing past behaviors to predict the likelihood of such behaviors occurring in the future. In the context of safety, it’s figuring out which behaviors can lead to accidents and taking action before the accident occurs.

“If all we are doing is compliance, we are not really helping anyone,” Skinner said. “Predictive behavior analysis is forward thinking and I mean really forward thinking. But it’s not magic; it doesn’t just happen. It’s a lot of hard work.”

Fortunately for motor carriers keen to take the road towards predictive behavior analysis, all the data made available by technologies such as the engine control module recording hard braking or rapid acceleration provide a rich source of data to be mined.

So can simple observations such as how drivers get out of their cabs – do they use the proper three-point technique or leap out on a wing and prayer?

“A lot of companies may want to do predictive analytics but have yet to master basic recording,” Skinner warned.

Observations of safety related behavior should be both frequent and plentiful – at least five or six times per week – he advised. Record the number of safe behaviors observed, the number of at-risk behaviors observed, and apply a severity grade by calculating the percentage of risky behaviors observed that are of medium severity or above.

Take nothing for granted in your observations, Skinner said.

For example, don’t lull yourself into a false sense of security just because you are providing safety training to employees.

Just as important as how many people attended the safety meeting and what you taught them is what information they actually retained. FE trucknews.com

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13-12-03 3:09 PM

TAKING CARE OF BUSINESS

Sometimes employees SHOULD stay home Dealing with “presenteeism” in your business

By Mark Borkowski

H

ow many employees in your company come to work on any given day coughing, sneezing and aching all over?

So-called “presenteeism,” or going to work when sick, is a persistent problem at more than half of Canadian and U.S. workplaces. It costs US businesses a whopping $180 billion a year, according to research conducted by CCH, a Riverwoods, Illinois based provider of business and corporate law information.

Like its more notorious counterpart absenteeism, it takes on growing importance as employers try to keep an eye on productivity and the bottom line.

“Employers are increasingly concerned about the threat that sick employees pose in the workplace. Presenteeism can take a very real hit on the bottom line, although it is often unrecognized,” says Brett Gorovsky, an analyst at CCH, a division of Wolters Kluwer. CCH research indicates that 56% of human resource executives see presenteeism as a problem. That’s up from 39% making the same complaint two years ago.

Presenteeism costs employers in terms of lowered productivity, prolonged illness by sick workers and the potential spread of illness to colleagues and customers, the report adds.

Presenteeism can prove elusive to measure, unlike absenteeism, says Cheryl Koopman, a professor of psychiatry and behavioral sciences at Stanford University and an expert on workplace stress and presenteeism.

“We all think we know somebody who’s made us sick, when that person is speaking into the same phone or touching your computer or even turning your doorknob,” she says, adding that she too is guilty.

As often as two-thirds of the time, sick people go to work because they feel they have too much work to do, according to the CCH study. The second-most common reason is workers believe no one else is available to cover their workload, CCH said.

“With corporate downsizings of the past creating a leaner workforce, employees often feel they have to show up for work, whether it’s out of guilt over staying home or concerns over job security,” Gorovsky said.

Of course, for plenty of people, going to work sick is not a choice, says Cindia Cameron, organizing director for 9 to 5, an advocacy group that found 47% of the US’s private sector workforce has no paid sick leave.

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Employers and health insurers are increasingly eyeing disease and health management programs as a means to ensure a healthier workforce. Some companies and private health plans are looking at a powerful motivator to entice their employees to participate: cash incentives.

“A robust incentive strategy, whether it offers cash, noncash or a combination of the two is critical to the success of any health management program,” says Michael Dermer, president and chief executive officer of IncentOne, a health and productivity incentive solutions provider.

According to a study by PriceWaterhouseCoopers, 84% of large company CEOs view incentives as the most promising tool to drive health care cost reductions.

IBM has paid out $160 million in wellness incentives, an investment in its workforce the company says it expects to pay off as it encourages employees to participate in walking teams or play basketball during their lunch breaks. Other companies are offering a take the free smoking cessation class, a cholesterol test or a regular trip on the treadmill – from all of which an employee can accrue points toward a company-funded shopping spree. Or maybe even a trip.

Nearly half of major US employers offer healthy living incentives to their employees.

“Data from clinical studies shows that healthier employee behavior pays off for employers in the form of decreased private health care costs, improved productivity and reduced absenteeism,” Dermer says. “The key is to develop a properly designed incentive program that recognizes the role of disease prevention and health management, and aligns rewards with an individual’s desire to achieve health improvements in a positive way.”

All this leads to a more positive bottom line. According to the US Department of Health and Human Services, wellness programs have a median return on investment of more than $4 for each $1 spent. FE Mark Borkowski is president of Toronto based Mercantile Mergers & Acquisitions Corporation.

Mercantile is mid market M&A brokerage firm.

He can be contacted at mark@mercantilema. com or www.mercantilemergersacquisitions.com November/December 2013 ❙ FLEET EXECUTIVE 13

13-12-03 3:10 PM

LEADERS

TTC’S JOHN FOSS ON THE BENEFITS OF BELONGING AND THE IMPORTANCE OF BEING INCLUSIVE

By Lou Smyrlis

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FE. THE TORONTO TRANSPORTATION CLUB CELEBRATED A VERY SIGNIFICANT MILESTONE WITH ITS 100TH ANNIVERSARY THIS YEAR. A LOT OF CLUBS HAVE COME AND GONE OVER THE PAST CENTURY. WHAT’S THE SECRET TO SUCCESS FOR TTC? HOW HAS IT SURVIVED FOR SO LONG?

Foss: The Club throughout its history has always held great events. Industry wide there have been a lot of people who have relied on the Club’s social events to keep in touch with people from all different sectors of the industry. The annual dinner especially has been a popular event. People put it in their schedule right away. They go to the dinner and call up the Club right away to find out the date for next year’s dinner.

But I would also say we’ve enjoyed having a broad spectrum of members and with all their support we’ve been able to weather any tough times over the years. We’ve always had members step up during such times to revitalize the club.

FE. WHAT’S ALSO INTERESTING ABOUT THE TTC IS THAT WHILE MOST CLUBS ARE MODE SPECIFIC, THE TTC IS OPEN TO ALL MODES. WHY IS THAT IMPORTANT?

Foss: The history of the Club started with the railways and the local cartage companies. CP in particular was heavily involved

and is the reason the annual dinner was held at the Royal York as CP owned it at the time. So the roots are multi mode. And that’s also the strength of the Club. We have railways, local cartage, 3PLs, common carriers and a large number of shippers.

Carriers bring in shippers as members and shippers bring in carriers. And that creates a lot of support for the club as well.

FE. IN A RECENT NEWSLETTER YOU WROTE THAT THE WOMEN IN TRANSPORTATION LUNCHEON HAS FOUND A PERMANENT HOME IN THE TTC ROSTER OF EVENTS AND THAT YOU HAVE A FEELING YOU WILL NEED TO FIND A MUCH LARGER VENUE FOR NEXT YEAR’S EVENT. WOMEN HAVE ONLY BEEN ALLOWED TO JOIN THE TTC SINCE 1981. WHAT HAVE THEY BROUGHT TO THE CLUB?

Foss: Look around transportation today and you see women moving into key management and executive positions and the Club has to be reflective of this reality. Look at TTC’s own board of directors and how many are women and also how many of our recent presidents have been women. The inclusion of women into the club has certainly changed the face of the room and it needed to have happened long before it did. We ran the Women in Transportation luncheon for the first time this year and had over 100 turn out. We are moving to a better venue next year and we are expecting to considerably increase the turnout.

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Collaboration trumps confrontation Surface TranSporTaTion 2012

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hippers and carriers work better when they work together, in a spirit of cooperation and collaboration rather than confrontation.

These are more than fancy words; they are the heart of what drives both Transportation Media and Dan Goodwill & Associates, two organizations which have made a concerted effort over the years to bring shippers and carriers together to discuss issues of importance, in an atmosphere that is both respectful of each other’s needs and yet spares no sacred cows.

And it’s what drove us to again bring shippers and carriers together for our second annual Surface Transportation Summit this Oct. 16th. More than 300 top level transportation and logistics professionals heeded our call for a full day of education and networking at our new venue, the Mississauga Convention Centre.

Our blue-chip lineup of more than 20 speakers dug deep into key subjects such as the economic outlook for transportation, the CEO’s view of the coming year, the future of intermodalism, the growth of dedicated transportation; retail supply chains; carrier performance management; effective transportation sales strategies; opportunities in mergers and acquisitions, and a frank debate on freight bids.

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We were rewarded with a very insightful exchange of ideas.

But this conversation is too important to allow it to end there.

So with this issue we are providing a comprehensive report on the major themes from the conference across all Transportation Media properties – Truck News, Truck West, Fleet Executive and Canadian Shipper, reaching more than 150,000 providers and buyers of transportation services across the country. Look also for our Inside the Numbers and HookedUp e-newsletters for more information as well as future episodes of our award-winning WebTV show, TMTV. We have already provided considerable coverage of the event on www.trucknews.com, www.ctl.ca, Twitter and on our Facebook page and will continue to provide more. This dialogue between shippers and carriers must continue beyond the Summit and we will be doing our best to ensure that it does.

Finally, we would like to thank our growing group of industry sponsors, whose support allowed us to bring the Surface Transportation Summit to a higher level. And don’t forget to book Oct. 15, 2014 into your calendar for our next Surface Transportation Summit.

Lou Smyrlis Publisher & editorial director Trucking Group, Transportation Media

Nick Krukowski Publisher Canadian Shipper Transportation Media

Dan Goodwill President Dan Goodwill & Associates

our sponsors

13-12-06 8:58 AM

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MOST ECONOMIC INDICATORS IN POSITIVE TERRITORY

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By James Menzies

espite all the negativity on the news, and the uncertainty involving the US debt ceiling, most trends are pointing to a steadily growing economy that bodes well for trucking’s future.

That was the synopsis from leading economists and industry analysts speaking at the 2013 Surface Transportation Summit. Carlos Gomes, senior economist with Scotiabank, has earned a reputation for being more upbeat than many of his peers.

He remained that way.

“I generally have been very positive over the past several years and I still remain positive with respect to the outlook,” Gomes said.

Globally, Gomes said the economy has been improving throughout the year, led by emerging markets in China, India and Brazil. “They have moderated as well, but they continue to grow in excess of 5%, while the global economy is closer to 3%,” Gomes said of emerging markets.

Even Europe, which has been an economic anchor in recent years, returned to positive growth in the second quarter, Gomes noted.

China saw some moderation in economic growth last year, but it has enjoyed double-digit growth in late 2012 and into 2013, “which is telling us the slowdown in China that was expected to last several years is coming to an end.”

Job growth is improving in the US, by about 2% year-overyear. That’s a leading indicator Gomes watches closely.

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“Employment growth went negative a full year before the recession began,” he pointed out.

Here in Canada, Gomes characterized the economic picture as “more mixed.”

“Coming out of the downturn, we had a significant improvement both in manufacturing shipments as well as building permits,” Gomes said, noting growth has since moderated. Canada still relies heavily on the US for 70% of its exports.

Gomes acknowledged Canadian household debt is a valid concern, but that it may not be as dire as it seems. Canadians now carry a debt-to-household income ratio of nearly 160%, which is higher than in the US today, and about equal to where US debt loads sat before the recession.

However, thanks to low interest rates, debt charges account for just 7% of disposable income in Canada, a figure that was in excess of 9% in 2008 and as high as 12% in the 1990s. Interest rates would have to climb by 100 basis points to bring the debt charges as a percentage of disposable income to its average rate of 8.5%. So while Canadian household debt is high, Gomes said it’s manageable as long as interest rates remain low.

Charles Clowdis Jr., managing director, North American markets with IHS Global Insights, said he’s seeing evidence of near-shoring, with as much as 5% of manufacturing that was moved to Asia, returning to North America, usually to Mexico. This bodes well for trucking and rail providers, he noted. FE trucknews.com

13-12-06 11:24 AM

LOOKING FOR AN EXIT STRATEGY? START PLANNING EARLY

By James Menzies

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usiness owners shouldn’t wait until they have to sell their business to begin the planning process, otherwise they’ll “lose control of the process.”

Mike McCarron, M&A consultant with Wheels Group imparted that advice and more during a discussion on mergers and acquisitions in transportation at the Surface Transportation Summit. He was joined on the panel by Doug Nix, vice-chairman, Corporate Finance Associates. Both speakers brought a unique perspective to the discussion; Nix has brokered many major acquisitions throughout his career and McCarron last year sold his own company, MSM Transportation, to Wheels Group.

McCarron said the trucking and 3PL markets are ripe for an escalation in M&A activity.

“I think trucking companies realize that without scale and technology, it’s going to be impossible to survive,” he said, citing that as one reason he and his partner opted to sell MSM when they did.

“We knew we were too big to be small and too small to be big.

We had to decide, do we want to risk everything at this stage in our lives? Do we want to go to ground zero and raise money? The people I’ve talked to in the business are thinking the same thing, ‘What am I going to do to get out?’ I think that is going to drive a lot of acquisitions, that state of mind in the industry.”

As baby boomers near retirement age, they’ll have to devise an exit strategy. McCarron pointed out there could be a logjam of boomers looking to sell at the same time, driving down expected returns.

Asked how business owners will know when the time is right to sell, Nix offered this tongue-in-cheek advice: “Ask your wife.”

If you no longer wake up in the morning eager to go to work, Nix said it may be time to prepare your business for a sale. But first, you should determine if it’s even saleable. Commoditized trucking companies without an established, steady customer base may be disappointed to find their business has little value in the marketplace. When considering when to sell, Nix said “I’d say it’s better to sell a little too early than a little too late, because you’ll never get that time back.”

McCarron said the owners of mid-sized trucking companies, and any sized 3PL, will find it difficult to keep pace in the

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current environment unless they add scale or invest a fortune into technology. American 3PLs are making capital investments into technology that dwarf what their Canadian counterparts can or will make.

McCarron suggested owners prepare their company for sale even before they’re ready to step aside, so that they are able to begin negotiations as soon as a prospective buyer comes knocking.

It can take two years or more to clean up the minutes books, settle old lawsuits, and clean up the business, and by that time an interested buyer may have moved on to another pursuit.

Once you’ve been courted by a prospective buyer, it’s important to determine if the match is a good fit for your business. McCarron said he stopped returning calls from a private equity firm when he sensed they were looking to cut costs, strip the company of its culture and then flip it for a quick profit, all while he’d be expected to stay on and assist with the process.

“It was about slashing and burning and ripping the culture apart,” McCarron said. “We felt far better with a strategic fit.”

But Nix cautioned against ruling out investment buyers. “We invite private equity groups into controlled auctions, because there’s half a trillion dollars sitting uninvested in North America.

“You can’t ignore that,” he said. “Oftentimes, the private equity guys will pay more money if it’s the right deal.”

However, he added few asset-based trucking companies will appeal to private equity firms.

When a good match is found, McCarron said it’s a good idea to solicit the help of an advisor, who acts as a buffer between the negotiating parties throughout the transaction. This helps keep negotiations from becoming too personal, McCarron said. This is important, since in most deals, the previous owner will be expected to stay on for a period of time during the transition, so a cordial relationship must be maintained.

“Where they bring the most value is the intangibles,” McCarron said of investment bankers, likening them to an agent who represents pro hockey players.

Using an advisor also frees up the business owner to continue running the company. McCarron said it’s a mistake to think that the dollars attached to a transaction on the letter of intent is the final value of the deal. Any losses suffered during the transaction process will affect the final value of the company at closing time.

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“The price you sell your business for is not Surface he price on the LOI,” he said. “I was terrified I TranSporTaTion ummit would lose2012 a large customer during the transaction. The advisor lets you focus on running the business.”

Having an advisor on-board also helps protect against “deal fatigue,” McCarron added.

“You cannot go through this process on your own,” he insisted.

Nix agreed, adding, “There’s a ton of emotional expenditure and effort and resources that goes into the sales process. If you’re not serious (about selling), don’t pull the trigger on this because it will sap your energy and your business will suffer for it.”

When choosing an advisor, Nix suggested asking them what they’ve accomplished lately.

“A lot of people will tell you what they’re working on, but few will actually say ‘I did this’,” Nix said. “There’s a difference. The reason they’re talking about what they’re working on is that they don’t have anything to talk about that they did.”

It’s important, Nix said, that both parties trust the advisors they’re dealing with.

If you’re looking to acquire another company, set out to find a target that fits a strategic need, not just to grow top line revenue, Nix suggested. Both Nix and McCarron agreed that buyers should pick up the phone and call a company of interest, even if it isn’t for sale.

When a fit is found, Nix suggested moving the transaction along as quickly as possible.

“Everything that drags gets dirty,” he said.

“I’m a big proponent of shortening timelines.”

As for when M&A activity will pick up, Nix said a dearth of deals this year isn’t due to a lack of interest.

“I see in the industry lots of interest and lots of discussion,” he said. “But I also see lots of caution. People are hesitant to pull the trigger.”

Last year, Nix’s firm did 45 mid-market transactions across North America, and this year they’ve done only 20. He thinks the decline is partly due to the uncertain political environment in the US, and that “once that stability comes, I’m quite bullish on the future levels of M&A activity.”

Large-sized 3PLs are expected to be the

most sought after targets, and are currently fetching valuations of 6-7xEBITDA. Asset-based trucking companies, by comparison, are commanding just 3-4xEBITDA. FE 20 FLEET EXECUTIVE ❙ November/December 2013

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MOVE TO ASSETFREE, DEDICATED FLEET TRANSPORT CAN BENEFIT CORE COMPETENCIES

By Julia Kuzeljevich

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n a session on dedicated transportation, and the outsourcing of fleet management, held at the Surface Transportation Summit, Jeff Lindsay, president and CEO, Canada Cartage, and Angelo Sarracini, president, Bailey Metal Products, shared the steps they took in outsourcing Bailey’s fleet to a dedicated service provided by Canada Cartage.

Managing a private fleet presents many challenges for shippers. But it’s not always an easy decision to outsource, when generational differences, or feelings about retaining some control over assets and drivers are factored in.

Canada’s largest provider of dedicated fleet outsourcing solutions, Canada Cartage, provides some complex final mile transportation solutions. The company first partnered with Bailey Metal Products, the largest lightweight steel framing manufacturer in Canada, some 15 years ago to set up an outsourced, dedicated fleet solution.

With 4,000 power units and half a billion dollars in revenue, Lindsay said that dedicated forms the core business at Canada Cartage, which is national in scope but competes against regional dedicated carriers.

“It’s quite a complex sale to convince someone to outsource,” said Lindsay. Canada Cartage aims to help its clients manage the unpredictable volumes inherent to many retail operations.

“Our operating model has a hub terminal with non-dedicated assets and drivers that can be diverted to dedicated customers as needed,” he said.

Sarracini said there are four primary components to Bailey’s business, which include: retail for their commoditized product lines; the commercial distributor market; providing engineered wall and floor systems to developers; and steel processing.

“Because we consume quite a bit of steel, we process a large component for our own operations and for sale. It’s one thing to be a good manufacturer and to have the locations but closing the loop and being able to put it on the truck and get it to the customer when they need it - that’s really part of the game,” he said.

The decision to sell the corporate fleet “was not a popular decision, but we thought we had the metrics. First and foremost, there was a driver training and compliance issue. Tight delivery windows were difficult to execute while ensuring cost-effective truck and staff utilization,” Sarracini said.

“We used to enjoy customers having a fair amount of inventory in their trucknews.com

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warehouses and like everything in life, that got downloaded to Surface the supplier,” he added.

TranSporTaTion 2012is lessummit Seasonality of a function now but was relevant to the decision in the 1990s when the construction industry had more peaks and valleys.

Strategically, Bailey felt transportation was not a core competency, but could it be trusted to a third party?

“Trucking is getting more complex and in a very bizarre way this is driving our growth in the last 20 years,” Lindsay said, of when clients realize that running a fleet is just not their core business.

“There is a shedding of risk when you outsource, not just around claims but also labour risk. I’m amazed at how much unconscious risk some customers are taking around the need to run their own fleet,” Lindsay added.

Building a business case around outsourcing means digging in to some of the costs that clients may not be aware of.

“Often during these fleet conversions, you see that companies may not be in tune with the wage rates in the industry,” Lindsay noted.

The cost of equipment and maintenance is another consideration. Usually clients carry too many assets, the wrong ones and the wrong spec’, said Lindsay.

Summit 13.indd 20

“Capital is a finite resource, and when you choose to invest in trucks, that’s at the expense of other areas,” he said.

Management oversight is another component, and looks at how recruiting, training, and overall driver management may distract the company from its core competencies.

In the case of Bailey, both parties agreed that a trial was the best way to assess fit and proof of concept, working through a successful pilot that led to a long-term agreement and a 160-point transition plan.

“There were a few growing pains in the beginning as we figured out what we were trying to accomplish,” said Sarracini.

The drivers, who transitioned into Canada Cartage’s workforce, remained in their Bailey Metal uniforms for a more seamless transformation, which helped the company retain its identity in that aspect of the process.

In terms of managing volume spikes, Canada Cartage maintains some non-dedicated assets and staff, which can help meet the demand.

“The first surge goes into our assets and drivers, the next surge could go into some agency associations,” noted Lindsay.

“It’s a tough sale cycle,” he concluded, especially if the scenario emerges as cost-neutral but has some potential soft benefits. FE

13-12-03 3:15 PM

DECISIONS 2014

FREIGHT BIDS

Shippers love them; carriers hate them.

Can they agree on changes that would leave both sides happy?

Find out with our annual ShipperCarrier Roundtable

Decisions13.indd 23

13-12-04 10:06 AM

DECISIONS 2014 { COVER STORY }

The Panellists

GRACE TOMASZUN Manager, North America transportation sourcing, McCormick & Company

MIKE OWENS Vice president of physical logistics, Nestle Canada Ltd.

FROM THE SPONSOR

Shaw Tracking is a leader in GPS tracking technology and fleet management solutions for the Canadian Transportation Industry. Shaw Tracking is committed to bringing the latest technology to its customers that are customer-focused with tangible ROI benefits. Their tracking solutions not only generate data, but also enable users to transform the data into action plans to help improve fleet visibility, fuel management practices, operational efficiencies and driver retention & performance. Shaw Tracking is dedicated to providing those in the Transportation and Logistics industry with value-added insight and support to help run their organization as efficiently and effectively as possible.

With more than 750 customers and over 50,000 units on the road, Shaw Tracking has proven results. But “Proven Results” is not just a marketing tagline. Shaw Tracking has demonstrated time and 24 FLEET EXECUTIVE ❙ November/December 2013

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time again that their customer-focused approach, along with their dedicated support team, strives to work hand in hand with their customers to unearth ways that they can help improve how they service and add value to their customers. Coupled with over 23 years experience and dedicated support to the Transportation and Logistics Industry, Shaw Tracking is committed to working with their customers to perform at unprecedented levels.

Shaw Tracking continues to act as founding sponsor of the “Shipper-Carrier Issues Roundtable” for the eighth consecutive year. Shaw Tracking is pleased to continue to support the important insight and dialogue brought forward by prominent industry stakeholders.

To learn more about Shaw Tracking, visit www.shawtracking.ca. trucknews.com

13-12-03 3:26 PM

MICHELLE partner, GX

f physical

FREIGHT BIDS Is there a better way for carriers and shippers to work together?

perience with freight bids. In a frank discussion led by Dan Goodwill, our partner in the Summit, they shared their insights on how to improve the freight procurement process.

The shipper-carrier rate panel discussion, sponsored by Shaw Tracking, brought together:

MICHELLE ARSENEAU Managing partner, GX Transportation Solutions.

F

BRUCE JANTZI Senior vice president, operations, Erb International

reight Bids: shippers love them; carriers hate them. Freight RFPs or freight bids have become increasingly popular over the last decade as a mechanism to negotiate freight rates and service. Even companies with as little as $50K in annual freight spend are putting their business out for bid. Are shippers seeking true business partners or simply trying to reduce their freight costs each year? Does the process allow carriers to communicate their value propositions and to secure compensatory rates? What information is required and which factors should be considered in making the most informed decisions during the bid process?

To answer these questions, we assembled a panel of two large shippers and two leading carriers at our recent Surface Transportation Summit. All of the panelists had extensive extrucknews.com

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Grace Tomaszun, manager, North America transportation sourcing, McCormick & Company, the largest spice company in the world. Her responsibilities include transportation sourcing, contract management and carrier performance for all modes of transport for US and Canada facilities.

Mike Owens, vice president of physical logistics, Nestle Canada Ltd. He is responsible for all warehousing, transportation, import/export and distribution activities across a broad spectrum of products from Stouffer’s frozen foods to KitKat chocolate bars.

Michelle Arseneau, managing partner, GX Transportation Solutions. She is responsible for strategic and tactical planning as well as all aspects of business development including sales, marketing, advertising and social media.

Bruce Jantzi, senior vice president, operations, Erb International, experts in temperature-controlled, time-sensitive food transportation within Canada and the United States.

I believe their comments on how to build a more thoughtful RFP process are worthwhile reading for both shippers and carriers.

Lou Smyrlis, publisher & editorial director Transportation Media

>>

November/December 2013 â?™ FLEET EXECUTIVE 25

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DECISIONS 2014

>>

FREIGHT BIDS FE: WHEN YOU DO A BID, WHAT ARE YOUR OBJECTIVES? WHAT ARE YOU LOOKING TO ACCOMPLISH AND HOW OFTEN DO YOU DO BIDS?

Tomaszun: I have been managing transportation procurement since 2007 in the US. In Canada my team started managing transportation procurement about 2.5 years ago. In the US, we experienced a major change in 2007.

For many years we did not run an RFP process and didn’t place as much focus on transportation. But transportation has obtained a lot more visibility over the last few years. It is quite a large expense and there are also volatile fluctuations with fuel pricing. Definitely transportation has become a more visible function within our organization.

In 2007 we went through a major RFP process. We had well over 100 carriers which we were doing business with. We felt that was way too many carriers to manage and we wanted with the RFP to streamline our processes and rationalize our carrier base, reducing it to a more manageable type of relationship. I stress relationship because that is something I have been stressing since taking on the role

sure we have the right mix of carriers in place to support our growth initiatives. Those are the reasons we do an RFP. It’s not necessarily all around price. The daily task my team has is to come up with a solution that strikes a balance between cost, service, capacity, and assessed risk. We do not award business based on price because we have critical customers for whom service cannot be compromised.

Owens: I’m not going to sugarcoat it; we’re looking for price in the RFP process but in none of our RFPs will we accept a reduction in service levels. We are in the food industry and it’s a business where you are fined heavily for being late for delivery, or for not fulfilling the order fully. It can be thousands and thousands of dollars in fines. So for me to go in and nickel and dime over a rate is wrong minded. Service level is extremely important and that is discussed very clearly up front.

The other thing we are looking at is sustainability. We are an international company and we did $100 billion in sales last year globally, 2.5 billion of that in Canada. We have a strong mandate to reduce our carbon footprint by

For many years we did not run an RFP process and didn’t place as much focus on transportation. But transportation has obtained a lot more visibility over the last few years. Grace Tomaszun of transportation procurement. It’s a two-way relationship between the carrier and the shipper. Out of 100 plus carriers we selected our top 20 to do business with and ever since then our approach from an RFP standpoint is more or less informal.

We sign pricing agreements every two years.

We are at a time now where we will be looking at the entire portfolio once again. Our network has changed as we acquired companies, opened facilities, and restructured and we want to en26 FLEET EXECUTIVE ❙ November/December 2013

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15%. We’ve been one of the pioneers for the FleetSmart program in Canada. The other area is ethical sourcing. When we do get down to the RFP and make changes, we also provide carriers with a list of documents they are expected to abide by, ranging from ethical sourcing to safety and training programs. So price is certainly there but service is very high on our list. Nationally, across all our business, we do half a million deliveries a year, 95% on time the last three years. trucknews.com

13-12-04 10:18 AM

FE: HOW MANY OF THESE BID REQUESTS WOULD YOU RECEIVE ANNUALLY AND HOW DO YOU GO ABOUT

That boggles my mind. How can a carrier be expected to submit a quote but not be allowed to ask questions?

Michelle Arseneau

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DECIDING WHETHER YOU ARE GOING TO QUOTE ON A BID?

Arseneau: We are in our 17th year of operation and we are an LTL carrier with a road service, dedicated service and an intermodal service.

We are always happy to have the opportunity to quote on new business – it’s part of the sales process and it means, generally, we are one step closer to securing more freight. That being said, we are not fans of the bid process that has been rolling out over the past 5 to 10 years. It seems to us that it’s very price driven.

There are shippers out there who are doing it in a proactive way that is managed well but there is a whole lot of other shippers who are making it very difficult for carriers to participate effectively in the process. They are rolling out the bid process to multiple carriers who are not necessarily all qualified to be handling that business.

The shippers are looking at sending the RFP to as many carriers as possible, hoping to scale down from there. As a carrier, when we get those massive tenders, even if everything is the way we want to see it in terms of matching our business model, we are still competing with 40 or 50 other carriers and we don’t know the customer first hand and don’t have the opportunity to ask questions. That boggles my mind. How can a carrier be expected to submit a quote but not be allowed to ask questions? So when we get these bids we consider: Is it just a benchmarking exercise for the shipper who is tendering the business or is it actually a means to an end? Is there actually a chance that we will secure this business or are we just going to blow our resources on completing the RFP? When you look at the LTL business, you have a half dozen weight levels for every single loca-

tion you are shipping to. If someone is putting out a national tender, it can involve thousands of rates that need to be worked out. Even with today’s technology, it’s still a time consuming process to go through that exercise. In the last couple of years there have been some interesting tenders that have come about where the pricing part of the process is hours and hours and all the preliminary stuff that you need to do is practically a full time job – supplying insurance documents, operating authorities and all that which should be done in advance and included in pre-qualifying carriers rather than being part of the tender process. It is such a large and time consuming process that when it’s thrown out to a whole slew of carriers and generalized, it makes it less attractive for the carriers to participate. Our chances of securing that freight are close to nil unless we have the opportunity to really sit down and present our company while meeting with their people and giving them a tour of our facility so they can see what we are doing and whether we actually have the proper processes in place. There are a lot of companies who will submit a bid but don’t have all the processes in place.

Jantzi: This year up to October we have seen 45 such RFPs. Usually, as a reefer carrier, the first thing I look at is whether it’s reefer or dry freight.

I have 30 dry vans in my fleet of 1,100 trailers so I’m always looking at reefer opportunities. I consider if I can I fill a void lane, whether it’s a triangle to Western Canada or as a roundtrip back from the US. Sometimes you get RFPs from the same customer year after year and you have to keep on resubmitting even though you haven’t changed from one year to the other.

FE: WHAT DO YOU TRY TO BUILD INTO YOUR BID PACKAGE TO HELP CARRIERS BID PROPERLY ON YOUR FREIGHT? AND WHAT DO YOU LEAVE OUT?

Tomaszun: Before we invite any carrier to participate in an RFP, we do an extensive amount of work understanding their business. We have numerous meetings and often times we go to visit their facilities and operations. And we also do extensive work in understanding our own

>>

November/December 2013 ❙ FLEET EXECUTIVE 27

13-12-04 10:18 AM

DECISIONS 2014

>>

FREIGHT BIDS

The key is that as a shipper you have to give accurate data — number of loads per day, days you are shipping. Give as much granularity as you can.

Mike Owens

operational processes because we are working with over 15 facilities and there are different business models in some cases and numerous personalities. It’s absolutely critical for us in procurement to understand our company’s operational needs so we can present the information to carriers when we do an RFP. I don’t like surprises. If we don’t understand our own operations and are not able to communicate our needs to the carrier base we are inviting to the RFP, then shame on us because there will then be surprises as we are negotiating, awarding business, and executing. We don’t hold information back. Whatever we feel is critical — accessorials, fuel, operation requirements, drops, hours of operation — is shared with the carriers up front.

Owens: The key is that as a shipper you have to give accurate data — number of loads per day, days you are shipping. Give as much granularity as you can. If it’s an annual shipping amount, give that.

The other thing is that we keep it to four or five participants for an RFP. We don’t do a blitz on the marketplace. We know the carriers for the most part. We need reefer protection – most of our shipments are going to have ice cream, frozen food or chocolate — so we have very strict restrictions on temperature control.

We also don’t let this be procurement focused. At Nestle we had the sense that in some instances procurement was going to negotiate freight and there had to be learning within our organization to actually have the functional expertise on our side of the data so that we are not just going through the seven principles of purchasing. We use an electronic tendering process tool. If there are any questions on the RFP, we post that with the answers so that all the participating companies have the same information. We try to be as transparent as possible.

And the final thing is a willingness to change 28 FLEET EXECUTIVE ❙ November/December 2013

Decisions13.indd 28

because I agree if this is just a benchmarking exercise maybe you should go find yourself a trade association where you can benchmark your company against your peers. If you are not willing to change, in the end you are driving a lot of cost into other peoples’ businesses.

FE: WHEN AN RFP HAS BEEN ISSUED AND THE CARRIER HAS RECEIVED IT, WHAT IS REQUIRED IN TERMS OF DATA FROM THE SHIPPER IN ORDER TO PUT TOGETHER A WELL THOUGHT OUT RESPONSE?

Arseneau: The pure basics such as the geographic locations, volumes, frequency and density. The latter is often missing. Customers who have multiple commodities have multiple densities and trying to determine the percentage of each commodity in terms of density will have a bearing on the costing process.

The other thing that happens all the time is that customers will provide the number of shipments or the number of loads on an annual basis but don’t specify that 80% of those loads may move within a six-month period.

That’s the kind of thing that an incumbent carrier would know but a new carrier quoting on the business wouldn’t know. What we often see on the LTL side is an average shipment size — 1,500 lbs, as an example. To see an average shipment size of 1,500 lbs doesn’t really help us a lot. We need to know is it a minimum size shipment? Is there a range per destination?

Further breaking down the volume into weekly or daily basis would be helpful.

Also, what is the value of the commodity, what are the requirements at the shipping end, the requirements at the loading end, what kind of waiting time is involved, what will be the process for booking the shipments, how does the whole communications process take place, what will be the metrics used to measure us if the contract is awarded, and what will we be expected to provide as feedback? Granularity of the data is important. There is nothing worse than submitting a quote based on A and it ends up being B after you’ve gotten the business. To think you are getting an average shipment of 2,500 lbs and in reality 80% of the time it’s a minimum size order is a big difference. trucknews.com

13-12-04 10:18 AM

Decisions13.indd 29

13-12-03 3:26 PM

DECISIONS 2014

FREIGHT BIDS I’m always looking at reefer opportunities. I consider if I can I fill a void lane, whether it’s a triangle to Western Canada or as a roundtrip back from the US. Bruce Jantzi

>>

TRANSPORTATIONMEDIA

Jantzi: I agree with the points Michelle has made and I have seen some RFPs where they ask the carrier for capacity, either weekly or yearly, and certainly the weekly capacity helps us. As a reefer carrier dealing with the new hours of service we are being involved more TRUCK NEWS and more in drop trailer pools scenarios with our customers. For dry van carriers that’s not as big of an issue because the cost of a dry van is not the same. The cost of a reefer is very high.

Usually those are the kinds of things that are missing in an RFP. What size of pool do I need to load these loads at the shipper or at the consignee? There is a cost to that and that isn’t always figured into the RFP process.

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FE: AS A SHIPPER WHO RECEIVES THE RESPONSES TO RFPS, WHAT IS YOUR EVALUATION PROCESS? WHAT DO YOU LOOK FOR WHEN COMPARING BIDS?

Owens: We would have two or three individuals reviewing all the submissions. It would be nice if everyone submitted in the same format but that doesn’t always happen. Sometimes you have to take your volumes and do a lot of calculations.

Some people have certain accessorials built in and others don’t. You try to get it down to a real apples to apples comparison across all the different metrics. We would have a score sheet that the individuals would use and that would include price, service, the capability to handle the size of business that is up for tender, the reputation of the carrier, the solvency of the carrier. We would be looking at all of these different aspects, which we think are important, in deciding who is going to be the successful participant of our RFP. Tomaszun: We have a very formal performance management program in place for the carriers we do business with. We know exactly where they stand on performance. We know the challenges and the opportunities. It’s a little bit more difficult obviously for anyone new we are inviting to the RFP, but we do our due diligence to understand their business. We have a number of divisions and facilities with different operational needs we need to consider so the process starts at a high level and then is weeded downwards.

Clearly with new carriers who we invite to the RFP there is some risk for us in not having that history from a performance standpoint but we do seriously look at everyone’s response prior to reengaging them in a discussion.

Continued next issue 30 FLEET EXECUTIVE ❙ November/December 2013

Decisions13.indd 30

trucknews.com

13-12-03 3:26 PM

CITT

HITTING THE MOVING TARGET ON FUEL SURCHARGES

By Julia Kuzeljevich

In

a panel discussion on fuel surcharges at the CITT’s National Conference on Supply Chain & Logistics, Lou Smyrlis, editorial director of Transportation Media, asked shippers, carriers, and oil industry experts to weigh in on fuel surcharges and the need to re-examine the processes around them.

Smyrlis also said he hoped the discussion would “spark an understanding of the different points of view and also the desire to continue the conversation.”

CITT’s National Conference, Reposition 2013, took place in Toronto this November.

Roger McKnight, senior petroleum analyst, with En-Pro International Inc., said there are many factors affecting the price of crude, whether it’s a low inventory in diesel as a factor of weather, a refinery or pipeline issue that immediately translates into a crude price hit, and even the perception of a political crisis that affects trading on currencies like the US dollar.

Six to twelve months out, he said, it’s expected that US shale oil and oil sands production will steadily increase and there will be some relief in terms of pipeline availability.

In the meantime fuel price volatility wreaks havoc on the transportation industry which must try to recoup some of that instability via fuel surcharges.

Ginnie Venslovaitis, director, transportation operations for Hudson’s Bay Company, said that while she wouldn’t want to “take money out of the carriers’ pockets, fuel surcharges should be based on fuel consumption and not on second drops, waiting time and other accessorials that are more driver-labour related.”

Panelists also discussed the merits of both percentage based and invoice based fuel surcharges.

Mark Lerner, assistant vice president, intermodal sales with CN Rail, said the railway uses mileage-based surcharges for carload but for intermodal, invoice based is easier for the customer to compare. trucknews.com

CITT.indd 31

“Invoicing is more efficient for intermodal when the complexities are built in,” he said.

Jeff Bryan, president and CEO, Jeff Bryan Transport Ltd., noted that carriers have to keep on top of the changes every time there’s a different version out for a mileage program.

“The process needs to stay as simple as possible, i.e. invoice based,” said Venslovaitis, essentially keeping the potential for arguments out of the process.

If someone did want to move to mileage based, there’s no easy way to do it other than grabbing on to something that already exists within the data, noted Richard Patenaude, vice president, Wheels International Inc. Are shippers and carriers willing to consider a revamp and a reset of fuel surcharge rates as they stand?

“Many of us as a group need to come up with what’s the new base rate and how much of getting from A to B is fuel these days. As long as it’s simple, we should raise the bar up and make fuel the right component of a freight bill,” said Venslovaitis.

“We’re open to looking at how it’s calculated. The issue happens when there is a wide swing in oil prices that may lead to the need for recalculation or recalibration,” said Lerner.

Considering the wide range of variability in fuel pricing, if carriers are hedging to that speculation, “I would make sure I overstated my base rates to compensate,” said Patenaude.

Why hasn’t someone come up with a new benchmark?

Smyrlis asked.

Because it costs money, said Bryan. “The shipper has to come to us and say we want to adjust our base rates to reflect ‘X’. Everybody has their own program-it can’t be whitewashed across the board. If a shipper wants to change their benchmark they could probably do that today,” he said.

“The reality is that we probably won’t take the initiative to change it. Everyone needs to be in alignment on the elements of what make up the charges. We also don’t need to get government involved in the process,” said Venslovaitis.

Are FCA fuel surcharge tables non-negotiable or can they be considered a starting point for shipper-carrier negotiations?

“It’s a guidepost to where the true negotiation and conversation should start. It protects your agreement with the carriers to volatility. When we look at the various reasons for why fuel prices jump around someone has to have protection,” said Venslovaitis.

What’s the best way then for the current fuel surcharge system to evolve?

“For intermodal we’re based on WTI and we’re going to constantly look at our tariff to make it as current as possible,” Lerner said.

“I see percentage-based as a better process, as long as people have a realistic approach to what they are paying for,” said Bryan.

“Trying to reduce it to the simplest form, making it easy to use, accurate and reflective of the market would be the best thing I could predict for the short term,” said Patenaude of the evolution of the current system. FE November/December 2013 ❙ FLEET EXECUTIVE 31

13-12-03 4:08 PM

CITT

CITT APPROVES CHANGE TO DESIGNATION NAME AT AGM

By Julia Kuzeljevich

Change will be discipline-specific, and aims to better communicate expertise and experience

In

an exclusive interview with Warren Sarafinchan, CITT, and vice president of Supply Chain at SunRype Products Ltd., Fleet Executive discusses CITT’s designation name change and certification.

FE: CITT has decided to change its designation name after over 50 years to CITT-Certified Logistics Professional (CCLP).

Why did CITT decide to make this change?

Sarafinchan:The simple answer is that CITT certified members and business leaders have been asking for a discipline specific description of the designation holder to better communicate their area of expertise and high level of experience, integrity and professionalism. CCLP was the most accurate, descriptive and appropriate designation name we could adopt. It also is the way we informally describe CITT’s fully certified pros and designation holders now. Each part of it provides important information about the credential holder.

FE: How can companies identify people who are CITT-Certified Logistics Professionals?

Sarafinchan: Companies have a wide range of practices on how industry, and other, credentials are shown with their staff’s signatures and on their business cards. For instance, some only allow job titles. So someone might have a credential but it isn’t shown. Of course, smart employers and customers will always ask if someone holds an industry credential.

That said, all CITT-Certified Logistics Professionals are entitled — and encouraged — to show the initials “CCLP” after their names and/or write out their full designation name. And only those pros that are fully certified by CITT and are in good standing as members will be able to call themselves CCLPs. This really distinguishes them from CITT’s program of study graduates and articling students as people who have met our academic requirements in logistics and business AND have logged a minimum of 8,500 sector-specific professional hours, have committed to continuing professional development and have pledged themselves to ethical conduct.

The other way that CCLPs can be identified is if they’re showing our optional-use, CCLP trust-mark. Since not all forms of communication will support or allow this kind of graphic, this is a value-added support for members and isn’t required for display.

FE: Why did CITT pick “logistics” and not a wider description, such as “supply chain”?

Sarafinchan: CITT-Certified Logistics Professionals (CCLPs) play lynchpin roles in the global supply chain ecosystem. Yet we felt it was really important to avoid the faulty thinking that says there’s only ONE, definitive “supply chain professional”.

In truth, there are several complementary skillsets that need to come together for someone to be a completely well-rounded supply chain professional. If people really want to be recognized as all-round “supply chain” professionals, they really need cross-functional certification from more than one expert certifying body.

So CCLP is a LOGISTICS management certification, providing industry’s deepest and more comprehensive coverage of the technical discipline combined with operation-critical management abilities. The other big skill-set for supply chain is procurement, and we’ll leave this with our colleagues at SCMA since that’s their focus.

FE: What was the reaction among your members to the change?

FE: Who is the CCLP designation for?

Sarafinchan: Most members are thrilled. And we had tremendous participation from a huge portion of our membership base in the decision-making process. Some of our most enthusiastic CITT champions wanted to be sure that CITT would still have a prominent profile. And they’ll be happy and confident that CITT is prominent in the new designation name.

32 FLEET EXECUTIVE ❙ November/December 2013

CITT.indd 32

Sarafinchan: It’s for anyone who buys, sells or manages logistics, or is impacted by the transportation of raw materials or goods. This is for people who work in businesses where logistics or ancillary services is the company’s core business or for people who work in supply chain and logistrucknews.com

13-12-03 4:08 PM

tics roles on the client side such as resources, manufacturing, retailing, or import-exporting.

FE: Why is certification good for people working in supply chain and logistics roles today?

Sarafinchan: When you know more, and have a third-party validation of that from a respected industry body you’re worth more professionally. And when times are tougher, or uncertain like they are now, companies really lean on and value people with proven supply chain logistics expertise. In all, it’s a proven investment that pays off with higher earning power, better advancement prospects and improved overall employability — no matter what’s happening with the cyclical economy or job market.

FE: Why is having a credentialed logistics professional (such as CCLPs) good for business?

Sarafinchan: There are quite a few reasons actually. Industry certification makes it completely clear what someone knows by applying a credible third-party standard of proficiency. For the

CITT.indd 33

CCLP designation, CITT’s standard is objectively-measured

based on the participants’ performance results in the program (not just showing up to a course). CITT’s standard is national and it’s recognized right across Canada as well as by international markets.

A professional designation really distinguishes the people who’ve made the effort to earn one. Unlike some other professional disciplines that require certification to practice, logistics credentials are entirely voluntary — although more and more people are becoming certified. Nevertheless, employers and customers can use credentials as a measure to identify credential holders as people who are committed to doing their jobs well and are serious about their careers and the business of logistics. And that will be more and more important with the coming wave of retirements.

Lastly, most professional groups have Codes of Ethics for their credential holders. CCLPs definitely have one, as did our “CITT”s. While this isn’t a great differentiator with other professions or other sector credentials who also have Codes of Ethics, having a code for CCLPs definitely sets them apart from those people or companies in business who are not interested in operating with integrity. FE

13-12-03 4:08 PM

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FE WHAT IS THE NEXT GENERATION OF TRANSPORTATION INDUSTRY LEADERS LOOKING FOR IN A TRANSPORTATION CLUB AND WHAT IS THE TTC DOING TO MEET THOSE REQUESTS?

Foss: I’m involved with the Ontario Trucking Association’s Next Generation program and we specifically asked young executives what they were looking for.

These are people in their late 20s to late 30s and they may have never attended an industry event because of the perception that it’s an old boys club. They may not know anyone and maybe they don’t feel welcomed. I think what they are looking for is an opportunity for someone to break the ice for them so they can become part of industry clubs, just like they see their parents or older executives at their firms do. They are looking for opportunities to network and gain new perspectives. What we need to do, and are doing, is to work on breaking down the barriers, to help them meet new people.

FE. ONE OF THE THINGS THAT STANDS OUT WITH THE NEXT GENERATION OF TRANSPORTATION EXECUTIVES IS THAT WITH STAFFING LEVELS AT A LOT OF COMPANIES BEING TIGHT, WORK SCHEDULES ARE PRETTY CRAZY AND THEY MAY BE HARD PRESSED TO FIND THE TIME TO BE PART OF INDUSTRY CLUBS OR ASSOCIATIONS. AS AN INDUSTRY PROFESSIONAL WHO HAS WALKED THE SAME TIGHTROPE, WHAT WOULD YOU SAY TO THEM ABOUT THE IMPORTANCE OF SOMEHOW FINDING THE TIME TO BE PART OF SUCH INDUSTRY GROUPS?

Foss: Shippers today use many modes. They don’t feel they should be captive to any one mode. Transportation has become multimodal. Being part of an organization such as ours provides the opportunity to meet people from all sectors of the industry and forge critical new relationships or refresh old relationships. I have met so many people through the TTC, which has given me a broader perspective of the transportation industry and helped me in my job and my career. I’ve met decision makers through the Club that I may not otherwise have had the chance to meet, and when you get to know each other on a more personal level, that helps facilitate business.

FE. IN AN AGE WHERE A LOT OF SOCIAL NETWORKING IS BEING PUSHED ONLINE, IS THE IMPORTANCE OF PERSON TO PERSON NETWORKING UNDERESTIMATED?

Foss: I think you need to have a lot of technical skill to make something like that work for you. How many people in your LinkedIn network do you really know well? There is still great value in meeting people face to face and to have that personal interaction.

FE. PART OF EFFECTIVE NETWORKING IS COMING TOGETHER IN AN ATMOSPHERE THAT MAKES THEM FEEL COMFORTABLE AND MAKES IT EASY AND ENJOYABLE TO MINGLE. HOW DO YOU ACTUALLY GO ABOUT CREATING SUCH AN ATMOSPHERE?

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Foss: Twice a year we have a new member event. We find that a good way to get people to meet each other. We make a point of our board members, including the Club president, meeting with new Club members and introducing them to other members. We also appreciate that new members have their own connections in the industry and if they enjoy the Club they will recommend it to their connections and that’s one of the ways the Club grows.

We also put on events that make it easy to socialize. Remember that while our annual dinner is a very large event, most of our events are under 200 people so it’s easy to work the room. FE trucknews.com

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13-12-03 4:08 PM

Think Small

Cummins to launch the 5.0L V8 diesel engine

C

By James Menzies

ummins has announced it is launching a 5.0-litre V8 diesel engine, designed for pickup-and-delivery applications and other light- and medium-duty trucks.

The ISV5.0 will be assembled at Cummins’ Columbus Engine Plant, which has received a makeover to accommodate production beginning in the fourth quarter of next year. The engine is already being tested, and a selection of vehicles with the new ISV5.0 were available for test drives at a recent press event here. Vehicles equipped with the engine at the event included a walk-in van, school bus, RV and Freightliner medium-duty sport truck.

However, Jeff Jones, Cummins vice-president, North American Engine Business, said the engine is not limited to those few vehicle types that were on display.

“There are hundreds of different types of applications we believe this product will eventually find its way into,” he said.

Cummins has long been a believer that there was room in the

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The ISV5.0 represents the next dimension in fuel economy and performance as Cummins continues to broaden our on-highway product line

“ market for a smaller diesel engine. Work on the 5.0L actually began about 13 years ago in partnership with Chrysler. But when Chrysler faced its financial difficulties during the recession, it abandoned the project and Cummins was left to forge ahead without an OEM partner.

“The dream was always, why doesn’t Cummins build a smaller diesel?” Jones said. “When you look at the price of fuel, emissions, all those things that mattered in these more commercial markets, they matter to some degree down at the lower end of the market. I think things are coming together — with our environmental needs, our economic needs and our energy independence needs — to where this market here is ready to go diesel. It’s got to be the right diesel and it’s got to be a cost-effective diesel…We think these markets are ready for the right diesel products.”

And with a market primed to embrace a 5.0L diesel engine, Jones reasoned Cummins was the ideal company to give it to them.

“We believe we are ready with the right product,” he said.

“We’ve worked hard to try to understand what the market needs and what the market wants, and we’re trying to do it in a way that only Cummins should be able to do it, with all our capabilities around turbochargers, fuel systems, aftertreatment, combustion technologies. The recipes we use in all the markets where we compete around the world, we applied here. So it’s not just another diesel engine, it’s a Cummins diesel.”

Cummins has done its homework, and found that many customers of heavy-duty pickups and other light- and mediumduty commercial vehicles are willing to make the switch from gasoline to diesel, should a viable option be available.

“Cummins ISV5.0 creates new opportunities for our OEM customers as a compact and lightweight engine that delivers best-in-class fuel efficiency and total cost of ownership,” said Dave Crompton, Cummins vice-president and general manager, engine business. “Many of our customers have asked for a Cummins alternative for gasoline or other small displacement automotive diesel engines. The ISV5.0 represents the next dimension in fuel economy and performance as Cummins continues to broaden our on-highway product line.”

The ISV5.0 represents the first Cummins engine to use a 36 FLEET EXECUTIVE ❙ November/December 2013

Geared.indd 36

compacted graphite iron block, which reduces weight and engine noise. Aluminum components contribute further weight savings and improve efficiency.

Cummins officials said the new engine has been designed to easily fit where a comparable V8 or V10 gasoline engine was previously installed. It’s not yet clear which vehicle manufacturers will be offering the engine, though Nissan earlier announced it would offer a 5.0L Cummins turbo-diesel engine in its next-generation Titan pickup. The launch date for that engine has not yet been disclosed.

The ISV5.0 features a Bosch high-pressure common rail fuel system and piezo fuel injectors for precise fuel control and optimum in-cylinder combustion, the company said. There will be four horsepower ratings (200, 220, 250 and 275 hp) available with torque up to 560 lb.-ft.

The engine uses ceramic glow plugs to reduce start time and limit electrical current draw in cold weather. The glow plugs are designed to last the life of the engine.

The fuel filter uses NanoNet media from Cummins filtration, which can trap more than 99% of all particles as small as four microns. The ISV5.0 also has a high-efficiency coalescing filter to eliminate crankcase hydrocarbon emissions and oil mist.

And the engine will be matched with Cummins’ aftertreatment system, including a diesel particulate filter and selective catalytic reduction system.

“Cummins has integrated the latest technologies in the ISV5.0 to deliver performance, fuel efficiency and durability in a highly sociable package. Every day, drivers will appreciate the smooth, quiet operation of the ISV5.0,” said Jim Katzenmeyer, executive engineer, V8 program. “In addition, the fuel savings offered by the ISV5.0 result in fewer greenhouse gas emissions – a great environmental benefit.”

While Cummins has yet to receive commitments from OEMs looking to offer the engine, Nissan aside, the company is confident opportunities will materialize. Customers today in the applications best suited for the ISV5.0 are often using the larger ISB engine and underutilizing its capabilities. Or, they’re running gasoline engines in which case there’s an opportunity to gain some significant efficiencies. FE trucknews.com

13-12-04 9:22 AM

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INSIDE THE NUMBERS

TL FREIGHT SHIPPERS Not sure 6%

Increase 30%

Stay the same 58%

29%

very tight 10 capacity

26%

Decrease 5%

22%

1%

1%

DOWN DOWN DOWN

balanced 5 capacity

12%

12%

UP

NOT SURE

3%

5%+ 2-5% 0-2%

FLAT

UP

UP

0-2% 2-5% 5%+

Size of Increase

4.66

% EXPECT THIS MODE TO HAVE HIGHEST PRICING POWER 2014

EXPECTED RATE INCREASES 2013

CAPACITY CONCERN

% of Respondents

CHANGE IN USE OF MODE 2014

SURCHARGES % RESPONDENTS PAYING 35%

Fuel Currency Detention Border Delay Border Security

excess capacity 0

94% 8% 26% 15% 11%

LTL FREIGHT SHIPPERS CHANGE IN USE OF MODE 2014

Not sure 4%

30%

very tight 10 capacity Increase 39%

% of Respondents

Stay the same 53%

EXPECTED RATE INCREASES 2013

CAPACITY CONCERN

Decrease 4%

18%

3%

4% 1%

DOWN DOWN DOWN

5%+ 2-5% 0-2%

balanced 5 capacity

FLAT

UP

UP

7%

8%

UP

NOT SURE

0-2% 2-5% 5%+

Size of Increase

4.76

% EXPECT THIS MODE TO HAVE HIGHEST PRICING POWER 2014

28%

SURCHARGES % RESPONDENTS PAYING

29%

excess capacity 0

Fuel Currency Detention Border Delay Border Security

95% 8% 19% 11% 13%

Fa

Ch av fo

RE 97 Ed Te

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Delo_Fuel E Inside the #.indd 38

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Inside the #.indd 39

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Inside the #.indd 40

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