Fleet Executive July August 2014

MOTORTRUCK

JULY AUGUST 2014

CANADA’S BUSINESS MAGAZINE FOR FLEET OWNERS

Professional Connection SEE PAGE 37

Custom telematics Canada Cartage builds system from scratch Fuelling the future Engine technology in the year 2025 INSIDE: Your 2014 Sizes & Weights Chart

Mid-term report What our Equipment Buying Trends Survey and other economic indicators reveal about industry growth for the second half and into 2015 1 Jul/Aug cov FIN.indd 1

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“The D16 fuel economy is huge - 2 mpg savings means around $20000/truck.”

“We run 54 power units – 48 of which are now Volvo. We transport fuel in b-trains in a demanding environment throughout Alberta and BC. What became apparent very quickly with our Volvo D16s is that our round trip fuel consumption came in considerably less than with our previous fleet. The D16 is a bulletproof engine – we have experienced savings all around – from fuel economy, downtime, and maintenance to driver safety and loyalty. Our 9 cents/mile is approximately 40% of what we were experiencing before we changed to Volvo.

It’s just a phenomenal product.”

Mark Taylor, Western Canada Regional Manager, Flying J Canada Transport Learn more at volvotruckscanada.com.

Volvo Trucks. Driving Progress

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Volume 83, No. 04

July/August 2014

”

contents 30

Cover Story 21 READING THE NUMBERS

The results of our Annual Equipment Buying Trends Survey are in, and added together with other economic data, they signal better times ahead.

Page 5: Your 2014 Sizes & Weights Chart

Features 18 LEADERS New MTA executive director Terry Shaw outlines the challenges he expects to face and the programs he’s working on.

28 DATA DRIVEN Like a lot of trucking companies, Canada Cartage decided it needed a telematics system. Unlike its competitors, however, Canada Cartage built one from scratch.

30 GREEN TO GOLD

Departments 4 WHAT’S ON TRUCKNEWS.COM

Alternative fuel fleets detail the pros and cons (including payback figures) of switching away from diesel, and speculate about the future popularity of newer fuels.

32

32 PROFITABILITY Investigating crashes with the goal of preventing future incidents.

6 THE VIEW WITH LOU

34 GEARED UP

8 CHECK CALL

Test drive of the Kenwoth T680.

10 THE HUMAN EDGE

34

12 TAKING CARE OF BUSINESS 13 THE BOTTOM LINE 16 RISKY BUSINESS 38 INSIDE THE NUMBERS

trucknews.com

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

BLOGS

FEATURES

> Crossing the finish line early

Trucking industry walks 25,000 miles in 23 days during the NAL Healthy Fleet Challenge tinyurl.com/NAL-finish

Earl Galavan says supervisors need training in how to supervise people. trucknews.com/ blogs/supervisor

> Daimler demonstrates self-driving trucks Navigating the Autobahn hands-free tinyurl.com/daimler-handsfree

> ZF demonstrates technological capabilities

A new transmission takes the backseat to a truck controlled by tablet tinyurl.com/zf-tablet

> Terrance Smith: A driver worth noticing

An interview with the TCA’s 2013 owner/operator of the year tinyurl.com/tca-oo

Ray Haight reflects back on the Truckload Carriers Association annual convention. trucknews.com/ blogs/tca-annual-convention

Web TV:

Transportation Matters LET’S GET HEALTHY Advice from Healthy Fleet for staying fit while on the road tinyurl.com/healthyfleet WATCHING THE CLOCK Verspeeten Cartage talks tight windows and JIT in automotive hauling tinyurl.com/verspeeten

Dan Goodwill explains why LTL is fun again. trucknews.com/ blogs/fun-back-ltlfreight-industry

ONTARIO TRUCK DRIVING CHAMPIONSHIPS: POWDER PUFF COMPETITION Spouses get an opportunity to drive an obstacle course tinyurl.com/OTDC-puff ONTARIO TRUCK DRIVING CHAMPIONSHIPS: IHSA SUPPORT Why a safety agency gets involved with a driving competition tinyurl.com/OTDC-IHSA

SOCIAL MEDIA FIND US ON FACEBOOK facebook.com/trucknews

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MOTORTRUCK

THE VIEW WITH LOU

Not ready to jump on the bandwagon

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

VOL. 83 NO. 04 PUBLISHER & EDITORIAL DIRECTOR

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

Carolyn Gruske

Why I’m taking a wait and see approach to the Transforce-Contrans mega deal Lou Smyrlis

E

MCILT, Editor • lou@transportationmedia.ca

ver since the end of the Great Recession, industry executives have been talking about the need to consolidate the industry as a way to soak up excess capacity, provide top shippers with the large scale transportation network they desire, and act as protection against downward pressure on rates. For just as long, we in the media have been speculating about when that blockbuster deal would happen or if it would.

Well, it just did with the announcement that Canada’s largest trucking firm, TransForce, has made a friendly, board-approved takeover bid for Contrans, another of Canada’s largest, publicly traded trucking firms, as reported first on our website www.trucknews.com. Until now we had seen markedly smaller deals. Executives from large fleets may have desired growth by acquisition, and there may have been numerous acquisition targets as the Baby Boomers who started many of our industry’s small and medium-sized enterprises approached retirement age, but most top company decision makers seemed more comfortable with less risky bolt-on type acquisitions.

The TransForce-Contrans deal is on a much different scale, totaling an equity purchase price of about $495 million. Does it carry within it the seeds for future success? The industry analysts we spoke to think so.

Doug Nix of Corporate Finance Associates, a speaker at our Surface Transportation Summit last year, felt it was a strong strategic fit. Contrans’ strategy has been to build a specialty carrier operation, but without looking south to the USA, it would have been hard to grow beyond where they were. So unless Contrans executives Stan Dunford and Greg Rumble were going to change strategy, selling was the best option, Nix believes.

RBC Capital Markets, in a report issued by analyst Walter Spracklin, also found the deal to be a good one. “In our view, this deal is compelling from a strategic perspective as we consider (Contrans) to be a best-in-class truckload operator with a strong position in niche markets. Accordingly, we believe TFI stands to gain a competitive edge

6 FLEET EXECUTIVE ❙ July August 2014

(416) 510-6809

cgruske@TransportationMedia.ca GEARED UP EDITOR

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

in TL markets across Canada. From an operating point of view, this transaction offers density and scale in the North America truckload market.”

Fleet Executive columnists who comment on such issues, Mike McCarron, who heads Wheels Group’s M&A, and Mark Borkowski, president of Mercantile Mergers and Acquisitions, believe the deal is proof a major transportation consolidation is taking place in the North American market and that the deals will get bigger and more numerous. The market has become so competitive that only the big will thrive and survive, they believe.

Personally, I’m going to take a wait and see approach to this one. Contrans, according to every analyst I’ve spoken with over the years, is indeed a well-managed company. Transforce has a reputation for choosing relatively well-run companies and letting them do their thing, at least initially.

But this is a big deal for the Canadian market.

There is a great deal of resources that will have to come into play to ensure it’s a smooth transition into the new reality for both companies.

Often mergers of this scale run into difficulties not because they don’t make sense on paper but because of cultural differences between the organizations. I still recall my conversation with Yellow Transportation president and CEO James L. Welch as his company was merging with Roadway in the blockbuster deal that hit the industry south of the border about a decade ago.

Welch was quick point out “the road has been littered with nothing but disasters when companies try to merge” but argued the difference between what Yellow-Roadway were doing and what happened before is that in the past it was usually a healthy company acquiring or merging with an unhealthy company. Their situation was “very different” he assured me, adding “You have two very healthy companies that are very well respected in the marketplace and are doing things to make their companies successful. What we want to try and do is grow both companies.”

I remember Welch as a very likeable gentleman. But we all know how that deal worked out. FE

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

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

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Carolyn Brimer Beverley Richards CONTRIBUTING EDITORS

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

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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.

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CHECK CALL

Bringing you the best of the best Covering the Ontario Truck Driving Championships Carolyn Gruske

Editor • cgruske@transportatiomedia.ca

F

leet Executive and Truck News were privileged to be media sponsors of the 2014 Ontario Truck Driving Championships.

Leading up to the provincial finals, we profiled drivers to watch, attended the qualifying events in Toronto and Cambridge, and were on hand in Barrie to watch the best drivers in the province test their skills against tough courses and each other. Here are a few photos from provincial finals. To see event coverage, go to trucknews.com and read “Nice guys finish first” (tinyurl.com/OTDC-nice) and watch “Interviews with the winners” (tinyurl.com/OTDC-winners). Congratulations to all the participants and good luck in 2015. FE

8 FLEET EXECUTIVE ❙ July August 2014

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Go to www.trucknews.com and download it today!

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14-08-05 10:08 AM

THE HUMAN EDGE

KNOW HOW TO GET THE KNOW-HOW

Seven steps to capture knowledge before it walks out the door

By Angela Splinter

Trucking HR Canada

I

t is not unusual to see drivers and other trucking industry employees working into their 70s. However, this may not be the norm in all organizations. Even when it does happen, these workers will not stay on the job forever.

It is why many firms are concerned about losing corporate knowledge, wisdom and industry insights when older workers walk out the door to begin retirement.

Smart organizations are responding with knowledge transfer programs—a combination of formal and informal methods which capture what the experienced workers know, so it can all be shared with younger and less-experienced personnel.

These programs will save money by ensuring that knowledge does not need to be recreated from scratch.

There are two types of knowledge to consider in one of these programs. Explicit knowledge is information that is easily documented and can be shared in person or through other means. Implicit or tacit knowledge is something that we know but is not easily transferred to another person verbally or in 10 FLEET EXECUTIVE ❙ July August 2014

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writing. It is gained through personal contact and hands-on experience. Some examples include how to work with a particular dispatcher, or understand the way things work beyond the written orientation booklet or formal policies. In other words, it can be about learning the informal tricks of the trade.

Trucking HR Canada’s popular Your Guide to Human Resources describes the knowledge transfer itself in seven steps.

1. Identify the essential knowledge you want to capture– including the sources and types of knowledge.

Focus first on those positions that are critical to your organization’s success (for example: truck drivers, dispatchers, sales people, etc.), as well as those that you are in danger of losing due to retirement. Then determine the type of knowledge each person has that is important to capture and share. Is it explicit or implicit/tacit knowledge? Is it both? The answer to these questions will determine the approach the organization should take in collecting information. trucknews.com

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2. Identify who in the organization has the knowledge that the firm needs to transfer. Who is the appropriate “knowledge keeper” to involve in the process?

These people might include soon-to-be retired truck drivers, dispatchers or others who are critical to your organization’s success. Knowledge keepers who have already retired could be brought back on a contract basis or through others means.

Choose these people carefully. Develop some criteria for choosing them: Are they excellent role models with the skills and knowledge you want shared? Are they interested in participating and are keen to share what they know? Are they good and effective communicators?

3. Motivate identified knowledge keepers to share their knowledge.

Organizations should reassure older employees that transferring knowledge to younger employees will not endanger their jobs or make them redundant.

Reward those who transfer their knowledge. Recognize the efforts in their performance reviews, and offer special recognition for participating. Plaques or a mention in the company newsletter are two possible approaches.

10 Human Edge.indd 11

4. Identify who should receive the knowledge.

Maintaining a regularly updated and clear list of the people who need to receive information will ensure that nobody is overlooked.

5. Design the knowledge transfer process and plan, and select the knowledge transfer method or tool to be used.

Be sure to consider the learning approaches and communication styles of different generations when developing the appropriate methods or tools to be used. And set the criteria by which you will measure the program’s success. What are the outcomes you hope to achieve?

6. Implement the knowledge transfer plan.

As important as the overall planning may be, employers must be committed to putting the plan in action.

7. Monitor and evaluate the outcome using the measures identified in Step 5.

Trucking HR Canada has tools to help your knowledge transfer plan—visit www.truckingHR.com for more information, and follow us on Twitter@truckingHR. FE

14-08-01 2:08 PM

TAKING CARE OF BUSINESS

Data loss: when USB flash drives go missing Preventing your company’s information from falling into the wrong hands

By Mark Borkowski

H

as anything like this ever happened to you or someone you know? You get to your destination or your client’s office and you realize your USB drive has decided not to join you. Now the fun begins. Was it encrypted? Where could you have lost it? It’s not just the information you’ve lost, it’s what can happen if the wrong person or people get their hands on it. Your boss is not going to appreciate this and the potential damage could be irreversible!

A study by the Ponemon Institute in Traverse City, Michigan shows an alarming percentage of companies do not consider protection of information on a USB drive to be high priority.

Less than one-third of organizations believe they have adequate policies to prevent USB misuse.

In contrast, nearly half of large organizations have lost sensitive or confidential information on USB drives in just the past two years, and the rate is climbing at an alarming rate. Statistically, an average of 12,000 customer records are lost per organization due to missing USB drives. Throughout Europe, companies are being fined and embarrassed as these types of “scandals” are all over the radio and television.

Look, let’s face it: not everybody who finds a USB drive is a criminal or has nefarious intentions, but losing your drive is not exactly like losing your house key. The lost house key can belong to any one of five million locks but a lost, unencrypted USB drive can have immediate and devastating consequences. If you found a lost drive what would you do? What if there was a possibility to make some money if you sold it? Then you wouldn’t have any direct involvement with what happens to the information contained on that drive. It’s not really criminal activity, but it can have some serious and expensive consequences.

Identity-theft protection is a multi-million dollar industry and is growing at the speed of light. Its very existence means that billions of dollars are potentially being lost due to wayward information. We need to stop being part of this problem and proactively help bring down the statistics on identity-theft losses. The question is, how can we securely protect our information inexpensively and with portability? A small company based in Toronto named Great Durable Products Ltd. thinks it has the answer: biometrics.

Biometrics is not a new concept but it is a really good one.

While the company’s Encriptor One fingerprint scanner will protect your data, it doesn’t actually need your fingerprint to do

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so. The people behind Encriptor One say their product’s squarepad design allows people to use any part of their fingers or even part of their hands as long as there is a pattern to detect. Say goodbye to the fingerprint critics.

In our always-connected society, we are bombarded with information about anti-virus software, firewalls, routers and password tactics to protect our private information on our own personal computers, but when we’re not dealing with our own information or our own safety, we tend to forget the urgency needed to protect the information other people entrusted to us.

Many computer contractors who are quite aware of security issues sometimes do not extend that awareness to USB flash drives and the information they contain. Even if they do, it is hard to drive that message home to every employee company-wide.

And in case you answered “no” to my first question about knowing anybody who has ever lost a USB drive, now is the time to change your answer because you know me (or least you know what I write in this column).

I lost a USB that fell out of my pocket a few months ago.

Afterward, I received a call from someone who found the drive and wanted to embezzle $3,000 from me by selling it back. He found me because my name was in the documents along with my contact information. I contacted the police and they arrested the gentlemen and returned my USB stick. I was relieved. It had sensitive and confidential information regarding three companies I was involved with.

The detective responsible for these high-tech crimes gave me a valuable lesson. He showed me a large container of USB drives that had been turned into the police. He said some contained pornography, some engineering designs and three contained military information. He estimated that over 500 USBs were turned into the police in Toronto alone. The rest end up in the garbage, or in the wrong hands.

So please consider encrypting the information on your flash drive. Remember, the data you save may be your own! FE Mark Borkowski is the president of Mercantile Mergers & Acquisitions Corp. Mercantile is a mid-market M&A brokerage firm. He can be contacted at mark@mercantilema.com www.mercantilemergersacquisitions.com.

trucknews.com

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BOTTOM LINE

Middle-man mania Second-generation executives are proving themselves in the field

By Mike McCarron

I

’ve spent a lot of time dealing with freight brokers, and in fact have been in the middle myself. I figured I knew the business. But as I prepared to moderate two industry events, I realized that this old dog has a lot to learn.

The first event took place last fall in our boardroom. I invited six industry leaders to sit down for a state of the union.

These are all “first generation” brokers—baby-boomer entrepreneurs who have been breaking trails for an industry that didn’t exist 30 years ago.

This second event took place this past winter at a local hotel. I moderated a panel for the non-profit transportation association Delta Nu Alpha that featured the “next generation” in the freight brokering business. This is the under-40, Gen-Y crowd whose companies are sniffing up the rears of the lead dogs and starting to make fresh tracks of their own.

I learned a lot from my time with both groups. It’s knowledge worth passing along.

Status quo: Things are eerily quiet on the M&A front. It’s rare to hear of a freight broker changing hands. Surprisingly, in spite of their age, baby boomers seem content to hang around.

They don’t seem as interested in cashing out as I thought.

These freight brokers have made wheelbarrows full of cash in transportation and real estate. Many are sticking with it simply because they haven’t figured out a way to get the hell out.

All in the family: More and more freight brokers are being run by the kids. In one way, it’s the owner deferring the uncertainties of selling his business. In another, it’s also a great setup for president mom and dad. They can continue to pluck from the nest of the golden goose from their condo in Lauderdale and/or their cottage in Muskoka. Getting Junior a wellpaying gig in a market where prospects aren’t bleak doesn’t hurt the math. Status quo is proving to be a-okay!

The next generation: Wow. Was I ever impressed by the next-generation studs that I interviewed. All of them were smart, engaging, and confident enough to be grilled by me unscripted and “on the record.” They are well educated and possess a set of skills that old bastards like us will never have.

They also got their on-the-job training during the dark days of 2008. It’s made them formidable competitors for first-generation brokers and carriers alike.

Blurred lines: Ten years ago a broker was a broker and a

carrier was a carrier. Today the lines are blurred. Hybrid transportation companies have evolved and are using assets and nonassets to build dynamic transportation products.

Now, specialty brokers are popping up all over the place.

They focus on a particular vertical market niche like flatbed, expedited, seasonal, or chemicals. They’ve been around for years but their presence is really increasing. In the US, research done by Carrier Direct shows that the “amount of LTL freight moving under blanket-wrapped programs by brokers has grown from US$575 million in 2007 to US$2.5 billion in 2012”—even though the market shrank by US$3 billion.

Culling in US: The US$75,000 surety bond requirement has helped cull the freight broker herd. According to James Lamb, president of the Association of Independent Property Brokers and Agents (AIPBA), “In December, there were 21,080 independent brokers. Today there are 12,996.” Losing 39% of the industry over a lousy 75-grand entrance fee almost floored me.

These stats also indicate how many brokers in Canada are on life support. If you apply the 10% Canada-to-USA rule, there are 2,108 freight brokers in Canada and 822 wouldn’t be able to write that cheque. It really makes you wonder how long the smallest can hang on for.

Rise of mega brokers: One reason the small guys are in trouble is because people with brains and dough are investing in the growing third-party space. Big brokers are being gobbled up and folded into mega-brokers with the scale and technology needed to survive (Adrian Gonzales, an industry pundit, suggests that one day computers could replace freight brokers, although a lot people don’t seem to buying into that theory).

During my research, one theme came through loud and clear: it’s a great time to be a freight broker. We’ll see how long that lasts. Someday, the dog-eat-dog environment at the top of the food chain is going to work its way to Canada. Until then, Mom and Pop Broker continue to hang in there, Junior has the reins, and his contemporaries are setting a fast pace in a capacity-short freight environment. 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. July August 2014 ❙ FLEET EXECUTIVE 13

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RISKY BUSINESS

SOLUTIONS TO HELP CARRIERS TURN SAFETY INTO A PROFIT CENTRE

F C

Medical marijuana causing pains for HR managers It’s the job description, not the drug that really matters

By Rick Geller

T

he trucking industry has been presented with another minefield to navigate: employees being prescribed medical marijuana as a pain management drug. But this particular minefield contains a red-herring trap that promises to snare unprepared carriers.

There is an element out there that is determined to use this issue as a political plank in the moral and legal battles over whether or not marijuana should be legalized. So we hear arguments about how it’s not as potent or strong as “real” marijuana; how it’s prescribed by doctors; how it comes in different forms for ease of use; how it’s only used outside of work hours; how the effects are individual and not general, and on and on.

Carriers need to sidestep all of the rhetoric and avoid the urge to manage this issue solely through their drug and alcohol policy.

At its core, the dominant issue is whether or not the employee is able to meet all of the job requirements of the position. That’s what the focus must be: how does the usage of prescribed medical marijuana impact the employee’s ability to do the job?

There are a number of pain management drugs available, both prescription and over-the-counter. To some degree, all impact a person’s ability to function. In the case of prescribed pain medications there needs to be a balance between managing the individual’s pain while being the least intrusive into the individual’s ability to function.

If the object of the exercise is for the carrier to determine what restrictions the use of medical marijuana place on the employee’s ability to meet their job requirements, then carriers first need to identify what those job requirements are.

This begins with a written job description. The job description identifies all of the functions and duties of the position. It is almost impossible to identify the job requirements until you first define what the job is. Carriers looking for sample job descriptions and templates of most of the jobs associated with moving freight by truck can check out www.onetonline.org.

Once the job description is complete, carriers need to identify the specific job requirements. For example, the job description might include the need to tarp loads and require the ability to lift a 40-lb. tarp and distribute it across the load.

When developing job requirements, carriers should consider the physical and legal requirements associated with driving a

16 FLEET EXECUTIVE ❙ July August 2014

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truck and delivering freight. These can include elements such as having to sit for extended periods of time, having to maintain focus, recognize hazards, and make critical decisions within the context of the environment in which they drive; ability to cross borders, amongst other issues and elements.

Armed with this information, carriers can then determine the extent of any restriction or limitation the medication has on the individual’s ability to meet the job requirements. Carriers may be well advised to engage the physician that prescribed the pain medication and have the physician identify any restrictions usage of this medication has on the individual’s ability to meet the job requirements.

Obtaining legal counsel would also be appropriate in terms of border crossing and compliance issues, as well as any accommodations that the carrier may be required to make in order to support an injured or disabled employee.

Once all of these factors have been taken into consideration, the carrier can then make a determination whether or not to continue to offer employment to the individual and, if so, with what conditions and restrictions.

For carriers, the trap to be avoided is to over-react to the fact that marijuana is being prescribed. This is simply another pain management medication that is being made available to patients.

Carriers need to focus on the person’s ability to meet the job requirements. If there are any limitations or restrictions on that ability, then what is the operational impact to the company? All employers, not just trucking companies, are required to make reasonable accommodation for their employee in these cases.

This determination can only be made when you have a written job description, as well as written job requirements for every position in your company! 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 both the Truck Training Schools Association of Ontario (TTSAO) and the Professional Truck Driving Institute (PTDI). He is also the incoming chair of the Toronto Chapter of the Fleet Safety Council, as well as an executive committee member for both the Ontario and Toronto Regional Truck Driving Championships. trucknews.com

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LEADERS

HIGHLIGHTING THE INSIGHTS OF INDUSTRY LEADERS ON KEY INDUSTRY ISSUES

GETTING TO KNOW MTA’S NEW EXECUTIVE DIRECTOR, TERRY SHAW

By Lou Smyrlis

There’s a new person at the helm of the Manitoba Trucking Association. Terry Shaw, who spent three years as the association’s general manager, moved into the executive director’s office after the retirement of the much respected Bob Dolyniuk (who spent 43 years in the industry, 17 of them as head of the MTA). Fleet Executive publisher and editorial director Lou Smyrlis travelled to Winnipeg to get to know Shaw, and understand how he will shape the association in the years to come.

FE: BOB DOLYNIUK WAS THE HEAD OF THE MANITOBA TRUCKING ASSOCIATION FOR A LONG TIME AND WAS ONE OF THE BEST KNOWN AND RESPECTED PEOPLE IN THE INDUSTRY. NOW THAT HE HAS RETIRED, YOU ARE STEPPING IN TO RUN THE ASSOCIATION. HOW WILL YOUR BACKGROUND BEFORE JOINING THE MTA AFFECT THE KIND OF LEADER YOU WILL BE?

FE: IT’S INTERESTING THAT YOU DO NOT HAVE A FAMILY BACKGROUND IN THE INDUSTRY. AS YOU KNOW, THIS IS AN INDUSTRY WHERE FAMILY TIES ARE COMMON. YET, IN KEEPING THE INDUSTRY VIBRANT YOU DO NEED NEW BLOOD, NEW PEOPLE COMING IN FROM THE OUTSIDE WITH DIFFERENT IDEAS.

Shaw: I’m one of the guys in the industry who doesn’t have a family history in trucking but I have been in the industry since 1996. One of the gentlemen I went to school with had a friend working at TransX at the time, and I ended up working at TransX for about five years in a variety of roles. One of my first roles was as a log audit clerk. From there I worked through planning, dispatch, customer service and other positions. When I left TransX, I went to work for the Workers Compensation Board here in Manitoba for about a year and then went to Big Freight Systems—working out of their Steinbach office initially and over the years out of both their Steinbach and Winnipeg offices for just under a decade. So in terms of leadership, I’ve had the opportunity to work for a large company and a smaller company to work with an LTL focus and a project-related open deck focus.

It was excellent working and learning with the executives running these companies and capturing the elements that would work for me in terms of my own professional development.

18 FLEET EXECUTIVE ❙ July August 2014

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Shaw: There are two ways into the industry—through family connection and simply finding your way into it. We are trying to make it a bit more of a career path and expose children and young adults to the industry and what a career in it entails. There are three distinct employment categories: truck driver, maintenance, and everything else, such as accounting, marketing, operations, pricing, IT and a whole host of other areas about which we are trying to create awareness and open people up to so that if you are going to go to Red River College and become an accountant, why not consider the trucking industry? Understand how big it is, how diverse it is and what kind of opportunities it holds for young people.

FE: I’M SURE IF YOUR CAREER WITH MTA IS GOING TO BE AS LONG AS BOB’S, AT SOME POINT YOU ARE GOING TO RUN INTO SOME TOUGH ISSUES. IS THERE A POLITICAL OR BUSINESS LEADER WHO HAS INSPIRED YOU AND WHOSE ACTIONS YOU TRY TO EMULATE, PARTICULARLY DURING TOUGH TIMES?

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LEADERS

We have been advocating for years for a wide base tire study and we finally have some traction on that.

Shaw: I’ve had the real pleasure of getting to know Bob over the past three years and watching him interact with people on multiple levels from the premier to a whole host of other stakeholders, and that has been a fantastic education. Over the past three years, Bob and I worked very closely and he has been very generous in affording me opportunities to learn. I’ve recognized his success and worked very hard to capture those elements which I identified in him and thought would work with me. Outside of Bob, getting to work with our board and our executive and watching these people in action, seeing how they approach situations, the questions they ask, how they reflect on situations before they take action, has been invaluable. I’ve learned more in the past three years probably than in the previous sixteen years of my career, which is saying a lot because I did learn a lot in those initial sixteen years.

FE: IN YOUR PREVIOUS ROLE WITH THE MTA AS GENERAL MANAGER, YOU MANAGED THE ASSOCIATION’S EFFORTS ON SEVERAL INDUSTRY ISSUES AND DEVELOPED POSITION PAPERS. WHAT WOULD YOU SAY WOULD BE THE MOST IMPORTANT ISSUES YOU’VE WORKED ON?

Shaw: The biggest issue recently was the T-plate issue. We’ve got different ways of licensing trucks in Manitoba, one of which is a T-plate. It’s a bit of a unique animal in that it’s a limited cost license for a limited operating area. Just recently, I was up in The Pas and the nature of the work the gentlemen I was visiting do was such that they had registered for T-plates. For many years the Ministry of Transportation had been advocating that T-plates should be preserved but also should be subject to the National Safety Code, which they previously weren’t. The province had indicated they were willing to make that change, which was fantastic but as things went through the machine of government it came out the other end with the suggestion not to amend the Highway Traffic Act but rather to remove T-plates as a licensing option, which would have seemed a simple solution bureaucratically but it would have meant people in the industry would have had to register their trucks facing 300% licensing fee increases, costing them thousands of dollars per year and our industry millions of dollars per year. We fought long and hard, and successfully on that issue FE: SPEAKING OF FIGHTING LONG AND HARD, WHEN YOU LOOK AT THE NEXT FEW YEARS, ARE THERE ANY LEGISLATIVE ISSUES PERCOLATING RIGHT NOW THAT YOU THINK WILL BE GRABBING YOUR ATTENTION IN THE FUTURE? 20 FLEET EXECUTIVE ❙ July August 2014

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Shaw: We have a whole host of infrastructure and transportation issues. We have been advocating for years for a wide base tire study and we finally have some traction on that. The Periodic Mandatory Vehicle Inspection is on a six-month schedule in Manitoba. We, along with BC and the Yukon, are the only jurisdictions in Canada that operate on a six month schedule as opposed to a 12-month schedule. We’ve asked for a review.

Manitoba regulators are regulating Manitoba companies to a different standard and it is creating a competitive disadvantage for our members. We believe we will be successful on that front and that will be very meaningful to our members because it will bring them on par with their counterparts in other jurisdictions and be a significant cost savings and create efficiencies with equipment by not having it tied up in the shop twice a year.

FE: WHAT MAJOR CHALLENGES DO YOU SEE YOUR MEMBERSHIP FACING IN THE YEARS AHEAD AND HOW DO YOU SEE THE MTA EVOLVING TO HELP THEM ADDRESS THOSE CHALLENGES?

Shaw: We are seeing constant challenges in attracting workers, which is by no means a challenge that is unique to Manitoba carriers. Besides drivers, there is a shortage of skilled technicians. In my years here I’ve seen growing recognition that we need to do a better job of promoting who we are and what we do and the value we create to the economy. There has also been a greater push and interest in education, such as mandatory minimum driver training. We are involved in some projects that move beyond the pure regulatory training, such as hours of service, and try to create tools and draw connections between essential skills and safety in trucking. We have an English-at-work program we are working with the province to create because of the demographics of some our driver pools in Manitoba. So we are seeing a whole host of educational opportunities and we are trying to package those for our members in ways that work for them. The traditional method of bringing employees to a classroom still works and it is something we offer but education needs to be quicker and more accessible. People in The Pas have the same educational needs and wants as people in Winnipeg but the reality is they are not likely going to come to Winnipeg to get that education. So we are working on remote options and Web-based options. We are also seeing in Manitoba some Workers Compensation Board education concerns.

We are working on creating tools through the creattion of an industry specific safety association, to leverage best practices to raise the level of safety and also, for those employing best practices, to receive some recognition for doing so. FE trucknews.com

14-08-01 2:11 PM

COVER STORY

UNCERTAIN BUT NOT ANXIOUS Conflicting statistics and economic indicators don’t sink positive expectations for 2015

On the release of Fleet Executive’s Annual Equipment Buying Trends Survey, Carolyn Gruske compiles data for a look at where the trucking industry will be in 2015 rying to figure out just how healthy the trucking industry is purely by juggling statistical data is an almost impossible trick. Looked at one way, the industry seems as if it’s booming. Viewed from a different perspective, it looks like trouble is on the horizon. The truth is likely somewhere in the middle of those two extremes. Welcome to the new normal.

Last fall, when speaking at an American Trucking Associations (ATA) economic briefing, ACT Research president Kenneth Vieth described this economic period we’re currently in—this post Great Recession, post recovery upswing—as “the Great Okay” and it’s a description that seems like it will continue to apply for the next year or so.

As to what that actually means in real terms, it seems there is no over-arching trend or mood, except maybe for a cautious attitude to doing business. To illustrate the one-toe-in-the-water approach, let’s look at some the results of Fleet Executive’s Annual Equipment Buying Trends Survey.

This year, 180 fleet managers and owners answered a comprehensive list of questions about their buying preferences, including their purchasing intentions. Answers were provided by executives responsible for all sizes of fleets—from small to large.

Last year, during the 2013 survey, when asked if they had any intentions of purchasing new heavy duty trucks in 2014, nearly half of respondents (46.8%) said they expected to replace 10% of their fleets; 21.7% said they had no intentions of replacing any trucks, and 20.4% thought they’d swap out 20% of their Class 8 vehicles.

In comparison, when asked the same forward-looking question (“What percentage of your heavy duty fleet do you anticipate replacing next year?”) in the 2014 survey, the results showed some differences. The number who answered zero took a sharp decline, with 13.2% of respondents saying they weren’t planning any replacements. A very similar percentage—45.4%—indicated they expected to update 10% of their trucks, while 27.6% said they’d replace 20%.

If the 10% and 20% replacement categories are combined and viewed as a measure of optimism about the economic outlook of the industry, we see 73% of 2014’s respondents expect they’ll be in the financial position to justifiy at least some major equipment purchases—compared with 67.2% who felt the same way last year—even if they aren’t going on major buying sprees.

Those replacement figures (see graph 1) are pretty much in line with what Kam Hon, managing director of industrials for the Toronto-based rating agency DBRS Ltd. expects.

“The forecast for 2014 compared with 2013 is just about flat.

Some people say it’s down a little bit. Some say it’s higher. Our internal expectation is it’s more or less flat. 2015, I would say is just about the same,” he said.

“At the end of the day, it’s just about the economic growth of the continent. We’re still a little bit concerned about the strength of the US economic growth, so we don’t see much impact at this stage of the economy kicking up into a higher gear. We feel the majority of the truck replacement purchasing is over. The big wave has gone. It will just be pretty flat for the next couple of years: we’re talking [total US sales of] 200,000 to 230,000 units. That’s what most people are predicting for 2014. And the same range for 2015. Tack on 10% for Canada, and we’re in that 210,000 to 240,000 range.”

Hon’s concern about the North American economy is fairly easy to discern. Starting in the US, a number of the key economic indicators are mixed at best. During the first quarter of July August 2014 ❙ FLEET EXECUTIVE 21

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COVER STORY 2

1

Current trade-in cycle for heavy duty vehicles, 2013 vs. 2014 % of respondants

% of heavy duty trucks fleets expect to replace in 2015

% of vehicles in fleet

the year non-farm labour productivity decreased 3.2% while hours increased 2.2% and output decreased by 1.1%. The Consumers Price Index increased 0.3% in June, and 2.1% over the last 12 months, driven mainly by a 3.3% rise in the gasoline index. The one positive set of numbers was the June unemployment rate, which declined to 6.1%. Overall, the US unemployment rate dropped 1.4% over the first half of 2014.

In contrast, the unemployment rate in Canada actually rose—albeit slightly in June—0.1 percentage points to 7.1%.

Although, there were more people working in June 2014 than June 2013, it was just a fractional amount higher: 0.4%. According to Statistics Canada, that tiny increase represents “the lowest year-over-year growth rate since February 2010, when year-over-year employment growth resumed following the 2008-2009 labour market downturn.” The June job figures also showed job losses for all age groups except people 55 years of age or older.

Other Canadian economic indicators look equally weak.

The country’s real gross domestic product grew 0.1% in both March and April, but the output of goods-producing industries fell 0.3% in April.

Financing equipment purchases Traditionally there were two ways of paying for new trucks. Using cash on hand or asking the neighbourhood banker for a loan. In today’s economy, trucking companies are turning to other sources for financing. Kam Hon of DBRS Ltd., a bond rating agency, said many trucking companies with good credit ratings are looking to insurance companies and pension funds to supply the cash for truck purchases.

“Because of the low interest rate environment right now, they are more than happy to loan it out to get a higher rate of return because money sitting in the bank doesn’t give you any return at all.”

As for the lease versus buying decision, Hon said interest rates and credit ratings are the primary driving factors in the decision making process. He explained if companies can borrow at a rate that is “more advantageous” than the leasing rate, that’s what they’ll do, calling it a very “mechanical decision.” If not, then they’ll lease.

22 FLEET EXECUTIVE ❙ July August 2014

One bright spot was the RBC Canadian Manufacturing Purchasing Managers’ Index, which registered a six-month high of 53.5 in June.

“The latest RBC PMI data indicates that in June, Canada’s manufacturers experienced the best conditions for growth in half a year,” said Craig Wright, senior vice-president and chief economist, RBC. “We expect that those conditions will further improve going forward supported by a strengthening global economy, increases in external demand for domestic goods and a depreciating Canadian dollar.”

Moving away from the general economy and focusing on the trucking industry itself, the numbers and statistics are a mixed bag at best. ACT Research reports that in June, North American Class 8 truck sales were up 28% versus June 2013, with a total of 26,729 orders placed. In contrast, however, Classes 5-7 net orders fell for the second straight month, coming in at 15,055 units.

The most recent ATA tonnage index report finds the June index dropped 0.8% to 128.6. Compared with June 2013, the seasonally adjusted index increased 2.3%, down from May’s 3.3% year-over-year gain. According to the ATA, this yearover-year increase was the second smallest in 2014, following a 1% gain in January. Additionally, that 128.6 figure is down 1.9% from the all-time high of 131 recorded in November 2013. So that looks bad, but the question is how bad? Yes, the numbers slipped in June, but they’re just fractionally off, and in the grand scheme of things, they aren’t that far away from the record high.

When compared to the first half of 2013, the first six months of 2014 showed an increase of 42% in spot market freight volumes according to the data compiled by TransCore Link Logistics’ Canadian Freight Index. Despite setting six consecutive monthly volume records, the index also shows that from May to June, load volumes were flat, and that second quarter volumes dropped 4% versus Q1 2014.

Our own Transportation Buying Trends Survey found 58% of Canadian shippers expect to move higher volumes of goods this year compared with 2013, with 45.3% of respondents saying they expect the increase to be between 5% and 10%. That same trucknews.com

COVER STORY

survey found that most shippers expect to increase their use of both LTL and TL services by 39% and 30% respectively.

When asked about how optimistic they feel, carriers answering the same survey ranked their positive outlook level at 6.1 on a scale of 1 to 10. And 40% said they expected to see an increase in volume. Looking deeper into that figure, it seems there are different feelings expressed by different sized carriers. Large carriers rank their optimism at 6.75. Medium carriers place theirs at 6.38, but small carriers come in lower than the average. They peg their number at 5.55.

In spite of the hodgepodge of conflicting data, generally the mood about the near future of the industry seems positive.

In an RBC Capital Markets Equity Research Report, RBC Dominion Securities Inc. analyst Walter Spracklin explained why the bank is upbeat about trucking.

“We are raising our estimates for the Canadian trucking companies in our coverage space on evidence we have uncovered that points to improving industry fundamentals, strengthening our earnings expectations for 2015 and beyond. Our optimistic outlook reflects positive indications provided in recent discussions with senior executives of private trucking companies regarding the three pillars of profitability for this industry: volume, capacity, and price. Put simply, we believe the industry is approaching an inflection point where demand (via higher volumes) is beginning to overtake supply (through tighter ca-

pacity), affording carriers greater pricing power (in the form of higher freight rates) that should translate into improved financial results going forward.”

Dan Goodwill, president of Dan Goodwill and Associates Inc. in Toronto, also feels generally good about the Canadian trucking industry. “I’d say my sense of the overall trucking environment today is probably the best it has been in years. My sense is it’s pretty buoyant right now and that’s a result of several factors. But I think if you talk to truckers, they will tell you demand is better today than it has been in some time.”

Hon too, said he’s “mostly positive” about the health of the industry. “The growth in the economy is what we call a structural growth trend, so truck demand is still up, but it’s in line with the general economic growth of about 3% per year. The trucking industry should still experience a growth trend because we think the North American economy will grow at a modest pace of 2%-3% per year,” he said.

“I expect unit sales to grow on a year-over-year basis. I expect 2014 to be slightly higher than 2013, and 2015 to be similar to 2014. That more or less reflects my sentiments about the US, but I don’t see Canada being any different.”

Note that qualifier “mostly.” Both Hon and Goodwill expressed concerns about issues with the potential to derail the industry. Hon said competition from rail is a threat, since Canadian railways are doing a better job meeting customer demands

COVER STORY

fill the trucks. That’s a two-edged sword. If there is less capacity, it puts upward pressure on rates, which helps these companies achieve higher yields on their businesses. But on the other side, it means it will be a tougher environment for shippers to get the capacity they need as the years go by.

“There is no simple formula to fix that because shippers don’t want to pay more for freight. An easy solution is for truckers to throw more money at the drivers, pay them more and raise rates.

That’s a vicious circle the buying public doesn’t want, but ultimately that’s one of the things that has to happen.” FE

and improving their service. He mentioned that with the driver shortage, even if companies want to buy new trucks, they can’t get them on the road if they can’t put somebody in the driver’s seat. He also noted the ever-increasing price of diesel.

Goodwill also singled out the driver shortage being problematic, but for slightly different reasons.

“Capacity is a challenge. I think it’s a challenge not because truckers can’t buy trucks, but because of the driver shortage,” he said. “I’ve been reading reports that some trucking companies are actually cutting back on their fleet size because they can’t

Multiple perspectives alking about the Canadian fleet is an easy piece of linguistic shorthand. The trouble is it really doesn’t exist.

Instead of a homogenous, uniform fleet, there are at least three different fleets and they’re based on size: large, medium and small.

And if there is one absolute truth that comes out of the 2014 Equipment Buying Trends Survey, it’s that fleets of different sizes seem to have distinct perspectives about almost everything.

When figures are pulled that represent all fleets, the question about whether a company intends to purchase Class 8 trucks next year and if so how many, returned results that included 13.2% of people saying they had no intentions to buy any trucks, 45.4% saying they would replace 10% of their fleets, and 27.6% reporting they would renew 20% of their fleets.

There are almost entirely different responses, however, when the questions are sorted by fleet size. Of those responsible for large fleets, only 4.9% said they wouldn’t replace any trucks. In contrast, 12.5% of medium fleet executives and 22.2% of small fleet executives said they won’t replace any vehicles. The 10% replacement level earned responses from 31.7% of large fleets, 56.3% of medium fleets and 33.3% of small fleets. At 20%, the results were as follows: 41.5% of large fleets, 21.3% of medium fleets and 27.8% of small fleets expect to replace this many trucks in 2015.

Trade in-cycles for heavy duty vehicles varied wildly depending on fleet size. (See graph 3 below.)

Compared with small and medium fleets, large fleets have purchased a considerably lower percentage of used trucks, with 55.0% responding in the affirmative that they have bought previously owned vehicles. For medium sized fleets, the response was 71.4% and for small fleets it was 76.5%. Looking forward to 2015, 17.1% of large fleets thought they would purchase a used truck next year, as did 16.7% of medium fleets and 35.3% of small fleets.

Different sized fleets also seem to have distinctive preferences when it comes to equipment choices. For example, large fleets select automatic transmissions as their number one choice, whereas most medium fleets indicate they prefer a 13-speed manual, while small fleets rank 18-speed manuals as their preferred gearboxes.

Dan Goodwill of Goodwill and Associates, offered some perspective about why smaller fleets made some of the choices they did, particularly when it comes to relying upon older, simpler trucks.

“My overall feeling is that smaller companies are having a tougher time than larger companies. I think there is going to continue to be consolidation,” he says. “There is so much pressure on small companies now. You can’t hire drivers, so with a small fleet, you can’t be as flexible and have the capacity a larger fleet has, and with all of the restrictions in the US and in Canada too, to some extent—hours of service and other regulatory issues—it’s just really hard for a small trucking company unless you’ve got a very good niche and you have differentiated yourself in the niche you are in. But if you’re a me-too trucking company, a small one, trying to compete with bigger guys who have better technology and more flexibility, the you are in tough.

I think some of them are just not going to be able to hang on in there.”

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% of heavy duty trucks fleets expect to replace in 2015 % of respondants

Current trade-in cycle for heavy duty vehicles

% of vehicles in fleet 26 FLEET EXECUTIVE ❙ July August 2014

trucknews.com

DATA DRIVEN

Telematics from scratch Canada Cartage builds its own information system

By Carolyn Gruske

A

trucking company deploying a telematics solution it not at all unusual—in fact, it’s pretty commonplace. So normally word that Canada Cartage has a new telematics system would barely qualify as news. But the century-old, Mississauga, Ont.-based company has taken an approach that most companies would never consider: it built its own system from scratch.

Going with a completely custom solution was an easy decision for the company, especially as it was viewed as a business decision rather than a computer technology project.

“The reason we wanted to do this is so we could differentiate ourselves from the standard, off-the-shelf package that anybody could buy. We didn’t want to go with a me-too solution. We wanted a competitive advantage,” said Daniel Roy, Canada Cartage’s vice-president of information technology.

“We needed a company-wide approach that was flexible enough that we could customize it based on our needs and our customers—so we could service our fleet and provide the best possible service to our customers in meeting their exact requirements. That’s what led us down this path,” said Roy. Specifically, the path is one that connects the company’s Accellos enterprise resource planning (ERP) system, and its Microsoft SQLServer databases, with the trucks themselves.

Having a fully connected system is not just beneficial for Canada Cartage, but also for its customers, explained David Zavitz, senior vice-president of sales and marketing.

“The fact we linked the telematics solution into our ERP system is not standard. That is one of our big differentiators.

Within our ERP system, we have a wealth of customer data and now with the telematics—the fact it integrates with the ERP—means we have a real 360 degree view of what is going on with the customers, the equipment and the fuel.”

“From a general standpoint, a basic requirement or basic desires from most of our customers, is visibility of assets we

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Screen shots from Canada Cartage’s in-house developed telematics system, showing samples of its asset tracking and routing reports.

have rolling for them,” added Jim Sistanis, vice-president of Ontario operations. “Some customers are looking for delivery notice applications that happen electronically. The other [requested] components are usually our ability to reduce our carbon footprint and show them what our emissions are at any given time, or our fuel efficiencies, that sort of thing.”

According to Roy, having a better understanding of where the trucks are and where the customers need them to be makes it easier to manage the fleet.

“Because of the fact we are able to feed into the ERP system, we can also build the patterns of the trips we are running and optimize those for better efficiency. To Jim [Sistanis]’s point on the ability to reduce the carbon footprint, we are trying to reduce it the best we can and to optimize the fleet,” said Roy. trucknews.com

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Along with managing its physical assets, the telematics system also allows Canada Cartage to know what its drivers are doing. Sistanis, repeating what every trucking company executive knows, explained that if the company wants to improve its fuel economy numbers, the best way to do that is to change the way drivers behave behind the wheel.

“We can review specific equipment, specific drivers, any odd behaviour. The system is set up to trigger alarms after certain intervals, depending on whether the driver is idling for a significant amount of time or whatnot. We’re made aware of those things very quickly and we can address them very quickly as well.”

The challenge with many IT projects is getting disparate systems to communicate with each other, and to generate data that is usable across multiple platforms and applications. Canada Cartage faced exactly those same issues, and it tackled them in the same way it did the overall project: it developed a custom solution. In fact, Roy said the company went as far as designing and constructing its own cables to extract information out of the trucks’ on-board computers, all while being unobtrusive and not interfering with any of the driver’s actions in the cockpit.

“With the overall J-bus standards, there is a ton of information you can pull out, but you want to pull out is what is relevant to you. That’s where the decision to go with our own cabling solutions came in. The hardest part was figuring out what came from the different manufacturers via the J-bus. Once we got that figured out, marrying it was just typically an RS-232 type of configuration. At that point, all it is, is deciphering which wire will do what and map it accordingly, so that’s what we did. Overall, the initial R&D component certainly required an investment, but it will pay dividends in the long-term.”

Roy added that having a standardized approach to data capture was critical. “That was the one key requirement that business asked us to provide. Jim [Sistanis,] was very strict on that from an operations perspective: we don’t want to see that if it’s an International for instance, data that looks like this, and if it’s a Freightliner, see data that looks like that. Everything has to be consistent when presented back to the ERP. There has to be consistency. We had to make sure what we were delivering was consistent across the board.”

By controlling the data it imports, Canada Cartage has to do very little cleansing or manipulation before being able to use the information. It is also able to limit the amount sent from each truck to less than 5MB per month.

“We have a set up a separate environment in our server farms that collects the [GPS and telematics] data and from there we parse the data. Based on what we capture, it is sent to various database we have set up.

“We don’t have to do a lot to it. That was the beauty of going the route we went. Because we were able to control the firmware, we are able to control the stream of the fields and the data that comes in, so we are able to send only what we require. Obviously, since it is going over wireless, that matters a lot in that environment.”

The hardware that is attached to the custom cables and that transmits the data from the trucks back to the office p 36

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GREEN to GOLD

WAITING FOR THE GREAT LEAP FORWARD

Diesel engines are becoming cleaner and more efficient but alternative fuels are gaining in popularity. Will diesel still be king of the road in 20

By Harry Rudolfs

“Big players never pay for technology in this industry. Rather, they want to invest in something that is similar to existing products but marginally better. So pitching to these big diesel engine manufacturers like Cummins and Caterpillar to adopt a totally new technology was a challenging and somewhat futile task.” ~ David Demers, Westport Innovations

W

hat will truck engines look like ten years from now? It’s anybody’s guess but alternative fuel sources will certainly be a big part of the story.

Fuel is the second largest expense for trucking companies (after wages) and the cost of diesel can only continue to spiral upwards. Alternative fuels like propane and natural gas are cheap, plentiful and cleaner burning, but with only a smattering of infrastructure, any kind of mainstream migration is still years off.

The debate over what kind of fuel is best is as old as trucking itself. The earliest manufacturers couldn’t decide whether the propellant should be steam, electricity, wood alcohol or petrol. While each type of fuel has its pros and cons, liquid natural gas (LNG) is gaining adherents.

30 FLEET EXECUTIVE ❙ July August 2014

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Currently there are a handful of Canadian companies running LNG powered tractors: Groupe Robert of Boucherville, Que., has 115 LNG Peterbilts running along the 401 corridor between Quebec and Ontario; Vedder Transport of Abbotsford, B.C. tallies 50 LNG units; Bison Transport of Winnipeg has 15 dedicated tractors on its LCV run between Calgary and Edmonton.

As with any technological transition, these initiatives have not been without their start-up problems. One issue is limited range. Bison’s LNG tractors have struggled, at times, to make the 600 km round trip between Calgary and Edmonton.

“We know first hand about the limitations of LNG because we can’t carry enough fuel for long distance applications,” says Mark Irwin, director of maintenance for Bison’s eastern region.

“The infrastructure’s not there to support long haul operations, though I understand it’s improving.”

As well, temperature variations and the laws of thermodynamics can play havoc with fuelling operations. LNG tanks are cryogenic and left sitting too long can vent a tank of fuel into the atmosphere within a few days. The specially-insulated tanks are also awkward and take up a lot of frame space Irwin reports “mixed results” from Bison’s LNG fleet. The company was expecting a two-year payback on its investment, but maintenance issues have arisen more frequently than expected. The trucks are getting about 6 mpg,” he says. “It would be cost-effective if we could get them closer to 9 mpg.”

Groupe Robert jumped into the LNG program with both feet and was able to get the Quebec government to help subsidize the conversion with a grant and a tax break. But the start-up costs are huge. With no infrastructure in place, Robert constructed two LNG fuelling stations at its terminals in Mississauga, Ont., and Boucherville, Que., at a cost of about $2 million each. The tractors themselves are expensive—almost twice the price of contemporary diesel-driven units. trucknews.com

14-08-01 2:14 PM

v

Robert’s technical director and manager of its LNG program, Yves Maurais, expects a payback period of three to 3.5 years. “I think the program has been a success, but there have been a lot of hurdles,” he says. Overall mileage for the LNG fleet is about the same as the diesel tractors, according to Maurais, ranging from 6.7 to 7 mpg. But the Westport HPDI 15L engine, which uses diesel for ignition purposes, is thirstier than first imagined, consuming about 10% diesel fuel rather than the 5% that was expected.

Executives at Robert and Bison must have felt sucker-punched when Westport Innovations abruptly cancelled production of the above-mentioned 15L natural gas engine in August of 2013.

Companies that had bought into the LNG program no longer had an engine supplier for their LCV fleets. The only other option, the Westport-Cummins 12L engine, doesn’t put out enough horsepower or torque for LCV applications. LNG proponents suffered another blow in January 2014 when Cummins announced that it was putting the development of its own 15L natural gas engine on hold. ut alternative Westport is now working on integrating its the road in 2025? high-pressure direct injection (HPDI) system with other OEMs, and is collaborating with Volvo on a new 13L LNG engine that is eagerly awaited by alternate-fuel enthusiasts. But difficulties can be expected when committing to new technology. R&D is expensive and some of it would probably not happen without government grants or subsidies.

Westport itself came about as a spin-off from research done at the University of British Columbia.

Legions of start-up enterprises come and go with the introduction of each new technological trend, so those carriers blazing an innovative trail have to be agile and resilient. For a brief while Azure Dynamics was a major supplier of electric and hybrid electric technology, and was carrying the banner for what was to be the game-changing all-electric Ford Transit.

It also developed and packaged Purolator’s fleet of 400 hybrid-electric vehicles, the same trucks you see on the streets of most Canadian cities every day.

So what do you do when your supplier of new tech goes bust, as happened to Azure in 2012? Serge Viola, Purolator’s National Fleet Director, wasn’t completely unprepared. “We had a pretty good parts inventory, and there are a lot of parts we can rebuild. We’re looking at other suppliers, and we’re even looking at working with the Tesla people for batteries,” he says.

No doubt, alternative fuels, hybridization and fuel cells will be driving motor transportation in the future, but what will Class 8 truck engines look like in 2025? Bison’s Mark Irwin thinks that a large-scale move to LNG engines might occur sooner than that. “I was at a conference where a speaker from Exxon suggested that the tipping point will be somewhere around 18%. That’s when there are enough users going over to make the infrastructure worthwhile” he says. Irwin suggests that the situation is analogous to when trucking switched over to diesel from gasoline decades ago. The first diesels were underpowered and distrusted. Fleet owners clung to their gasoline-powered tractors as long as they could. p 36

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14-08-01 2:14 PM

PROFITABILITY PROFITABILITY

CASH-SAVING CRASHES Investigating accidents with an eye toward prevention

A

By Carolyn Gruske

ccidents are expensive: they drive up insurance rates, force unscheduled downtime, delay shipments and incur repair bills. But if handled properly, they can also become future money-savers.

Carmine Benedetti is a health and safety consultant and a trainer. He is also one of the presenters at the Fleet Safety Council’s 23rd Annual Education Conference, and it’s at that conference where he intends to teach attendees how to investigate accidents with an eye to preventing future incidents.

Typically, accidents are investigated from the perspective of what Benedetti calls “chargeability”—discovering who is at fault and what highway traffic code violations can be brought against that person. When he looks at an accident, however, he views it through the lens of preventability: what can be learned from the circumstances to help drivers avoid getting into similar situations in the future.

“You are really investigating the same type of information but what you are trying to do is ensure you get the entire picture. That really is the key, and it’s what is often missed—getting the entire picture.

“Determining preventability as opposed to chargeability, what you are really trying to do is look at the collision from both perspectives—in other words, what could have been done to prevent this collision?”

In order to get a complete view of the big picture, Benedetti says first everybody on the team needs to be prepared for the possibility of an accident. They must have been given the information about how to act and react.

“It’s unfortunate, because it’s the type of information you have to prepare for, but you never want to use. If truth be known, the whole idea is to never have to investigate collisions.

That would be the ideal situation, but we do know they do occur, so being prepared for that investigation is paramount.”

Benedetti adds drivers can often serve as part of the investigative team, but to be successful they need to know what is required of them. They need to understand that evidence should be gathered and perspectives need to be considered.

As an example, he said when they’re considering braking distances drivers should determine what was in the line of sight before the collision point.

32 FLEET EXECUTIVE ❙ July August 2014

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“Drivers are sometimes given cameras to take photographs of the scene, but they don’t really know what to look for or what to take pictures of, so they will take pictures of the side of their truck and they will take pictures of the potential damage without providing reference points with regards to where they stood or how big an object is. Even something as simple as placing a pen in the picture will put perspective to it, in terms of the distance or size,” he explained.

Once all of the information is collected about the accident, then it’s up to the organization to put it to good use via defensive driving programs, changes to internal communications policies, or updated training methods.

“In many cases the dispatcher is not often involved in the driver training side of the equation, but the dispatcher can play a big role in ensuring preventability elements are put into place simply by communicating. When a driver comes in and says, ‘roads are closed off in a particular area and there is a lot more congestion,’ the dispatcher should automatically let future drivers know ahead of time what the expectations are.

So the dispatcher is somebody who could be involved and that could be one of the recommendations: identifying who in your company has an impact on your driving. Take a look at those recommendations from a broader perspective than simply saying, ‘we need to train our drivers a little bit more.’”

Benedetti says his Fleet Safety Council presentation will be more like a workshop, as he intends to provide participants with actual accident data and walk them through the process of developing recommendations they can take back to their companies and implement. That way they can start getting the economic benefits that come with heading-off future accidents.

“I like to say the preventability element is always a money-maker,” says Benedetti.

“We know safety a money-saver. Safety doesn’t have to cost. It should be built into the process. I chuckle when I see videos with titles like ‘safe lifting’ or ‘safe driving’ because what other way do you want to do it? Whether it’s driving or lifting, the process should be done in a safe fashion, so safety isn’t really separate. It’s definitely a money-saver, no question about it.” FE The 2014 Fleet Safety Council Annual Education Conference runs November 7-9 in Niagara Falls. For more information see www.fleetsafetycouncil.com. trucknews.com

14-08-05 2:09 PM

32 Profit.indd 33

14-08-01 2:15 PM

GEARED UP

T680advantage

Driving the

Kenworth produces its most fuel-efficient truck ever

K

By James Menzies

enworth has assembled a set of fuel-saving specifications that when ordered on the T680 highway tractor can improve its fuel efficiency by up to 5-6%.

The T680 Advantage comes in a 6×2 axle configuration, but since that spec’ is illegal in Canada, we’ll knock off a percentage or two. Still, the savings are significant.

“Through aerodynamics, powertrain efficiencies and other factors, we came up with the spec’ that will produce the most fuel-efficient truck Kenworth has ever built,” said Brett VanVoorhis, on-highway marketing manager with Kenworth. The T680 Advantage builds upon the popular T680, which has sold 15,000 units since its 2012 launch.

Components of fuel efficiency

Kenworth’s Chillicothe, Ohio truck plant is currently churning out 147 trucks a day, about half of which are 680s. The Advantage consists of improved aerodynamics (factory-installed components that streamline airflow and narrow the trailer gap); an optimized powertrain based upon the Paccar MX engine; the Eaton Fuller Advantage automated transmission; ef34 FLEET EXECUTIVE ❙ July August 2014

34 Geared.indd 34

ficient drive axles that have eliminated the wet sump for a 1% efficiency gain, and low rolling resistance tires from the customer’s preferred brand.

To be considered an Advantage model, the truck must also be equipped with at least one of the following four options: wide-base tires, the Smart Wheel steering wheel, Kenworth’s idle management system, or a tire pressure monitoring system.

If one of those spec’s is unlike the others, it would be the Smart Wheel. How exactly can a steering wheel contribute to greater fuel economy?

“Smart Wheel puts cruise control at the driver’s fingertips and encourages them to use cruise control while going down the highway more often than they would otherwise, if they had to reach to the dash,” VanVoorhis explained.

That could be true, though I hope we haven’t become so lazy that we won’t use a beneficial feature such as cruise control unless it’s within an inch of our fingertips at all times. Regardless, the Smart Wheel is just a really nice option to have.

In addition to cruise control, it also places the radio controls at your fingertips so you can change the volume or toggle through stations without taking your hands off the wheel. I consider it more of a safety spec’ than a fuel-saver, but either trucknews.com

14-08-01 2:16 PM

way, it’s a great option that’s available for not a lot of money, and it could encourage the use of cruise control.

Driving impressions

I drove a Kenworth T680 Advantage while in Ohio and my first impression upon approaching the vehicle was, Kenworth was right, this is a really green truck. Shamrock green, to be exact. I’d call it lime green but we’re splitting hairs, really.

Colour aside, the T680 Advantage really does scream fuel savings. The one I drove was equipped with every fuel-saving device imaginable, from aerodynamic wheel covers to a trailer tail (my first time pulling a tailed trailer, though it felt no different than any other 53’).

This is the type of truck you can feel good about pulling into a customer’s yard—even non-truck people can tell at a glance that you’ve done evLeft: The T680 Advantage erything possible to maximize offers improved aerodynamics. your fuel efficiency.

Below: The Smart Wheel puts But most of the fuel-saving cruise control and radio buttons technologies are invisible. The at the driver’s fingertips.

Eaton Fuller Advantage transmission performed exactly like the latest-generation UltraShift Plus, but it is 75 lbs. lighter thanks to a precision lubrication system that eliminated the need for an oil cooler.

The truck was powered by the Paccar MX engine, which put out 455 hp and up to 1,750 lb.-ft. of torque.

When switching from the original T680 to the Advantage version, no compromise is required from the driver. This is still the driver-friendly T680 that has proven so popular since its launch.

The fuel-saving aspects of the T680 Advantage will not diminish a driver’s satisfaction with their ride. They’ll be noticed only by the astute owner who carefully tracks his or her numbers.

The 680 Advantage drives like any other T680, and that’s not a bad thing. This was already one of the most driver friendly trucks on the road today.

Visibility out of the T680 with its sloped hood and large onepiece windshield is excellent, and the aerodynamic design of the mirrors has done nothing to compromise rearward visibility.

Okay, so I was caught off-guard by the auto-shutdown feature, which killed the engine after five minutes of idling while I was preparing to head out on the road. But that’s on me. There was no need for me to be idling all that time in the first place.

For drivers who’ll be taking multi-day trips, the Kenworth idle management system can provide eight hours of cooling without idling. Every hour of idling that’s avoided is a gallon of diesel saved. Kenworth has proven in its T680 Advantage that you can have all the benefits of fuel efficiency without any corresponding suffering among drivers. FE

DATA DRIVEN p29

over satellite and cellular networks is also unique to Canada Cartage. It’s a hybrid of specially designed and engineered technology and off-the-shelf components from its IT partner.

Although Canada Cartage undertook roughly half of the of the project development itself, the company did have support from Lyndhurst, New Jersey-based Wireless Links Inc. Roy describes the fleet management integrator and service provider as being willing to help the trucking company create the access and customizations it needed—even to the point of having the CEO directly involved in some of the development work.

Wireless Links also helped Canada Cartage integrate handhelds into the telematics equation. Company-issued smart phones send drivers information about routes, pickups and deliveries, provide customer notifications, act as data capture devices and serve as smart routing management tools.

During the system design phase, steps were taken to ensure data security. While he won’t go into details about how the system was hardened, Roy said, “data security is an absolute integral part of our being here. We had to build an environment to make specifically sure of that. We had to take that into consideration. It was a big part of the project.”

Because the solution is so new, Canada Cartage is still deploying it across the entire fleet. Since the end of 2013, when the project finished beta-testing, approximately 700 units have been installed in the company’s trucks, and clients have gradually been introduced to the solution. So far, Sistanis said their reactions have been positive.

“Customers have the ability to log in through our portal and have visibility of the units that are working for them on a given day—their whereabouts, the speed they are travelling and things like delivery notification and estimated time of arrival.”

It’s not just the existing customers who are benefitting. Sistanis said the new system makes it easier to bring new customers on board quicker and easier—usually within a week.

“Even going back to the initial question: why did we decided to develop our own as opposed to buying something off the shelf, the interesting part of our business is the significant number of customers we service with different applications they have and utilize. Part of our struggle over the years has been in a lot of cases the customer has dictated what they want us to utilize to communicate information back to them.

This [telematics solution] gives us the ability to have an inhouse system that will satisfy a lot of the requirements our customers have with their own systems so we don’t have to tie Dan [Roy]’s group up trying to integrate a bunch of different off-the-shelf systems into our ERP system to make things work so we can communicate with them. We can adapt them to our system a lot easier than we did in the past.”

Overall, Sistanis says the new technology has made the company more efficient and proactive.

“Being able to see all the information come to fruition is fantastic—to see how quickly we can identify an operating issue and be able to jump in and resolve something that shouldn’t be happening.” FE 36 FLEET EXECUTIVE ❙ July August 2014

34 Geared.indd 36

GREEN to GOLD p31

LNG Peterbilt with Westport HPDI 15L engine

Viola thinks there will be more alternative-fuelled trucks in ten years, but diesel will still be the mainstay. “You’re going to see the diesel engines getting cleaner and cleaner and more efficient. And electric motors are going to play a big part, running all the accessories. But I don’t think you’re going to see an all-electric highway tractor for a long time—they’re too heavy. Maybe for city and regional work.”

Wade Long, director of product marketing for Volvo Trucks, also thinks that diesel fuel will continue to be the propellant of choice for most truckers. “Alternative fuels have commanded significant attention in recent years,” he says, “but we believe diesel will remain the most prominent fuel for heavy-duty trucks for the foreseeable future.

Cory Shumaker, chief electrical engineer for Vision Motor Corporation of Long Beach, California, takes a different perspective. His company is engaged in developing demonstration hydrogen fuel cell/electric Class 8 tractors for a speciality niche—doing short run drayage work between the docks, nearby distribution centres and railyards at the ports of Los Angeles and Long Beach.

The tractor is a little heavy at almost 20,000 lbs. but has no problem grossing 80,000 lbs. The all-electric truck sits in a Freightliner glider kit and chassis, but Shumaker insists his company is “chassis-agnostic” and can work with any make or model. Four 5.6 kg hydrogen tanks of gaseous hydrogen hold the fuel source, which Shumaker says should be good for 200 miles per eight-hour shift, with the driver refuelling at the end of each shift.

As expected the truck is incredibly quiet and needs no transmission. Power is provided directly to the rear differential by a drive shaft through a 320 Kw (430 hp) Siemens electric motor. The truck is expensive (around $300,000) but Shumaker believes the price will come down as production begins. “We found a manufacturer that basically cut the price of fuel cells in half and we think they’ll continue to come down” he says.

But how soon before we see an all-electric highway tractor?

“Not long at all,” says Shumaker. “You need about a 130 Kw fuel cell to run long haul down the road and we’re not that far from it now. We really think this is the way of the future.” FE trucknews.com

14-08-01 2:16 PM

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mix of both

42%

The right tire maintenance strategy can provide considerable cost savings and improve vehicle downtime. Transportation Media Research has been tracking the evolution of tire maintenance strategies annually for almost a decade. Our latest research shows that only 18% of fleets handle tire maintenance completely inhouse, with the majority choosing to use both in-house facilities and dealer facilities to service their tires. The amount of tire work done inhouse, however, has been on the increase and 45% of fleets report having dedicated tire staff. Lower cost and ease of access to vehicles and scheduling are the primary reasons for performing tire work inhouse. Pressure checks, rotation and mounting/dismounting of tires are the services most likely to be performed in-house. More complicated procedures, such as wheel assembly balancing and alignment are more likely to be done at the dealer facilities.

TREND IN AMOUNT OF TIRE WORK PERFORMED IN-HOUSE LAST 5 YEARS

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40%

CANADIAN FLEETS WITH DEDICATED TIRE STAFF

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41%

stayed the same

39%

yes

45%

no

55% decreased

20%

MAIN REASON FOR DOING TIRE WORK IN-HOUSE SERVICES PERFORMED IN-HOUSE lower cost

ease of access

35%

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57%

47%

72%

pressure checks

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6%

16%

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MAIN REASON FOR SERVICING DEALER DOING TIRE WORK SERVICES PROVIDED BY DEALER lack of equipment

No budget for dedicated tire staff

39%

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14-08-01 2:19 PM