Fleet Executive November/December 2014

MOTORTRUCK

NOVEMBER DECEMBER 2014

CANADA’S BUSINESS MAGAZINE FOR FLEET OWNERS

Professional Connection SEE PAGE 45

Test Drive: Mack Pinnacle versus the snowstorm

City Smarts: Spec’ing and maintaining medium-duty trucks in urban environments

Surface Transportation Summit:

Extensive coverage of the industry’s most popular conference

The 4Cs

Co-operation, collaboration, communication and commitment are the keys to redefining the shippercarrier relationship

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CAUTION: PERFORMANCE ENHANCING SUBSTANCE

On the road, the only rule is SURVIVE. For more information call 1-888-CASTROL or visit www.castroldiesel.com

Field TesTed. FleeT TrusTed.

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P R I N T S P E C I F I C AT I O N S

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BLEED SIZE

8.25 x 11

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Volume 83, No. 06

November/December 2014

contents 42

Cover Story 25 THE 4 Cs

Redefining the shipper-carrier relationship with an emphasis on co-operation, collaboration, communication and commitment.

Features 13 FLEET SAFETY COUNCIL’S 23RD ANNUAL EDUCATIONAL CONFERENCE Panel discusses ways technology is being used to improve safety.

16 LEADERS Silvy Wright of Northbridge Insurance gives her thoughts on how embracing technology might make trucking more attractive to younger recruits.

9

19 SURFACE TRANSPORTATION SUMMIT Coverage of the Transportation Media conference that brings the logistics supply chain together.

Departments 4 WHAT’S ON 6 THE VIEW WITH LOU 8 CHECK CALL 9 THE BOTTOM LINE

33 CITY SMARTS: VOCATIONAL TRUCKS IN URBAN ENVIRONMENTS

19

34 Spec’ing a medium duty truck.

38 St. John’s has a multi-pronged maintenance strategy for keeping its city fleet roadworthy.

40 CITT’s CANADA LOGISTICS CONFERENCE 2014 Experts address the challenges of Western Canadian logistics.

10 TAKING CARE OF BUSINESS

42 GEARED UP

11 THE HUMAN EDGE

A snowstorm creates an ideal environment for test driving the Mack Pinnacle.

33

12 RISKY BUSINESS 46 INSIDE THE NUMBERS

November/December 2014 ❙ FLEET EXECUTIVE 3

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

BLOGS

FEATURES

> T he truck comes first Doug Marcello explains punitive damages. trucknews.com/ blogs/punitivedamages-corporateliability-claims

Owner/Operator of the Year George Sutherland built his business by running it like a business tinyurl.com/OwnerOp2014

> N umbers add up for natural gas

Groupe Robert Inc. and Sutco Contracting Ltd. detail the costs of running an alternative fuel tinyurl.com/numbers-natgas

> B uffalo snow-pocalypse

Driver tells tale of being stuck in the truck tinyurl.com/snow-Buffalo

Kevin Snobel lists the support and equipment drivers need to survive emergencies. trucknews.com/ blogs/emergency

> P ersonal responsibility of leadership

Executive’s opinions influence work behaviour and culture tinyurl.com/biz-influence

Web TV:

Transportation Matters CAT INTRODUCES THE CT681 Take a tour of the short-nosed, setforward axle truck tinyurl.com/CAT-CT681

Ray Haight continues describing the efforts he is taking to turn a fleet around. trucknews.com/ blogs/makingprogress

VOCATIONAL TRUCK MAINTENANCE PART 1 What to do to extend the life of a hardworking vehicle tinyurl.com/truckmaintenance1 INTERVIEW WITH GORDON EXEL The Cummins Westport president compares LNG and CNG and talks about upcoming products tinyurl.com/GExel INTERVIEW WITH FRED ZWEEP The Vedder Transportation Group president describes the engine failures his natural gas fleet has experienced tinyurl.com/FZweep

SOCIAL MEDIA FIND US ON FACEBOOK facebook.com/trucknews

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

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MOTORTRUCK

THE VIEW WITH LOU

An unexpected gift

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

NOVEMBER/DECEMBER 2014

VOL. 83 NO. 06 PUBLISHER & EDITORIAL DIRECTOR

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

Carolyn Gruske

3D printing could change transportation patterns and solve the driver shortage in the process Lou Smyrlis

MCILT, Publisher and Editorial Director • lou@transportationmedia.ca

(416) 510-6809

cgruske@TransportationMedia.ca GEARED UP EDITOR

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

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

T

his is the time of year when we try to take a breather from the rapid pace of our business lives and pause long enough to glimpse into the future. Usually we look just a year ahead at how the economy will shape up, what new regulations we will be expected to deal with, etc. I would like to take a longer look—about a decade or two into the future and a technological development that could reshape transportation as we know it.

Everyone involved in the transport of freight should mark Sept. 13, 2014 as an important date on their calendar. Looking back on this date two decades from now we may identify it as a significant turning point in the freight patterns upon which our industry has been fashioned.

History was made September 13th when the world’s first 3D-printed car was driven out of The International Manufacturing Technology Show at McCormick Place in Chicago, Ill. Called the Strati, the vehicle was 3D printed over 45 hours

by Local Motors in one piece, using direct digital manufacturing, (DDM), which is the first time this method has been used to make a car. Local Motors plans to launch production-level 3D-printed vehicles that will be available to the general public for purchase in the months following the show.

3D printing, or additive manufacturing as it is also called, has the potential to change the face of manufacturing and along with that the transportation and logistics practices of the future.

A recent Eye for Transport survey of manufacturers found that nearly 20% are already using 3D printing while more than 15% are currently evaluating it. A survey of logistics providers found that 37% now view it as a business opportunity while almost the same amount view it as both an opportunity and a threat. More than 40% believed it would have a moderate to substantial impact on the logistics services they provide just in the next three years.

Using 3D printing technology, along with a

6 FLEET EXECUTIVE ❙ November/December 2014

CONTRIBUTING EDITOR

blueprint on a computer, a solid object can be built up gradually from a series of layers—each one printed directly on top of the previous one.

The raw material used is a powder, which can be a metal, plastic, aluminium, stainless steel, etc., or a combination of these. The object—a spare part for a car, a hearing aid, a bicycle frame—is built by either depositing material from a nozzle or by selectively solidifying a thin layer of plastic or metal dust using tiny drops of glue or a tightly focused beam. I saw just such a machine at work myself at Bridgestone’s US headquarters.

What’s important for those of us concerned about supply chain practices is that it changes the parameters upon which those practices are set. The traditional supply chain is typically about warehousing mass produced products and shifting them outwards from the point of manufacture. What 3D printing does is make customization of (admittedly smaller products) feasible and economical on a local scale at microfactories. As Ed Morris, director of the US-based National Additive Manufacturing Innovation Institute points out: “In terms of impact on inventory and logistics, you can print on demand. Meaning you don’t have to have the finished product stacked on shelves or stacked in warehouses anymore. Whenever you need a product, you just make it. And that collapses the supply chain down to its simplest parts.”

And although that doesn’t mean that large scale mass production will die out, it does mean there will be increasing amounts of localized production, leading to more local or regional deliveries.

More local or regional deliveries due to 3D printing will build on the growth of such deliveries already started by online shopping. For a trucking industry plagued by a shortage of drivers willing to run long haul and be away from family for long stretches of time, this trend towards shorter, more regional runs could prove the holiday gift it has never been able to deliver itself. FE

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

Carolyn Brimer Beverley Richards CONTRIBUTING EDITORS

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

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STRAIGHT TALK, SMART STRATEGIES Growing your business: A guide for small fleets and O/Os

STRAIGHT TALK SMARTTEGIES STRA

• How to stay profitable

VOLUME 3

• Secrets to success from Canada’s best owner-operators • How to effectively calculate cost per mile

STRAIGHT TALK SMARTTEGIES STRA

• What to consider when growing your fleet

VOLUME 4

d growth an A guide to l fleets y for smal profitabilit r-operators and owne Media sportation erica you by Tran n North Am Brought to with Micheli In partnership Inc. (Canada)

• Why buying used is a smart option

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• Equipment that saves you money d growth an A guide to fleets y for small profitabilit tors ra pe r-o and owne

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3:27 PM

CHECK CALL

The next best thing to being there Transportation Media brings conferences to you Carolyn Gruske

Editor • cgruske@transportatiomedia.ca

Y

ou’ll notice the content in this issue is a little different than normal. Three of our regular sections (Profitability, Green to Gold and Data Driven) are absent and there are fewer feature-styled articles. If you’re missing what we usually present, don’t worry, everything will be back to normal in the January/February issue.

Much of this issue is devoted to conference coverage.

The majority of the reporting originates from Transportation Media’s Surface Transportation Summit, but there are also articles from Niagara Falls and the Fleet Safety Council’s 23 Annual Educational Conference and from CITT’s Canada Logistics Conference 2014, which was held in Calgary.

It has been a busy few months at Transportation Media.

The editorial team that brings you Truck News, Truck West, and Canadian Shipper, in addition to Fleet Executive, has been in attendance at industry gatherings across the country, all because we know our readers can’t always escape from the office to attend all of the shows, events and conferences that are on the schedule. By being there and reporting on the proceedings, both in the pages of our magazines and on our websites, we hope to bring some of the highlights of each event directly to you.

Not only are we there in the audience, live tweeting the presentations, taking pictures, videotaping interviews, and doing our duty as reporters, the Transportation Media team has been an active participant in many events. Of course, as hosts of the Surface Transportation Summit, you saw Lou Smyrlis, Julia Kuzeljevich, James Menzies and me at the podium as moderators, but the odds are pretty good that if you’ve been out to an event, you’ve seen us perform similar duties at other conferences, and it’s our privilege to do so. And while I can’t necessarily speak for my colleagues, I personally find hosting and moderating duties a lot of fun. I like not knowing what the presenters will say or what questions audience members will ask. I just know that if I can get a conversation flowing, that means all sides are gaining some benefit from the day.

As journalists, we believe in the value of disseminating information, and if we can help do that—if we can aid in shaping the conversation, or asking the questions you want answered—we consider that a job that’s well worth doing.

Being active participants also means that we can do our part to give back to this industry—an industry that we all care about. While we may not make our living logging hundreds of miles per day or working out the logistics of getting a trailer load of merchandise from the warehouse to a retail outlet

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three provinces away, it is the industry we are immersed in.

We know how vital shipping, transportation and logistics are to the economy of this country. So anything we can do that goes beyond putting out a magazine or posting news to a website to connect industry participants with each other, to introduce new ideas to the table, and to get the word out that transportation and logistics are (or, when they’re at their best, can be) innovative, creative and responsible endeavours.

So as you start to plan your 2015 travel schedule and you’re trying to figure out if an event is worth your time and travel budget, remember that you can always take a look back at the events we’ve covered and get a flavour for their content. Just in the past few months alone, the busy Transportation Media team has reported from the Highway H20 conference, Richard Lande’s annual Transport Conference, Natural Gas Vehicles Canada, American Trucking Associations’ Management Conference and Exhibition (in San Diego), the Atlantic Provinces Trucking Association’s Annual Transportation Summit (in Moncton), and the Saskatchewan Trucking Association’s Annual General Meeting and Gala Awards Banquet in Saskatoon, among others.

I do want to emphasize, that if you see any of the Transportation Media team at an event, please come up and introduce yourselves. We always love to meet our readers and hear what you think about our websites, videos and publications. We do our jobs for your benefit, so if you think there is something we should be covering or an angle to a story we haven’t considered, please let us know. It’s only by getting your feedback that we can improve our products. On the flip side, if there is something you think we’ve done well, it’s always great to hear about that too. I love it when readers say, “I ripped a page out of the magazine and passed it along as inspiration.” Then we know we’re on the right track.

The other reason we love speaking with our readers, is because usually you have something newsworthy to tell us we can share with the rest of our audience. If there is one thing I’ve learned this year, it’s that trucking companies, for the most part, tend to be a bit publicity shy, and that’s something I’d love to see change. If you’re doing something innovative or novel or praiseworthy, then let the world know. I understand that certain procedures or processes can be thought of as a competitive advantage and that there is a reluctance to speak about them, but if your customers and the rest of the world don’t know about the wonderful thing you are doing, you’re not making the most of your advantage. FE

trucknews.com

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BOTTOM LINE

Separating yourself from

the herd

Why it’s important to develop your personal brand

By Mike McCarron

Y

our only contact with this prospect has been your semi-annual chin-wag. Sure, it took 47 phone calls to reach him but one day your persistence will wear him out and you’ll get a chance to make a pitch.

The problem with this strategy is the only thing you’re wearing out is your personal brand.

Think how you feel when your home phone rings during dinner. On the other end of the line is someone who can’t pronounce your name selling a duct-cleaning service.

That’s how this busy, educated, tech-savvy transportation buyer thinks about you.

And that’s why cold calling is a flawed sales strategy. It hurts your personal brand more than it helps.

Everyone has a personal brand. Quite simply it’s what people say about you when you leave the room. Everything you say and do contributes to the perception that people have of you.

If you’ve acted like a buffoon for the past 15 years, there’s a good chance your brand is pretty battered. A strong, authentic personal brand sends a clear, consistent message about who you are and what you have to offer. It helps you become known for what you’re good at while setting you apart from your competitors.

If a customer falls into a hole there are 25 average sales reps who will sell him a ladder. Your personal brand should send a message that you’re the type of rep who will prevent him from falling in the hole in the first place.

Here’s why I think it’s important to understand and manage your personal brand.

Shopping has changed Today’s transportation buyers don’t make decisions the way they did during the heydays of cold calling. The stats say it all: • 90% of buying decisions today are based on Internet research.

• 66% of buyers trust their own research over information provided by sales reps.

• 92% of buyers are more confident in the information they find on the Internet that what they hear from sales reps.

What does all this mean? Customers think they don’t need you anymore. They trust the words on their screen more than what comes out of your mouth. You need a damn good personal brand to have any chance of sales success.

Margin math Selling is simple math: nothing in equals nothing out! The number of deals you close is directly proportional to the number of prospects you have in your sales pipeline.

Without a strong personal brand you’re going to have one hell of a time finding prospects. When you don’t have enough deals in the works, it’s hard to walk away from the ones you’re trying to close. There is nothing worse for margin than taking on bad business because your sales math didn’t allow you to walk away.

Lost in space The stats indicate a good chunk of the purchasing decision happens before “outsiders” ever get involved. A strong personal brand will draw you into opportunities you were not expecting. Unexpected freebies are great for business.

Conversely, when your personal brand is weak you will lose opportunities that you never knew existed. They get lost in space never to return again. Customers do their research and decide they really don’t want to do business with you. Chances are they never will.

Who’s your competitor?

Intense competition has led to a commoditized trucking world where fewer products are considered unique. More than ever your competitor is not the name on the truck but the brand of the rep you’re selling against.

A strong personal brand is how you can differentiate yourself.

In many ways, your reputation is more important than price.

When customers start scoping you out online you will be compared to the other nine reps banging on their door. When a customer contemplates who you are and how you can help him, what will he think? Are you standing strong and separate from the herd or are you vulnerable and on the outside looking in?

I’ll talk more about how to develop and manage your personal brand in my next column. 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 2014 ❙ FLEET EXECUTIVE 9

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TAKING CARE OF BUSINESS

Factoring: over-looked financing option Accounts receivable financing isn’t just for businesses in trouble

By Mark Borkowski

A

dmittedly, accounts receivable financing isn’t the first form of funding business owners will consider (if they even consider it all) when it comes to structuring long-term strategic changes such as acquisition, sale of a company or pursuing new channels of distribution. But used in part with long-term debt or equity financing, accounts receivable financing can help business owners free up capital to acquire another company, or enable target companies to take some money off the table, thereby lowering the acquisition cost.

Accounts receivable financing, also known as factoring, is one of the oldest forms of commercial finance. Unfortunately, certain players in the category (i.e., less reputable firms) have given the industry a black eye and perpetrated many myths— which are easily debunked.

Myth 1: Factoring is for troubled companies with no place left to turn for capital There is a certain stigma that goes along with factoring. Many people believe that it is a business’ last resort before failure.

Truth is, smart, savvy entrepreneurs commonly use the strategy to secure flexible and short-term solutions to working capital challenges. In Canada there are over $120 billion in invoices paid by factors annually, a statistic that proves this is not a fad but truly a viable and respected form of financing.

Myth 2: A/R firms charge exorbitant rates Factors typically charge less than 2% all-in on the face value of an invoice to a credit-worthy customer who pays around 30 days. While this might seem high, ask yourself whether you would give a 2% discount to a customer who pays you inside 10 days. If the answer is yes, you should consider factoring—it is both cheaper and reverts more control over your cash flow to the business owner.

Myth 3: Sending receivables to an A/R firm means you’ve lost control of your business The opposite is true. Selling your receivables can free you from the time-consuming tasks of collections so you can better focus your attention and energy on running and growing your business.

Myth 4: Factoring sends the wrong message to your customers A good factor will work with you to craft a targeted communication plan that positions your partnership with the factor as a way to ensure access to capital, to grow your business and to further professionalize the accounts receivable management function.

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Long-term vs. short-term financing. It’s not an either/or proposition To understand how A/R financing works with other long-term financing options, it first helps to understand the difference.

Accounts receivable financing, is a simple, and quick way to secure working capital for your business. You simply sell outstanding invoices to the A/R company and you’re given an advance on the receivables balance, thereby increasing your working capital without the wait. The lender typically requires a first position filing on the assets of the company or in some cases can orchestrate a carve-out of only certain collateral within the A/R pool.

A/R financing can work alongside mezzanine and other types of longer-term debt as long as the factor’s security interest is perfected. A common mistake for growing companies is to gravitate toward further equity infusions (a long-term solution) to free up capital to pay suppliers and expand sell-through initiatives (a shorter term challenge). Increased equity may seem less expensive (and more enticing) but, the fact is, it’s a permanent change to the capital structure and dilutive to the original investors/owners.

Do your due diligence first After choosing the most appropriate financing instrument, it is equally as important to select the right funding partner. To feel comfortable with your decision, here are a few things to be aware of and important questions to ask yourself: Flexibility: Are they willing to think outside the box and create a structure that really fits my business? Will they consider creating additional availability against inventory or work toward non-notification in certain instances?

Bridge: Will I be able to exit the contract when I no longer need alternative lending, even if the contract term is not officially up? Are the termination penalties egregious? Do they have bank relationships that will accelerate my path to bank financing?

Transparency: Is it clear what the fees are and how they apply? Ask them to run you through an example of what fees would apply on a typical invoice and to provide that in writing.

Growth: What determines the size of the capital facility? If my receivables grow, will they increase the credit limits in real time? What kind of factoring volume can they handle?

Speed: Everybody says they fund quickly—but what are some objective measures? Is it not in the lender’s best interest to fund more slowly?

Access: Once the sale is made, who is my go-to person?

How can I ensure that I will be a priority for that manager? p44 trucknews.com

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P

We

THE HUMAN EDGE

FIVE WAYS TO OPEN YOUR DOORS TO SOLUTIONS

Being able to talk to senior managers makes employees feel respected

By Angela Splinter

T

Trucking HR Canada

he 2014 Top Fleet Employers program offers plenty of insight into the trucking industry’s best practices in human resources, but one approach is clearly embraced more widely than any other.

Many of the honoured employers have committed themselves to an open-door policy.

Open and honest communication plays an important role in any positive and respectful workplace. But when Trucking HR Canada interviewed fleet employees as part of the screening process for these honours, the open doors seemed to be valued by drivers most of all. Perhaps it is because of the hours that drivers spend alone on the road, or simply a general wish to be recognized for their experience.

“I love the open-door policy. I can speak with anyone— even the VPs and chairman—whenever I want. They take time and listen,” one driver observed. “I believe that this company is very flexible in regard to the personal needs of the employees … there is a great open-door policy with management at all levels,” said the driver at another fleet.

By its very nature, an open-door policy ensures that employees at every level can approach senior managers with any questions or concerns. This freedom fosters a sense of mutual respect and consideration in the workplace.

Relationships are strengthened as a result.

As important as this openness may be, a well-structured approach will be most effective. Consider these tips to keep the doors open at your fleet: • Manage the time: Open-door policies require leaders who are receptive and take a solution-oriented approach to business matters. But the time has to be managed wisely. It would be all too easy for an approachable manager to spend a large portion of their day, at the expense of other duties, dealing with employees who “just need a minute.”

• Commit and communicate: Announcing that you have an open-door policy

is not enough. A manager who asks for feedback is also committing to action. Those who leave issues unresolved will actually harm morale and productivity alike. Drivers will feel more disenfranchised than ever. In contrast, managers can offer timelines around how issues will be addressed. The answers and actions don’t always need to be in a driver’s favour, but everyone should understand the reasoning behind the decisions.

• Develop a structure: Different layers of managers are put in place for a reason. Junior and middle managers may feel that their authority is undermined if employees continually go above their heads. Many issues can be resolved by ensuring that employees contact their direct supervisors before taking issues to senior managers.

• Open your own door: Some people will always be uncomfortable about approaching a boss. Managers can help break down these barriers by stepping out of their own offices and approaching employees. Engage in conversations with drivers throughout the workplace, whether in a dispatch area or a fleet yard. After all, informal conversations can be just as insightful as a formal complaint.

• Monitor the trends: As important as individual concerns may be, the most telling insight can emerge in broader trends. Do some employees open your door more often than others? If they all seem to report to the same manager or dispatcher, there may be a personnel issue to resolve.

When the approach is properly managed with tips like these, a willingness to consider new thoughts and ideas may be one of the most powerful HR practices of all. FE To learn more about human resources tips and techniques adopted by Canada’s Top Fleet Employers, download a free copy of the Drive to Excellence report at www.truckingHR.com.

November/December 2014 ❙ FLEET EXECUTIVE 11

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RISKY BUSINESS

SOLUTIONS TO HELP CARRIERS TURN SAFETY INTO A PROFIT CENTRE

Prepare for winter’s wrath Help your drivers avoid weather-related accidents

By Rick Geller

A

s we settle in for the onslaught of another Canadian winter, carriers need to prepare to meet the challenges of adverse road, weather, and traffic conditions to keep both trucks and freight moving safely.

Preparations begin with the adoption of a formal adverseweather policy for the company. Winter driving increases risk. It is unfair and unwise to ask drivers to make the decision whether or not to drive without providing some guidance and a benchmark outlining the basis upon which you want them to decide.

Without a formal written policy, drivers may feel pressure, real or perceived, to continue driving even though they are reluctant to do so. At the other end of the spectrum are the drivers who over-estimate their ability to safely navigate the conditions they face. They believe they can drive through anything.

In developing an adverse weather policy carriers need to be cognizant of FMCSR §392.14 (Hazardous Conditions; Extreme Caution) and their duty to ensure that their drivers adhere to it.

Under FMCSR §392.14, drivers are required to exercise “extreme caution” operating a commercial motor vehicle (CMV) when hazardous conditions caused by snow, ice, sleet, fog, rain, dust, or smoke, “adversely affect visibility or traction.”

And the onus of safety mandated on the driver doesn’t end there: §392.14 also mandates that the driver reduce speed when such conditions exist and to discontinue operation of the CMV if conditions become “sufficiently dangerous.” Drivers may not resume driving until the CMV can be safely operated.

Regulators have left it to the courts and individual states to define “extreme caution” and “sufficiently dangerous,” however some guidance can be found in the various states’ commercial driver licence manuals. Michigan, for example, requires that drivers reduce their speed to two-thirds of the posted limit in inclement weather.

Against that backdrop, it becomes very difficult for drivers and/ or trucking companies to blame crashes on bad weather. To attempt to do so is tantamount to handing the plaintiff attorney a gift.

To supplement your adverse weather policy, carriers are well advised to provide refresher training on an annual basis to all of their drivers. While some may argue that professional drivers know the risks associated with driving in adverse weather conditions, I would point out that rising crash frequency rates suggest otherwise.

So what are some of the things that you may wish to discuss during the training sessions? Consider the following: • Have your drivers “map” places of safety before the bad weather hits. This is easily done by marking every pullout or other place of safety on the driver’s GPS. By doing this, drivers can then search for and obtain precise directions 12 FLEET EXECUTIVE ❙ November/December 2014

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to the nearest place of safety if and when the need arises.

During a storm, it can be difficult to spot a pullout until you have already passed it. GPS can lead you to it.

• While some carriers provide skid control training, I would urge you to also provide training on how to recognize the conditions that can lead to a skid. Once the truck is skidding, it may be too late to avoid a crash. More often than not, drivers do not realize just how slippery the road is until the first time that they touch the brakes. Have your drivers pick a safe spot to “test” the traction they have on the road.

• Ice is more slippery when it is wet. Provide this simple demonstration to illustrate the point. Take a glass or bowl and fill it with water and ice. Let it sit for about for about 1520 minutes and then invite someone to pick up one of the ice cubes. You will find that they are difficult to grab hold of. In a second bowl, place ice cubes that have just been removed from the freezer. You will find it easy to pick up and it will almost stick to your fingers. Remind drivers of this when they tell you the roads are just wet!

• Avoid driving with the engine brake on—you need to have even braking applied to all axles or you run the risk of a jack-knife.

• Avoid using the cruise control in adverse weather—it slows your response time and you lose the “feel” of the road.

• The new LED lights do not generate the same amount of heat that incandescent bulbs did. This means you have to check your lights more frequently to ensure they are not snow covered.

• Don’t follow the taillights of the vehicle ahead of you. If you can see them in adverse weather, you’re too close. Also, if the lead driver makes a mistake, you will too.

Perhaps the most serious hazard a driver faces is the unpredictable actions of other motorists. This underscores the need to train drivers to maintain proper speed and space management. Reduce speed to allow time to recognize and respond appropriately to hazards. Increase space in order to increase your options and the chance of avoiding the crash.

Let’s be a spectator to the adverse weather crashes and not a participant! 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

14-12-04 9:28 AM

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SAFETY PREVENTION GOES HIGH-TECH Fleet Safety Council panel discusses new ways to prevent accidents and deal with their aftermath

By Carolyn Gurske

T

echnology is playing an increasingly important role in the trucking industry. From preventing accidents to helping investigate them after they happen, it is changing almost every aspect of the business.

The role and use of technology was the main theme of the panel discussion at the Fleet Safety Council’s 23rd Annual Educational Conference, which was held Niagara Falls, Ont. The four panellists were Dino Bagnariol, director of the highway standards branch for the Ontario Ministry of Transportation, Ryan Fletcher, Canadian private fleet sales manager for PeopleNet Canada, Jason Spence, product marketing manager for Volvo Trucks, North American sales and marketing and Greg St. Croix, senior vice-president, national

transportation risk focus leader at Marsh Risk Consulting.

Fleet Executive editor Carolyn Gruske moderated.

Volvo’s Spence reminded the audience that driver error is a factor in nine out of 10 collisions. He also noted that in accidents involving passenger vehicles and transport trucks, the car, van and pick-up drivers tended to be the cause of between 77% and 85% of the collisions, and despite that, the commercial truck driver is typically cited for being at fault.

Because people’s mistakes play such a large role in accidents, Spence said Volvo is constantly looking for ways of compensating for human error and reducing mistakes. It’s to that end that Volvo emphasizes the development of safety systems “to provide defensive driving situations for the truck drivers.”

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While avoiding any crash is a net positive, accounting for something that doesn’t happen can be difficult to calculate when it comes to determining ROI invested in safety systems or new equipment.

“That’s why it’s important to have numbers. It’s important to have safety councils like this so that we understand the cost of the collisions the trucks are involved in,” said Spence.

It’s no doubt the costs continue to go up. The insurance rates continue to go up.

“One thing that our fleets cannot bear is to continually have to pay for collisions that would be avoidable and so what we’re doing is really focusing on prevention. It’s hard to measure a collision that you don’t have. Unfortunately, most fleets have the experience of collisions and dealing with that and so all they have to do is look at the costs they’ve already had and project those numbers in the future. Prudent fleets, they look at the numbers. They see the reality in the statistics and they move forward by choosing safety systems and putting them on their trucks.”

According to Spence, Volvo is very cognizant of the potential of technology overload, so the company makes it a point to prioritize the information and feedback the driver gets while behind the wheel. But when it’s important for the driver to get information, it will be delivered, especially as technology develops in the future.

From left to right: Greg St. Croix, Marsh Risk Consulting; Jason Spence, Volvo Trucks; Dino Bagnariol, Ontario Ministry of Transport; Ryan Fletcher, PeopleNet.

“What you’re going to see in the future for safety systems is more cameras in the vehicles, and not just cameras for watching ahead, but cameras that process, that develop algorithms, that identify the difference between a deer and a person or a cyclist ahead of the truck. Not only will they identify these things, they calculate reasonable telemetry to identify if the truck has the potential to run into this other object on the road. If so, it’s going to alert the driver of the truck to the potential danger and it’s going to stop the truck to keep a collision from occurring. Cameras are going to be a big deal in the future going forward.”

PeopleNet’s Fletcher spoke about the use of onboard 14 FLEET EXECUTIVE ❙ November/December 2014

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recorders and how they are integrated with the trucks’ own systems and linked with systems back at fleet headquarters, providing fleet managers an unprecedented view of every action taken on the road, and a way, via scorecarding, to keep track of how safe a driver is.

While the use of a scorecard can be viewed in a negative manner—here are the mistakes you’ve made as a driver— Fletcher said it doesn’t have to be used that way.

“There’s a number of ways to look at scorecarding from a safety perspective—you can monitor with it, hold people accountable, or even or even reward them. Sometimes a hard brake is a good thing. You can say, ‘Good job.’ It doesn’t always necessarily prove bad or evil safety-related behaviors.”

The amount of data generated by onboard recording systems can be enormous and even intimidating. Unfortunately, there is no one quick or easy solution for utilizing it properly.

Knowing what data is important and can strength the bottom line or improve overall safety can be a challenge.

“I think it really does depend on the fleet because of the data coming in,” said Fletcher. “For an LTL, dedicated, private, heavy haul, or explosive, some things are the same and some things are different, so you decide what’s important to you and then hone in on those specific pieces of data, because there’s definitely a lot. Whether it’s too much I think it depends on what you want to do with it. It really depends on your priorities are as a fleet. Sometimes there’s so many reports you need. Sometimes it’s two or three that get you the ROI.” As for elogs, Fletcher said that while it may take a while for some drivers to warm up to the idea of them, he finds that drivers eventually become fans of the technology.

“They don’t want to go back to find paper and pen, pencils, rulers and recording all this stuff manually. Doing all that is just so cumbersome and once they’ve been able to run it for a couple of weeks, they say, ‘Okay it doesn’t take away my hours. I’m just doing my regular job. I get to drive and do it and then go home: log in, log out.’ Really it’s after they use them, they trust them and they’re okay with it.”

While it may seem as if technology, particularly telematics, is offering fleets all sorts of new ways of understanding their businesses, the Marsh Risk insurance representative on the panel, St. Croix, said it’s really nothing novel.

“Telematics has been around since trucks have been on the road almost. It’s just a question of evolving telematics.

Telematics was as simple as a plug-in for an ECM decades ago.

Now every fleet is connected whether they want to be or not.

It’s the question of whether the fleet wants to use telematics or not. Certainly the insurance industry is recognizing telematics as a driver-behavior or a human-behavior modification tool that can be used to the benefit of the fleet and to the safety of other road users. It’s been well-demonstrated in Europe for decades, and North America has traditionally been slower and more aloof to the use of telematics and the technology but it is here much like electronic onboard recorders, the EOBRs. It is here. You cannot run. You cannot hide. You might as well embrace the technology. It is here.” trucknews.com

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Even though the cost of trucks has escalated, along with the cost of making repairs, St. Croix said those costs aren’t reflected in insurance premiums, thanks in part, to technology.

“Fortunately today there is a pretty soft market for any trucking company looking to get insurance today. It’s pretty damn reasonable, cheaper than insuring my own car. It’s exciting times that we’re into now. With telematics technology we are becoming a much safer industry.”

St. Croix also addressed the topic of pay-as-you-drive (PAYD) policies, saying there are advantages and disadvantages to them. In particular, if a fleet is known to drive lanes through high-crash-risk areas, under a PAYD policy, that fleet can expect to pay a bit extra. If, however, that same fleet is able to navigate that high-risk-corridor with a lower-than-average rate of accidents, then that will be “very cost beneficial to them; extremely cost beneficial to them.”

The final panellist was the MTO’s Bagnariol. He explained the OPP has started using UAVs (unmanned aerial vehicles) to take photos at highway accident scenes. Using traditional methods, it typically takes officers between two and three hours to photograph and map out a crash site. With the drones, Bagnariol said the process can take as little as 15 minutes, allowing the highway to be opened that much faster.

“We’re hoping the work will continue to expand the use

of these devices. We have a few teams now that they’re using them. Hopefully we’ll have more and more.”

Bagnariol said the MTO is continually evaluating systems and technology companies searching for ways to improve congestion. He mentioned the programmable message boards over the 400 series of highways and said they might be able to provide even more information in the future.

“As technology changes, a lot of the information is being collected in fleet vehicles. Maybe there’s a way to collect that information and transmit that to a central location and maybe we can transmit messages on the signs about congestion or weather conditions changing, and that sort of thing.”

Along with high-tech solutions the province will have to continue to build or extend roads—Bagnariol mentioned projects to extend the eastern portion of Highway 407, and widening Highway 417 in the Ottawa area—create additional high-occupancy vehicle lanes, improve transit and repair aging infrastructure. He also said that this winter, extra equipment will be added to road cleaning crews to ensure on- and offramps will be cleared of snow and ice. The government has also re-introduced legislation to improve various aspects of road safety, by increasing fines for impaired and distracted drivers, and requiring drivers to take more precautions while passing tow trucks parked on the side of the road. FE

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LEADERS

EVOLVING IN A CHANGING WORLD

Silvy Wright of Northbridge Insurance shares her perspective about the transformation of the transportation industry with Lou Smyrlis and the audience at the Surface Transportation Summit

By Lou Smyrlis

FE: AS CEO OF NORTHBRIDGE, A COMPANY THAT IS VERY WELL KNOWN IN TRUCKING CIRCLES, WHAT CAN YOU TELL US ABOUT THE TRENDS YOU SEE BOTH IN THE TRANSPORTATION AND THE INSURANCE INDUSTRY? WRIGHT: Our landscape is changing, consolidation being one of the factors. But one of the prevalent trends I think we really need to pay attention to, which is going to impact the next five to ten years, is the adoption of technology. When we think about technology, most of us think about using technology to become more efficient and effective, but I see technology changing service models. Where service models are becoming more competitive and more successful potentially than the traditional service models.

One of the examples we see today is the Uber app. Uber is an application on your smart phone that you use to call a cab. Young people today do not call 411. I call 411 to ask for a number so I can get a cab. Young people today use this app to get the cab closest to them. They have an account and it’s all paid. So here we go: one application has bypassed the dispatcher and has changed the customer experience. That is very, very interesting. Very quickly it has started to gain a lot of traction around the world.

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Most interesting to me was not necessarily the customer experience but what happens to the taxi driver. One day I arrived at Billy Bishop Airport and jumped in a cab with my 16-year-old and she recognized the cab driver had the Uber app technology on his dashboard, so I started to talk to the guy and asked him: ‘what do you think about Uber?’ He said, ‘I love it. I’ve been working with Uber for three months. They give me feedback on how well I’ve serviced the customer. I earned points. I’ve gotten a new suit. I’ve been working with my taxi company for 10 years and they’ve never told me how well I did my job.’

So here this technology not only changed the customer experience and the service model, but it changed the driver experience. Yes it was a taxi driver, not a transport driver, but the concept of impacting the driver through technology because he was getting instant feedback that he was doing his job well applies.

So how could that translate into the transportation industry? How do we make our drivers feel special and feel they are doing a good job in a unique way? I thought that was a very interesting adoption of technology. It very quickly started to change his work experience and all of the sudden he became more loyal to Uber than the company he had been working for for 10 years. trucknews.com

14-12-04 9:29 AM

FE: CERTAINLY TECHNOLOGY CAN BE DISRUPTIVE, BUT AT THE SAME TIME, THERE ARE POSITIVE ELEMENTS TO IT, PARTICULARLY IF IT IS USED WELL, IN GROWING EFFICIENCIES AND IMPROVING THE RELATIONSHIP BETWEEN THE COMPANY AND ITS EMPLOYEES. THE THING I WANTED TO ASK YOU, BECAUSE YOU MENTIONED IN YOUR COMMENT ABOUT TECHNOLOGY USAGE AND YOUNGER PEOPLE’S ACCEPTANCE OF IT, IS THE ISSUE WE HAVE WITHIN TRANSPORTATION, AS WELL AS THE INSURANCE INDUSTRY, WITH HUMAN RESOURCES. I’VE HEARD YOU TALK PASSIONATELY IN THE PAST ABOUT PEOPLE. BUT THE INDUSTRIES, BOTH INSURANCE AND TRANSPORTATION, FACE SOME REALLY IMPORTANT CHALLENGES WHEN IT COMES TO RECRUITING PEOPLE. WOULD YOU SHARE YOUR THOUGHTS ON THAT?

WRIGHT: Technology is reshaping our world, but we all know that people are at the core of our success. The insurance industry and the trucking industry have had challenges recruiting, for different reasons. Part of it though is awareness and image. Both industries probably haven’t done the best job we could do in improving the image of both industries with regards to the professional experience it provides to young people.

I’m chair of the Insurance Institute, the body that provides training to people in the insurance industry so they develop expertise. As well, the Institute reached out to schools to improve the image of the insurance industry. As we all know, nobody puts up their hands and says, ‘I want to work in the insurance industry.’

Image is very important, and by using social media, in particular, and visiting the schools, high schools in particular where students are thinking about their careers and what to do next, I think that’s an opportunity for both the insurance and the trucking industries.

I applaud the Blue Ribbon Task Force. That is an example where the industry has come together to deal

with the big issues, such as the driver shortage. I know that issue has been there for 20 years. I’ve been in the insurance industry for 20 years and have been very fortunate that the bulk of that time has been spent serving the trucking industry. Twenty years ago we had a driver shortage. The issue went to

sleep in 2007 because of the recession.

Now it’s top of mind. It’s really great to see the industry come together with innovation with regards to improving the driver experience, which I think will transcend in the image of the trucking industry. p44

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November/December 2014 ❙ FLEET EXECUTIVE 17

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14-12-04 9:29 AM

S

MOTORTRUCK FLEET EXECUTIVE, CANADIAN SHIPPER, AND DAN GOODWILL & ASSOCIATES PRESENTS

OCTOBER 14, 2015 MISSISSAUGA CONVENTION CENTRE

PLEASE PLAN ON JOINING THE COUNTRY’S TOP

TRANSPORTATION & SHIPPING EXECUTIVES FOR A DAY OF

EDUCATION & NETWORKING

Summit 2015 Mag.indd 1 Leaders.indd 18

14-11-04 10:32 AM 14-12-04 9:29 AM

MORE EFFICIENT TRANSPORTATION STRATEGIES START WITH A FRANK DISCUSSION OF CURRENT REALITIES

W

ith the North American economy gaining strength, the focus of shipper-carrier relationships is shifting. The shift is towards more efficient transportation strategies and practices to ensure adequate capacity for the growing amount of freight that needs to be moved and the quality of service that needs to be provided. After years spent dealing with a divisive inward focus on cost cutting it’s a welcome sign to see both sides of the transportation equation once again looking outwards and focusing on improvements to our commercial transportation system.

Although the intentions are good, and the economic climate improving, the challenges remain substantial. Success, we strongly believe, is dependent on shippers and carriers finding ways to work together in a new spirit of co-operation and collaboration. And that is what drives us to bring shippers and carriers together every year for our annual Surface Transportation Summit.

Our third annual Surface Transportation Summit— organized once again in partnership with Dan Goodwill & Associates—took place Oct. 15 at the Mississauga Convention Centre. The focus on working together, on collaboration over confrontation, must be resonating with both shippers and carriers as our attendance has doubled since our first year.

Almost 400 top level transportation and logistics professionals answered our call for a full day of education and networking.

Our blue-chip lineup included almost 30 speakers and they were able to provide deep and insightful views into the economic outlook, the reasons behind mergers & acquisitions activity, the regulatory and insurance scenes, alternative fuels, insurance telematics, warehouse strategies, human resource

practices, and trends that could shape transportation’s future.

Back by popular demand were sessions that provided frank debates and helpful tips on the shipper-carrier relationship.

New this year were two formal “speed networking” sessions designed to help attendees leave the conference with key new business contacts.

The exchange of ideas surpassed expectations but the 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 awardwinning WebTV show, TMTV. We have already provided considerable coverage of the event on www.trucknews.com, www.candianshipper.com, 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. 14, 2015 into your calendar for our next Surface Transportation Summit. FE Lou Smyrlis

Nick Krukowski

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President

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November/December 2014 ❙ FLEET EXECUTIVE 19

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14-12-04 9:31 AM

REFLECTIONS ON NATURAL GAS

By James Menzies

A

recent pullback of heavy-duty natural gas engine development may have interrupted the momentum natural gas was enjoying as a potential alternative to diesel fuel, but it has done little to dissuade advocates from believing natural gas is still a better choice in many applications.

At the Surface Transportation Summit panellists said natural gas still has enormous potential as a transportation fuel.

Among the speakers was Kelly Hawes, president of Cold Star Freight Systems, which runs 10 CNG-fuelled Mack tractors in a B.C. regional haul application. He has seen fuel savings of 30-40% and has found the ISX12 G to be fully capable.

“We’re pulling full tridem loads around the Lower Mainland and back with CNG trucks,” Hawes said. “But we’re also not pulling the Rocky Mountains with these trucks.

Our range is about 350 kilometres, pretty flat for most of it, and there’s no problem.”

Hawes acknowledged the ISX12 G requires the driver to drop about two additional gears on the hills compared to a diesel, but it only adds about six minutes to a haul.

“For a 30% savings, I’m okay with that,” he said. “Performancewise, there’s no problem. We can pull tridem loads if we have to. The drivers don’t even notice the difference.”

While a lack of fuelling infrastructure has been cited as a reason for the reticence of fleets to transition to natural gas, Christopher Hoad, marketing manager with LNG supplier ENN Canada which has public fuelling stations in Woodstock, Ont. and Chilliwack, B.C., said a network is taking shape.

“The momentum is still there,” Hoad said. “We’re still building stations. We’re building a brand new one in Alberta next year. The OEMs have paused [engine development], and that’s a really important point. They haven’t cancelled the program, they’ve paused it. To us, it’s not a matter of no. It’s just a matter of not yet.”

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Kelly Hawes, Cold Star

stations and both Hawes and Hoad said it would be nice to see those opened to the public.

“I think it’s really up to industry to work together to make a lot of these stations public access because that’s what’s going to fuel the growth of the industry and open it up to a lot more fleets,” Hoad said.

“If I had it my way, nobody should be able to build a fuelling station without it being a third-party cardlock system,” Hawes said. “That’s how you get infrastructure and get more people to be able to do this.”

Cold Star Freight worked with natural gas supplier Fortis B.C. to open a fuelling site near its terminal, which has been opened to the public. That relationship with Fortis was vital in getting a small fleet like Cold Star, which operates about 40 trucks, to take the plunge. It included a 75% rebate on the premium associated with purchasing natural gas-fuelled trucks; so $45,000 of the $60,000 upcharge was paid back to Cold Star, provided it met its CNG purchasing obligations of displacing 400,000 litres of diesel per year.

“That was pretty attractive right out of the gate,” Hawes said of the incentive. However, he said that given the fuel savings Cold Star has achieved, he would make the same decision today even without the incentive.

For fleets in the Ontario market where no such incentive exists and the upcharge to natural gas-fuelled trucks is deemed too risky, there’s also the option to invest in a dual-fuel system such as that offered by Universal Truck Rental and Alternative Fuels Alternative Solutions. Steve Baty was on-hand at the Summit to discuss the dual fuel solution.

“It takes any diesel engine and converts it to run on diesel and natural gas as the same time,” Baty said. “There’s no component changes whatsoever, it’s a bolt-on system. The system costs about $16,000 and that’s installed, road ready.

That will save you up to 20-25% net on your fuel costs.”

Universal Truck Rental has a demonstration unit available for fleets in the Ontario market to test. The performance, said trucknews.com

14-12-04 9:31 AM

Baty, is transparent, but the fuel savings are clear.

“You get in the truck and drive it. Nothing changes. When the natural gas runs out, the truck runs 100% on diesel,” he explained. “It’s just a cheaper form of running your truck.”

Shipper-carrier collaboration was one of the themes at this year’s Surface Transportation Summit, and with Hawes speaking openly about fuel savings of 30-40%, he was asked how much of that, if any, shippers could expect to be applied to their freight bills. However, Hawes cautioned that fleets enjoying fuel savings from using natural gas should instead be reinvesting those savings into their operations and not giving it entirely back to shippers.

“Everybody is hearing today about driver shortages and trying to improve the margins of the trucking industry,” he said. “Although I think the shipper should share in some of the savings, it’s a really tricky discussion, and it should be a discussion that happens between each carrier and their prospective customer. That’s the way we’re approaching it. No, we’re not reducing our pricing because of this, and we’re being very public about the savings that we’re seeing.

However, in turn what we’re doing is reinvesting either in more CNG trucks, driver wages, driver training, dispatchers and all that stuff. Trying to get our margins up to where we believe they should be. With that said, what we’re hoping is that there will be savings by reducing our fuel surcharges.

That’s where it should apply. And we’re also hoping that we can maintain or stabilize our rates for the next year, anyways.

That’s how we’re approaching it right now.”

However, Hawes may have had the most compelling reason to make the switch. He indicated the fuel savings will help him grow his business.

“With 40% savings on 40 trucks, that means I could buy a natural gas truck in cash every three months with the savings,” he said. “I can’t do that with the margins I had before. The other way to look at it is, if I wanted to put that kind of money on my bottom line, the amount of top line revenue that I would have to grow is in excess of $5 million in sales, which means more staff, more drivers, more buildings, more everything. Or I could buy new trucks, which I need already.” FE

FINANCIAL FUTURE LOOKS GOOD FOR TRUCKING INDUSTRY

By James Menzies

L

eading economic indicators are pointing towards continued economic growth and favourable conditions for motor carriers. That was the upbeat message from Carlos Gomes, senior economist with Scotiabank, who provided an economic outlook at Surface Transportation Summit.

“Despite all the events of the last week in the equity markets, we continue to be optimistic with respect to our outlook.”

Gomes said global economic growth is expected to accelerate over the next year. New order activity, which tends to lead industrial activity, has been on the rise globally.

“When we look at the global economy, most regions are on an upward trend, especially the US,” Gomes said.

The European economy has returned to growth mode, albeit at a modest pace. China’s economic growth is expected remain around 7% per year.

While household debt in the US and Canada is high, Gomes said he isn’t alarmed because interest rates are low and household finances are actually healthier than in the past.

In 2007, about 20% of disposable income went to paying debt, interest and energy costs. Today it’s about 15%.

Carlos Gomes, Scotiabank

“While debt is high, the fact rates are low and energy prices are actually declining as we speak, means it’s not consuming a significant amount of household income,” Gomes said. “It leaves significant disposable income for other purchases.”

This is good news for the auto sector, which has seen demand for new vehicles return to pre-recession levels while the average age of the fleet remains at a record high.

“The financial conditions of households are very healthy and the average age of the fleet in the US is about 11.5 years. About 40% of all vehicles in the US are more than 12 years old. That tells you if they’re not going to be replaced this year or next year, they’ll definitely have to be replaced one to three years down the road, so that gives me confidence we’re going to have a decent cycle for an extended period of time,” Gomes said.

Gomes sees Canadian exports growing 6% in 2015 and is bullish on the US economy, where consumers are financially stable and manufacturing activity is up.

Asked if he has any concerns, Gomes said economic conditions in Europe and China still bear watching, as do interest rates in the US and Canada, though indications are that they’ll be kept low for the immediate future. FE November/December 2014 ❙ FLEET EXECUTIVE 21

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“THE AMERICANS ARE COMING,” WARNS KRISKA’S MARK SEYMOUR And other reasons industry consolidation will continue to alter the trucking landscape

By James Menzies

M

ore consolidation within the Canadian trucking industry is coming, including the likely arrival of some major US players, according to experts speaking this morning at the sold-out Surface Transportation Summit.

“I think the Americans are coming,” warned Mark Seymour, president of Kriska Holdings. “They’ll buy their way into Canada or find their way in some other way. Building mass and building scale puts us in a better position to defend against what it is they are likely to do.”

Ongoing domestic consolidation and the potential arrival of new competitors from south of the border were a couple of the reasons Kriska chose recently to align with Mullen Group.

“Big customers are looking for capacity right now,” Seymour said. “There are more discussions with shippers around capacity now than price.”

Seymour said Kriska has tried growing organically for the past three to five years but has been unable to add capacity.

David Newman, equity research analyst with Cormark Securities, agreed that US fleets could be looking for a piece of the Canadian market as the owners of small- to mid-sized Canadian carriers look to sell.

“Smaller carriers face a whole host of challenges and it’s going to get tougher,” Newman said, citing a tightening regulatory environment and the driver shortage. “You’ve got US carriers kicking tires.”

He cited Celadon’s purchase of Yanke and Kenan Advantage Group’s purchase of RTL Westcan’s bulk division as two recent examples.

Newman said he wouldn’t be surprised if TransForce is broken up into several divisions and listed in the US or sold, potentially to American firms. But Newman also said there could be more Canadian trucking companies going public as well.

Patrick Cain, vice-president of business development 22 FLEET EXECUTIVE ❙ November/December 2014

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Mark Seymour, Kriska (left) and Patrick Cain, Cain Express

with Cain Express and Titanium Transportation Group, also addressed the appeal of consolidation, having recently sold his family business to Titanium.

“Growth creates challenges for organizations,” he said.

“Certainly for a company the size of Cain Express, as we continued to grow we put stress on our people, stress on our processes and systems and stress on our equipment and financing.”

Both Cain and Seymour concluded their respective businesses were too small to compete with the big players on their own.

“If we didn’t have a significant role with a customer, we were relatively easy to replace,” Cain admitted. “Bringing scale to your customers gives you a better relationship.”

But while a merger or acquisition may look good on paper, Seymour acknowledged that how the corporate cultures of the organizations involved will mesh is another consideration. For this reason, Kriska and Mill Creek—the Mullen-owned van carrier included in the joint venture— will continue to be run separately.

“Between 1995 and 2008, Kriska made about seven acquisitions, all of which ended up being tuck-ins,” Seymour said. “Each time we had a rude awakening about how powerful culture was at the company we tried to tuck in. Over time, we learned from our mistakes. In this case we will not be putting Kriska and Mill Creek together for that very reason. Mill Creek by itself has significant scale, it’s very profitable, safe and disciplined so there’s no advantage to try to put them together but there’s a tremendous amount of risk to try to do that.”

Cain added differences in corporate culture are not necessarily a bad thing—as long as both organizations adopt the best that their new partner brings to the table.

“In some cases, differences (in culture) will be for the better,” he said. “Hopefully you can bring something to the table that helps them with their business.” FE trucknews.com

14-12-04 9:31 AM

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THE HUMAN EDGE

SAMEDAY SHIPPING PUTS DOWNWARD PRESSURE ON RATES

By James Menzies

B

y the end of 2014, Amazon will offer same-day delivery service to 23% of the US public. It’s a trend that could revolutionize the transportation industry, according to Marc Wulfraat, president of MWPVL International, who spoke at the Surface Transportation Summit.

“Tomorrow is not fast enough anymore,” said Wulfraat.

“Everybody loves free shipping, that much is clear. What’s not clear is how much people are willing to pay for it.”

Amazon charges Amazon Prime members $6 for same-day delivery on top of their $99 annual membership fee.

Wulfraat said it’s not viable to offer same-day delivery service for much less than that. His consulting firm has calculated it would take 150 deliveries on a single truck in order to keep the price to $4 per delivery.

“So if you don’t have mass density and volume to support same-day delivery, you can get into the $10-$12 price tag very quickly,” he said. “If you’re doing 30 stops per load for $5, it’s going to be a money-losing proposition.”

Same-day delivery services present opportunities for courier companies willing to dedicate a portion of their capacity to a customer who provides the service. Traditional package delivery companies like UPS and FedEx, however, stand to lose if the trend continues. Wulfraat pointed out about 4.2% of packages shipped by UPS come from Amazon.

Amazon is using a broad network of fulfillment centres and sortation facilities to organize packages and then drops them off at local post offices or delivery companies for final delivery to the customer. Items ordered between 7 a.m. and noon will be received by 9 p.m. Amazon’s goal is to offer the same-day service to 50% of the US population.

“To keep up with Amazon in terms of delivery service levels, every other retailer has to keep up with that raised bar, so there’s a mad rush now,” Wulfraat said.

Other retailers offering or planning to offer same-day delivery in the US include: Google: Through its Google Shopping Express concept, customers can order things from local retailers, which will be delivered to their home by Google within two hours. The program is being tested in San Francisco with 20 retailers. eBay Now: Since 2012, eBay Now has used couriers

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as local valets to pick up and deliver items from hundreds of retailers in less than two hours. It charges $5 per order with a minimum order of $25. Plans to expand the program to 25 cities by the end of this year have been shelved, Wulfraat said.

Walmart To Go: WalMart is testing an online grocery delivery service in Denver. It charges $5-$7 per order with a minimum order of $30 with the aim of converting its stores into logistics centres.

Walmart.com: A separate business unit, Walmart.com will provide same-day delivery service from its stores.

Target: Target is offering same-day delivery in three markets (Minneapolis, Boston and Miami) with a $10 charge for rush delivery. Items ordered by 1:30 p.m. will be received between 6 and 9 p.m.

Macy’s: Macy’s is launching a same-day delivery service in eight markets beginning this fall.

Instacart: This grocery delivery company provides delivery within one to two hours from a variety of grocery retailers including Costco. It charges $4 for two-hour deliveries and $6 for one-hour service.

“We haven’t seen this in Canada to the same extent it’s happening in the US,” acknowledged Wulfraat. “Canadians don’t order online as much as Americans do. But whatever is going on in the US is definitely on its way here, in certain markets where it makes sense.” FE

More coverage of the SURFACE TRANSPORTATION SUMMIT can be found online at www.trucknews.com HOW TO HIRE TOP QUALITY CANDIDATES http://tinyurl.com/STS-hiring TALKING REGULATIONS http://tinyurl.com/STS-regs WHAT’S TRENDY IN WAREHOUSING http://tinyurl.com/STS-warehouse FAVOURITE TMS FEATURES http://tinyurl.com/STS-TMS STRESSES BUILD STRONG BUSINESSES http://tinyurl.com/STS-stress

trucknews.com

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DECISIONS 2015 IMPROVING THE SHIPPERCARRIER RELATIONSHIP

It’s only by working together toward the same purpose that shippers and carriers will be able to come to a business arrangement that benefits them both.

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14-12-04 9:32 AM

DECISIONS 2015 { COVER STORY }

The Panellists

JACQUIE MEYERS president, Meyers Transportation Services.

ELIAS DEMANGOS president and CEO of Fortigo Transportation Management Group.

ANNA PETROVA associate director, supply chain, Ferrero Canada Ltd.

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SUSAN PR Whirlpool C

ector, d.

CO-OPERATION, COLLABORATION, COMMUNICATION AND COMMITMENT Redefining the shipper-carrier relationship What are the most visible characteristics of a true shippercarrier partnership?

SUSAN PROMANE director, supply chain, Whirlpool Canada.

LOU SMYRLIS publisher, editorial director Trucking Group, Transportation Media.

T

he inspiration for this track at our Surface Transportation Summit came from Jacquie Meyers, one of the speakers on the executive panel last year, who made the observation that shipper-carrier collaboration is not as prevalent as it should be. Many shippers seem to be RFP or pricedriven. She decried the lack of true partnerships between shippers and carriers. Many people were very supportive of Jacquie’s comments in the post-Summit surveys. This encouraged us to create this track to address the issue in greater depth.

FE: Jacquie given you served as the inspiration for this panel discussion it seems appropriate we start the discussion with you. How do you define shipper—carrier collaboration?

MEYERS: I did indeed open this can of worms last year. I was very excited when I heard that you were putting together this panel because I think it’s a can of worms that needs to be opened. We need more open and honest dialogue between shippers and between carriers. I’m sure there will be different opinions up here today on ways we can do it better and the dreaded RFQ process. But I think by the end of it we will agree that there is a better way forward. Lou asked me, what’s my definition of Shipper-Carrier collaboration. It’s very, very simple. It’s a shipper and a carrier working together to improve service levels and drive cost out of the system. I repeat, together, working together. I would say it is the exact opposite of a poorly executed RFQ. I think everyone in this room probably knows what I’m talking about when I say poorly run RFQ. It’s a mass e-mail that goes to 101 carriers. You’re not supposed to speak to the shippers. You’re not supposed to speak to each other. The cheapest carrier wins.

I’m going to argue that is not the best way forward. There is a better way and I’m loving what I’m hearing that we are changing and we’re talking more about collaboration and that is the way forward. Getting back to the question, what are the characteristics of collaboration? The very basics are open and honest communication, trust between the partners, information sharing, joint problem solving. That’s all at the core. You need that for collaboration to work. Then I’m going to push for a little bit more today and I’m going to ask for commitment and investment.

We know those RFQs where you get a commitment of one year. I’m pushing you. Come to us, give us a real commitment November/December 2014 ❙ FLEET EXECUTIVE 27

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DECISIONS 2015 { COVER STORY }

of 2, 3, 5 years that you’re going to work with us. When we have that commitment, we can invest. We need you to invest and we can invest. I’m talking about management time and energy.

I’m talking about I.T. integration, specialized equipment, specialized customer service solutions.

When you get to that step where you’re investing and committing together, the world is your oyster. We can conquer anything then. I don’t want my message to be skewed. I’m not anti-RFQ. I understand there’s a time and a place for a wellrun RFQ. I’m talking where you invite core reputable carriers, you give them a legitimate seat at the table where we can provide solutions to you. Then the service provider is chosen on price and service.

Working together, collaborating, will save you far more money than a poorly executed RFQ that you do every year.

changes too much to lock in for any longer term than that from our perspective. Now that’s not saying that after two years we look for a massive RFP but do we test the market?

Yes. I would say we typically don’t have that many changes to our carrier base beyond that. But what we’re really looking for with carriers are people who want to work with us, who do what they say and when they can’t, give us notice that they can’t, which again doesn’t always happen. Being able to adapt to change is a real opportunity.

To Jacquie’s point of a collaborative relationship, that doesn’t always mean winning every time, right? Sometimes you don’t win every time, but you shouldn’t lose every time either. Do we want the right price? Absolutely. I have a boss to answer to. But we’re not willing to put everything at risk in our network in order to have to get that short term.

FE: Susan, let’s look at things from the shipper’s side. How would you describe relationships with transportation providers? How do those relationships meet the definition that Jacquie gave us of true shipper-carrier partnerships.

FE: Anna let’s hear from you. From your professional experience, how would you describe the relationship with major carriers that you’ve dealt with in the past?

PROMANE: It’s hard to argue with Jacquie’s definition.

Certainly I think everybody would say that’s absolutely how you would define a great relation, a truly collaborative relationship. I can say that, as with any strategy, usually where it falls apart is in execution. From a carrier perspective, a carrier who truly operates that way would differentiate themselves for sure because from my perspective there really aren’t that many who truly operate that way.

I can tell you how we define carrier management. My team has transitioned over the last 7 years to a more professional approach to carrier management. We make sure we articulate our business goals to our core carrier community on an annual basis. We are clear with what our goals are, what the service requirements are, how we’re going to measure them. We do measure them on a monthly basis.

On an annual basis we look at a scorecard. We Susan Promane have an award for the best carriers. Could we do a better job? Probably but I think we’re pretty proactive.

We lock in for two years because reality is the world just

What we’re really looking for with carriers are people who want to work with us, who do what they say and when they can’t, give us notice that they can’t.

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PETROVA: I don’t think you’re going to hear any controversial statements from me because I completely agree with both ladies. But I can tell you that from my professional experience, and I’ve been fortunate enough to work for major well-loved and well-established consumer brands, we have always taken the approach that the transportation company that we hire is an extension of our organization, is an extension of our brand.

For me, I think what is extremely important in any relationship, in any partnership is alignment on the strategy. I don’t believe that we’re always aligned on the strategy, strategy being we all have the same customer.

Our customer is the retailer. The customer can fire us. The customer can fine us for poor performance. The customer can punish us and when that happens, it’s very important to stay aligned. Not to execute blame games and fingerpointing but to actually act as one. I agree it is easier said than done. It requires a lot of commitment on both sides, like any relationship pretty much. I would say that from the strategic alignment it’s very important to understand that we’re all in this marketplace because somebody is taking our bill.

Retailers measure us on two main KPIs. The case fill rate measures our ability to fill the orders. Then they measure us on the on-time delivery, which is pretty much your KPI since you are responsible for the transportation service. This is what aligns us in this marketplace and I think as long as we’re all on the same page, collaboration is certainly possible.

FE: Elias, I’ve heard a lot of comments here that really are impossible to argue with; they all make sense. But let’s be realistic, the reality is some relationships work better than others. In your experience and with your company you have trucknews.com

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DECISIONS 2015 { COVER STORY }

to work very closely with your customers. What are the things that make a relationship work?

DEMANGOS: Like a marriage, communication and honesty. What I mean by communication is not irregular communication but regular communication, addressing issues real time as they happen. Don’t let them fester to the point where both sides have gone so far down a different track that it’s impossible to reconvene. Many of our partnerships with customers are multi-year partnerships. We’re fortunate in that sense.

But you have to be honest from day one. There should be no shortage of hard work.

You don’t just get a customer and then push the button, set and forget. There’s a lot of hard work that has to go on to continue with that partnership. Regardless of contracts you can lose a customer by not working hard. No one is perfect around the room, we all Elias Demangos make mistakes. The key is how do you address the mistakes when they happen? Do you have this, “Ugh it happens” type attitude or do you say, “It happened, and here’s what I’m going to do to solve it.”

For me plan B is critical to how we plan the business.

Everything has a plan B, an issue will arise, I guarantee it.

Last winter with trucks not starting, that was a given. It’s not a surprise. Think of it a step further, backwards, driver’s car not starting on his or her way into work. That’s going to happen, so what are you doing?

An effort to truly understand both sides’ point of view and lastly, continue improvement—are attributes of a good healthy partnership.

There’s a lot of hard work that has to go on to continue with that patnership.

FE: We’ve heard about what makes for a healthy relationship.

Susan I want to hear from you, based on your past experiences, what contributes to a relationship going south, quickly. What’s enough to get you to say, “Maybe I should not be working with this carrier?”

PROMANE: I agree communication is critical. Communication has to be of some kind of substance too. A couple of examples, when you’re entering into rate negotiations. I understand the carriers have cost pressures but our business has cost pressures, so understand that. Just coming in saying, “My costs are up, therefore I need a price increase”—frankly it’s quite surprising for how many carriers that’s their approach. I understand that but I want to understand a little bit more. What are you doing yourself 30 FLEET EXECUTIVE ❙ November/December 2014

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to try to take costs out and then drive the efficiency in your own organization? It shouldn’t just be a pass through. I want to understand that you’re taking it seriously, that you’re trying to get creative. It’s no different in my business. We’re in profit planning time as I’m sure everybody in the room is. I just presented my plan and I’ve got cost headwinds, for sure. I’ve got rate increases.

But I have to find ways to offset that, getting creative and not on the back of security, but getting creative on how we are doing things smarter in order to offset those increases.

I think the other thing is, as we’re trying to drive change, is continuous improvement. That often times is met with resistance. If it’s outside the box of the partner, is it impossible or just hard? If it’s impossible, OK. If it’s hard, well let’s figure it out. At the end of the day, if it’s the right thing for us to do as a business and I articulate that well enough, then the carrier should support and win from a long term relationship.

We won’t try to drive cost out on the back of rate. We really don’t try to do that, we try to get creative on how do we ship differently to drive more efficiency in the supply chain. That’s the approach that we take. Again oftentimes, it’s met with resistance.

FE: Listening to all of your comments, trust seems to be the key word here. How does the carrier trust the shipper? How does the shipper trust the carrier? I’ll assume that’s a particularly challenging one if it’s a new carrier that you’re dealing with.

Anna I want to take that question over to you. How do you build that trust when you’re dealing with a new carrier?

PETROVA: First of all I think it’s very important for us as shippers to be very particular and very clear with regards to our specializations. What are our expectations of service and Susan made the great point that we might actually agree on the strategy but when it comes to execution, this is when everything fails. Even with rates, it takes only so long to agree on the rates. Then you have a year, two years, three years, whatever is the duration of your contact, to cohabitate in the hopefully successful marriage. That can only be ensured by corporate service levels. If this first step is not addressed correctly, there is room for grey areas. I think it is very important to not only express what your expectations are, but to also perhaps formalize them in a document.

In my career I’ve seen it called a service level agreement or a carrier operations manual—it has many names. But it’s very important that your list of expectations is written down.

How would you like the pick up to be executed? What is your expectation for customer service support? Do you want to dedicate a CSR for the account. What type of reporting would you like that dedicated CSR to generate and send your way to make sure that you are in the proactive mode managing your customer’s needs rather than being reactive. So all those need to be clarified and they need to be very transparent because transparency is one of the key rules of trust. trucknews.com

14-12-04 9:33 AM

The next important part of trust is accountability. We keep making comparisons to marriage, assuming that everyone is ready for marriage right? There’s a whole bunch of people who aren’t. But when you’re entering into a shipper-carrier relationship, which requires commitment, it means that as a shipper we have to ensure we are providing volume numbers, we plan ahead our capacity, we pay you on time. You also have some obligations in that relationship as the carrier. If you promise us to be 98% on time and the rate that we’re paying you is actually contingent on that number, we would like to see people walk the talk.

I think that walking the talk is probably the number one component of that trust along with open communication and transparency. That is how we build trust. By demonstrating mutual respect, by treating each other fairly, by being open with each other and cherishing that partnership that hopefully results in the best possible service for the rate that we’re paying.

FE: Jacquie looking at this same question from the carrier side, how do you go about demonstrating to your customers that Meyers Transport is a company that can be trusted as a partner? In return, once you have that partnership, what do you expect back from your shipper clients?

MEYERS: It’s pretty basic. Assuming that we are ready for marriage and we’re moving forward. The very core, obviously, don’t ever lie to your customers. I know that if my dispatch lies to you, I will not last as a supplier and my dispatch knows that if they lie to you they will not last as a dispatcher. Lying makes for very uncomfortable co-habitation, I would say. But beyond that, and I alreadymentioned it a little bit, transparency, giving visibility. We’re very open with our customers.

If they want to come in we will open our books to them, talk about where our costs are growing, how the driver shortage is affecting them, load balance, etc. We’re open with where our costs are increasing but then coming back to Susan’s point as well, we’re also open with what are we doing to improve our efficiencies, to improve our service offering. We’re very transparent with all that. Then I would say the final step where I find true trust is built is when we can actually come forward to you and offer cost savings solutions or service improvements.

A very quick example, let’s say I’m running a dedicated run for a customer, and it’s only half full. It doesn’t matter to me. I’m making the same dollars day in and day out, it doesn’t matter to me. But it’s imperative that I bring that forward to my customers and say, “Here’s how you’re spending money and I don’t think it’s the best way. Is there a better solution?” Could we run it every other day? What does that do to your customers?

Could we merge you with another customer without impacting your service? Should we be using a different equipment type?

It’s imperative that I bring that forward to say, here’s how you can save money. Because my best partners, my best customers

are happy, healthy and profitable so I need to do everything I can to make sure my customers are happy, healthy and profitable. What do I expect back? Openness, honesty, transparency everything that Anna really said.

The very basics are open and honest communication, trust between the partners, information sharing, joint problem solving.

PETROVA: Can I add to that? One of the things that I like about Jacquie’s style and what she’s saying is positive Jacquie Meyers leadership. I attend a lot of transportation conferences. Probably less now because they all tend to have that cloud of continuous complaining.

We all have our challenges, right? We just don’t spend the majority of our energy on complaining. We try to create some positive leadership also for our teams. I personally spend a lot of time on that concept because when I run my meetings I want to also focus on wins.

I’m pretty sure that every transportation company in this room has had great achievements, best practices, great results, so why aren’t we hearing about that? Why do we always hear about problems, challenges, costs? It sounds to me like it’s some sort of a rehearsal for coming for a visit and asking us for more money again, right? Positive leadership is something that transforms a relationship into a partnership, because it comes with initiative. It comes with a desire to upgrade the current situation. It comes with ideas for the transformation from a commodity supplier to an innovation driven, qualitydriven service provider that we would love to embrace. I think that the transportation industry has all the capacity to be that. We’re hoping that that culture of positive leadership will become a little bit more visible, which by the way in return will attract talent. Because working for an industry that’s always on the defensive is not very attractive, as you probably would appreciate. Also I can tell you from my perspective and I’ve been engaged with the transportation industry pretty much for over 20 years now, here and in Europe, very often it has been that we had to drive the innovation. It wasn’t the transportation company who was coming forward and offering solutions and offering fresh thinking and making us, giving us some improvement suggestions.

It just so happens that for the most part it was always us. I think it would be really 21st century thinking and 21st century experience for us to work as equal partners and hear each other out and see you lead us because we certainly are not perfect. There are certain areas where we could get better.

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We would like to hear more of that from you. So let’s stop complaining and let’s build our future together.

FE: Speaking of being positive, Elias with your company offerings of dedicated service, you may be dealing with clients that already have a private fleet that’s handling some of the business. It’s safe to assume there is a vested interest in maintaining the status quo. How do you work around that?

How do you ensure that the vested interest in maintaining a private fleet doesn’t have an impact on the partnership that you’re trying to form?

DEMANGOS: Good question after Anna’s comments. Quick little quote from a guy by the name of Mark Twain. “He would choose heaven for the climate and hell for the society as each has its own advantages.” Status quo, serves a certain purpose in my mind for certain customers. Certain things, like potentially keeping the drivers the same, keeping the logos and the branding the same, are important for the customer that we’re on-boarding. In that case, status quo makes sense. But there are other things that we should be bringing forth as ideas. Some of them would be very, very easy wins. Why don’t you expand your shift a bit longer every day because it will do x, y and z and it’s going to save you money. It’s not just simply lower the hourly price or the kilometer price that’s going to drive the cost reduction. What’s going to help to get your cost reduction now is working together. With our customers we talk daily. We get into the granularity of did we optimize every cube on every trailer on every truck that went out? Where were the delays?

Were the delays because of snow? OK well today let’s make sure it’s snow plowed there. It’s that type of little stuff that overall if you keep adding them all together they will bring cost reductions. It’s cost reductions which ultimately is what we all want. I agree. Those lines of communication need to be more open. That involves more than yearly contracts and truly having a partnership, truly wanting to work together.

FE: Sometimes relationships do sour. Carriers don’t perform where you expect them to. I want to hear from our shipper panelists on this. First of all, how do you measure performance? What do you share with your carrier partners?

If one of them is not meeting expectations, what do you do then? How do you bring them back into the fold or is this the case of if you don’t perform, you’re gone? How do you handle that situation?

PROMANE: We measure our carriers on a monthly basis and as I said, we report out to the larger carrier community on an annual basis. We measure on-time performance, that’s obviously key, and on-time performance is carrier controllable. We also measure safety. We also measure what I would call, compliance to admin functions—EDI compliance, 32 FLEET EXECUTIVE ❙ November/December 2014

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billing accuracy are key. We have a formal process if there is a service issue. We have a transportation management provider that manages our carriers based on a day-to-day basis.

Incidents are written up and we need to see corrective action in a particular time frame. We don’t have knee-jerk reactions.

I can’t think of any incident where something happened and the next day the carrier was gone. We just don’t operate that way. We work with the carrier to correct the situation but if it continues over a long period of time we’ll be forced to make a change because we just can’t afford service issues that happen over a long period of time.

PETROVA: I’ve always measured carrier performance on a monthly basis. I think what is also very important, before you hire a carrier, you need to be 99% sure that you’re making the right choice. It’s sort of very similar to the recruiting process. I think it’s very important to ensure the right fit.

If there’s no right fit, you probably would know about it as a buyer because although I heard a lot about of bad RFPs, there are also Anna Petrova good RFPs. It’s a tool.

What makes it good or bad is the criteria that people use in awarding the business.

It’s very clear that if everything is simply based from the price, there will be repercussions and then you might be forced to go to the more expensive carrier because the ones that you chose unfortunately are not able to perform.

The process of a carrier selection is a very complex process and it always starts with service at least for every organization that I’ve ever worked for. Because if you’re choosing a person who promised you a lower rate but can only give you one truck a week, and that truck is likely late, that’s not the type of marriage that you want to be looking at. In terms of monitoring on a regular basis and in terms of corrective and preventive actions, I found myself in my career sometimes a little bit too involved and almost infiltrated into the carrier structure and into the carrier organization trying to understand who are the best people to speak to.

Who are the decision makers? Who is the one who enforces a high standard of operation? Once you figure that out and you talk to the right people, hopefully things will improve. If things don’t improve then chances are, if you’re looking at a horizon of poor performance, it’s time to make a change. FE

Positive leadership is something that transforms a relationship into a partnership, because it comes with initiative.

trucknews.com

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CITY SMARTS

CITY SMARTS

Work trucks for the urban environment

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CITY SMARTS

SPEC’ING REGIONAL AND MEDIUM-DUTY TRUCKS Beware the cookie cutter approach. Spec’s can vary widely from fleet to fleet.

By Harry Rudolfs

I

s there a cookie-cutter day cab tractor whose spec’s fit most regional and P&D trucking applications? Yes and no. The cab and chassis might be somewhat generic, but some items can vary widely from fleet to fleet. And when it comes to straight trucks Class 7 and below, custom spec’s are the name of the game.

With the exception of couriers like UPS running single axle A-trains, single-axle tractors have all but disappeared from the industry—they’re just too limited by the amount of weight they can carry. Daycabs these days are almost always tandems, and the spec’s are pretty standard across the board: 12,000 lb. front ends and 40,000 lb. rears, what John Haines, national fleet manager for Canada Cartage, calls the “grocery truck spec’.”

His tractors are powered by 410-435 hp engines and sit on 3.70 rear ends. Most general freight carriers will order a wheelbase between 173 to 189 inches, while Haines opts for 173 inches and short-nosed Volvos and 8600 model Internationals. Shorter spreads have less chance of getting in scrapes in tight dock areas, and that’s important when you oversee a fleet of hundreds of trucks.

These Canada Cartage trucks are meant for regional work and short highway runs and peddle loads. “We don’t bother with a faring or too much aerodynamic stuff on this kind of 34 FLEET EXECUTIVE ❙ November/December 2014

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truck. Other than a decent seat for the driver, it’s pretty basic,” says Haines. “There’s no reason to order an expensive 10-piece front bumper when a painted one works well enough.”

Haines spec’s all his new trucks with automated transmissions, as the move to automatics continues in the trucking sector. In a few years drivers won’t ever have to deal with three pedals. Still, 10-speed Roadrangers are the most popular shifter among the old school, while 13-speeds, and less often 18, are still favoured by a number of heavier haulers.

At least three strong arguments support the move to automated transmissions: attracting new drivers, limiting abuse, and most important of all, fuel efficiency. Kathy Salandziak, director of safety and operations for Messenger Freight Systems of St. Thomas, Ont., whose company just recently purchased a slew of ProStars, is getting great results with fuel mileage. “With the automatics our drivers are getting 10.3 miles (Imperial) per gallon, while our most experienced drivers are getting 10.1 to 10.3 with the 10-speeds.”

Salandziak ordered half the Prostars with 10 speeds and the other half with Eaton-Fuller Ultra-Shift Plus automatics, keeping both her new hires and veteran drivers happy. Most new drivers have no interest in learning on a stick shift while her older drivers eschew automatics and want the tried and true Roadrangers. trucknews.com

14-12-04 9:33 AM

Choice of horsepower for regional trucks varies from the high 300s to around 450 and should put out anywhere from 1,450 lb./ft. to 1,650 lb./ft. of torque. But getting the rear end ratio right is just as crucial for achieving the best fuel efficiency.

Messenger Freight’s new Internationals are powered by the Cummins ISX 15 litre engine for power, producing 425 hp and resting on 3.43 rear ends. While another large regional carrier goes with Navistar’s 13 litre N13 (with urea) set at 410 hp and sitting on 3.55 rears.

According to Rob Arcese, sales and lease manager for Carrier International Truck Centers of Cambridge, Ont., “It may take a few years, but every customer has a spec’ that they’ve developed that works for them.”

Rick Poser of Kitchener, Ont., has had trucks on with Parmalat since 2000. His six tractors pull heavy loads on company-owned tri-axle trailers. They make 5-10 stops daily and cover anywhere from 175,000 to 200,000 km per year.

“When I first started, we were running 2000 Sterlings with 410 CATs and 4.12 rear ends,” says Poser. “We weren’t sure what we needed for the loads.” These days Poser is working 435 hp Volvo D13s matched with 3.90 rear ends. “We learned that by dropping the rear end ratio we could improve the fuel mileage by running faster at lower rpms. So years ago we’d be running 100 kph at 1,650 rpms, and now we’re doing the same speed at 1,450 rpms. We could probably go lower, but I wouldn’t want to pull the rear end out.”

LED lights have replaced halogen and become standard from some OEMs. “More and more trucks are starting to get ordered with LED lighting (inside and out),”says Matt Ysinga,

truck sales representative for Expressway Trucks of Ayr, Ont. “LED lighting tends be a lot brighter and last a lot longer than regular lights.”

Driver comfort is essential for employee retention, among other things. You’d be hard-pressed to find a day cab that wasn’t air-ride, and didn’t have a good stereo. Poser slip-seats his driver. When he orders a tractor he specifies a higher-end interior along with a premium seat. But for Poser, getting good fuel mileage is a top priority. “I also get the extended faring and fuel tank faring, aluminum wheels to keep the weight down a bit,” he says.

Straight trucks, of course, do a lot of the work for regional carriers. There’s a configuration and box-type for every transport need, whether it’s a class 3 grossing 12,000 lb. delivering baked goods, or a heavy-duty tandem straight truck with a 30 foot reefer box pulling heavy loads of frozen food.

But at least there’s no debate about transmissions—automatics are di rigueur for straight trucks and you’ll probably have to go with the six-speed Allison automatic, which has been the industry standard for some time now.

What you’re hauling and how far is important. The weight of your shipments should be paired with the right-sized engine and corresponding torque to achieve the best economy and performance. According to Arcese, a good mate for a medium duty truck might be a 250 hp engine with 550 ft./lb. of torque.

Anything heavier and you could step it up to a 7 litre 300 hp engine with 660 ft./lb. of torque. Beyond that something in the 9 litre range and 335 hp might suffice.

Driver-friendliness, accessibility, visibility are all factors

November/December 2014 ❙ FLEET EXECUTIVE 35

CITY smarts.indd 35

14-12-04 9:33 AM

CITY SMARTS

to consider, trumped only by customer service requirements.

A courier who doesn’t do much dock work might request a low-profile vehicle that sits on smaller wheels. Most straight trucks include a split seat in the cab which is handy for service for delivery trucks or service vehicles that occasionally carry helpers. The driver’s seat remains separate so the height can be adjusted, while a bench seat is bolted alongside that can hold two passengers.

Much straight truck work is contracted to a private manufacturer or retailer and may require specialized accessories. Canada Cartage operates a home delivery service for Home Depot that includes an array of equipment including flat decks, boom trucks and curtain-siders. The company uses Class 7 straight trucks to make deliveries in Ontario and eastern Canada, but favours a tractor pulling a 36 foot pup in the western provinces.

“I hate to buy a truck off the lot but sometimes you have no choice,” says Haines. “As has happened recently, you need the truck right away and you can’t wait for them to make one for you.” In the case of his Home Depot vehicles, Haines has to decide if the truck will be equipped with a crane (in which case the front end could be strengthened to 16,000 lbs.), or if it will have a Moffet kit attached (a mobile fork-lift truck that attaches to the tail of the and requires a beefed-up frame and 40,000 lb. rear ends).

Power tailgates are an essential feature for some delivery trucks, and David Moore, owner and president of General Cartage in Etobicoke, Ont., has had some mixed experience with them. “A standard tailgate for general freight has a capacity of 3,000 lbs. But we found we were getting tailgate failures anywhere from the third to fifth year. So we went to the heavier, 3,500 lb. tailgates and seem to have avoided those problems.”

Tailgates come in basically two types, the “rail-gate” and the “tuck-away.” The rail-gate rides up and down on a railing at the rear of the truck and folds up so that it becomes part of the rear bumper. The tuckaway folds under the box or trailer and is much preferred by Haines of Canada Cartage, who specifies a 5,000 lb. capacity tailgate for his delivery vehicles.

“Rail-gates have to be repaired three times more frequently than the truck-aways,” says Haines. “And you can’t put a rail36 FLEET EXECUTIVE ❙ November/December 2014

CITY smarts.indd 36

gate on the back of a 53-foot trailer because you’d be overlength. But you can put a tuckaway on the back of a 53-footer.”

Sometimes you may not be able to spec’ for the accessories you count on the most, as Moore of General Cartage discovered. “We recently received delivery of a cabover Peterbilt 220 which is a truck primarily made for the European market. In this model the convex mirrors sit on top of the rear-view mirrors but that’s not what our drivers are used to.

Some of our drivers had difficulty seeing cars in the blindspot.

What happened in this case? The dealer agreed to replace the European mirrors with North American ones.

“We’re generally moving to a more generic spec’ and we usually follow the OEMs spec’ for city and regional trucks,” adds Moore. “There are some things that become chronic issues, but they’re generally small things. Looking at the roll up door, we use all stainless steel hinges which stops rust from bleeding onto the back door boards. And we request dual rollers in the track of the roll up door, which clamps them at two points rather than one. And the scuff liner. We’ve had better results with a hardwood scuff liner and that’s what we get the builder to install.”

Jim Pinder thinks that innovations are key to keeping a fleet state-of-the-art and efficient, and he’s seen a few of them included in the truck spec’s during his first two years as corporate fleet director for the Erb Group. Among them, automatic greasing systems on all tractors, soon to be extended to the straight truck fleet; LED lighting wherever possible on all trucks; and a motion-sensitive lighting system in the back of trucks and trailers so the driver doesn’t have to worry about turning a light on and off.

Recently Erb Transport started hauling flowers and Pinder talks about the challenges with this commodity. “We’ve always been a 100% climate controlled company but this was something new. But we’d recently purchased some new reefer equipment and that gave us some more options and more BTUs. That’s what our business is all about,” he says. “Adapting to a situation, and then meeting customer expectations.” FE

trucknews.com

14-12-04 9:33 AM

CITY smarts.indd 37

14-12-04 9:33 AM

CITY SMARTS

TUNING UP St. John’s shares some of its fleet maintenance strategies

By Carroll McCormick

Maintenance on snowclearing equipment is handled in-house.

(City of St. John’s)

T

o outsource or not to outsource. That is the question for anyone responsible for equipment maintenance. The rough rule of thumb for the City of St. John’s public works department is “outsource where possible and do it in-house when necessary.”

The city has 450 pieces of rolling stock, from heavy equipment like graders, loaders, sidewalk clearers and snowplows, to lighter pieces such as vans, pick ups and gang mowers. It has 30 staff mechanics, all of which are dualcertified for heavy and automotive work. Most hang their hats in the 100-foot x 300-foot main garage on Blackler Avenue, which has 41 bays. A few more clock in at the five-bay shop at the landfill site on East White Hill Road.

As able as the city is to maintain its fleet, it still prefers to outsource, but with some caveats. “We focus on the heavy equipment. For the light equipment, like cars, vans, oil and grease work, or engine and transmission problems, we tend to contract out all the tasks,” says Paul Mackey, deputy city manager responsible for public works, City of St. John’s. “Another thing we do is take extended maintenance agreements with suppliers, and put the onus on them.”

The guiding rule is to let outside shops do what they are best at, and take care of the rest in the city’s garages. “We have a lot of local shops that can do that work. It is the easy stuff. Primarily we focus on preventative maintenance,” adds Richard Parks, fleet manager, City of St. John’s. That includes doing the brakes on the heavy trucks, since, Parks notes, “Heavy truck specialists are more limited.”

Public works also tends to do the maintenance and repairs themselves on equipment that has specialty parts, because of parts availability issues.

Things get a bit less “us or them” when there is a heavy demand for equipment. On the one hand, Mackey explains, “We use our own forces more for the snow clearing equipment, because we need the faster turn around.” On the other hand, in order not to overwhelm the city mechanics during peak periods, public works will outsource more equipment maintenance than usual.

Outsourcing can be a good thing, but there is a small 38 FLEET EXECUTIVE ❙ November/December 2014

CITY smarts.indd 38

downside, Mackey explains. “You need someone to administer it and make sure you are getting value.” For some work, public works solicits new quotes every year. The city also does periodic audits to review the process for fair prices.

Partly because of the lopsided ratio of hours logged versus miles driven by the city’s vehicles, maintenance intervals are generally more frequent than those recommended by the equipment manufacturers.

“Most of the new pick ups and cars, [manufacturers] are telling us to run up 7,500–12,000 kilometres between oil changes. We are backing up to 5,000 to 6,000-kilometre oil change intervals. We do short trips and idling. There are engine oil sludge problems at longer intervals. It is a lot of hours of [engine running] for the kilometres driven. Ironically, we send the sanitation trucks out on the Outer Ring Road to give the exhaust gas recirculation systems a chance to warm up to operating temperatures, which is a minimum of 25-30 minutes. This allows the system to dump extra fuel into the catalytic converter to burn out the buildup of carbon,” Parks elaborates.

Public works uses a Wennsoft computerised maintenance management program, not because it is especially suited for fleet maintenance management, but because of its compatibility with other city software programs. Wennsoft issues scheduled tasks, but the public works operations supervisor makes the judgment calls on whether maintenance is actually warranted.

“We will run a printout once a week and review it. The maintenance depends on whether servicing has to be done during the seasonal [peak] or if the kilometers are lower than usual. During intense periods, the operations supervisor makes decisions on when to service equipment,” Parks says. “The operations supervisor is in tune, anticipates what is happening and makes sure that the equipment is staying within the parameters.”

Mackey adds, “Maintenance scheduling is a lot more challenging when you don’t have regular use. A sander might put in 1,000 kilometres a week for a few weeks, and then not be used for the rest of the winter. You’ve got to be flexible to accommodate all that variation.” FE trucknews.com

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CITT

WEATHERING WINTER CITT’s Success in the West panel looks at logistics challenges and solutions for Western supply chain stakeholders

By Julia Kuzeljevich

W

estern Canada boasts a distinct set of logistics challenges. During CITT’s Canada Logistics Conference 2014 in Calgary, Alberta, a panel session called “Success in the West”, moderated by Lou Smyrlis, delved into some of these challenges and into supply chain strategies as the winter approaches.

James Zacharias, vice-president of revenue accounting and LTL sales, with TransX, said that restrictions around certain single lane highways in the West mean the driving is much more dangerous, with the impact being more slowdowns, and traffic congestions.

“We spend a lot of time training drivers on proper passing, using simulators. Road closures really hold back the traffic flow in both directions. The cost doesn’t stop but the traffic does, and the impact to the shippers is delays at both ends. We lost 96,000 truck hours last year, more than double those of the year before.

There is not a lot you can do because of the single lane highway restrictions.

“With the GPS systems we have in play now we know if unit won’t be able to make it on time so we send out automated red alerts via email so that the customer is aware we may have to rebook the appointment. We also send a weather forecast out to our shippers so they will know to expect the truck is going to have some kind of delay. We added more rail capacity this year and on the logistics arm tried to secure some more capacity if needed,” Zacharias said.

John Ignaczewski, director intermodal wholesale sales with CP, said the railway has been leveraging its capabilities, working on its many western corridors, with a goal to provide comprehensive services throughout.

“We have put $1.2 billion dollars into capital expenditures of which 75% goes right back into getting the infrastructure ready for winter. Lots of money has been put into our north line into Edmonton, and we are also focused on the IT side of things, enabling customers to go in, get updates and see their overall supply chain and how it’s moving,” he said.

Mark Lerner, assistance vice-president, domestic intermo-

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CITT.indd 40

dal, with CN, said the railway went through some painful steps in the 1990s to streamline operations, leading to increased train speeds under precision railroading in the 2000s. As to weather-related bottlenecks in the system, he said it’s a question of physics and how cold affects the rail.

“In Western Canada we can run some trains that are 14,000 ft. in length. Distributive power allows us to maintain longer trains. But at temperatures that are lower than -35 degrees Celsius we reduce trains to 8,500 feet with distributive power, so we have to add more power or crews and velocity and cycles are down. We have some resiliency in the network if it’s an issue of a day or two. But after 7-10 days in a row as we experienced last winter, it just shuts it down. We’re a network, and the whole network suffers. When you think about weather think about the extremes and the duration,” he said.

The winter of 2013-2014 taught CN to be more proactive on its communication strategies, he added.

“We have embarked on creating a customer service group that works 7/24/365. Dispatchers sit now with customer service reps so the CSRs have a pulse on the first and last miles.

Even before we start shipping with the customer we create a service delivery plan around what are the escalation procedures, whom do we contact etc. We know when our regular customers are in jeopardy and we try to be proactive.”

Greg Stringham, vice-president of markets and oil sands for the Canadian Association of Petroleum Producers, said that CAPP, which represents about 90-95% of the gas industry that produces upstream, “has to rely on rail significantly more now. We are looking for logistics to get our product to market.

We are also spending $71 billion this year in capital investments and in order to do that we need logistics to bring things in as well, to produce the product and move it back out internationally. Our board is focused on cost control given where oil prices are,” he said.

Warren Sarrafinchan, vice-president of supply chain/information services, at Sun-Rype Products, noted the company is seeing success with its expansion into US and Eastern Canada.

In terms of weather-and road related constraints in the trucknews.com

14-12-04 9:35 AM

company’s supply chain planning, Sarrafinchan noted the severity of some of the Western passes, especially during the winter months.

“You can reposition inventory differently depending on what is happening. You have to take a pragmatic approach: transit times are going to increase in the winter. If you structure around realistic transit times you have better chance of being successful. The uncontrollable delays are going to happen. It’s important we get the communication about the delays as fast as possible—good, timely and factual info about what is happening,” he said.

Some delays, he suggested, can however be considered “controllable.”

“It’s hard to plan around information that is not timely or fact based and (results in) you making the wrong decisions.

Having a plan, extra assets, and the right maintenance programs are proactive approaches we’re expecting from our supply chain partners,” Sarrafinchan said.

How can shippers best deal with the inevitable road closure and weather delays when transporting goods through Western Canada?

“You have to be realistic—in the winter we are not going to have the same level of service. A lot of our shippers want to have lean supply chains but there are times when they are shipping forward a little bit. You saw similar activity when the IWLU was having trouble on the West Coast. We have over 8000 containers and we also use steamship line containers— in the winter the cycle time is lower. Customers will sit on the equipment. We also look at day of the week capacity and whether there is some flexibility in your fleet to wait for offpeak shipping,” Lerner said.

Forecasting is huge and it’s an issue amongst everybody, he noted.

“With road closures you have to look at your overall supply chain and build contingency into it,” Ignaczewski said.

“CP has moved into a new market—we’re actually now handling courier traffic. A lot of that was just understanding what they needed, I think that was a real success story especially as we went through the winter,” he said.

What are the prospects for the intermodal network in terms of being able to handle growth if there is an uptick in the economy?

“I could look at this in different ways—there are a lot of headwinds in trucking in terms of the driver shortage, use of EOBRs etc. If the economy spikes, it’s going to drive a lot of supply chain concerns, and it’s going to drive a lot of freight into intermodal,” Lerner said.

Said Zacharias of the trucking capacity situation, “Now we are trying to make some money again. We’re adding a lot more staff or trucks, and if we don’t have the right rates to support that, it is not going to make for a good economic model.

Capacity will be much quicker to come on board. Shippers have been able to save some money, but as the whole market and industry starts to realize they have to make money again it becomes difficult to add the capacity. The driver shortage is not as much of a problem as it is in the US but it is still a problem. Can we get creative in converting long haul to more short hauls?” he said. FE

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GEARED UP

SNOW

STAR

James Menzies puts a Mack Pinnacle through its paces during severe winter weather

I

t was as nasty a November day as you’ll encounter in Southern Ontario. The thermometer read -9 C; balmy when compared to the -19 C wind chill. Snow blew horizontally, painting the horizon a milky white. Snowdrifts piled up on the road in places while the wind swept other sections of highway clear, leaving behind only a thin layer of black ice.

Gusting winds caused vehicles and old buildings to shudder, as well as the people within them.

In other words, it was a perfect day to test drive a Mack truck.

The truck was a Mack Pinnacle tractor with its newest engine rating, the 13-litre Mack MP8 505C+. It was put together

by Vision Truck Group as a demonstration unit and loaned out to James Dick Construction. The new made-for-Canada rating, introduced in August, produces 505 hp and 1,860 lb.-ft. of torque through all the gears. In short, it’s a Mack that pulls like a Mack—all the time.

While many of today’s engines are designed to withhold torque to preserve fuel economy under certain conditions, this engine is all torque, all the time. James Dick Construction is an ideal fleet to put the truck through its paces. It hauls heavy payloads of about 34,000-40,000 kg around a hilly part of southern Ontario just north of Toronto. Typically, these trucks shuttle tonnes of aggregate between various construction sites and cement plants from James Dick’s many gravel pits in the area.

I shared driving duties with Murray Lowe, who the fleet has chosen to test the new truck, knowing they would get an honest assessment from the opinionated and knowledgeable pro driver. It was useful to ride shotgun with Lowe, because he could compare the driving experience directly to his incumbent truck, a 2011 Freightliner glider kit featuring a pre-emissions DD13 engine and 13-speed manual transmission.

Pulling the long grade leaving Bolton, Ont. Lowe marvelled as the mDrive automated manual transmission held seventh gear with 32,000 kg of gravel in the 38-ft. Cobra end-dump trailer. “I’m normally in fifth gear here,” he said.

Lowe has five million miles under his belt, achieved over a 41-year career that was spent mostly doing linehaul. I figured he’d be skeptical of the mDrive but he surprised me with how quickly he warmed up to it.

42 FLEET EXECUTIVE ❙ November/December 2014

Geared Up.indd 42

“I’ve been doing this over 40 years,” he grumbled. “What do I need to shift gears for?”

Power is power

As we crested a long, steep downhill grade with a red light at the bottom, Lowe questioned aloud the engine brake’s ability to hold back the heavy load and then nodded in approval when it did just that.

The MP8, being a 13-litre engine, often raises questions about its engine braking capability compared to a 15L product. But it does produce nearly 500 braking horsepower, which shouldn’t be an issue, even when heavily loaded. David McKenna, director of powertrain sales with Mack Trucks, emphasized power is power, and torque is torque, regardless of whether it’s produced by a 13- or 15-litre engine.

“If I’m giving you 1,860 lb.-ft. out of a 13L, it’s exactly the same as 1,860 lb.-ft. out of a 15L,” he pointed out. “But it tends to be 300-500 lbs. lighter and generally speaking, more efficient on fuel, so when we’re talking the aggregate business, if I can take 300-500 lbs. out of your TARE weight, that’s nothing but money to the customer.”

Naturally, having 1,860 lb.-ft. of torque available at all times means a driver’s going to take advantage of it and at times it will come at the expense of fuel mileage. However, McKenna contends the fuel economy penalty is low, especially when compared to the productivity gains that can be exploited.

“The fuel economy with the 505C+ is going to be a little less than a straight 505C or E model,” McKenna acknowledged. “If you want more power, it’s going to take more fuel to do it. But if you can learn to keep your foot off that throttle pedal and let the engine do all the work, fuel economy is just about the same.

But when you’re pulling 63,000 kg in the aggregate business and you can reduce cycle times by 15-16 minutes per cycle, that’s an extra load every day and when you have 40 metric tonnes of product, you just managed to pick up an extra load for free every day and it’s very economical.”

We picked up a load of blended aggregate at James Dick Construction and then I took the wheel and brought it down to a Lafarge plant in Brampton. trucknews.com

14-12-04 9:36 AM

v A button on the mDrive’s console allows you to activate maximum engine braking, which was a useful way to hold my speed to 80 km/h without riding the service brakes, even when grossing 50.86 metric tonnes (50,860 kg or 111,892 lbs.). This Pinnacle drove well. The front end felt a little loose, but repositioning the fifth wheel would solve this. The seat was comfortable, sight lines were excellent and the ride on even bumpy two-lane roads was smooth and quiet.

The interior of the Pinnacle was stylish and functional. Attractive, brushed nickel faceplates can be quickly removed from the dash to expose the wiring behind them for easy serviceability. The exterior styling could use a refreshing but as far as comfort and drivability are concerned, this truck holds its own against anything out there.

Most Canadian customers who previously ran the MP8 505 have switched to the C+ rating since it was introduced in August, I’m told. Even in Western Canada, there have been no complaints about fuel economy, power or engine braking performance. Mack has discovered a way to give 15-litre power and performance to truckers in a 13-litre package.

Maximizing uptime This is where GuardDog Connect comes into play, Mack’s telematics-based maintenance monitoring system. It sends fault codes generated by Mack engines, transmissions and aftertreatment systems to a call center where they’re evaluated by a Mack expert who then advises the driver or fleet manager on the proper course of action. If the light came on due to an issue that can be resolved later, then the truck can be kept in service till the end of a shift or its next scheduled service interval. This service comes standard and free of charge for two years on new Mack trucks.

An additional benefit that’s often overlooked is that GuardDog Connect has the potential to eliminate downtime resulting from driver error, by alerting fleet managers to driver-induced problems before they require a truck to be taken out of service. For example, if the driver is using the gas pedal to keep the truck stationary on a grade, the mDrive will generate a fault code indicating an overheated clutch. If this is happening routinely it will alert the fleet manager to some bad driver habits and allow for an intervention—hopefully before the clutch is burnt out and needs to be replaced.

There are many applications where the Mack Pinnacle with the MP8 505C+ is well suited—aggregate being just one of them. This rating will fit in anywhere that constant torque is desired. Don’t be put off by its 13-litre displacement. Engineers today can coax more power out of smaller, more efficient engines.

Mated to the mDrive transmission, the 505C+ is a highperformance powertrain that will likely challenge everything you thought you knew about the limitations of 13-litre engines and automated manual transmissions in Canada’s most rigorous applications.

And it’s also just plain nice to drive. In fact, an unprompted remark from Lowe may have served as the greatest endorsement of this product that Mack could’ve hoped for.

“I was going to pack it in after this year,” he said. “If this is my new truck, I may have to stick around a while longer.” FE

Geared Up.indd 43

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TAKING CARE OF BUSINESS

p 10

Technology: Ask to see technology. How user-friendly is it? Is it real time? Does it readily help me manage my working capital position?

Reputation: Ask for references. What is the incidence of fraud in the portfolio? How long do customers stay with them?

Why do customers leave?

Capital: Who finances the organization? This is an unregulated industry so public disclosure is not required. Try to get a sense as to whether they are well capitalized and their staying power in the industry.

most of the first order. Problem is, it will starve the rest of the business and, given payment terms dictated by the big-box retailer of 60 days, stretch the company’s ability to continue production of any further orders.

On the other hand, at 2% per 30 days factoring would take the company’s margins on the new business down to 16%. And with revenues of $10 million (instead of $5) and assuming no increase in fixed costs, gross profit increases to $1.6 million. As an added bonus, access to a new distribution channel portends even greater growth for the company.

Can you afford not to factor?

An option worth considering

Many companies get hung up on the cost of A/R financing. Yes, it is more costly than traditional bank financing, but the opportunity cost of turning down new business because it cannot be financed is much greater. Consider the following example: A $5 million distributor of electronics accessories has been selling into a few medium-sized retailers for years and revenues have been stagnant. Gross profit margins have averaged about 20%. The company lands a choice PO for $5 million from one of the big-box retailers for a new product offering. Suppliers are willing to provide terms and there is enough capital to fund

Given all the advantages of accounts receivable financing, it’s time to not only give it the respect it deserves, but to recognize this valuable short-term working capital solution for its many long-term benefits. FE

LEADERS

Mark Borkowski, is president of Mercantile Mergers & Acquisitions Corp. Mercantile is a midmarket M&A brokerage firm. He can be contacted at www.mercantilemergersacquisitions.com

p 17

FE: KEEPING IN MIND THAT YOUNG PEOPLE SEEM TO BE A LOT MORE COMFORTABLE WITH TECHNOLOGY THAN US SLIGHTLY OLDER FOLKS ARE, IS THAT A MISSED OPPORTUNITY? SHOULD THE INSURANCE AND TRANSPORTATION INDUSTRIES BE FOCUSING MORE ON THE COOL TECHNOLOGIES WE ACTUALLY GET TO PLAY WITH EVERY DAY AS A WAY TO ATTRACT MORE YOUNGER PEOPLE INTO OUR INDUSTRIES? Wright: You know how kids spend their time and how they connect with their friends, how they connect with their communities. I think we cannot close our eyes to that. That goes to all our employees: using technology, getting instant feedback.

I think that is one of those things that is changing in this world— people want instant service, and instant feedback. With regards to our employees, how do we give them the appropriate recognition in the way they want to receive it? Once a year claims free award? I don’t think that’s going to be enough for the younger generation entering into this industry.

Quebec ice storm. Basically that would be the catastrophe we all remember. Now what’s happening is every year we’re having severe weather. Climate change is creating severe weather, and obviously creating damage and creating havoc on property, and transportation and automobiles. For the last five years starting in 2008 we have had catastrophes north of one billion dollars every year.

We need to be prepared. How well prepared are you to change routes, how well prepared are you to deal with certain equipment that gets affected by lower than average temperatures?

Your drivers and dispatchers need to have that Plan B in place.

The key is being prepared. I know that sounds very common but sometimes we think, ‘oh that just won’t happen.’ I just want to highlight the fact it is common. Having those plans, those routes in place so you don’t lose business is important. It’s not just Plan B if the day will come, it’s just Plan B as the normal course of doing your business. In Toronto two hours of rain cost one billion dollars. It was that severe, it had that impact.

FE: ANY FINAL THOUGHTS YOU WANT TO SHARE WITH US?

FE: SO TECHNOLOGY OBVIOUSLY IS A FORCE OF CHANGE FOR BOTH OUR INDUSTRIES. THERE ARE OTHER FORCES THAT CAN ALSO HAVE AN IMPACT. I KNOW ONE OF THE THINGS DEFINITELY ON THE MINDS OF INDUSTRY LEADERS IS CLIMATE CHANGE. WHAT DO YOU SEE AS THE IMPACT OF CLIMATE CHANGE ON OUR RESPECTIVE INDUSTRIES? Wright: With regards to climate, the big change now is that severe climate, severe weather, is all of the sudden being more common than not. We all remember 1998 was the 44 FLEET EXECUTIVE ❙ November/December 2014

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Wright: As I mentioned, I’ve been in the industry 20 years, the bulk of that serving the transportation industry. They are two very strong industries and very hard working. One of the things that I do want to leave with you is that for too long, both industries have been seen as commodities, and we have to be open to innovation so we can leverage our expertise, leverage the people we have to really deliver the best service to our customers. So be open to innovation and evolve because that in the end will win in the long run. FE trucknews.com

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INSIDE THE NUMBERS

Know your customers Our latest Survey of the Canadian Supply Chain Professional, conducted in partnership with the Supply Chain Management Association, polled buyers of transportation services about the top issues they faced in the past 12 months and the issues they anticipate facing over the next 12. Despite carrier hopes for rate increases, the research shows cost control topped the charts for both questions. On the bright side, this concern has declined since 2012. Respondents also identified external Top 3 supply chain issues groups most impacting their supply chain role and which areas anticipate facing next 12 months of government regulation were taking up most of their time.

Issues

Top 3 supply chain issues faced past 12 months Issues

% of respondents

% of respondents

Cost control

51%

Supplier relationship management

27%

Reorganization

27% 23%

Cost control

46%

Risk management

Supplier relationship management

30%

Skills shortage

22%

Reorganization

27%

Forecasting

21%

Forecasting

23%

Technology upgrade

19%

Risk management

21%

Capacity shortages

18%

Skills shortage

20%

Government regulation

13%

Capacity shortages

17%

Transportation

12%

Technology upgrade

16%

Inventory visibility

12%

Inventory visibility

16%

Political uncertainty

9%

Government regulation

15%

Overseas sourcing

8%

Transportation

15%

Outsourcing

8%

Political uncertainty

9%

Software/ SaaS installation

7%

Overseas sourcing

8%

Corporate social responsibility/sustainability

6%

Outsourcing

8%

Software/ SaaS installation

8%

Corporate social responsibility/sustainability

6%

Areas of government regulation taking up most of supply chain managers’ time Government regulations

External groups having largest impact on supply chain role External groups

% of respondents

% of respondents

Customs & security

35%

Government procurement rules

33%

Employee health & safety

23%

International supply chain

19%

Competition

16%

Taxation

12%

Business reg. & reporting requirements

12%

Suppliers

67%

Customers

60%

Government & regulatory agencies

44%

Sustainability

12%

Shareholders & investors

21%

Consumer safety

8%

Industry and professional associations

12%

Intellectual property

8%

Local community

12%

Employment

7%

Privacy

7%

Building permits

6%

Surveys & statistics

4%

Immigration & foreign workers

3%

Standards bodies

9%

Aboriginal groups

7%

Media

5%

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