Motortruck January 2009 by Annex Business Media

Motortruck

JANUARY/FEBRUARY

2009

Fleet Executive

TOP TIER C A N A D A ’ S

B U S I N E S S

M A G A Z I N E

Your annual in-depth look at the capacity, capabilities and future direction of the

NATION’S LARGEST CARRIERS

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contents January/February 2009

TOP TIER

Volume 78, No. 1

Page 17

COVER STORY

TOP TIER. . . . . . . . . . .17 Your annual in-depth look at the capacity, capabilities and future direction of the country’s largest carriers.

EXECUTIVE SPEAK Six top trucking executives share their thoughts on how road transport will reshape itself as it claws its way out of the recession.

FEATURES

DECISIONS 2009 Part II Shippers and carriers debate how to best deal with the thorny issue of fuel surcharges in part 2 of our annual Industry Issues Roundtable.

TIRE TRACKING The best way to control tire costs is to pay closer attention to the tires you have.

DEPARTMENTS VIEWPOINT . . . . . . . . . . . . . . . . . . . . . . . 5 Why the economic crunch may take a bite out of more than just the borderline operators. COMPETITION WATCH . . . . . . . . . . . . . . . . . . 6 Mullen Group Income Fund making move from income trust to a growth oriented corporation; Trimac buys bulk fertilizer transporter Canamera Carriers; Cascades Transport picks up technology award for participation in Energotest fuel-efficiency tests; and more. MY HR SPACE . . . . . . . . . . . . . . . . . . . . . . 8 Training programs are only as effective as their support materials. TAKING CARE OF BUSINESS . . . . . . . . . . . . . . .10 Why Canadian business owners shouldn’t put off succession planning.

PROFITABILITY . . . . . . . . . . . . . . . . . . . . .11 Exchange rate issues, fuel price volatility, and crumbling infrastructure are just a few of the current realities facing executives in the transportation sector. But despite these economic obstacles, a positive attitude still reigns supreme among industry executives. Here’s how to take a chin-up approach to managing a downturn. Plus, learn how alternatives to the Workplace Safety and Insurance Board affect profitability. GREEN TO GOLD . . . . . . . . . . . . . . . . . . . . .14 Why natural gas trucks are a key element in helping drastically reduce pollution at ports. Plus: R&B Trucking unveils new hybrid-electric delivery truck as part of the Green Fleets B.C. program. INSIDE THE NUMBERS . . . . . . . . . . . . . . . . .38 How many North American transportation and logistics mergers and acquisitions were recorded in the third quarter? Plus: an analysis of trucking performance from recessions past, a look at the penetration of various types of surcharges, and motor carriers’ predictions of where fuel surcharges will end up in 2009. JANUARY/FEBRUARY 2009

Motortruck

Fleet Executive

Viewpoint

is written and published for owners, managers and maintenance supervisors of those companies that operate, sell and service trucks, truck trailers and transit buses. JAN/FEB 2009

VOL. 78

reality check

NO. 1

Editorial Director Lou Smyrlis (416) 510-6881

lou@TransportationMedia.ca

why the economic crunch may take a bite out of more than just the borderline operators

Managing Editor Adam Ledlow (416) 510-6890

adam@TransportationMedia.ca Features Editor Julia Kuzeljevich (416) 510-6880

ur annual focus on the nation’s top motor carriers this month places the spotlight on a much troubled industry. There’s no way to hide the troubles facing trucking companies these days. The six executives who candidly share their thoughts in this month’s cover story about how road transport will be reshaped during the economic Lou Smyrlis, MCILT downturn certainly harbor Editor no illusions about the tough lou@transportationmedia.ca road ahead. US GDP contracted WORTH REPEATING 3.8% in the fourth quarter “There is a connection between the punch line of 08, which was the worst and the bottom line.” since the first quarter of – Adrian Gostick and 1982. In 2008 as a whole, Scott Christopher, the US GDP grew 1.3%, The Levity Effect however if you remove the strong build-up of business inventory from the equation, GDP actually shrunk 5.1%. The Canadian economy is not experiencing the deep issues wreaking havoc on businesses south of the border but we all know the Canadian economy can’t long escape US reality. Truck tonnage in the US plunged 11.1% in December, which is the largest month-to-month decline since April, 1994 when unionized LTL truckers were on strike. In a recent Webinar, Noel Perry, managing director and senior consultant with FTR Consulting Group, said the US trucking industry has actually been experiencing a freight recession for nearly three years. Our own data has shown that freight volumes and freight rates in Canada have been on the decline (from an admittedly sharp increase starting in 2003 and peaking by 2005). Forty three percent of Canadian motor carriers expect their freight volumes to drop below their already less than spectacular volumes in 2008. FTR Associates maintains a Trucking Conditions Index which measures many variables that impact the health of the trucking industry. It has fallen to “unprecedented negative numbers,” according to Perry. He compares today’s freight conditions in the US to the last big recession in 1982. And downward

julia@TransportationMedia.ca

pressure on rates is certain to continue. As Perry explained, a huge reduction in fuel surcharges during the fourth quarter gave shippers something to declare victory over but traffic managers are under intense pressure to cut costs and he anticipates the “worst price pressure that fleets have felt in our lifetime.” While our own Canadian data doesn’t paint such a gloomy picture, it does also indicate downward pressure on truck rates. Our research found 47% of motor carriers expect no improvement in their rates and 24% expect rate drops in 2009. As a result, Perry anticipates the number of US fleet bankruptcies to “continue and accelerate” over the remainder of 2009 and even into 2010. And all that is ominous for the share pricing of the continent’s prominent trucking providers. In November, during a session on economic realities I chaired for CITT in Winnipeg, David Newman a senior vice president and equity research analyst with National Bank Financial revealed a sobering comparison. By mid October the value of trucking companies had declined by 32.5%, which is pretty well spot on with what happened back during the 1982 recession. But as bad as this may be, it can get worse. Many economists believe this will be the worst recession North America has faced since the Great Depression. That could place the economic pain to be felt on par with what happened back in 197375, perhaps worse. And during 1973-75, trucking shares fell an average of 45.4%. Over the past few months many commenting on the troubles in the motor carrier industry, myself included, have spoken of the cleansing to come; that the current difficulties would rid the industry of those operators who never did adopt successful business strategies and relied on low prices rather than superior service to attract clients. But in his comments on the short term future of the trucking industry Ray Haight, executive director of MacKinnon Transport and the executive director of the Truckload Carriers Association, believes differently. He believes that during this recession we will lose some of the worst operators but also some of the best. I have a lot of respect for Ray, and I’m beginning to think he’s right. MT @ARTICLECATEGORY:129;

Creative Director Mary Peligra

mpeligra@bizinfogroup.ca Advertising Creative Directors Carolyn Brimer Beverley Richards

Contributing Editors

Ken Mark James Menzies Ian Putzger John G. Smith Carroll McCormick Harry Rudolfs

Publisher Rob Wilkins (416) 510-5123

National Sales Manager Don Besler (416) 699-6966

Account Manager Brenda Grant (416) 494-3333

Production Manager Kim Collins (416) 510-6779

Circulation Manager Valerie Fraser

Vice President Publishing Alex Papanou

President Bruce Creighton Head Office 12 Concorde Place, Suite 800 Toronto, Ont. M3C 4J2 Motortruck

Fleet Executive is published 6 times a year by BIG Magazines LP, a leading Canadian information company with interests in daily and community newspapers and business-to-business information services. The contents of this publication may not be reproduced or transmitted in any form, either in part or full, including photocopying and recording, without the written consent of the copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without prior written consent. Motortruck is indexed by Micromedia Limited. PUBLICATIONS MAIL AGREEMENT 40069240 Return Undeliverable Canadian Addresses to: Circulation Dept. – Motortruck Magazine, Suite 800 – 12 Concorde Place, Toronto, ON M3C 4J2 USPS 016-317. US office of publication, 2424 Niagara Falls Blvd., Niagara Falls, NY. 14304-0357. Periodical Postage Paid at Niagara Falls NY USA. Postmaster send address corrections to: Motortruck, PO Box 1118, Niagara Falls NY 14304. Member Canadian Business Press. Subscription Inquiries – (416) 442–5600. PAP Registration No. 11025 We acknowledge the financial support of the Government of Canada through the Publications Assistance Program towards our mailing costs ISSN Number 0027-2108

4 MOTORTRUCK Member/Canadian Business Press

CompetitionWatch

MULLEN GROUP INCOME FUND has announced it will convert from an income trust into a growth-oriented corporation. The move is in response to the 2006 federal government decision to place restrictions on income trusts. Murray K. Mullen, chairman and CEO of the company, says that a 2009 conversion is in the best interests of both Mullen Group and its security holders, especially in light of the current economic downturn and the dramatic decline in crude oil and natural gas pricing. Mullen Group officials also stressed the “challenging” nature of 2009, noting that security holders will see a “material decrease” in their distributions this year, while Mullen employees will experience a wage freeze, hiring freeze and see the suspension of the company’s profit-share program. TRIMAC has purchased bulk fertilizer transporter CANAMERA CARRIERS. Canamera is a bulk trucking and warehousing company that specializes in fertilizer, agricultural products and road salt in the provinces of Saskatchewan, Alberta and Manitoba. The carrier is based in Yorkton, Sask. Trimac Transportation purchased the business for $2.9 million, which includes the acquisition of 19 company-owned tractors and 24 trailers. The company boasted annual revenue of $7.9 million in its last fiscal year. Trimac will also assume about $1.3 million in debt as part of the deal. CASCADES TRANSPORT and FPInovations, Feric division were recently named winners of the Technological Innovation award presented by the Association Quebecoise pour la maitrise de l’energie (AQME) at its Energia Gala. The transport company and research group were rewarded for their participation in the Energotest fuel-efficiency tests conducted in 2007 and 2008. Robert Transportation and several government bodies also participated in the tests, which measured the fuel-efficiency of dozens of fuelsaving devices. “It was only natural for Cascades to get involved in such a project, since the protection of the environment has always been and continues to be one of our main concerns,” said Alain Boutin, director of risk management and compliance at Cascades Transport. “The Energotest 2007 campaign not only fit in perfectly with our practices, but also contributed to lowering our operating costs.” FEDEX CORP. plans to improve the fuel efficiency of its FedEx Express vehicle fleet by 20% by 2020. The ambitious new goal was outlined in the FedEx 2008 Global Citizenship Report released in November. Since 2005, FedEx Express has improved vehicle fuel efficiency by 13.7%, which, combined with its reduction of aircraft carbon dioxide emissions by 3.7% per available tonne mile, has reduced vehicle carbon emissions by almost one billion pounds. FedEx operates the largest fleet of commercial hybrid electric trucks in North America in the transportation industry with more than 170 vehicles. FedEx E700 hybrid electric trucks, the most common hybrid in the FedEx fleet, improve fuel economy by 42%, reduce greenhouse gas emissions by approximately 25% and cut particulate pollution by 96% compared with conventional vehicles, the company says. FedEx Express has also worked to optimize its delivery routes to ensure that the most efficiently-sized vehicle is used on each route. As a result of these efforts, more than one-fourth of the FedEx Express fleet has been converted to smaller, more fuel-efficient vehicles, saving more than 45 million gallons of fuel in the past three years, according to officials. Two Ontario-based carriers were honoured with SCHNEIDER LOGISTICS’ Carrier of the Year award at the transportation giant’s sixth annual Carrier Recognition Conference in Green Bay, Wis. Sept. 17-18. The distinction is presented to Schneider third-party logistics carriers that serve a variety of transportation modes and excel in operational performance, exceptional service and ease of conducting business. Included in the group of 16 carriers honoured this year were two Canadian carriers: KINGSWAY TRANSPORT of Mississauga, Ont. and OTTAWAY MOTOR EXPRESS of Woodstock, Ont. Carriers recognized at this year’s conference, which hosted representatives from more than 140 carriers, represent the top 1% of service providers moving freight on behalf of Schneider Logistics’ customers.

For daily COMPETITION WATCH news go to www.trucknews.com or subscribe to our bi-weekly e-newsletter. 6

motortruck

T R A N S P O R TAT I O N C O M PA N Y W O R K S H O P

How to Survive and Prosper during Difficult Times Toronto, April 15th 2009 - Airport Marriott Sponsored by Dan Goodwill & Associates and Motortruck Fleet Executive magazine Canadian trucking companies are being battered by the worldwide economic downturn. For many Trucking firms, trying to survive and prosper is currently quite a challenge. If you are looking for some proven strategies from industry leaders, that may help you and your company through these difficult times, mark this one-day conference in your calendar. In addition to being able to learn some useful survival techniques and growth strategies, in an informal interactive setting, you will also have an opportunity to network with other owners and executives in the industry.

AGENDA 7:30 AM – 8:00 AM – Registration 8:00 AM – 8:30 AM - Breakfast 8:30 AM – 9:00 AM – The Major Factors Affecting the Freight Environment in 2009, Carlos Gomes, Senior Economist, The Bank of Nova Scotia Where are the Canadian and world economies going in 2009? What changes can we expect in freight capacity? What changes can we expect in fuel costs? 9:00 – 9:45 AM – Building a solid Business Plan to lead your Trucking Company through Tough Times, Dan Goodwill, President, Dan Goodwill & Associates Inc. Effective crisis management Building an effective business plan Understanding customers’ changing needs Firing up sales Building and leveraging core competence Cost effective growth strategies Employee retention and downsizing strategies 9:45 – 10:00 AM – Refreshments and Networking 10:00 – 10:30 AM – Effective Strategies to Manage Costs and Capacity, Barry McKee, Transportation Consultant Cost control To park or not to park Cash flow management Measurement Capacity management Accountability Asset utilization Results 10:30 AM – 11:00 AM – Streamlining Business Processes to Reduce Costs and Improve Efficiencies, Jim Papineau, Director Supply Chain Systems and Automation, Dan Goodwill & Associates Inc. Documenting business processes Identifying duplication and waste Improving efficiencies Making effective use of technology Cost savings Business development

DAN GOODWILL & Associates Inc. Mo Motortruck oto o torttru uck

Fleet Executive

11:00 AM - 11:45 AM - Surviving the Downturn, Carrier Panel led by Lou Smyrlis, Editorial Director, Transportation Media Carrier Participants: Doug Munro, CEO, Maritime-Ontario Freight Lines Limited, Serge Gagnon, President, XTL Group of Companies The current state of the Canadian trucking industry Current survival strategies Future of the industry 6 and 12 months out Driver and truck capacity Domestic and cross-border freight traffic Freight rates 11:45 – 1:00 PM – Lunch 1:00 PM – 1:45 PM – Creating a Successful Freight Brokerage Operation, Peter Eadie, Director of Logistics, JDI Logistics Migrating business to a brokerage division Building the team Creating a carrier network Pricing for profit Working with freight brokers 1:45 – 2:30 PM – Buying and Selling Trucking Companies, Elian Terner, Director, Investment Banking, Scotia Capital How long can you survive? Determining the value of your business Succession planning How to sell? How to buy? 2:30 – 2:45 PM Refreshments and Networking 2:45 – 4:00 Small Group Workshops Business development – led by Dan Goodwill Cost and capacity management – led by Barry McKee Buying and selling – led by Elian Terner Creating a brokerage business – led by Peter Eadie 4:00 – 5:00 Networking/Cash Bar

Cost: $299.00 includes binder with copies of conference materials Early Bird Special Rate: $199.00 (Must book attendance by March 15) Please go to www.trucknews.com to register! For more information please contact Dan Goodwill at 416-932-9701

the human edge

material matters Training programs are only as effective as their support materials

ook at the shelves in any safety manager’s office and you will likely find a stack of binders that are stuffed with training material. Some of the documents probably support classes that are delivered by a third party, while others will be filled with lesson plans that were designed for in-house training programs. A closer look will show the most important difference of all. The well-crafted training material will have the dog-eared pages of a book that has been used time and again. Trainers will know the content off by heart and be able to locate specific information as easily as a driver can identify the highways on a well-worn map. The other binders will simply be coated in a layer of dust. Bernadette Allen, president of Charlottetown-based Future Learning, admits that poorly designed training material can actually be a waste of valuable time and resources. “All of it is within the reality of ‘There is never enough time, never enough money and never enough people to read it,’” she says. In contrast, effective training material will consider a learner’s existing experience and knowledge, and help to convey a specific skill that is actually required by the industry. Any training program should address a skill that is identified in an industry’s formal occupational standards, she says, referring to those that have been developed for the trucking industry by the Canadian Trucking Human Resources Council (CTHRC). “It’s developed by a lot of people in the industry who know what it takes to do a good job. You can use that to build your own training program or you can use it as a way to screen other training [material].” The best training material will tend to be presented in self-contained modules and deliver the information using a variety of methods, she adds. An illustration may offer a clear look at the way a logbook needs to be filled out, but a case study will allow trainees to explore the different ways a trip can be completed within the Hours-of-Service rules. This is particularly important because people will learn in different ways. The material itself should also follow the commonly accepted ap-

To find a HR Essentials workshop in your region contact:

MOTORTRUCK

proach to adult learning. Every piece should begin with a clear description of what the trainees can expect to learn, complete with a clear example that will show how the information applies, she says. The language of the text will be important as well. Any written material will need to be clear and unambiguous, while the language should also reflect the terms that are used in the industry every day. And there should be additional space near the critical content, encouraging trainees to record their thoughts and comments. Trainers may also want to reconsider the evaluation forms that are used at the end of the related training process, Allen adds. While most of these documents ask trainees whether they liked the instructor or the food that was delivered during the lunch break, many of them overlook the biggest question of all – do the trainees feel that they will be able to apply the information that they learned? “If it’s about rules and regulations, the training is about applying them,” says Allen. “Can you fill in the form? Are you able to plan your route?” Those who deliver any of the information also need to be reasonable when setting their learning outcomes. “The biggest problem I see is that people expect training will do more than it actually can, unless they are willing to invest more time,” she explains. “If you are really changing behaviours or learning new skills, there is no quick fix.” But the proper training material will still help to ensure that trainees learn the information as efficiently as possible.

The Canadian Trucking Human Resources Council (CTHRC) works with and on behalf of this vibrant and vital industry. Building on the experience of our members and our council expertise, the CTHRC is the foremost resource for information services and solutions related to recruitment and retention, training, and human resources management in the Canadian trucking industry. For more information about improving the level of skills at your fleet, visit www.cthrc.com.

AMTA www.amta.ca

PEI Trucking Sector Council www.peitsc.ca

Ontario Trucking Association www.ontruck.org

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

inside the numbers

SATISFACTION WITH DIFFERENT JOB ASPECTS Pay and benefits

3.28

Job security

3.22

Recognition for strong performance

2.97

Training and development provided

2.86

Challenges in work

3.24

Stress in work

2.94

Feeling of accomplishment in doing job

3.49

Opportunity to grow with company

2.63

TOP 6 REASONS CHOSE TO WORK FOR CURRENT EMPLOYER

People work with

3.58

Independent thought and action can exercise

3.55

Respect and fair treatment receive from customers

3.67

Pay/benefits

53.8%

54.0%

The overall quality of supervision

3.32

Job security

51.3%

34.7%

Career opportunity

60.0%

29.5%

New entrants

Experienced drivers

There are significant differences between what experienced Work schedule 33.8% 33.5% drivers look for in an employer and what new entrants find Hours of work 18.8% 30.1% enticing, according to recent research conducted on behalf Travel opportunities 31.3% 14.2% of the CTHRC (see chart on right). Although pay and benefits are top of mind for both groups of drivers, job security and career opportunity are far more important to new entrants. Conversely, experienced drivers tend to place greater emphasis on hours of work than do new entrants. However, research conducted this summer by Transportation Media in coordination with CTHRC, shows that fleets have considerable room for improvement in meeting the expectations of both new entrants and experienced drivers (see chart above on left). Driver satisfaction with pay and benefits averaged 3.2 out of 5, basically a C grade. Job security was ranked no better. And of most concern is that satisfaction with the opportunity to grow with the company received the lowest mark, barely a D grade.

TOP 5 TRAINING NEEDS OF NEW ENTRANTS

BARRIERS TO TAKING TRAINING 37.2% 34.9%

30 30

24.3%

23.2%

18.9%

20.9% 18.7%

12.2%

8.1%

0 0 Regulations

Backing coupling & uncoupling

Shifting & transmission

Defensive driving

Reading writing, math and/or ESL

Concerns about quality of training

Lack of funding

No financial support from the employers

Not enough time outside working hours

Training programs not offered in region

Research conducted on behalf of the CTHRC shows that new entrants have a variety of training needs, ranging from a better understanding of regulations to operational basics such as backing, coupling and uncoupling to proper shifting techniques. However, the research also found that limited time to provide the training, lack of funding, and lack of training opportunities in certain regions remain significant obstacles to training in our industry.

Saskatchewan Trucking Association www.sasktrucking.com

British Columbia Trucking Association www.bctrucking.com

Manitoba Trucking Association www.trucking.mb.ca

Camo-route www.camo-route.com

Or Contact the Canadian Trucking Human Resources Council, info@cthrc.com or 613 244 4800 JANUARY/FEBRUARY 2009 9

TakingCareofBusiness

who will take over? Why Canadian business owners should not be putting off succession planning

ccording to the ESOP Association Canada (Employee Share Ownership Plan), Canadian business owners are undecided about a planned exit strategy and the vast majority are unsure how, when or to whom they will turn over their business. According to a recent Harris/Decima study commissioned by BMO Bank of Montreal, more than half (56%) of businesses polled are in the later stages of their enterprise and yet only 21% of these business owners have decided on or named a successor. Of those businesses who do not have a succession plan in place, 40% believe it is too early to do so. Yet, in stark contrast to this claim, more recent business owners see the value in putting a formal succession plan into place earlier in the business lifecycle. Only 19% of business owners have identified a successor, yet just under a third of those have a transition plan in place, with training times widely varying. “Our research and experience advising business owners across Canada shows that many of them are unprepared for the inevitable,” says Sean Foran, vice-president of succession planning at BMO Harris Private Banking. “Whether they intend to sell their business or hand it down to a family member, it’s important they begin planning as early as possible to ensure they get the most out of the many years of work they have

put into the business.” Other highlights of the survey revealed: • Almost 40% of respondents say their ideal succession plan would include selling their business to an outside party. • Only 17% said they would sell the business to a family member. • One-quarter of respondents say they have no interested family members and 17% say they have no family members who could take it over. • 85% of business owners say they are the first or second generation of the family that started the business. “These findings reflect the mindset of a typical entrepreneur,” says Gail Cocker, senior vice-president of commercial banking for BMO Bank of Montreal. “Most business owners are so focused on growing and maintaining their business, they find it difficult and even emotionally draining to contemplate selling or winding it down. Our best advice is to speak to one of our commercial bankers. They can provide guidance and direction on how to put a succession plan in place.” Business owners are overwhelmingly intent on using the proceeds from the sale of their business as investment dollars. In fact, two-thirds of business owners surveyed say they will invest their business sale dollars – nearly the same number who intend to fund their retirement through RRSPs or other investments.

Mark Borkowski is president of Mercantile Mergers and Acquisitions Corporation. Mercantile is a mid-market M&A advisory firm focused on the sale of privately-owned business. Mark can be contacted at (416) 3688466 ext. 232 or mark@mercantilema.com.

However, 61% intend to rely in part on the Canada Pension Plan to get them through their retirement years. “Clearly some entrepreneurs are concerned the sale of their business will not sufficiently subsidize their retirement lifestyle,” said Foran. “That’s why it’s important they maximize the proceeds of the sale of their business by investing that money wisely with the aid of a professional advisor.” Almost three-quarters of those surveyed are more than five years away from selling their business, providing ample opportunity mt for a carefully planned exit strategy. @ARTICLECATEGORY:3361;

motortruck

Profitability

Alternatives to WSIB impacting profitability By Lina M. Demedeiros

or those carriers and owner/operators who are looking for an alternative to the Workplace Safety and Insurance Board, there are several options. In deciding which plan to choose, it is important to look at the various components that will impact your profits. Does the plan have limitations on different types of injuries? For example: are there limitations on soft tissue injuries on this type of claim? Does the plan limit the benefits for rehabilitation costs? Another issue is whether the plan is medically and financially underwritten at the time of application or at the time of claim. From a financial perspective, does the plan provide only short-term benefits or are there longer benefits/annuity payouts? Finally, will there be rate increases based on experience rating and will the plan be subject to cancellation? If so, it’s time to revisit these contracts. There are four types of contracts available in the market. The best contracts in the market provide complete medical and financial underwriting up front and no surprises at claim time; no limitations on soft tissue or maximum limits; and cover for both injury and illness. These contracts are called “non-cancellable contracts.” Since they cover both injury and illness, the insurer can never cancel your contract, never increase pricing, or provide limits that expose your fleet statutory accident benefits. You may withdraw from the contract any time. The second type of contract is a guaranteed renewal contract which again offers you a similar level of safety. They are similar to non-cancellable contracts and you must purchase both with injury plus illness coverage. The application is medically and

financially underwritten; again no exposure to your fleet statutory accident benefits. Rates are guaranteed, as well as the renewability of the contract. The above two contracts are sold primarily in the insurance brokerage market. They also offer an independent owner/operator the opportunity to secure their own occupation to age 65, add partial disability, future savings protection for monthly contributions of RRSP’s, inflation protection, etc. The underwriting process will also consider some beneficial accounting strategies such as income splits and secure pricing. The cancellable contract, also known as a conditionally renewable contract, is the most flexible in the market. You may purchase “injury only” coverage; it is generally underwritten only at claim time for injury only and underwritten at time of application for illness. The contracts provide limitations on high persistency claims like soft tissue injury claims and lifetime maximums on soft tissue. Rates can increase based on poor claims experience in a specific industrial sector or the insurance company may withdraw, from the specific industrial sector completely. If the insurance company does apply for the increase or withdrawal, they must do this in every province they are licensed to transact business. Another form of a renewable contract is group long-term disability. Association plans are the most widely sold plans in the transportation industry. Like the cancellable contract, they are the most flexible, easily administrated, and the lowest in cost contracts available in the insurance industry. Like group insurance and the cancellable or conditionally renewable contract, they offer a simple applica-

tion, very few qualifying questions, blanket amounts of coverage offered based on gross earnings, are medically and financially underwritten at time of claim, flexible, and offer similar limitations including a limitation on total payout “aggregate limits.” They offer the least amount of safety to any owner/operator or transport company in the event of a permanent disability. They may expose the transport company to litigation by the owner/operator or increase your fleet insurance costs. It is important to note that in spite of the limitations found in both the cancelable, conditionally renewable or association plans, they are still very much needed contracts in the transportation industry. Many individuals may not qualify for a non-cancellable or guaranteed renewable insurance contract due to age, medical history, height, weight, income and number of years in business. In our article next issue, we will demonstrate the impact of purchasing these various contracts and how they will respond with a typical common claim in transportation. mt Lina M. Demedeiros, principal of LMD Insurance and Wealth Management in Etobicoke, Ont., is a financial advisor, specializing in the group and individual benefits market. Since 1994, Lina has represented some of the largest insurance companies in Canada, delivering innovative concepts to meet individual business owners’ needs ranging from risk management to helping people manage their money. january/february 2009

Profitability

grin and bear it:

Taking a chin-up approach to managing a downturn By Julia Kuzeljevich

ake your pick. Whether it’s exchange rate issues, fuel price volatility, crumbling infrastructure or a downturn in consumer confidence and purchasing power, these issues have definitely had an impact on the transportation industry and on executives’ business approach. But an overwhelmingly positive attitude still seems to prevail among executives faced with this year’s economic obstacles. “We’re not going to dwell on the economy. The sun will come up on the other side,” said Doug Duncan, president and CEO of FedEx Freight, speaking at a recent conference. “The trucking industry is going wherever the supply chain is taking us,” he added, noting that fast cycle logistics is what led to the formation of FedEx Freight in the first place and is the company’s entire focus. In terms of positives, said Duncan, there is the return, in one incarnation or another, of manufacturing to the US.

MERCANTILE MERGERS & ACQUISITIONS Mercantile Mergers & Acquisitions Corp oration are a mid-market M&A brokerage firm. The company specializes in the purchase and sale of mid-market companies, including the Transportation industry. In addition, the company advises on business valuations, mez zanine, and equity financing, management buyouts, restructuring of debt, family busi ness re-capitalization and workouts. Contact (in confidence): Mark Borkowski, President at: (416) 368-8466 ext. 232 or mark@mercantilema.com Mercantile Mergers & Acquisitions Corporation

12 motortruck

“Some of it is to do with high logistics costs but also because of sourcing closer to market. “Some of the manufacturing jobs will come back to the US, but certainly to North America,” he said. Another positive is that because of the economic crisis, many companies are taking a closer look at cashflow and improving it. “I think that companies have been doing a phenomenal job of taking inventory out of the supply chain, and the reason is cash. I think we’ll see a renewed focus on supply chain compression. These kinds of discussions we can’t do on our own as companies,” said Duncan. From a supply chain management perspective, said Mike Tierney, president of UPS Canada, “It’s definitely best to proceed with caution when cost-cutting. Keep the long-term always in clear focus. Everyone wants to reduce costs and streamline their operations, including within their supply chain,” he says. The danger, noted Tierney, is that if there’s no wiggle room in your supply chain and one component experiences a disruption, it could have a severe impact on reliability and revenues. “Our advice to the cost-cutters would be to skim fat strategically. Look at what is really expendable and what is a necessary extra cost that will serve as insurance to keep your supply chain intact and ultimately serve customers better. We have invested $15 billion dollars over the past 15 years in technology. Our Canadian businesses can leverage this investment to streamline their own processes in order to keep costs down,” said Tierney. Calgary-based Darshan Kailly, president and CEO of CF ‘Managing Movement,’ said that exchange rates, oil prices and home equity losses feature as top concerns. “The model that works and has worked for us for a few years is to link up with great

partners having geographic coverage and reach, a similar service attitude and strategic management philosophy. Collaboration improves results, i.e. talking with people that are not within the organization and that don’t have to toe the line,” said Kailly. Tools will matter all the more, whether it’s tracking and tracing capabilities, linked IT systems, excellent equipment at your disposal, and the most relevant tool of all: motivated team members. “Part of our domestic focus is having local market knowledge,” said Kailly, who noted that the US market is not at all similar to Canada’s. “It is a tougher, different type of marketplace,” he said. While Kailly’s aim is to focus on domestic strengths, Rick Gaetz’s approach to the US marketplace has been to make controlled infrastructure the prime objective. The president and CEO of Vitran Corporation said that the company has merged all of its IT and culture in a complete “Vitran branding.” An IT platform integration, begun in 2007, was completed in May, and Gaetz said that things flowed well despite some EDI and billing quality issues. “We want to be able to sweep up LTL and move it within our own infrastructure,” he said. “We had to make ourselves more user-friendly with customers.” Most recently, in October, Vitran completed a facilities integration, and elimination of duplicate facilities, which Gaetz said has led to dramatically improved service times. “Now we have less expensive line-haul with 14% of our miles cut, because of a combination of streamlining plus the effects of the economic environment,” he said. He noted that it has been difficult to determine real gains because of such continued economic volatility. “It’s the first time we didn’t have sequential improvement in the US but ero-

Profitability sion on a daily activity basis (looking at a span from) July to October,” said Gaetz, noting that Canadians in general do not understand how bad a state the US economy is in. “I would urge you all to manage your business as aggressively as you can. It’s going to be the fight of your life over the next year and a half,” he said. According to Michelle Arseneau, president and CEO of GX Transportation Solutions, there is no doubt that organic growth will be challenging over the next 12-24 months. “Some of the strategies we’ve implemented include maximizing our sales efforts in conjunction with direct marketing campaigns aimed at qualified prospects via both print and electronic media. We’ve brought our technology to the forefront of our sales efforts, ensuring that clients are aware of our systems and processes in order to provide increased service levels. We’ve also implemented an internal program specific for new clients called ‘The 5 Star Program’ that ensures all bases are covered with respect to familiarizing ourselves with the needs of both shippers and consignees alike. This program removes any assumptions and ensures that the client’s experience with GX is far above standard expectations. Sourcing and securing new business is difficult enough during such turbulent economic times. We need to ensure that there is no margin for error when an opportunity does present itself,” she said. While Arseneau noted that the proper amount of cost reduction is crucial in tough financial times, too much will result in poor performance and a loss of business, and not enough will result in poor financial performance that will cripple the best of companies over time. Key partnerships with customers, meanwhile, are essential for long-term sustainability. “Partnering with the right suppliers is equally important, so as to ensure that the level of service your customers expect will be maintained. By combining the commitment of all parties in your planning and budgeting process, you should be able to achieve your cost objectives,” she said. Getting face-to-face with the customer is a big priority for Rosedale Transport’s president, Rolly Uloth. “We’ve been in a constant reinventing of the company, and have been responsive to

customer needs,” said Uloth. Uloth said that while the operating environment in 2008 and into 2009 will certainly be challenging for trucking, he saw more challenges during the regulation era, at least in terms of gaining customers. Uloth stressed that Rosedale uses a totally in-house approach, with a close environment and no divisions between the operations. The US operations are based at one centre as well. Internally cost-conscious, while Rosedale does not have true profit-sharing, said Uloth, “Everyone shares in our wins and they don’t have to pay when we’re losing. We have a lot of 20-year people who have a work ethic that you don’t find today,” he said. Uloth has never had to lay off workers at the company and said he will strive to work with employees in terms of accommodating alternate work schedules especially if it will save a job. With the market changing by the hour, “it’s going to take special management skills to get through,” said Uloth. “We want to be the most important supply chain carrier to the customer base we choose to deal with,” he said. So is it possible to maintain a long-term focus on a strategic plan while responding to daily volatility? Certainly it’s a matter of constantly reviewing your financials. “The economy will eventually improve and demand will once again surge. It’s important for us to have the infrastructure, technology and geographic presence necessary to meet that demand and provide our customers with the quality of service they have come to expect from UPS. As examples, in 2008, we announced the expansion of our main sorting facility in Canada, a new facility in Calgary and a new facility in China,” said Tierney. “Instinctively, many companies scale back investment during rough times in antici-

pation of a drop in consumer demand. Yet doing so can often lead to a drop in quality of service. Cutting corners is not the solution to the economic troubles of today. Putting money into research, innovation and product development, while maintaining a consistently high standard with respect to customer service, has allowed us to prosper in the past, and we will continue that tradition throughout the current economic drought,” he said. “We all have to plan accurately for the future, and that means to plan often, to ‘refresh the forecasts,’ and to operate without a model” said Duncan. “But you do have to have a long-term plan with regard to facilities,” said Kailly. “If you don’t manage the detail differently on a daily basis while maintaining a long-term plan, you won’t be there to manage it,” said Gaetz. If there’s pressure by suppliers, he added, “Be prepared to say no. Often ‘no’ will still get you the relationship.” “I remind my sales force all the time that negotiations don’t begin until the word ‘no’ CT&L comes out,” said Duncan. Features editor Julia Kuzeljevich has been writing about transportation issues for almost a decade. Her meticulously researched articles have garnered transportation writing awards and several Canadian Business Press Award nominations.

JANUARY/FEBRUARY 2009

GreentoGold

it’s only natural Why natural gas trucks are a key element in helping drastically reduce pollution at ports b y

P a u l

reathing near the California seaports at Long Beach and Los Angeles is probably a little easier now, two months after Daimler Trucks North America began delivering 232 natural gas-fueled daycab tractors to customers working in and around the two busy cargo hubs. All of the new units – intended to replace aging, much less environmentallyfriendly ones – are Sterling L-113 flat-roof conventionals, powered by 8.9-litre Cummins Westport ISL G engines rated at 320 hp and 1,000 lbs./ft. of torque. More than half the total, 132 to be exact, went to California Cartage Company, a family-owned drayage and warehousing firm with operations across the US. The other 100 were destined for smaller carriers and owner/operators doing business with the ports. These “green” trucks were not cheap. They sold for roughly US$160,000 a copy. Cal Cartage, however, was rewarded for being an “early adopter” under a local initiative called the Clean Trucks program, the goal of which is to reduce air pollution at the ports by more than 80% by 2012. As such, the company was able to score a significant discount on its purchase, thanks to a collaborative funding project between the US Environmental Protection Agency, California Air Resources Board and the South Coast Air Quality Management District. The agencies put together grants totalling nearly US$12 million, or about US$90,000 per truck, and another US$4.22 million in federal tax credits. The amount of governmental subsidies available for other buyers was unclear. Although assistance is certain – to be paid for by a levy on containers moving through the ports – it probably won’t be

motortruck

H a r t l e y

quite as generous. Obviously, the cost of engines burning natural gas, whether compressed or liquefied, is much higher than that of comparably sized diesels. But truckers switching from the latter to the former do benefit somewhat from lower fuel prices – even though diesel offers better economy. The chief advantage of natural gas is its effects, or lack thereof, on the environment. During a press event to publicize Sterling’s sizable sale at the ports, officials from Daimler Trucks North America referred to the Cummins Westport ISL G as a “near-zero emissions” engine. They said that it already met the EPA’s 2010 diesel exhaust mandate – without particulate filters or other aftertreatment devices. The engine uses an advanced combustion system, cooled exhaust-gas recirculation and a three-way catalyst to quell emissions. Nitrogen oxide emitted from the engine is at a CARB-compliant 0.20 gram per brake horsepower/hour; particulate matter is at 0.01 gram bhp/h. Greenhouse gasses are almost non-existent because natural gas contains little carbon. DTNA president Chris Patterson, speaking at the event, pointed to yet another benefit of natural gas: It’s abundant throughout North America. “Each of these tractors will reduce the use of imported oil by 500 barrels per year,” he said. Multiplied by 232, the total reduction could be as much as 116,000 barrels annually. Of course, the abundance of domestic sources doesn’t mean the fuel is readily available on the street, at least not yet. Bob Lively, vice-president of strategic planning for Cal Cartage, says the ports currently have just one publicly accessible LNG fueling station nearby, and it’s owned and operated by Southern Counties

GreentoGold Express, another drayage fleet that’s begun using natural gas-powered vehicles. Until more are built, this could pose problems for newlyminted LNG truckers who might spend a lot of time waiting for their turn at the pump, especially because the trucks in question have an operational range of only 250 to 300 miles between 100-gallon fills. Lively says there are actually more CNG facilities in California, but few of those are set up for large trucks. Still, he’s bullish about the future of both types of natural gas, and he expects his company to continue buying trucks powered by those fuels. That might be true, but it won’t be ordering many more with a Sterling nameplate. This fall, DTNA announced the brand’s discontinuation (scheduled for March) in an effort to cut costs during these lean economic times. Officials have chosen Freightliner’s M2-112 to replace Sterling’s L-113 as the designated medium- and heavy-duty natural gas vehicle. Whatever body panels are used, executives said the environmental benefits of these new trucks will be considerable, noticeable and immediate. Cal Cartage president Bob Curry Sr. agreed, saying he was proud to be involved with an effort to improve the area’s air quality: “At our company, we want to be a part of the solution, not the problem.” mt

Fastfacts

Sterling NG L-113 basic spec’s: Front Axle: rated at 12,000 lbs., set back Rear Axle: rated at 40,000 lbs. Front Suspension: Taper leaf Rear Suspension: AirLiner Fuel Capacity: single 119-gallon stainless steel tank Cab: 113-inch BBC Flat Roof Engine: Cummins ISL G, (320 hp @2,000 rpm, 1,000 lb./ft. @ 1,300 rpm) Transmission: Allison 3000 HS Automatic

@ARTICLECATEGORY:3361;

New hybrid-electric delivery truck unveiled in Victoria

hanks to support from the B.C. Ministry of Environment and the Fraser Basin Council’s Green Fleets B.C. program, Victoriabased R&B Trucking is meeting the tough economic times head on with a new diesel-electric hybrid refrigerated delivery truck that’s expected to save the company as much as 35% in fuels costs and reduce its greenhouse gas (GHG) emissions by more than 20 tonnes per year. It’s all part of the Fraser Basin Council’s Green Fleets B.C. program, which provides support to trucking companies, to help them move towards environmentally-friendly practices and technologies. In return for sharing their experiences with others in the industry, participating companies save money, improve worker health, and decrease smog and GHG emissions. The B.C. government is supporting Green Fleets B.C., a key component of the provincial government’s Air Action Plan, with $330,000 for the Fraser Basin Council’s hybrid truck incentive programs. The program covers the difference between a hybrid truck and a conventional truck, for up to $20,000 per vehicle. R&B’s Class 7 2009 Freightliner M2e 106 hybrid truck (33,000 GVW) uses Eaton’s hybrid system, allowing it to capture energy produced under braking and use it to help launch the vehicle. It can also run the refrigeration unit off battery power, eliminating the need for a second engine. R&B Trucking owner Paul Cunnington said the company is proud to take a leadership role in this area. “With the long-term cost of diesel rising, we’re looking forward to seeing a big drop in our fuel bill. We’re also excited to be doing our part for the environment.” In return for assistance in purchasing the truck, R&B Trucking will collect and share operational data and driver feedback with other Green Fleets B.C. participants. This information is intended to assist other fleet operators across B.C. to determine which green technologies can best help them trim operating costs.

january/february 2009

LIGHTWEIGHT ENGINEERING DESIGNED TO BULK UP PROFITS. INTRODUCING THE NEW MACK® PINNACLE ™.

ALL SCIENCE. NO FICTION.

TOP TIER

Your annual in-depth look at the capacity, capabilities and future direction of the

NATIONâ&#x20AC;&#x2122;S LARGEST CARRIERS Sponsored by: Peoplenet Canada, Mack Canada and Castrol Heavy Duty Lubricants

That’s why more than 1,200 fleets have chosen PeopleNet and made us the fastest-growing provider in the business. So go ahead, get on the New Route. Find out for yourself why more and more fleets are partnering with PeopleNet. Call us at 888-346-3486 or visit www.peoplenetonline.com.

From the Sponsors

PeopleNet is the leading mobile communications and onboard computing provider in the Canadian marketplace. Known for its customer-driven innovation, unparalleled flexibility, leading edge technology and proactive customer care, PeopleNet gives you a business edge unlike any other. Reconstruct accidents in real-time. Send documents from inside a cab. Locate vehicles with a click of the mouse. Capture signatures and bar codes – wirelessly. Get a question answered before it’s asked. That’s what PeopleNet customers experience day in and day out, mile after mile. No wonder PeopleNet is the fastest-growing mobile communications and onboard computer provider in the industry.

Mack Trucks Canada has been serving the needs of the fleet market in Canada since 1921. Over the years, Mack has built up an extensive dealer network of almost 100 sales, parts and service locations across the country. Many truckers and fleet owners started their careers and businesses with Mack B models and R models. The Mack Vision models also became very popular in the 1990s and now Mack has introduced a new engine and a new model that replaces the Vision. The Mack Pinnacle, with its redesigned interior and bigger cab, is an ideal fleet truck that is available in both daycab and sleeper configurations. The all new Mack MP series of engines which provide more power and better fuel economy are also well suited for both local and long haul fleets. Mack is also one of the first truck manufacturers to make anti roll stability a standard feature on all of its 2008 highway truck models. While Castrol is well known to most people around the world as the lubricant of choice for their car, pick-up truck or SUV, some people may not be as familiar with Castrol’s ground-breaking products for the Commercial/Heavy-Duty marketplace. Whether onroad or off-road, Castrol has developed a complete line of unique commercial lubricants that is second to none when it comes to protecting the vehicle investment of the owner/operator, commercial fleet or mining corporation. Castrol’s Heavy Duty lubricants are designed for the single purpose of making your fleet as reliable and profitable as possible. By understanding the increasing technological demands of today’s engines, and working directly with OEM manufacturers, Castrol has employed the latest information, along with our extensive knowledge of commercial lubricants to develop a full line of products to help you get the most out of your equipment. Congratulations to all Top Tier 100 fleets highlighted and continued success in 2009.

MOTORTRUCK

TOP TIER

Your annual in-depth report on the capacity, capabilities and insights of the NATION’S LARGEST CARRIERS.

ur fourth annual Top Tier report offering a comprehensive look at the nation’s largest for-hire carriers, is a snapshot of an industry battling through some of the toughest times in recent memory. After two years of slowing freight volumes, the collapse of the North American economy by the fourth quarter of 2008 has left motor carriers scrambling for business and fighting to keep their costs in line with slumping revenues. We are seeing, and expect to continue to see, significant changes among the leaders of the country’s major fleets. Some TL carriers are abandoning marginally profitable longhaul lanes, particularly if these lanes have too many out of route or empty miles. They’re shifting to regional hauls, which is bringing them into direct competition with smaller carriers who may not have the service portfolios or technology to compete. On the LTL side, the large LTL carriers are seeing competition from former regionals who are expanding their geographic reach to stay competitive. And the entry of companies such as UPS and FedEx into the LTL arena is shaking things up. These companies have wide service portfolios and very strong technology backbones, which they leverage to provide customer service. The traditional players in this sector feel they have to either get big or go home. There is both the need and the opportunity for acquisitions and mergers in both the TL and LTL sectors but the credit squeeze is making that difficult. There were only 125 transportation related mergers and acquisitions (disclosed value of at least $50 million) in 2008, which is a drop from the 145 posted the previous year. About a quarter of those are trucking specific. Thankfully operating costs have declined but, as we noted last year, the combination of weak freight, softer rates, and now much tighter credit, are causing many carriers to focus on shrinking rather than growing their fleets. A recently published survey by the Ontario Trucking Association found that 67% of respondents would not be adding tractors to their fleet and 23% said they would reduce their fleet size. To help you keep up with the latest developments in the following pages you will find detailed and up-to-date information about the capacity and capabilities of the 100 largest for-hire motor carriers in Canada. This exclusive data is from annual research conducted on behalf of our sister company, BIG Transportation Media research. An additional feature this year is a report on the fleets owned by three of the largest and most aggressive acquirers in recent years, Transforce, Contrans and Day & Ross. As well, six of the industry’s most influential executives share their insights on the current situation and how it will reshape trucking in the near future. This comprehensive guide is not intended as a mere tally of vehicle counts. In fact, we have chosen not to list the top 100 carriers by size. The top 100 carriers are listed in alphabetical order because we believe that after a certain threshold, optimum fleet size is a reflection of the different markets these fleets are meant to serve. I would also like to thank the sponsors of our Top Tier report, Peoplenet Communications, Mack Canada and Castrol who continue with their support. Their support is instrumental in helping us deliver such a comprehensive report. We hope our report serves as a tool not only for the largest carriers to keep tabs on their competitors but also as a tool for the smaller and medium-sized fleets to contrast their buying strategies with the industry’s largest and gain a fuller understanding of the trends and issues they can expect to deal with in future years. @ARTICLECATEGORY:3361;

Lou Smyrlis Editorial Director JANUARY/FEBRUARY 2009

Company Name

Headquarters

Customer Line

Web Address

Operating Area

Allied Systems (Canada) Co. ** Apex Motor Express Armour Transportation Systems Arnold Bros. Transport Arrow Transportation B&R Eckel’s Transport Big Freight Systems Inc. Big Horn Transport (TransX) Bison Transport Inc. BLM Group Bruce R. Smith Limited Byers Transportation System Inc. Canada Cartage System Can-Truck Inc. Caron Transportation Systems CAT Inc. Celadon Canada Challenger Motor Freight Clarke Road Transport Inc. Clarke Transport Inc. CN TL Consolidated Fastfrate Inc. Contrans Income Fund Cooney Group of Companies Creekbank Transport Day and Ross Transportation Group DCT Chambers Trucking Empire Transportation Entrec Transportation Services Ltd. Erb Group of Companies Fluke Transportation Group Gibson Energy Ltd. Grant Transport Groupe Boutin Groupe Guilbault Ltee. GTL Transportation Inc. H & R Transport Ltd. Seaboard Harmac hbc Logistics Hercules Freight Hyndman Transport International Freight Systems **Kindersley – Siemens Trans. Group Kindersley Transport Kleysen Transport Kriska Landtran Systems Inc. Mackie Moving Systems MacKinnon Transport Manitoulin Transport Group Maritime-Ontario Freight Lines McKevitt Trucking Meyers Transport Ltd. Midland Transport Ltd. Mill Creek Motors MorTrans Inc. Muir’s Cartage Mullen Trucking LP Musket/Melburn Group Muskoka Transport Nesel Fast Freight Normandin Transit Northern Industrial Carriers Paul’s Hauling Ltd. Penner International Purolator Courier QuikX Group of Companies TVM Ltd. ** (Formerly RAM) Reimer Express Lines Ltd.

Burlington, ON North York, ON Moncton, NB Winnipeg, MB Richmond, BC Bonnyville, AB Steinbach, MB Calgary, AB Winnipeg, MB Kitchener, ON Simcoe, ON Edmonton, AB Toronto, ON Oshawa, ON Sherwood Park, AB Coteau du Lac, QC Kitchener, ON Cambridge, ON Halifax, NS Concord, ON Concord, ON Woodbridge, ON Woodstock, ON Belleville, ON Mississauga, ON Hartland, NB Vernon, BC Grimsby, ON Calgary, AB New Hamburg, ON Hamilton, ON Calgary, AB New Hamburg, ON Plessisville, QC Ste-Foy, QC Dartmouth, NS Lethbridge, AB North York, ON Mississauga, ON North York, ON Wroxeter, ON Tilbury, ON Saskatoon, SK Saskatoon, SK Winnipeg, MB Prescott, ON Edmonton, AB Oshawa, ON Guelph, ON Gore Bay, ON Brampton, ON Thunder Bay, ON Belleville, ON Dieppe, NB Ayr, ON Belleville, ON Concord, ON Aldersyde, Alta. Mississauga, ON Bracebridge, ON Bolton, ON Napierville, QC Edmonton, AB Winnipeg, MB Steinbach, MB Mississauga, ON Mississauga, ON Cottam, ON Winnipeg, MB

404-373 4285 800-895-APEX 506-857-0205 800-665-8085 604.324.1333 780-826-3889 800-665-0415 403-277-1166 800-GO-BISON 800-265-2743 888-277-6484 800-661-6953 800-268-2228 800-361-7940 780-449-6688 800-363-5313 800-265-6467 800-265-6358 866-425-2753 800-387-3558 888-MOVINCN 800-268-1564 800-561-9040 613-962-6666 905-670-5600 866-DAY-ROSS 250-549-2157 800-263-0240 403-777-1644 800-665-COLD 800-263-4843 403-206-4000 800-668-4481 800-267-4509 800-361-2093 902-468-3100 403-328-2345 416-642-0515 416-644-2700 416-412-7855 800-265-3071 519-682-3544 800-667-8556 800-667-8551 888-488-6878 800-461-8000 780-468-4300 800-565-4646 800-265-0444 800-461-1168 905-792-6100 807-623-0054 800-565-3708 888-MIDLAND 800-265-7868 800-267-2867 800-646-2013 800-661-1469 905-823-7800 800-461-5808 800-387-1288 800-667-8780 780-465-0341 204-633-4330 866-729-7134 888-744-7123 800-461-8023 800-749-6960 877-330-3321

www.alliedholdings.com www.apexltl.com/ www.armour.ca www.arnoldbros.com www.arrowtransportation.com www.breckels.com www.bigfreight.com

North America Multi-Regional Multi-Regional, North America, International Multi-Regional, North America North America Multi-Regional North America Multi-Regional, North America North America North America Multi-Regional, North America Multi-Regional, North America, International Multi-Regional, North America North America Multi-Regional, North America Multi-Regional, International International International North America Multi-Regional North America North America

www.bisontransport.com www.blm.com www.brsmith.com www.byerstransport.com www.canadacartage.com www.can-truck.com www.carontransport.ca www.cat.ca www.celadoncanada.com www.challenger.com www.clarkeroad.com www.clarkelink.com www.cn.ca www.fastfrate.com www.contrans.ca www.cooney.ca www.creekbanktransport.com www.dayrossgroup.com www.dctchambers.com www.empiretrans.com www.entrectransport.com www.erbgroup.com www.fluke.ca www.gibsons.com www.granttransport.com www.boutinexpress.com www.groupeguilbault.com www.gtltransportation.com www.hrtrans.com www.harmactransportation.com www.hbc.com www.herculesfreight.com www.hyndman.ca www.international-freight.com www.siemenstransport.com www.kindersleytransport.com www.kleysen.com www.kriska.com www.landtran.com www.mackiegroup.com www.mackinnontransport.com www.manitoulintransport.com www.m-o.com www.mckevitt-trucking.com www.shipmts.com www.midlandtransport.com www.millcreek.on.ca www.mortrans.ca www.muirscartage.com www.mullentrucking.com www.musket.ca www.muskoka-transport.com www.nesel.com www.normandintransit.com www.nictrucking.com www.paulshauling.com www.penner.ca www.purolator.ca www.quikx.com www.ramcarriers.com www.reimerexpress.com

Multi-Regional, North America Multi-Regional, North America International Multi-Regional, North America Multi-Regional, North America, International Western Canada Multi-Regional, North America North America Multi-Regional, North America North America Multi-Regional, North America Multi-Regional, North America North America International North America Multi-Regional, North America North America North America Multi-Regional, North America North America North America North America Multi-Regional, North America International North America North America International Multi-Regional, North America North America Multi-Regional, North America Multi-Regional, North America International Multi-Regional, North America Multi-Regional, North America North America Multi-Regional, North America Multi-Regional, North America Multi-Regional North America North America Multi-Regional, North America North America International North America Multi-Regional, North America Multi-Regional, North America, International

LEGEND: THE TOP 100 were chosen according to vehicle counts which included straight trucks, tractors, trailers and intermodal containers domiciled in or controlled from Canada. Top 100 carriers are listed in alphabetical order. Both parent company and holdings shown if large enough.

A capacity and capability guide for the country’s largest motor carriers Services TL,VC D,LTL,TC,TL D,E,F,I,L, LB,LTL,P,TC,TL D,E,F,L,P,TC,TL TL D,DB,E,F,I,L,LB,LTL,TC,TL F,L,TL D,E,F,I,L,TL E,I,L,TC,TL D,E,F,LTL,TC,TL D,F,TC,TL E,I,LTL,TL D,DB,E,F,HG,L,LB,LTL,TL DB,LTL,TL,VC D,DB,F,L,LB,TL D,DB,E,F,I,LTL,TC,TL,VC D,TL D,DB,E,F,I,L,LTL,TC,TL D,FB,I,TL D,F,I,L,LTL,TC,TL D,E,F,H,I,L,TC,TL,VC D,E,I,LTL,P,TC,TL D,DB,F,I,TL D,E,I,L,LTL,P,TC,TL D,E,F,L,LTL,P,TC,TL D,DB,F,LB,TL D,E,F,TL DB,L,LB,LTL D,E,L,LTL,TC,TL D,DB,E,F,L,LTL,TC,TL DB,LB D,F,L,LTL,TC,TL D,F,I,L,LTL,TC,TL D,I,L,LTL,TC,TL D,I,LTL,TC,TL I,L,TC,TL D,LB D,I,TL LTL,TL TL D,E,F,TL E,F,HG,I,L,LTL,P,TC,TL E,HG,I,L,LTL,TC,TL DB,F,I,L,LTL,TC,TL L,TC,TL D,E,F,L,LTL,TC,TL D,E,HG,I,L,LTL,TL,VC D,E,F,I,LTL,TL D,E,F,I,L,LB,LTL,P,TC,TL D,DB,E,F,I,L,LB,LTL,TC,TL D,F,L,LTL,TC,TL D,E,L,LTL,TC,TL D,E,I,LTL,P,TC,TL D,L,TL D,E,I,L,TC,TL D,DB,F,I,L,TC,TL D,E,F,L,LTL,P,TL D,I,TL F,L,TL E,TL,LTL E,F,L,LTL,TC,TL,VC D,E,I,TL D,DB,E,L,LB,TL D,E,LTL,TL D,E,LTL,TL E,I,L,LTL,TL D,E,F,I,L,TC,TL D,E,LTL,TL

Straight Trucks 86 150 3 27

0 57 385 1 2 32 35 1,358 1 321 1 0 150 18 70 1 5 3 8 35 37 26 18 20 126 67 3 13 100 5 0 3 6 3

100 75 1 39

Tractors 791 160 810 350 315 181 200 80 1050 177 379 210 1539 120 215 378 375 1500 210 310 750 221 2,312 250 68 2452 250 80 32 500 200 600 129 245 425 58 539 350 225 142 207 175 770 368 250 400 267 225 245 736 403 135 276 675 100 54 175 174 210 140 200 250 150 240 375 425 550 200 542

Trailers 758 324 2625 850 315 686 400 200 3000 480 1456 500 1903 481 490 1262 1360 3450 380 942 5200 763 1000 113 2638 690 320 140 925 500 2000 435 650 1200 159 900 480 1400 261 515 175 1960 1160 500 1200 395 420 546 1606 708 300 874 1550 221 152 1100 407 150 350 600 568 1200 619 850 1000 1100 600 1356

Containers

300 4 200

0 300 120 375 6000 28 85 0

95 500

50 50 600

347 42 100

650

200

Terminals 17 13 25 5 18 9 6 2 6 2 8 56 24 1 7 7 1 7 4 19 16 17 7 1 66 4 1 3 10 2 15 2 7 13 1 9 5 9 24 2 2 18 12 7 2 16 1 2 64 21 4 8 23 1 1 2 2 3 2 4 1 4 3 8 100 17 2 23

Web V V V,R V,R,C R V,R V,R,C V,R,C V V V,R,C V,R,C V V,C V,R,C V,R,C V,R,C V,R,C V,R V,R,C V,R,C V,R,C V,R V V,R V

V,R,C V,R,C V,R,C C V,R V V V V,C V,R,C V,R,C V,R,C V,R,C V,R V,R,C V,R,C V,R,C V,R,C V,R,C V V,R,C C V,R,C V V,R,C V,R,C V,R V,R,C V,R,C

CODES. Operating Area: Regional – One province/state; Multi-regional – Selected provinces/states; North America – Canada, U.S.; International – Canada, U.S., Mexico/Other; Types of Service: D – Dedicated Contract; DB – Dry Bulk; E – Expedited; HG – Household Goods; I – Intermodal; L – Logistics; LB – Liquid Bulk; TL – Less than Truckload; P – Package; TC – Temperature Controlled TL – Truckload; VC – Vehicle Carrier; Web Services: Web Visibility (V); Web Reports (R); Web Custom (C); * 2008 figures ** Holding company

Company Name

Headquarters

Customer Line

Web Address

Operating Area

Robert Transport (1973) Ltd. Rosedale Transport Rosenau Transport Schneider National Carriers SGT 2000 Shadow Lines Transportation Group Simard Transport SLH Transport Sokil Transportation Group Speedy Transport Sunbury Transport System 55 Transport Thomson Terminals Ltd. Totalline Transport TransForce Inc. TransFreight Transport Fortier Boostway Transport Gregoire Transport Herve Lemieux Transport Morneau Transport Thibodeau Transport VA TransX Group of Companies Travelers Transportation Trimac Transportation Services Inc. UPS Freight ** Van Kam Freightways Verspeeten Cartage ** Vitran Express Canada Warren Gibson Williams Moving and Storage Wilson’s Truck Lines Ltd. XTL Transport

Rougemont, QC Mississauga, ON Edmonton, AB Guelph, ON St-Germain-de-Grantham, QC Langley, BC Lachine, QC Kingston, ON Edmonton, AB Brampton, ON Fredericton, NB Oakville, ON Rexdale, ON Vaughan, ON Montreal, QC Kitchener, ON Quebec City, QC Plessisville, QC St-Laurent, QC Ste-Arsene, QC Portneuf, QC Laurier Station, QC Winnipeg, MB Brampton, ON Calgary, AB Mississauga, ON Surrey, BC Ingersoll, ON Toronto, ON Alliston, ON Coquitlam, BC Etobicoke, ON Toronto, ON

800-361-8281 877-588-0057 800-371-6895 800-461-3168 800-363-4216 800-663-1421 514-636-9411 800-661-2146 800-661-9923 905-455-8005 800-786-2879 800-268-5070 800-771-7487 800-565-3556 514-331-4000 859-372-5935 888-566-6294 1-800-461-8813 514-337-2203 800-465-2727 800-463-3874 800-363-8175 800-665-7392 800-265-8789 403-298-5100 800-PICKUPS 888-229-9889 800-265-6701 800-263-9588 800-461-4374 877-410-9411 416-621-9020 800-361-5576

www.robert.ca www.rosedalegroup.com www.rosenau.org www.schneider.com www.sgt2000.com www.shadowlines.com www.simard.ca www.slh.ca www.sokil.com www.speedy.ca www.sunbury.ca www.system55.com www.thomsongroup.com www.totalline.com www.transforce.ca www.transfreight.com www.fortierboostway.com www.transportgregoire.com www.transportlemieux.com www.groupemorneau.com www.groupe-thibodeau.com www.vatransport.com www.transx.com www.travelers.ca www.trimac.com www.ups.com www.vankam.com www.verspeeten.com www.vitran.com www.warrengibson.com www.williamsmoving.com www.wilsonlogistics.ca www.xtl.com

Multi-Regional, North America Multi-Regional, North America Multi-Regional International International North America Multi-Regional North America North America Multi-Regional North America Multi-Regional, North America Multi-Regional, North America International

Company Name

Headquarters

Contrans Income Fund Brookville Carriers Flatbed LP Cornerstone Logistics LP ECL Carriers LP Firm Transportation LP Glen Tay Transportation LP Hopefield Trucking LP L. A. Dalton Systems LP Laidlaw Carriers Bulk LP Laidlaw Carriers Flatbed LP Laidlaw Carriers PCS LP Laidlaw Carriers Tank LP Laidlaw Carriers Van LP Tri-Line Carriers LP Tripar Transportation LP

Woodstock, ON Truro, NS Oakville, ON London, ON Toronto, ON Perth, ON Mississauga, ON Caledonia, ON Woodstock, ON Hagersville, ON Beloeil, PQ Woodstock, ON Guelph, ON Calgary, AB Oakville, ON

Customer Line 800-561-9040 800-567-6665 877-388-2888 800-265-0934 800-440-6055 800-450-9483 800-265-5430 800-363-5912 888-209-3867 800-263-8383 800-363-9412 800-465-8265 800-263-8267 800-661-9191 800-387-7210

–

Day and Ross Transportation Group Day and Ross Fastrax Sable Warehousing and Distribution Sameday Worldwide

Headquarters Hartland, NB Hartland, NB Florenceville, NB Halifax, NS Mississauga, ON

Owned

Web Address

Operating Area

www.contrans.ca www.brookville.ca www.cornerstonelogistics.com www.contrans.ca www.firmtransportation.com www.contrans.ca www.contrans.ca www.contrans.ca www.contrans.ca www.contrans.ca www.contrans.ca www.contrans.ca www.contrans.ca www.triline.ca www.tripartrans.com

North America North America North America North America North America North America North America North America North America North America North America North America Multi-Regional, North America North America

– Company Name

International North America Multi-Regional, North America Regional Multi-Regional Multi-Regional, North America Multi-Regional International North America International International Multi-Regional, North America Multi-Regional, North America North America Multi-Regional, North America International Multi-Regional, North America North America

Customer Line

Web Address

866-DAY-ROSS 866-DAY-ROSS 506-392-2600 902-468-8933 905-676-3750

www.dayrossgroup.com www.dayross.ca www.fastrax.ca www.sameday.ca

Owned Operating Area North America North America Regional North America

Services D,DB,E,F,I,L,LB,LTL,TC,TL D,L,LTL,TL D,DB,E,F,I,LB,LTL,P,TC,TL D,DB,E,I,L,LB,TL E,F,I,L,LTL,TC,TL D,E,I,LTL,TL I,L,LTL,TL D,E,L,LTL,TL D,E,F,I,L,LTL,P,TC,TL LTL,TC DB,E,F,L,TC,TL D,F,L,TL D,E,F,L,TC,TL DB,E,F,H,I,L,LTL,TC,TL D,E,I,L,LTL,TL D,F,L,LTL D,E,L,LTL,TL D,F,I,TC,TL D,LTL,TL D,E,F,L,LTL,TC,TL D,L,LTL,P,TL D,E,F,I,L,LTL,TC,TL D,E,L,LTL,TC,TL D,DB,I,L,LB,TC,TL E,I,L,LTL,P,TC,TL D,E,F,HG,I,L,LTL,P,TC,TL D,I,TL I,E,LTL,TL,L,TC F,I,TL D,DB,E,F,HG,I,L,LTL,TL,VC D,L,TC,TL D,LTL,TL

Straight Trucks 10 50 50

60 80 50 4 2 47 2 35 29 27 7 210 3 2026 10 115

Tractors 1000 325 220 500 402 285 275 600 140 291 307 128 250 206 5355 272 95 256 225 295 406 130 1500 250 990 102 350 425 405 350 80 400 385

Trailers 2850 1013 770 1400 1231 900 225 3600 550 735 726 410 800 322 13509 1964 200 688 225 695 1045 400 3150 688 2355 363 700 800 1280 1400 300 1100 1275

Containers

10 200 115 425

850

675 50

Terminals 12 13 16 1 7 6 6 15 4 7 3 1 3 11 274 11 2 3 1 14 14 3 12 4 50 215 7 1 21 2 16 4 5

Web V,R,C V, R V,R,C V,R,C V R,C V,R,C V V V,R,C V,R,C C V,R,C V V,R,C V V V,R,C V,R,C V,R V,R,C V,C V,R,C V,R,C V,C V,R,C V,R,C V V,R,C V V,R,C

companies Services TL L TL L TL TL TL TL TL TL TL TL D,TL,LTL TL

Straight Trucks 1,358

Tractors

Trailers

2,312 102

174

133

62 37 50 143 122 27 233 338 98 48

103 93 60 197 178 47 309 776 145 97

Containers 28

Terminals

Web

2 2 1 1 2 1 1 4 2 1 4 5 2 3

companies Services LTL,TC,TL F,I,TC,TL LTL,TL E,H,L,LTL,P,TC

Straight Trucks 321 0 0 1 320

Tractors

Trailers

Containers

2452 1413 375 3 554

2638 1866 585 8 100

85 85

Terminals 66 36 5 1 38

Web V,R,C V,R,C V,R,C V,R,C V,R,C

–

Own

Company Name

Headquarters

Customer Line

Web Address

Operating Area

TransForce Inc. A&M International Beaudry Location de Remorques Bergeron Besner Byers Transport Canadian Freightways Canpar Durocher International Epic Express Excellent Transport Groupe Fortier Ganeca GHL Transport Golden International Grégoire Hemphill Highland Intermodal Highland TL Howard’s Transport Services ICS Courier JAF Transport JC Germain Kingsway Kingsway Alimentaire Kingsway Chimique Kingsway – Dompeur Kingsway Vrac Kos Oilfield Transportation Lacaille International Lacrete Transport Landry Lapalme Legal Freight Services Martrans et Canvec Logitrans Transport Services Matrec McArthur Express McGill Air McMurray Serv-U Expediting Mirabel Dedicated Services Montkar MTMX Transport Nordique Papineau International P&W Intermodal Rebel Transport Select / Daily St-Lambert Streeper Contracting Thibodeau Transport Trans4 Logistics TST Automotive Services TST Expedited Services/TST Air TST Overland Express TST Truckload Express Universal Contract Logistics UTL Transportation Services Westfreight Systems

Montreal, QC East Angus, QC Montreal, QC Amos, QC Saint-Nicolas, QC Edmonton, AB North Burnaby, BC Mississauga, ON Saint-Felix-de-Kingsley, QC Mississauga, ON Mascouche, QC Levis, QC Saint-Hyacinthe, QC Lavaltrie, QC Bois-des-Filion, QC Plessisville, PQ Rock Springs, WY Markham, ON Markham, ON Stony Plain, AB Toronto, ON Boucherville, QC Trois-Rivieres, QC Mississauga, ON Mississauga, ON Mississauga, ON St-Romuald, QC Mississauga, ON Drayton Valley, AB Carignan, QC LaCrete, AB Saint-Noel, QC Granby, QC Edmonton, AB Lachine, QC Saint-Jerome, QC Boucherville, QC Cambridge, ON Saint-Laurent, QC Fort McMurray, AB Saint-Jerome, QC Sainte Foy, QC Oakville, ON Saint-Jerome, QC Saint-Jerome, QC Oakville, ON Edmonton, AB Saint-Laurent, QC Saint-Romuald, QC Fort Nelson, BC Portneuf, QC Brampton, ON Whitby, ON Windsor, ON Mississauga, ON Mississauga, ON Mississauga, ON Edmonton, AB Calgary, AB

514-331-4000 819-832-4936 866-351-7575 819-727-9404 418-831-5444 800-661-6953 604-420-4044 905-276-3700 819-848-2042 905-238-1616 800-309-9939 418-837-7625 800-561-7444 450-586-3236 450-628-8000 819-362-8813 907-382-5650 905-513-2023 905-513-2023 780-968-8555 416-233-5558 450-449-4974 819-624-4050 905-624-4050 905-624-4050 905-624-4050 418-834-5454 905-624-4050 780-542-5141 450-658-4008 780-928-3989 418-776-2327 450-777-5969 780-452-7221 514-422-9747 450-623-3586 450-641-3070 519-740-7080 514-856-7567 780-791-3530 450-438-4909 418-651-2929 905-849-1228 450-438-6685 450-432-7555 905-815-9412 780-464-5171 514-333-0041 418-839-6655 250-774-7247 800-463-3874 905-454-1117 905-434-8577 519-972-8111 905-625-7500 905-624-7130 905 238-6855 780-454-0761 403-279-8388

www.transforce.ca www.transforce.ca www.locationbeaudry.com/en www.transforce.ca www.transforce.ca www.byerstransport.com cf.cfmvmt.com www.canpar.com www.durochertransit.com epic.cfmvmt.com www.excellent-transport.com www.transportfortier.com www.ganeca.ca www.camionnageghl.com www.transforce.ca www.transportgregoire.com www.transforce.ca www.highlandtransport.com www.highlandtransport.com www.transforce.ca www.ics-canada.net www.transforce.ca www.transforce.ca www.kingswaytransport.com www.transforce.ca www.transforce.ca www.transforce.ca www.transforce.ca www.kosoilfield.com www.transforce.ca www.transforce.ca www.transforce.ca www.transforce.ca www.legalfreight.com www.transforce.ca www.transforce.ca www.matrec.ca www.mcarthurexpress.com www.mcgillair.com www.mcmurrayservu.com www.transforce.ca www.transforce.ca www.transforce.ca www.transforce.ca www.papineauintl.com www.transpel.ca www.rebeltransport.ca www.selectdaily.ca www.transforce.ca www.streepercontracting.com www.groupe-thibodeau.com www.trans4.com www.tst911.com/solutions/automotive.html www.tst911.com/expedited/air.html www.tstoverland.com www.tsttruckload.com ucl.cfmvmt.com/ www.cfmvmt.com www.westfreight.com

North America Regional Regional North America Multi-Regional, North America North America North America Multi-Regional, North America North America North America North America Multi-Regional, North America Regional North America North America Regional Multi-Regional, North America Multi-Regional, North America Regional North America Regional North America Multi-Regional, North America Regional Regional Regional Regional Regional North America Regional North America North America Multi-Regional North America North America Regional North America Multi-Regional, North America Regional Regional North America Regional North America North America North America Multi-Regional Multi-Regional, North America North America Multi-Regional Multi-Regional Multi-Regional, North America Regional Regional North America North America Multi-Regional Regional Multi-Regional, North America

ed companies Services TL TL TL E,LTL E,L,LTL E,P F LTL TL TL TL LB F TL F I,TL TL F E,P I,TL TL LB,LTL,TL DB LB DB TL F TL LTL F TL F,HG,L,LTL,TC,TL TL TL DB D,E,LTL,TL TC,TL E D TL I,TL TL TL I F LTL F F LTL,TL D,HG,I,L,LTL,TL TL E LTL TL DC TL F

Straight Trucks

Tractors 5355 40 7 63 108 161 303 943 74 73 26 87 41 64 96 284 40 5 56 24 467 34 179 297 29 53 19 45 77 68 34 37 23 47 15 230 54 12 34 45 17 19 61 74 29 22 56 15 16 326 1 15 355 18 35 2

Trailers 13509 140 1,022 131 363 708 1,043 309 136 207 89 232 138 95 223 876 47 177 570 35 3 138 606 748 48 199 28 88 115 227 43 50 41 45 139 66 30 179 29 2 139 46 124 150 264 114 47 195 68 43 846 263 18 12 1,184 135 172 301 24

Containers

Terminals 274 1 2 3 2 15 30 52 2 1 1 1 1 1 3 2 2 1 3 1 44 1 3 16 1 1 1 5 6 1 5 1 1 2 1 1 6 1 1 1 1 1 1 1 1 2 2 1 1 2 13 2 2 1 13 1 1 1 4

Web

V,R,C V,R,C

V,R,C V

V,R,C

V,R

V,R,C V,R V

TOP TIER EXECUTIVE SPEAK

Six influential voices from across Canada’s trucking sector prognosticate about what the industry will look like when the fog finally lifts: Directors, presidents and CEOs (three from the east, three from the west) share their thoughts about how road transport will reshape itself as it claws BY HARRY R UDOLFS its way out of the recession.

Clayton Gording President, Reimer Express Lines Winnipeg, Man.

Julie Tanguay OTA chair, and president and CEO, L. E. Walker Transport St. Thomas, Ont.

t’s going to be really, really interesting to watch. If the recession were to turn around tomorrow, you wouldn’t see a whole lot of change in our industry; a lot of carriers have simply parked their units to fit demand. The concern is over the length of the recession. If it carries on for a whole year, a lot of companies will start to permanently take capacity out of their system. And you can expect consolidation and integration to continue like we’re doing with Yellow Freight Systems and Reimer Express here in Canada, and similar to what Yellow and Roadway are doing in the US. Today, the rates are soft because of an excess of capacity. Changes could occur if some of the carriers withdraw from the market and others continue to downsize. When the turnaround does come, it’s conceivable rates will go up to adjust for demand. I expect we’ll continue to see regional differences across Canada. Right now, the Ontario market is very soft, while Alberta, Manitoba, Saskatchewan, even B.C. are still quite solid. But with the price of oil being where it is now, we’ll be watching Alberta very closely. We could see a change there very quickly. We’re excited about the new 2010 truck engines. There has been a major breakthrough in the reduction of greenhouse gases and NOx particulates over the last 10 years, to the point where the next generation will run virtually emission free. Having said that, the question is: how many will be buying new equipment? Under the current economic conditions, many carriers may pull back and not even consider investing in new equipment. The same goes for new technologies. Although there is a lot of interest in these technologies, not many companies have a budget for much research and development. I think the emphasis is going to be on just plain survival for the next year and you won’t see a lot of new spending. A lot of things depend on how long this economic downturn will last and how severe it gets. Many economists are not expecting much improvement until the third quarter of 2009. I think the industry will continue to see reduced volumes in the market, but hopefully customer loyalty will remain solid. Once we start seeing the volumes return to normal, there may be some short-term capacity issues, but as an industry, we normally respond quickly to demand. 26

MOTORTRUCK

e (trucking companies) started experiencing the recession three to six months before the media even started debating it. So likely we’ll be the first to see the upswing. When will this be? I wish I knew the answer, but my guess would be Q3 of 2009. Some quality carriers will fail. It will be especially sad to see those companies who have developed strong cultures of safety and training fall by the wayside. The giants stand a better chance of survival than small to medium fleets. One reason is that the larger entities have a more sophisticated management team that can concentrate on truly managing during volatile times. Consolidating and integration will continue, and this should create opportunities for smaller companies to align with larger players. This can be a difficult decision for privately-held companies though, who would prefer to keep the succession and management within the family. Capacity will be an issue when the upturn occurs. Owner/operators have left the business and will not return. Companies’ business infrastructures have been shredded, and the momentum of “fixing” the driver shortage has slowed, if not stalled, for most carriers. Freight rates have been destroyed! Due to present over-capacity and desperation, some carriers are running their trucks down the highway without even covering their variable costs. This is not a secret. Freight buyers know this and seek out these carriers. When the turnaround does happen, carriers with capacity will support shippers who have maintained a fair relationship during the tough times. And because of increased demand, rates may soar above 2006 levels. Access to credit is definitely going to be a challenge, but I also think it contributed to where the industry is today: too many trucks in the marketplace; no barriers to entry; credit too easily available. There will be more emphasis on profit-building and strong balance sheets. Unfortunately, this comes at the expense of some “green” initiatives. Many companies who have started these programs have had to put them on hold. Survival is about having two strategies: 1) A team of individuals continually driving cost out of the organization; 2) A comprehensive sales strategy which includes de-marketing poor lanes, improving poor lanes, and rebuilding for the future.

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TOP TIER Allan Penner President, Penner International Steinbach, Man.

Don Bietz Corporate director, ECL Group of Companies Calgary, Alta.

t would be very hard to nail down exactly when the economic recovery will start. Current excesses have to be worked out of the system first. The wild card may be infrastructure spending, which is an investment in our country’s future. If projects can be started sooner than later, a spring or summer recovery may be in the offing. Heavily financed carriers will continue to struggle with high debt/ equity ratios and a declining revenue base. Rate cutting to keep the fleet running and cash coming is only a short-term solution and could leave the carrier in a more precarious position in the future. Consolidation or integration may be one of the answers, but at what cost? And it still does not address the over-capacity issue. For both LTL and TL carriers, reducing freight rates, but not the overhead costs, means more freight is needed to maintain the status quo. But with the shipment volumes declining, it may be impossible to sustain all the carriers at their current levels, so capacity adjustments have to be made. Let’s not forget that fleets that are parking tractors and trailers still have this “pool” to draw from. If an over-capacity of 10% has been taken out of the system, and is parked on a carrier’s lot waiting for the upturn, it could be approximately two years before any replacement equipment is needed, which would indicate a very slow recovery for the OEMs and their suppliers. As in any economic model, there will always be pockets of growth. Regional carriers in certain geographic areas should do well. But for the national carriers, an overall improvement will be needed. Certain sectors of an economy are often recession-proof, such as the food industry and other businesses which supply the basic needs for the consumer. These industries are the backbone of any economy, and their shipping volumes should not decline significantly. The core industries will hold steady for the national carriers and allow them to position themselves for future growth as the big picture improves. Credit is still available for the well-run, balance-sheet solid companies. But they are being cautious as well, and want to see some indication of economic recovery before investing heavily in replacement or new equipment. These companies will be well-placed to take advantage of the financial opportunities available to the industry as the economy begins its recovery. 28

MOTORTRUCK

CL Transportation’s primary business is a tanker fleet hauling refined petroleum products including propane in Western Canada. A good portion is focused on the farm trade and we expect that volume to remain fairly steady. We also have a dry freight division in select markets and we expect to maintain volumes through 2009. In general, it appears that the transportation companies in our area, especially those servicing the oil industry in Western Canada, are riding out the balance of the year on their favourable 2008 numbers and will likely experience a reasonable first quarter in 2009. There is concern for the effects of the national recession for the balance of the year. Our operations team are predicting revenues in 2009 similar to those is 2008. We expect to see some consolidation in trucking in 2009 and capacity will reduce. This may be seen through attrition where older equipment will be retired and not immediately replaced, and there could be some substantial auction sale activity in 2009. Those with cash or the ability to finance in this market will have some interesting opportunities and will be in excellent position to expand their business when recovery from the recession begins. Shippers will align with carriers that are healthy, have served them well and treated them fairly with regard to pricing through the tight times in ’07 and ’08. Operating efficiencies will be the focus for 2009. Considering the high costs of training drivers, those that can maintain their labour force through the downturn will have an advantage. We could also see some downward pressure on hauling rates in some sectors aside from the reduced fuel surcharges. The “greening” of fleets will continue, although improvements that would have come on new equipment or discretionary modifications could be affected if spending is curtailed in the downturn. Reduction of idling and fuel efficiency are key to us and we will continue to emphasize proper gearing, speed management and improvements to aerodynamics. We are also anxiously anticipating the improvements that are available with wide-base single tires. Overall, we are cautiously optimistic about our business in 2009. We will certainly be focusing on, and be making decisions based on, current financial results. People are still our key resource and we will continue to strengthen our driving force, administration and management. There is no doubt that 2009 will be an interesting and challenging year at ECL.

TOP TIER Ray J. Haight Chairman, TCA (Truckload Carriers Association) Executive director, MacKinnon Transport Guelph, Ont.

Kevin Chase Vice-president financial and CFO, Day and Ross Hartland, N.B.

here are many who subscribe to the theory that what is happening now is in fact a type of cleansing of the transportation sector, and that when this recession ends, we’ll be left with the cream of the crop. I have never believed in this line of thinking. It is my belief is that we’ll lose both classes, some of the worst operators and an equal amount of the good ones (those who for their own reasons decide that they don’t want to wait to see what is on the other side of this downturn). Those who have survived should find themselves in greener pastures. It should be easier for them to separate themselves from the predatory rates that currently exist: rates that are structured to capture capacity rather than quality. Tightened capacity should put leverage back in the hands of the carriers. With regards to contract negotiation, I would not be lured into obligating to long-term contracts during the next 12 to 24 months. These might come back and bite carriers climbing out of the current economic climate. I fear that many carriers have deluded themselves into thinking that the current reduction in driver turnover numbers is here to stay, rather than being a reflection of the current job market. My hope is that the concerted efforts of many carriers to attract good drivers will continue. Good HR policies are ongoing efforts that must keep going if we are to avoid slipping right back to the triple-digit nightmare that has plagued the industry for more than a decade. As US President Obama moves ahead with a highway infrastructure stimulus plan, and the same happens in Canada, we will see further development of intelligent highway systems including intersections with synchronized traffic lights, weigh-in-motion truck inspections, electronic tolling, collision avoidance systems, smart transit vehicles, and real-time information about traffic conditions and travel options. This will make transportation safer, more efficient, and will lead to greater productivity and a cleaner environment. New legislation is coming shortly from south of the border on entry level driver training. Similar legislation on this side of the 49th parallel will reshape Canadian driver training rules for years to come – something which is long overdue. I believe we will be a much different looking industry when the economic tide turns, and we will be a much stronger and healthier sector than we have ever been. 30

MOTORTRUCK

iven the makeup of Canada’s economic diversity, somewhat along regional lines, recovery will in all probability be quite different and occur at different intervals. Regional carriers, depending where they are positioned, may be poised to be first or last to participate in a recovery. The oil price will recover, at prices renewing confidence and ongoing exploration and development of the Alberta, Saskatchewan and Newfoundland energy sectors. The recovery of forestry and manufacturing will be more dependent on the recovery in the US, which I believe may take a little longer than anticipated. National carriers who are well positioned and financially strong through the economic downturn will be prepared to take on regional carriers in regions where recovery is evident first. National carriers have already been conditioned to the challenges of the regional economic disparity in Canada over the past few years by dealing with double digit growth in the West, versus flat or marginal growth in central and eastern regions. This situation had already created balance issues that many carriers were, and still are, contending with. New technologies will play an ever-important role for carriers. While focusing on getting costs out of their operations, they should resist cutting strategic investments such as those in new technologies which will position them to be more competitive and improve services, e.g. communications tools that will provide for better planning for dock and route departures and arrivals. Trucking companies need to stake out their position and contribution to the green supply chain by embracing new fuel consumption reduction technologies such as APU’s, speed limiters, anti-idling, road-trains, and ongoing engine improvements. I do believe tough times give carriers an opportunity to get closer to their customers. Working together can solve issues and get costs out. On the other hand, relations can strain if customers delay payment to manage cashflow or solvency situations resulting from the lack of available credit. Carriers need to manage through this, taking firm positions yet offering solutions such as early payment discounts and articulating their own cashflow challenges. For the most part, carrier expenses like fuel, wages, salaries, and owner/operators require payment well within 30 days. In an industry so fragmented, where there are weak players, I do see opportunities even in tough times for financially strong carriers with a low-cost operating model, offering national and North American coverage to actually grow their businesses.

Tire Track(ing)

BY JOHN G. SMITH

The best way to control tire costs is to pay closer attention to the tires you have

he rolling rubber that meets the road tends to represent one of the highest operating costs for any fleet. From the moment a new tire is introduced, it is only a matter of time before it scrubs away. Surprisingly, fleets often fail to give their tires much respect. Tire maintenance is often treated like an entry-level job, and many drivers openly measure inflation levels with nothing more than a smack to the sidewalls. Piles of scrap tires are also filled with examples of irregular tread wear and casings that are too damaged to support retreading. In contrast, a well-planned tire strategy can have a dramatic impact on the overall cost of these rolling investments. As obvious as it may sound, the strategy will always hinge on buying the right tire for the right application, and that can appear to be a bigger challenge when budgets are restricted. Purchasers focus more on the initial price in the midst of tough economic times, admits Steve Haugan, fleet sales manager for Bridgestone-Bandag Tire Solutions. The problem is that these decisions can also lead to higher costs over the life of the tire. Fuel economy can be reduced, retreading opportunities can be limited, and downtime can increase because of outright failures. Major manufacturers all agree that tire-related data must be collected and analyzed – by fleets and their suppliers – to have a true understanding of tire investments. “If you don’t know what the cost per mile is or your fuel economy benefit is, or don’t have any idea how many retreads you’re getting, it’s hard to jump to a different brand and decide if you’re doing better or worse,” says Guy Walenga, Bridgestone’s director for engineering, commercial products and technologies. Fleets appear to be divided on the amount of information that needs to be tracked. A simple costjanuary/february 2009

per-mile calculation will involve the initial purchase price of tires and retreading, compared to the overall distance that the tires travel. But Walenga has even seen operations that incorporate maintenance costs ranging from shop rags to road calls. “If you have warranty issues, and the manufacturer is not dealing with you very adequately or [not] taking care of those problems, that is a cost. You may be throwing away casings the other manufacturers might see as a warrantable item,” adds Goodyear commercial tire spokesman Tim Miller. “You want your supplier to be able to directly or indirectly offer quick turnaround on any warrantable items.” Still, it is also important to ensure that managers are not consumed by the data collection process. “Decide what you’re going to follow and when you’re going to review it,” Walenga says. “You could become buried with the data and you might lose sight of where you intended to go in the first place.” Usually, trends can be identified by analyzing the data on a quarterly basis. Any successful tire program will also watch for the issues that, left unchecked, can lead to premature wear or expensive roadside failures. Optimal inflation pressures, for example, need to be established using a combination of weights and inflation tables, while these pressures also need to be monitored on a regular basis to ensure that they are always within 5% of the target. About 2 to 3 psi will be lost each month as air migrates through the tire and around the bead. That means the tire could lose 10% of its air in as little as three months – an amount that can affect everything from the fuel mileage to the life of the tire itself. The question, then, is how often someone actually needs to use a calibrated tire gauge. The Tire Retread Information Bureau has for years been stressing “Don’t thump ’em. Pump ’em,” but drivers are still seen whacking the sidewalls and listening for the dull thud that indicates a severely underinflated tire. The action hardly identifies the subtle differences that can still lead to premature tire wear. “Weekly is good. Monthly is probably adequate and probably more practical,” Miller says, referring to how often long-haul tires should be checked with an air gauge. Fleet managers are often surprised at the differences that exist. One operation found that a mere 42% of its tires were 32

motortruck

within a target inflation range of 96 to 119 psi, he adds. Michelin segment manager John Overing suggests that tire inspections should cover the “Critical 6.” Low pressures will emerge on a tread in the form of rapidly wearing shoulders as well as the flexing sidewalls that can shorten the life of a casing. In contrast, high pressures will lead to rapid wear in the centre of the tread, introducing the threat of more impact-related damage. (It is an important observation for fleets that have been over-inflating tires in a bid to improve fuel economy.) Valve caps are often removed from the outside tires on dual assemblies because they are harder to reach, but that sacrifices an important secondary seal for the air, Overing adds, referring to the third issue that needs to be rectified. Dual assemblies should also be matched in terms of pressures and actual heights. A difference of 3/32 inch in tread depth is no more than the height of a dime stacked on a nickel, but the impact over 100,000 km is the same as dragging the lower tire more than 300 km, he observes. Irregular wear can also identify mechanical issues that are to blame for premature tire wear. Cupping, for example, could be linked to a broken shock. If one steer tire shows signs of a toe in and the other steer tire shows signs of a toe out, the drive axles are not perfectly parallel. Walenga says that vehicle alignment should actually be checked every six months – before signs of irregular wear even have a chance to emerge. Even the mounting procedures need to be inspected. “Once it’s set on the wheel and bolted to the truck, even if there is an issue with vibration or pulling, it’s a long time before someone addresses it,” Walenga adds. In contrast, installers can take a quick look at the GG ring (the raised ring of rubber that is found just above the bead) to ensure that it is an equal distance from the rim flange at every point. If any differences exist, the installer will still have easy access to the tools that can break down the wheel and re-seat the tire. “You really get costs driven down when you develop an enthusiasm around these things,” he suggests. Indeed, these steps can all help to extend the life of the tires and protect the casings to maximize the retreading opportunities. “With 99% of the fleets out there, there

is an opportunity to save costs by introducing retreading,” says Haugan. “There are some applications where you can get six, seven retreads.” To maximize the number of retreads, he also stresses the importance of removing tires before the treads wear down too far. Otherwise, puncture resistance might be sacrificed. Steer tires should be pulled once treads reach 5/32 inch, while drive and trailer tires should not wear down below 4/32 inch. These final tread depths will still depend on the specific application, however. Haugan knows of one fleet that needed to remove tires with 8/32 treads because of the damage that could be inflicted by scorio-covered roads. Piles of scrap tires should also be carefully analyzed to identify the reason that casings could not be reused, whether they show snags or cuts in the sidewall, or patch jobs that did not incorporate an appropriate plug. Some of the tires may even be reclaimed in the process. “We can repair a lot of injuries with the crown and sidewall that a lot of people will tend to throw to the side,” says Haugan. And any decision to switch between different models or brands of tires should also be based on a fair evaluation, with the different options mounted on similar vehicles that travel similar routes. “Concrete is far more abrasive than asphalt,” Overing observes, referring to the impact of one factor that can affect the tests. A realistic comparison between two brands should also include about six trucks, he adds. “If you see a positive result on one brand over another, you will expand it a little more to see if the results are consistent.” “Fleets today also need to consider tires as a key component of their fuel savings strategy, and that is something that fleets are not used to,” Overing says. “Different tires have different rolling resistances, and rolling resistance is key.” But this also needs to be compared over the entire life of a tire. “The day before you take it off, it’s at its most fuel-efficient,” he adds. It is just another way that a proper tire strategy can help to reduce operating costs. mt For more information on tires, watch archived episodes of Transportation Matters at trucknews.com

DECISIONS ’09

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the

Panelists MODERATOR Lou Smyrlis Editorial Director, BIG Transportation Media

motortruck

Dan Goodwill President, Dan Goodwill & Associates

Michel Robert Vice President Groupe Robert

DECISIONS ’09

Issues Roundtable

part ii

Survival Game

Shippers and carriers debate how best to deal with the thorny issue of fuel surcharges

hinking differently than we have in the past was a central theme of our annual Industry Issues Roundtable as we brought prominent shippers and carriers together to discuss the challenges of navigating their companies through what is expected to be a long and deep recession. In Part I of our roundtable (see our Nov/Dec 2008 issue) our panelists looked ahead to the eventual recovery and how different shipper-carrier relationships would be for the survivors. In Part II they focus specifically on the thorny issue of fuel surcharges and whether there is a better way to approach them. Watch also for video clips of their comments on many other issues in special installments of our Web TV show Transportation Matters, available on www.trucknews.com and www.ctl.ca. BIG Transportation Media, through its ownership of both motor carrier and shipper publications, is in the unique position of being able to see issues from “both sides of the fence.” We consider it our mandate to foster dialogue between buyers and providers of transportation services. Our third annual Shipper-Carrier Issues Roundtable, which is published in both our carrier and shipper publications, is a step towards that goal. It allows buyers and providers of transportation services across the country to gain a more well-rounded understanding of the issues at hand. This roundtable would not have been possible without the support, once again, of Shaw Tracking and I wish to thank this highly respected industry player for its support. I would also like to thank all the roundtable participants who took time out of their hectic schedules to make this roundtable a possibility. As with past participants, these individuals were specifically chosen because of the highesteem with which they are held within the transportation industry and their insightful and honest contributions certainly showed why.

Lou Smyrlis

WES ARMOUR President and CEO Armour Transportation Systems

Ginnie Venslovaitis Manager Transportation Services Unilever Canada

KEVIN SNOBEL General Manager Caravan Logistics

WARREN SARAFINCHAN Senior Director, Logistics Solutions Maple Leaf Foods

january/february 2009

DECISIONS ’09

Issues Roundtable MT: Thinking differently going forward has been a central theme of our discussion so far. Keeping that in mind, I want to tackle the issue of fuel pricing. If we look at how the rise in fuel pricing was handled the last couple of years and look ahead to the future when prices will likely rise again, is there anything we’ve learned that may cause us to want to do things differently? Robert: Right now, the price of fuel is down, but even if you go back a few months ago, I felt the price couldn’t have been that high because you saw people on Hwy 401 doing 115-120 km/h. And yet they are going back to the shipper and saying you need to adjust my fuel surcharge. It’s a change in mentality that’s required. You need to start by managing the best you can on your side first and then go to the shipper and see if they can help you out. Over the years, we and other serious carriers have invested heavily on devices to save fuel, such as gen sets and aerodynamics, trailer skirting, reducing speed, etc. What more can we do? I think the technology will help us get there, but we will need money from the government to help us out. We have limited help right now from the government in terms of subsidies and incentives. MT: If we look at the trucking industry overall, did motor carriers do enough to invest in fuel saving technologies over the past couple of years or, and I’m not suggesting that we should not have fuel surcharges, have they been used as a crutch to an extent? Armour: You have to remember that during the past two engine revisions we lost fuel mileage in the sake of making trucks cleaner. So buying new trucks actually worked against you and we had to find other ways to save fuel. I think our industry has done a lot. Can we do a little more? Of course. But you have to weigh the technology against the cost. One of the things that comes up once in a while is why don’t you buy futures? We spent a considerable amount of time looking at that and we did used to do it years ago when you could predict fuel pricing and you could predict when to buy and when not to buy. But with the volatility in the fuel situation today, just imagine where any one of us in this room would be today had we bothered to buy futures at $125 a barrel, especially when we were being told it was going to go to $200 a barrel. It’s safe to say most carriers have gotten away from this strategy because it is so risky. Nobody would have thought a few months ago that fuel would have ended up at today’s prices. Any of the carriers that were serious about the business had already implemented speed control in their trucks and carriers like Robert have certainly been leaders in testing different fuel saving devices. I don’t know what else we can do about fuel. The oil companies hold all the cards. MT: We’re talking about having idling controls, speed controls – does it surprise you that at least 30% of motor carriers, at least according to our research, don’t support speed limiter legislation? Snobel: It is very surprising. When you look at an 800 km trip from here to Chicago with a truck limited to 100 km/h, it is go-

ing to take eight hours to get there. If the driver goes 110 km, he is going to take the chance of getting a speeding ticket and save maybe 20 minutes. So what does he really save? Nothing. And with the fuel wasted, he’s cost the company money. With drivers you have to educate, educate, educate. Teach them to slow down; teach them why they should slow down. We are not monitoring fuel consumption to slap them on the wrist, we are trying to show them how by going 100 km/h rather than 110 km/h you save this much money, at Christmas you would have got this much of a bonus instead of no bonus and you will be helping us stay in business this year and next year and the year after. The other issue is that there is nowhere for drivers to stop and rest. Go from Montreal to Windsor, how many truck stops do you have? That costs fuel, that costs money and it wastes time. Also, we really have to get the government more involved so they can help the industry. We’re not looking for handouts; we’re looking for different ideas. MT: Warren, if we look at it from a shipper’s point of view, do you see shippers becoming more vigilant in the future in their carrier negotiations over fuel surcharges? Do you see shippers asking carriers exactly what they’re doing to improve their fuel economy? Sarafinchan: From a shipper’s point of view, we need to be smart about how we are utilizing the assets. We need to be finding efficient routing. We need to be leveraging some of the new technology tools that are available. Equally, some in the motor carrier industry have done a lot to improve fuel utilization, but I don’t think that across the whole industry we’ve done enough. And, frankly, when we go into the next round of fuel price increases, we need to stretch that much further from a technology and assets point of view in how we manage drivers and in how we look for collaborative ways to drive such costs out. The shareholders and customers are expecting more. Goodwill: Some of the shippers are getting a lot more involved in the issue of energy conservation. What I am seeing is them specifically asking carriers about their energy and fuel conservation programs. They are asking carriers what they are getting in miles per gallon and they expect the carrier to know that. It looks bad on the carrier when their people can’t speak to that. And we have to talk about this fuel surcharge thing. While I applaud what is being done on the trucking side, I think where we fall down a little bit is on the communication and transparency of the discussion with the shipper. You have carriers charging a 51% surcharge and still moaning and groaning about not making enough money and then you have carriers that take the FCA surcharge and drop it by 20%, 30% or 40%. That creates a credibility gap with shippers. We understand why truckers need fuel surcharges but there has to be more transparency. What do carriers really need? I think most shippers are willing to listen if the carrier is doing all the right things. Otherwise why should a shipper pay for a carrier that doesn’t have it together?

DECISIONS ’09

Issues Roundtable Armour: The fuel surcharge was at a level (of the base rate) where it was ridiculous, it was never intended to be there. But we have tried as a carrier to go to customers and say let’s set that bar at a more realistic level, and if fuel went way down then we will adjust your base price way down. I have no issue with doing that. But there seems to be a real reluctance to do that. There almost seems to be two departments with customers. There is the pricing department and then somebody else who pays the fuel surcharge. We’re not looking to increase anything; all we want is to improve a ridiculous situation. But we’ve had very poor success and have almost given up on it. I wonder why there is so much resistance to that. Wouldn’t that be a better way to do this?

carriers to come back and say what we agreed to back then has changed and tell me their story. Unfortunately not everybody does that. Goodwill: Of course, it’s not always a level playing field because the railways come into the picture and are asking the shipper why he is using trucking when rail has a lower fuel surcharge. We have all these puts and takes in the market. Venslovaitis: It’s becomes a negotiating

tool that doesn’t reflect real costs in some situations I think. Snobel: That’s a key point you bring up. A lot of carriers go in and use the fuel surcharge as a rate increase. And you have to separate the two. Fuel has the fuel surcharge and here is your base rate. And if you want a rate increase, you should say you want a rate increase. If you want a fuel surcharge increase, establish your base, talk with your customers and tell them what you need, and that’s it. mt

Venslovaitis: I’m all for it. Snobel: Anyone who ships by air freight knows that this is the fuel surcharge; pay it or your freight sits. Or with ocean freight, you have the bunker surcharge and if you don’t want to pay it, your freight sits. It’s that simple. So why are customers reluctant to pay the fuel surcharge for truck freight? Because you have every Tom, Dick and Harry running up and down the road and not charging the proper amount. We are our own worst enemies. Goodwill: That’s exactly what the problem is. If everybody said we are going to charge X% of the FCA fuel surcharge and let’s duke it out on the freight rate portion, that would be fine. But the fact is carriers do not all have a strong backbone and there is not a unified camp on surcharges and that instills uncertainty and a lack of confidence on behalf of the shippers. The carriers who are going to survive are the ones that know their costs. Venslovaitis: We had the fuel surcharge fight six years ago and we came to an agreement on the piece that needs to be for fuel, and the pieces for infrastructure and for drivers. I think going forward from there, fuel hasn’t really been an issue in any of our negotiations. Now we are looking at what’s the base rate needed and I have a spreadsheet with 47 lines on it for each different lane, each different carrier, each different situation. If there is an issue, I expect our

When the going gets tough, the tough get smarter If there was ever a time to find ways to run your business more efficiently, now is the time. So, where do you find accurate capacity concerns based on Now Available! information about industry trends and future estimates for shipment volumes, rates and surcharges, so that you can plan your operation accordingly? Where can you find stats that allow you to compare your trucking operation to others, so that you can identify potential problems and opportunities for your business? Look no further, Motortruck Fleet Executive is about to publish a comprehensive guide for fleet managers and transportation professionals, called “Inside the Numbers” – a snapshot of expectations for shipment volumes, rates, surcharges and

detailed research of shippers operating in several industries. • What can your trucking operation expect in 2009? • What are the business trends that are changing your industry? • What are the strategies shippers will be using to stay the course in 2009? This timely report will provide you with a wealth of knowledge that you can use to guide you through the difficult year ahead. To Order - Go to: www.trucknews.com/inside or call: 416-442-2122 or 1-800-668-2374

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january/february 2009

125

That’s the number of North

WELCOME to Inside the Numbers. We’ve been busy collecting a great deal of

American transportation and

data on industry trends and statistics through

logistics industry mergers and

our BIG Transportation Media Research division.

acquisitions recorded through

We’ve also been collecting such data from other

InsidetheNumbers

to the third quarter, according to a report from PricewaterhouseCoopers (PwC). The

sources. And we want to share it with you.

TRUCKING PERFORMANCE FROM START OF RECESSION TO MARKET TROUGH

consultancy found that deal activity slowed during the third

Nov ‘73 to Mar ‘75

quarter, with only 37 deals

-45.42

Jan ‘80 to Jul ‘80

$50 million) announced, bringing the total deals through the third quarter of 2008 to 125 – down from 193 deals announced in 2007.Given the current economic and credit

Recession cycle

(disclosed value of at least

- 0.72

Jul ‘81 to Nov ‘82

-33.27

Jul ‘90 to Mar ‘91

-17.2

Mar ‘01 to Nov ‘01

-13.56

Mid-Oct -22.034

AVERAGE

environment, PWC expects that deal activity in the fourth

-32.5

CURRENT

quarter will likely not exceed

-50

the levels seen in the third

-40

-30

-20

Accordingly, deal value in 2008 is not expected to match the levels of the previous two years.

Motor Carrier Perceptions on Direction of Fuel Surcharges for 2009

PENETRATION OF VARIOUS SURCHARGES AND MOTOR CARRIER PERCEPTIONS ON DIRECTION Border security surcharge Border delay surcharge

9% 26%

Detention surcharge

Increase 18%

MOTORTRUCK

0 %

The current recession of the North American economy is expected to be among the worst since the Great Depression. To get an indication of just how much motor carrier valuations stand to suffer in coming months, it’s worth looking back at how trucking stocks fared during the deepest recessions of the past. Unfortunately, history shows that the current losses of up to a third of share value are not as deep as they may go.

quarter and may even decline.

Stay about the same 44%

-10

NBF Economy & Strategy (data from Datastream)

Currency surcharge Fuel surcharge

Decrease 38%

47% 23% 97%

0 20 40 60 80 100 120 Surcharges present an important way for motor carriers to capture revenue lost due to issues beyond their control, such as the fuel price hikes we have endured the last two years. The carrier version of our annual Transportation Buying Trends Survey revealed that basically all motor carriers have fuel surcharges in place. The two main questions surrounding fuel surcharges, however, are whether motor carriers are truly able to recover through surcharges the entire cost of fuel when prices spike and whether they will be able to continue to make surcharges stick in the face of a North American economic downturn that may leave motor carriers competing vigorously for every scrap of available business. Diesel pricing has dropped significantly in recent months and a large number of motor carrier executives responding to our survey (38%) expect their fuel surcharge rates to drop in 2009 while 44% expect fuel surcharge rates to stay about the same. Only 18% expect an increase in their fuel surcharge rates.

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