Motortruck Fleet Executive March/April 2010 by Annex Business Media

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Fleet Executive C A N A D A ’ S

B U S I N E S S

M A G A Z I N E

MARCH/APRIL 2010

F O R

F L E E T

O W N E R S

exhausting experience Engines meeting 2007 emission standards have now notched many miles. Are they living up to expectations?

HUMAN RESOURCES Solutions to family business dynamics EXECUTIVE FILE Behind the scenes at the latest big merger GREEN TRUCKING Let’s look 20 years into the future

Less tires. Less fuel.

Brent Bergevin – Director of Transportation Gemini Motor Transport

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contents March/April 2010

Vol.79, number 2

COVER STORY

Exhausting Experience . . . . .

How are the EPA2007-compliant engines shaping up in the real world? Maintenance issues, road breakdowns and loss of fuel economy are commonplace, according to fleets at the annual meeting of the Technology and Maintenance Council.

FEATURES

SLOW RECOVERY A better balanced recovery is still a year away, according to a Conference Board of Canada economist – especially for motor carriers reliant on transborder trade.

EXECUTIVE Q&A John Abate of MSM Canadian Transport sits down with Fleet Executive to discuss surviving the downturn and growing in the upturn.

SMARTER SUPPLY CHAINS The transportation industry must explore new markets and monitor risk to gain competitive advantage postrecession, according to FedEx Express Canada chief David Binks.

VISION 2030 The Future of Trucking Symposium looks 20 years ahead to see a growing addiction to oil, increased urbanization and fully intelligent transportation systems shaping the industry.

ELECTRIFYING ORDEAL Learn all about the changes coming to vehicle electrical systems in the wake of the latest round of emissions regulations.

MERGER MEN We catch up with the two players behind one of the trucking industry’s most recent mergers – Vaughn Sturgeon of Warren Transport and Gord Peddle of D.D. Transport – who have joined forces to create Atlantica Diversified Transportation Systems.

DEPARTMENTS VIEWPOINT . . . . . . . . . . . . . . . . . . . . . . . . 6 We’re entering a new year and a new decade that’s coming on the heels of the worst economic downturn of the post-War era. Editorial director Lou Smyrlis looks at some of the most important questions for the future of trucking. COMPETITION WATCH . . . . . . . . . . . . . . . . . . . 8 RTL-Westcan acquires Calgary’s ECL Transport; Meyers Transport patriarchs pass company torch to daughters; Contrans Group buys up certain assets and business of Truboy Freight International; TST Overland Express improves Mississauga terminal’s cross-dock operations; and more. TAKING CARE OF BUSINESS . . . . . . . . . . . . . . . . 9 Now is the time for an entrepreneurial evolution to rise from the rubble and lead Canada to the forefront of international growth, says Mercantile’s Mark Borkowski. MY HR SPACE . . . . . . . . . . . . . . . . . . . . . . 10 Family businesses create some challenging dynamics – but there are solutions. EQUIPMENT WATCH . . . . . . . . . . . . . . . . . . . 12 Paccar ups North American engine ante with new MX; Shell Lube Express machine offers faster, cleaner oil changes; Stemco unveils new brake training vehicle; SAF-Holland intros new vocational suspension; and more. INSIDE THE NUMBERS . . . . . . . . . . . . . . . . . . 38 How much have base rates for ground transportation fallen over the past year? Why are shippers diverting freight from truck to rail? Plus: why there’s a ceiling to how high trucking rates can rise. mar/apr 2010

what’s on trucknews.com? Blogs • David Benjatschek finds there’s a lesson to be learned about leadership from Canada’s “Own the Podium” program at the recent Winter Olympics in Vancouver. • Has the recession permanently changed the way we do business? Editorial director Lou Smyrlis discusses the future of trucking in his latest blog. • Caravan Logistics’ Kevin Snobel argues the importance of due diligence as drivers and company managers to avoid potential legal entanglements down the road. • Trucker Harry Rudolfs delights readers with a two-part blog chronicling his experiences on the road with Mackie Moving Systems’ patriarch, Ross Mackie.

Web TV: Transportation Matters • THE UNDISCOVERED COUNTRY: If we look 20 years into the future of transportation, what would we see? • SLEEP APNEA: Steven Laskowski of the Ontario Trucking Association discusses the growing problem of sleep apnea among truck drivers. • CFMS CHANGES: Organizers of the Canadian Fleet Maintenance Seminar are looking to breathe new life into the decades-long event. Dave Ongaro, general manager of CFMS, sat down to discuss some of the changes coming at this year’s event. • CSA 2010: Both carriers and drivers can expect major changes with the coming of the new CSA 2010 rating system. Do you know what’s in store for your operation?

You Said It . . . “We need to quit labelling ourselves and we need to stop looking down our noses at others. Here we have carriers who cry about cheap brokers who don’t have skin in the game…brokers crying about carriers...OTA verses non OTA...the industry against people with badges etc. ‘If they’re not like me they’re BAD…and they’re out to get me.’ The trick to doing well is to partner with people who are above average in capability. Brokers aren’t bad when you’re dealing with good ones who pay fair rates promptly. Likewise carriers aren’t bad when they treat their shippers or broker partners like customers instead of as an unnecessary evil. Circle your wagons and only deal with capable people who have integrity...your results will quickly improve.” – Rick responding to Ray Haight’s blog: Ray’s Rules 4

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Motortruck

Fleet Executive

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

Viewpoint

MARCH/APRIL 2010

VOL. 79

NO. 2

Editorial Director

Important questions for the future

Lou Smyrlis (416) 510-6881

lou@TransportationMedia.ca Managing Editor

here seems to be a great deal of interest lately in the future of trucking. Industry analysts have been devoting a heck of a lot of ink in trying to figure out how the face of the industry will change over the coming decades. Last month, I spoke on that very topic at a well-attended symposium organized by the Transport Institute of the University of Manitoba and we’ve devoted a Lou Smyrlis, MCILT good bit of space recently in the Editor pages of Fleet Executive to fulou@transportationmedia.ca ture-thinking industry executives and analysts. Why all the fuss? Well, we are entering not only a new year but also a new decade. And we’ve just emerged from the worst economic downturn of the post-War era, so it’s only natural for industry folks to be looking forward to better times ahead. But trucking has also really taken it on the chin the last couple of years and the change we’ve seen as a result is monumental. Consider just one change Jim Hebe, Navistar’s senior vice-president of North American sales operations, pointed to at the recent TMC. (Of, course, the fact that the charismatic and controversial Hebe, who became an industry icon during Freightliner’s reign as the North American Class 8 market share leader, is now speaking for rival Navistar, and has been for some years now, is, on its own, indicative of the change this industry has seen.) Long and tall, the beloved truck style of owner/operators and drivers across the land for decades, is “dead and gone,” according to Hebe. The classic long-nose conventional, which had also become a frequent spec’ among fleet owners looking to attract drivers, accounted for 25% of Class 8 sales back in 2000. Its market share has since dropped to less than 6% and Hebe believes the long-nose conventional is about to be placed on the endangered species list. A large part of the reason the long-nose conventional seems destined to become part of the industry’s past is that when you get beyond looks, the reality is that it’s the biggest fuel hog around. That just won’t do in an industry that operates on thin margins and one of the most volatile and damaging costs it must deal with is fuel. 6

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Adam Ledlow (416) 510-6890

One of the more important questions for the future is how volatile energy pricing will affect transportation. Historically, minimizing energy consumption has not been a big-ticket concern among carriers and certainly not shippers. The oil price shocks seen in early 2008, of course, brought the issue into the foreground for both. A 45% price increase from January to July 2008, coupled with much greater short-term price volatility, was impossible to ignore. And so is the likelihood of a return to such high prices and the possibility of even higher ones as the global economy rebounds. At the very least, continued volatility in energy pricing is a sure thing. The only way for a carrier to be able to justify having fuel-guzzling long-nose conventionals in its fleet is if it could truly pass on all fuel costs to its clients. But shippers were stung badly just before the recession with fuel surcharges, and although they may understand their necessity, I see them becoming much more aggressive in ensuring the carriers they contract with are as fuel efficient as possible. Yet soaring oil prices may not prove to be the main driver for fundamental change in the industry. Rather, the need to significantly reduce greenhouse gas emissions may prove to be the main driver. PricewaterhouseCoopers (PWC) in its vision document, Transportation & Logistics 2030, boldly states: “We see reducing emissions as posing a greater challenge to T&L companies over the next 20 years than obtaining a sufficient supply of energy.” Currently, transportation activity contributes approximately 37% to Canada’s total energy-related GHG emissions inventory. Roughly half of transportation emissions are attributed to freight transportation. From 2002 to 2006, GHG emissions increased 12.6% in the sector, with the trucking subsector comprising the majority of the increase. The situation has been exacerbated by a decoupling of air contaminant emissions from energy use (fuel efficiency has generally gone down to meet CAC emission standards from EPA). So trucking has a big bull’s eye on its back among legislators. The stakeholders PWC spoke to were in agreement that over the next couple of decades, a system would be in place to ensure that the cost of carbon is allocated to the causer. And that will cause a significant challenge for commercial transportation. A challenge we must overcome. mt @ARTICLECATEGORY:129;

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

julia@TransportationMedia.ca 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 Mary Garufi

Video Production Manager Brad Ling

Research Manager Laura Moffatt

Vice President Publishing Alex Papanou

President Bruce Creighton Head Office 12 Concorde Place, Suite 800 Toronto, Ont. M3C 4J2 Motortruck Fleet Executive is published by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd., a leading Canadian information company with interests in daily and community newspapers and 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 Fleet Executive is indexed by Micromedia Limited. PUBLICATIONS MAIL AGREEMENT 40069240 Return Undeliverable Canadian Addresses to: Circulation Dept. – Motortruck Magazine, Suite 800 – 12 Concorde Place, Toronto, ON M3C 4J2 USPS 016-317. US office of publication, 2424 Niagara Falls Blvd., Niagara Falls, NY. 14304-0357. Periodical Postage Paid at Niagara Falls NY USA. Postmaster send address corrections to: Motortruck, PO Box 1118, Niagara Falls NY 14304. 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

Member/Canadian

CompetitionWatch

RTL-WESTCAN GROUP OF COMPANIES has acquired the business and transportation assets of Calgary-based ECL TRANSPORTATION LTD. ECL has more than 60 years experience delivering bulk commodities and freight throughout North America. Jim Davis, president and CEO of ECL Transportation, will serve as president, while Tom Kenny will continue as CEO of RTL-Westcan. Davis joined ECL in 1998 as chief financial officer and held that role until his appointment as president in September 2003. He moved to the position of president and CEO in January 2004. “RTL-Westcan and ECL are two premier companies in our industry. Our joining of forces brings together two very complementary organizations as ECL’s service and geographic offering augments RTL-Westcan’s current line of products,” Kenny said. “We are looking forward to combining the best of both companies to achieve a ‘best in class’ level of quality, value and service that is unmatched by our competitors.” CONTRANS GROUP has acquired certain assets and business of TRUBOY FREIGHT INTERNATIONAL, an Ontario-based flatbed transportation business. Contrans plans to blend Truboy into an existing operation – Laidlaw Carriers Flatbed LP – that currently operates from offices in Hagersville, Ont. “Adding Truboy to our existing flatbed operations in Ontario offers the existing Truboy customers a great platform for growth and expanded service capacity; and for the existing Laidlaw operation, this acquisition will extend our reach to a new customer base. This should prove valuable to all parties,” said Stan Dunford, CEO of Contrans. MEYERS TRANSPORTATION SERVICES GROUP (MTS) owners Evan and Larry Meyers have announced they are passing the torch to their daughters Jacquie and Natalie. After 37 years of running Meyers Transport, Mortrans and Mosaic Logistics, Evan and Larry have decided the time is right for daughters to take over, the company said in a release. Jacquie Meyers is the daughter of Evan. She’ll assume the role of president of the MTS Group of Companies. Larry’s daughter Natalie Meyers will be serving as chairperson. The company says Jacquie will be focused on growth, sustainability and logistics. She has worked in the industry for more than eight years, focusing on pricing, operations and sales. She has also managed Mosaic Logistics for the past two years, the company says. Chairperson Natalie Meyers will focus on operations, safety, administration and finance. She joined the company in 1995 and most recently served as vice-president of eastern operations. Meyers Transport was founded in 1927 and has been family-run ever since. Truckload food hauler G. EDWARDS ENTERPRISES has been acquired by DAY & ROSS TRANSPORTATION GROUP, the companies have announced. “With the addition of Edwards we are able to make a number of enhancements across our group of businesses. We gain a modern terminal in Saskatoon which opens up new lanes in western Canada for our truckload network and we gain capacity to grow our LTL, small package and dedicated businesses,” says John Doucet, president and CEO of Day & Ross. Jeff Edwards will remain with the company, joining the Day & Ross management team, the company claims. G. Edwards Enterprises was founded in 1977 by Garry Edwards. Today, it primarily hauls produce, meat and other fresh and frozen food items. Day & Ross says it will integrate its newest acquisition with its Fastrax division, uniting the capacity of both businesses for future growth. TST OVERLAND EXPRESS has expanded its Mississauga terminal to improve cross-dock operations. The upgraded facility features 114 doors (20 more than before) and higher ceilings, providing the carrier with greater flexibility in serving its customers, TST Overland Express has announced. TST’s primary cross-dock serves as the carrier’s hub for most long-haul linehauls between eastern Canada and the US or Western Canada. “We made the decision to move forward with the investment in this expansion to ensure that we are ready for the increased business generated by the rebound in the economy,” said Rob O’Reilly, president of TST Overland Express. “We have commitments to our current customers plus goals to continue our growth path. This facility is key to our success in both areas.” Correction Transportation Media was provided incorrect equipment counts for the Yanke Group’s listing in our annual Carrier Capacity Guide. The fleet should be listed as having 15 straight trucks, 352 tractors, 702 trailers and 412 containers.

For daily COMPETITION WATCH news go to www.trucknews.com or subscribe to our bi-weekly e-newsletter. 8

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TakingCareofBusiness

don’t wait; get involved today Now is the time for an entrepreneurial evolution

“

specter is haunting Canada – the specter of complacency.” Although tongue-in-cheek, this statement points to a very serious matter in this country, the tendency towards riskaversion. It is going to be up to new entrepreneurs who are not afraid and motivated to put their ideas and money on the table. Canada needs more entrepreneurs. For those entering the entrepreneurial world, many will be wildly successful; many will fail. Some will try again and again until they find their place in the world of successful ownership. As a result of downsizing, poor planning and a plethora of other factors we are all too aware of, Canadian industry, which is one of the most technologically advanced in the world today, has suffered arguably more than any other country in the world. The number of truly gifted professionals who are being unused in Canada or that are taking permanent flight southward or to other parts is, quite simply, a national embarrassment. This call to support entrepreneurism is a call to those who can help capable individuals left by the wayside, to rise from the rubble and lead Canada to the forefront of international growth. We are looking for a ripple of productive economic activity. Every piece of the economic puzzle exists in Canada; we have the know-how and the investment capital. What we lack is the gumption to take the bull by the horns and realize our opportunities. The economic pie is massive and if Canada is to survive

the next century, it will need to grab a significant piece. Let us make one issue perfectly clear: our survival depends not on government intervention, but on the initiative and ingenuity of Canadians. Entrepreneurship is about creating wealth. It is about building and growing much more useful enterprises. New wealth and economic growth in the future will come from commercializing new technologies and growing our smaller and medium-sized companies into international competitors. To those individuals interested in exploiting opportunities, there are a multitude of them available. Sustainable societal wealth is not created by the accumulating, rearranging and manipulating of wealth. Experience shows us that real wealth – those products and services which are tradable and exportable – means a great deal more to an economy than inflated real estate prices. The question must be asked as to what the current and established industry companies will do and are they going to promote the existence and success of such wealth-creating enterprises in Canada. Although money knows no boundaries, economic peaks and troughs have significantly stronger currents on national economies. One of our super ordinate goals must be the preservation, as well as creation, of jobs and the increased ability to maintain development and commercialization of products in Canada by Canadians. An extra effort must be undertaken to

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) 368-8466 ext. 232 or mark@mercantilema.com.

explore the options of management buyouts, joint ventures, technology transfers, and most of all, start-ups. Entire divisions are being cut from fat corporations no longer interested in mass production, leaving many attractive and more lucrative market niches upon which to capitalize. It is precisely these types of wealth-creating ventures that drive the Canadian economy and its tax base. Real estate flips do not create real wealth. We in the industry have been too preoccupied in the safe money game. There is a growing urgency that we get our hands dirty with the real crux of economic activities. We must help and support start-up ventures. Do not wait, get involved today. mt @ARTICLECATEGORY:3361;

mar/apr 2010

the human edge

family matters Family businesses create some challenging dynamics, but there are solutions

avid Shlagbaum uses a joke to illustrate the challenging dynamics of a family business. A father calls his son into an office where there are two hats on the table. One hat says “boss” and the other says “dad.” The father puts on the “boss” hat and says, “Billy, I’m sorry to say this, but you’re not working out. You’re not right for this role. You’re fired.” Then he immediately puts on the “dad” hat: “Billy, I’m so sorry. I just heard you got fired! Are you okay?” There is certainly a long tradition of fleets that carry family names on truck doors, complete with the footnote of “and sons” to indicate the expectations of a legacy, but his joke shows the nature of some of the business model’s unique issues. In many cases, the challenges are not overcome. About 70% of family firms will not survive the transition to a second generation, notes Shlagbaum, president of the Ontario chapter of the Family Firm Institute, which specializes in advice and research for family businesses. The failures themselves can often be linked to a lack of clearly defined roles and responsibilities. Fundamentally, any business will need to make decisions that are not influenced by family relationships, he says. It can be easier said than done, but there will be a price to pay if the line between family matters and business issues is allowed to blur. A parent who pays two siblings the same salary in the name of “family unity” may be overlooking the fact that one of the roles could be covered at one quarter of the cost. The business is robbed of the chance of finding the best candidate for the job, unrelated members of the management team see that paycheques are not linked to performance, and overall operating costs are inflated. “You can wind up distorting the value of the company,” Shlagbaum adds. “One of the decisions that people involved in a business have to make at an early point is, are you building a legacy or are you creating wealth?” he adds. Business decisions that are entirely limited to preserving a legacy can hurt everyone involved. The next generation of a family may actually want to forge an entirely different career path, and a child might lead a venture to failure if

To find a HR Essentials workshop in your region contact:

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given the business outright. “Without skin in the game, very often there’s no commitment,” he explains. Even if they buy the business, a child may be taking on debt for something they don’t really want. It illustrates the importance of a clear line of communication. Regular meetings of a formal “family council,” complete with the services of a professional facilitator, can be important to resolve issues that are unique to a family business. “The role is basically to enfranchise all of the various stakeholders, give them an opportunity to express their needs, their goals, their concerns,” Shlagbaum explains. It can help to identify issues such as a jealousy between siblings, which, unchecked, can affect decisions in the workplace. “You’re setting up a vehicle for communication that is designed to bring up those issues; to put on the table the issues that…could wind up impeding success.” The discussions may have an impact on something as fundamental as the way assets are divided. Someone who is not interested in the daily activities of a business, for example, could own the land that is leased back to the fleet. And a formal shareholders agreement can clearly define roles and responsibilities of everyone involved, complete with the governance model that explains how decisions will be made. Other formalized documents should include a clearly defined business plan and a succession plan that considers the goals and needs of everyone involved. Granted, the formalized processes can be a challenging step for many entrepreneurs. “Some people who have been running their business for 40 years just can’t deal with the intrusion of a third party,” he admits. But it is the type of support and planning that can be good for business and family unity alike.

Funded by the Government of Canada’s Sector Council Program, the Canadian Trucking HR Council (CTHRC) is an incorporated not-for-profit organization that helps attract, train and retain workers for Canada’s trucking industry. For more information, 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

Driver Job Satisfaction (scale of 1 to 5) 2006 2007 2008 2009

3.66 3.66 3.48 3.13

Top 5 Reasons To Consider Working for Another Carrier – Driver vs. Manager Perceptions Reasons

Drivers

Fleet Managers

Better money

83%

77%

Better benefits

48%

42%

Better rewards program

22%

30%

Better career opportunities

34%

30%

Better scheduling

28%

Level of Concern Regarding Driver Needs Making sure driver equipment is safe Paying drivers on time Providing drivers with adequate safety training Getting drivers home when promised Giving drivers enough time to complete their trips Providing drivers with a competitive income Meeting regularly with drivers Making sure driver equipment is modern Offering drivers job security Providing drivers with training in new technologies Rewarding drivers for strong performances Seeking their advice on equipment purchases

Drivers

Fleet Managers

Difference

3.9 4.3 3.4 3.3 3.4 3.3 2.7 3.4 3.1 2.9 2.9 2.3

4.9 4.7 4.6 4.5 4.5 4.4 4.2 4.1 4.1 4.1 4.0 3.4

-1.0 -0.4 -1.2 -1.2 -1.1 -1.1 -1.5 -0.7 -1.0 -1.2 -1.1 -1.1

LEVEL OF CONCERN REGARDING DRIVER NEEDS

With the memory of the deep recession still fresh and the pace of the recovery frustratingly slow, motor carriers still troubled with excess capacity can be forgiven for not thinking too deeply about the prospect of another acute driver shortage.Yet a confluence of events may well bring about a driver shortage in the years to come. Our annual research, conducted in partnership with the Canadian Trucking Human Resources Council, shows that driver job satisfaction levels have been dropping. On a scale of 1 to 5 (with 5 being most satisfied) drivers last year rated their job satisfaction at just 3.13, compared to 3.48 the previous year and 3.66 for the two years previous to that. Other research conducted on behalf of the CTHRC has shown improvement in driver turnover rates, but if job satisfaction levels continue to plummet, those gains may suffer a reversal. Fleet managers have a pretty accurate picture about what would make a driver leave to work for another carrier, our research shows. But money is not the only thing behind job satisfaction. Feeling that the employer has an adequate level of concern for driver needs also goes a long way towards retention. Our research, however, reveals distinct differences between managers and drivers in terms of how managers view their level of concern versus driver perceptions of management. In all cases, drivers are less convinced of their managers’ concern. For instance, managers appear to be concerned that they meet regularly with drivers (4.2). On the other hand, drivers rate management’s level of concern as 2.7. 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

mar/apr 2010

EquipmentWatch Paccar ups North American engine ante with new MX By Jim Bray Kenworth and Peterbilt customers now have a new, high-tech engine choice in parent company Paccar’s MX diesel. Paccar took the wraps off the North American-spec’ MX at its Mount Vernon, Wash. technical centre on Feb. 4, inviting media in from all over North America for the occasion. The introduction came after a successful 80 million-kilometre test program in which the company says the MX performed up to expectations for power, efficiency and cleanliness. Paccar says the MX offers best-in-class performance, economy and, according to chairman and CEO Mark Pigott, is one more step forward in the company’s plan to offer its own complete powertrain solution. Pigott says that, while the launch of any new product is a momentous occasion, “This introduction is even more so because it’s occurring as our industry continues to confront the worst recession in decades.” He points to the realities of aging fleets that will need to be replaced and low dealer inventories of new and used trucks as positive signs for the industry. “The good news,” Pigott says, “is that Paccar is in an excellent position to grow when the economy improves.” The Paccar boss says the company invested a billion dollars into its engine program over the past decade and has delivered an entire family of engines, two new engine factories, expanded engine test facilities and has “the best engine development team in the business.” A clean sheet design, the MX is a 12.9-litre, inline six-cylinder turbo diesel with four valves per cylinder and an in-block cam design that not only allows it to be mounted lower, reducing vibration characteristics, but which also reduces its complexity thanks to fewer moving parts. “Our goal,” says Paccar president Jim Cardillo, “was to offer the lowest cost of ownership for Kenworth and Peterbilt customers and we think we’ve achieved that.” He cites what he says is the MX’s best-in-class fuel economy and drivability, torque-to-weight ratio, and easy access for maintenance. The MX engine can be configured to put out from 380 to 485 horsepower and up to 1,750 lb.-ft. of torque, which the company says puts it at the upper end of the power/torque range for Class 8 applications. Part of its efficiency, Cardillo says, comes from the use of CGI (compacted graphic iron), which he says is 75% stronger and stiffer pound-for-pound than gray cast iron. Paccar, Cardillo says, was first to use CGI for the cylinder head and is the only manufacturer to use it for both the engine block and the head. 12

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Using CGI shaves about 150 lbs. from the weight, according to Craig Brewster, Paccar assistant vice-president, while a crankshaft design that eliminates counterweights saves about 25 more pounds. The result is an engine that tips the scales at about 325 lbs. less than the Cummins ISX. The design and construction of the block and rear gear train also contributes to significantly lower in-cab noise levels, Brewster says, “resulting in a more comfortable driver environment.” Paccar claims a noise level for the MX that’s three times more quiet at idle and about 1.5 times quieter at 88 and 113 km/h (55 and 70 mph). That quiet performance was noticeable during a test drive session the company offered journalists, who were invited to take a couple of laps around the technical centre’s 1.5-mile high-speed oval and 1.5-mile durability track. The MX engine-equipped trucks were indeed quiet, making conversation easy at speeds up to about 105 km/h. “You can lower the radio volume by half,” Brewster says, noting that, “When we heard that from our test drivers, we knew we were on the right track.” The MX engine also uses fractured cap technology for the main crankshaft bearing, which Cardillo says results in increased strength and contributes to longer power and torque curves across a wide range of RPMs. Brewster says the flat torque curve gives the MX a more responsive feel and excellent drivability while helping reduce downshifting under load. He also says its integral engine brake (rated at an industry-leading 460 hp at 2,200 RPM) provides powerful performance across a broad range of engine RPMs. The extensive testing of the MX engine for the North American market included some 300,000 hours of extreme lab testing at Paccar’s Mount Vernon technical centre, where they can simulate a variety of driving and environmental conditions. The MX also underwent winter testing near Yellowknife, extreme heat tests in Death Valley, Calif. and the Arizona desert, and high altitude tests above 3,000 metres in the Rocky Mountains of Colorado. This real world testing was helped by Paccar customers who drove the MX in their day-to-day operations, with data-linked trucks sending information to the Paccar Technical Center for analysis. The engines were also run at the technical centre using data gleaned from the real world trials. The commitment to design and manufacturing excellence should contribute to a long-lived engine: Paccar claims a B10 engine life for the MX, which means 90% of the engines will reach a million miles of service as compared, they say, with their competition’s 50% rate. Though new to North America, the MX has been powering Paccar’s DAF trucks for about four years. And, of course, it’s only

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in a location and needs to get from, say, 123 Main, Connecticut to 456 Renè Lèvesque, Montreal, the dispatcher simply keys in the two addresses.The system returns the narrative driving directions, miles between the two points, estimated driving time and the digital map,” Ashburn explains. “The goal is to provide, not only the estimated miles and driving times from A-B,a common use for paying a driver or setting a rate, but also to deliver safe, accurate, easyto-follow commercial routing instructions.” Information of interest to commercial drivers is included; e.g., avoiding dangerous intersections, low-traffic roads and low weightlimit bridges. EastStreet tends to avoid oddly-named streets, favour the in aprovide series ofroutes engines has cranked out over left latest turns and thatthe arecompany easy to follow. It also has data the past 50trailers, years. “We’ve delivered than and 900,000 for 53-foot height and weight more restrictions moreengines than to date,” Cardillo, “andmaps have 125,000 MX engines 16,000 tollsays roads. Its full-color clearly show landmarks like in service America) already. It’s reliable, quiet, and schools,(outside hospitals,North railroads and bodies of water. In November 2005 the ProMiles Software Development fuel-efficient.” Corporation (PSDC) XF V.12 of its heavyIt also appears to bereleased buildingProMiles a reputation. Paccar says, for extruck mileage and routing software which, among other updated ample, that the MX was named “Best Engine of the Year” three features, included updates to zipAsia and postal codes,inthe road datayears running at the Bus World Exhibition China. base, road restrictions, HAZMAT restrictions, toll road fees, and The MX meets EPA2010 diesel engine emissions rules using the interface to ProMiles dispatch partners such as Maddocks, Selective Catalytic Reduction (SCR) in combination with exhaust Tailwind, FreightLogix, and Axon.V.12 and the Owner/Operator gas recirculation (EGR). Diesel (DEF) tanks can be version TruckMiles routing and Exhaust mappingFluid program also boasted ordered in sizes from six to 30 gallons and mounted on either side GPS-compatibility. of the truck. ProMiles and TruckMiles reside on the users comAlthough According Alan Treasure, marketing, puter; i.e., the to databases are frozenPaccar’s betweendirector updates,ofthere is an each MX-equipped vehicleexplains will haveProMiles a DEF gauge on president the dash to exception for fuel pricing, Canada Mark Bowie. “When you build a route we consider the level. fuel provide easy-to-see-and-understand indication of theallDEF prices stops along route, MPG, fuelbelow capacity and “In at the event thethat DEF fluidyour levels drops 10% fillstartlevel,” ing fuel level your tanks, best places to buy fuel. to Treasure says,in “there will and be asuggest series the of progressive indicators Daily price updates via the Internet keep fuel prices current.”

EquipmentWatch

In late 2006 or early 2007 PSDC will introduce street routing with the release of ProMiles XF V.13.“We have always had truck routing at higher levels and routing to major streets in Canada and the US. But when you get down to side streets, turn by turn, this is something we haven’t done yet,” Bowie says.“Currently you can look up a street address, but when you get to the corner of Yonge and Lawrence, say, V.12 does not give you routing directions to Wanless, two blocks away but the street is visible in our map.” A truck’s current location will be displayed on the map as an icon: as the truck moves along, the icon will move along too; the map refresh rate is user-selected. alert the driver of will the be condition, from a warningproject light on the DEF Like V.12, V.13 able to simultaneously several gauge e.g., to anoptimised illuminated light, and to anmaterial illuminated routes; for check truck engine size, number of stops, stop engine being hauled lamp.” and the shortest route. V.13 will also answer the Treasure says the warnings to alert driver of obligatory truck routing questionsare thatdesigned keep truckers outthe of trouble.“We want toand get the truck sufficient restrictions, time-of-day restrictions, the DEF level provide time to take action. truckThe routes through cities, one way no right turn, no leftnew, engine will be produced in streets, North America at a brand turn, etc.,” Bowie says. $400-million plant near Columbus, Miss. Ground was broken for ProMiles V.12 cannot currently used on a are theAlthough plant in 2007, withXF construction finished lastbe year. Engines palm pilot, users can e-mail trips; e.g., pictures of a map, text, state expected to begin flowing from the facility this summer, initially or province breakout, to other computers, including palm pilots. via reconfigured European-built engines, with US domestic proThe company’s first venture into street routing will induction to follow. clude major Canadian and US cities; PSDC will add more in Paccar is already taking orders for the MX through its Kenworth MT future builds. @ARTICLECATEGORY:865; and Peterbilt dealer network. It comes with a two-year, 250,000@COMPANYINARTICLE:024637996; 024644511; 024664030; mile standard warranty, with extended service plans available. Carroll McCormick is an awardSo far as pricing is concerned, Paccar that it will winning writer whowill hasonly beensay covering be competitive, slightly transportation less than a 15-litre, offering industrybut issues and all the technologies for more than a decade. same features. is based in Quebec. Paccar is confident itsHecommitment to engine production and

The Shippers’ Magazine www.ctl.ca Distributed to over 18,000 Shippers across Canada. 14

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EquipmentWatch faith in the future will help the MX earn its place in the transportation industry. “Not many people have built factories in North America in the last 18 to 24 months, but we did,” says Cardillo. “We’re in the engine business in North America, and we’re proud to be here.” Wakefield Canada takes over Canadian BP Lubricants plant Wakefield Canada has inked a deal to purchase a Toronto-based Castrol blending and packaging plant from BP Lubricants. As per the agreement, Wakefield will assume ownership and manufacturing responsibilities for the plant, where it will blend and package most Castrol products for the Canadian market. Wakefield will maintain its exclusive sales, marketing and distribution rights for Castrol commercial lubricants in Canada, the company announced. “BP believes that this alliance will provide the opportunity to combine the global

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technology and marketing leadership of BP with the local entrepreneurial capabilities of Wakefield,” Wakefield Canada said in a release. “This alliance will ensure the continuing success of the Castrol brand, which is already a market leader in the intensely competitive Canadian automotive lubricant market.” Bob MacDonald, president and CEO of Wakefield, added: “We intend to deliver on our aspiration to be the clear leaders in the Canadian marketplace. This is a strategic move for Wakefield and provides us with greater flexibility to deliver intuitive customer service within the Canadian marketplace.” The plant is now in a transitional period and BP Lubricants will retain ownership and operations responsibilities until the transition is completed in mid-2010, the companies report. Wakefield first signed a strategic partnership with BP Lubricants in 2005 and has since marketed Castrol lubricants and services to the Canadian market. Long and tall is now ‘dead and gone,’ says Hebe By John G. Smith Navistar executive Jim Hebe has proclaimed the days of long nose conventional trucks “dead and gone” among a series of pronouncements that suggest North America’s trucking industry is about to face a series of radical changes. The outspoken senior vice-president of North American sales operations pointed to the growing use of intermodal shipments, shorter truck hauls, and the greater importance of the top 30 truck fleets in terms of vehicle sales. Equally, he suggested the idea of “phony down payments” is gone in an era where fleets are struggling to deal with the depreciation on vehicles equipped with costly emission controls. “We’re in a whole new world today,” he said during a keynote address during the annual meeting of the Technology and Maintenance Council.

While classic long-haul conventional trucks accounted for 25% of Class 8 sales in 2000, the market share has since dropped to 5.8%. “It ain’t coming back. That truck is going to be rather unique on the highway,” he said, suggesting that traditional buyers of the equipment will have trouble getting financing. Part of the blame goes to the cost of emission-controlling equipment. Since 2002, emission regulations have added $25,000 to $30,000 to the price of a truck, and the latest 2010 emissions will ask for $10,000 more from an industry that has been unable to reclaim a dime of these investments in the value of the used vehicles. An $118,000 tractor is depreciating $30,000 in a single year, Hebe said. “What do you think a finance company is going to think about when they look at that amount of risk?” Owner/operators, for example, might need to put down $40,000 on a $130,000 truck. And as fleets adjust the depreciation rates on equipment, they will begin to lose more of the competitive advantage they have over rail. It isn’t the only change to expect in the truck market. The market for Class 4-8 trucks – once “normalized” at 350,000 units a year – is now half that size. Last year, North American Class 8 sales slumped to around 100,000 trucks, while there were less than 50,000 of the lighter Class 6 and 7 options. The latter trucks account for less than 20% of the business, while Class 4 to 5 trucks have grown to 30% of the market. He also alluded to the fact that the Class 4 and 5 vehicles will have a new manufacturer in the next “couple of weeks.” The lighter vehicle segment will become even more important if Hebe is right in predictions that would see the trucking industry lose more of the long-haul market to railways. Railways are now competitive in hauls as short as 400 to 600 miles, which will lead trucks to focus on more regional service, he suggested. As a result, the num-

EquipmentWatch ber of Class 8 trucks will continue to decline, and those that remain will be moving higher densities of freight. “It’s going to be tough on manufacturers, it’s going to be tough on dealers, it’s going to be tough on suppliers,” he added, noting how maintenance services will need to change in the process. Truck manufacturers who have now integrated their own engines need to establish a service network that the buyers of Cummins, Caterpillar and Detroit Diesel came to expect, he added. Manufacturers might also be focusing more attention on the largest customers of all. The 30 largest carriers and two leasing companies accounted for 47% of 2009 sales, and 60% of the orders in the last 90 days of the year. “The concentration of power in this industry is changing dramatically,” Hebe said, noting how a handful of key buyers can have a dramatic influence on a specific brand’s market share. In terms of the equipment that everyone buys, he referred to further integration, with electronics and electrical systems becoming a key focus. While he doesn’t expect much growth in the use of fuel cells, he did refer to product introductions that are focusing on natural gas. There will be further “refinement” of technologies to meet 2010 emission standards, he added. The next frontiers in terms of greener vehicles will include fuel economy, parasitic losses such as the amount of drag in the rear axle, and the ability to recapture energy. “There’s a lot of heat generated on that truck and clearly we’ve got to find ways to use it. “Five years from now, pouring a second fluid into a truck to meet 2010 emissions will be obsolete,” added Hebe. Navistar remains committed to its in-cylinder solution, but it is exploring the potential use of a solid-based SCR. Pining for the good old days? Forget it. “Don’t look for it to ever go back where it was,” he said.

SAF-Holland introduces new vocational suspension SAF-Holland has introduced a Neway ADZ Series drive axle air-ride suspension for vocational trucks it claims is 220 lbs. lighter and 54% more durable than its predecessor. The new suspension also boasts 27% less rolling resistance, the company says, and fewer components require less maintenance. The ADZ Series is designed for vocational trucks and tractors, including applications such as mixer, construction, logging, mining, oilfield, refuse and heavyhaul. The suspension is available in 23,000and 26,000-lb. capacities and can be configured for single, tandem or tridem axle applications. The new suspension features a onepiece integral lower module, which the company claims is the industry’s first onepiece assembly that includes cast equalizing beams permanently assembled to the transverse beam with no fasteners. The ADZ’s V-rod upper control arm directs lateral forces towards the crossmember and frame rail junction, improving bushing life and allowing for a lighterweight crossmember, SAF-Holland says. The ADZ 23K series is currently available through select specialty vehicle manufacturers and is being submitted to major truck OEMs for databook consideration, SAF-Holland says. The 26K series will be launched in mid- to late 2010. The ADZ will eventually replace the company’s Neway AD 23K and 26K series. “The creation of the Neway ADZ Series exemplifies SAF-Holland’s commitment to managing and introducing new technology to the vocational vehicle marketplace,” said Sam Martin, chief operating officer for SAF-Holland. “The Neway ADZ Series delivers on our promise to leverage SAF-Holland global technologies and create products that offer our customers the best balance of performance and value possible.”

Shell Lube Express machine offers faster, cleaner oil changes Shell Lubricants’ new Lube Express system has emerged from tests in Australia, promising a quicker way to complete oil changes. Technicians can even complete the work without getting their hands dirty, so there is no worry about spills or burns. Engines that can take advantage of the system will simply need to be equipped with a new fitting and quick-connect coupling at the base of the oil filter. The process begins by connecting hoses to the sump plug and inlet fitting. An oil sample bottle is inserted into the machine, and air is fed through the hose to the inlet side of the filter. Used oil is pulled out of the filter, oil gallery and recesses of the crankcase, out of the sump and into collection tanks. When the system says the engine is clean, the mechanic replaces the filter, and new lubricant is added. The entire process takes less than 15 minutes. The units will cost between $6,000 and $7,000, while the engine fittings will cost about $70 per unit. Stemco unveils new brake training vehicle, pushing further into market segment Last year, about 20,000 technicians gathered around the back of one of Stemco’s 40 training vehicles to learn how to install wheel seals and adjust bearings. Now they’ll be able to learn about brakes as well – for free. The metal stand that extends from the back of each pickup truck is being equipped with a working S-cam brake. The spider can even be pulled out of the drum and turned to offer a clear view of the way everything works as air pressure is applied. The training is offered free of charge to any fleet, regardless of size and even if its trucks don’t use Stemco products. Granted, it is still an important part of the company’s sales strategy. Sixty per cent of those who did not use Stemco products before taking the wheel end mar/apr 2010

EquipmentWatch training ended up making a switch. “We believe the [brake] category lacks leadership. We base that on the fact the training is not being done,” added vice-president Jim Reis, referring to how brake-related issues continue to dominate out-of-service figures during roadside inspections. “It appears the category is being treated like any other commodity,” he said, referring to manufacturers who have been moving a larger share of production offshore. Stemco does make Duraline products in Brazil, but it is looking to increase production in the US, perhaps on land that it has in Longview, Texas, he said. Its brake tables are already made domestically. The company is also looking for potential corporate acquisitions to round out its brake catalogue. The company failed in an attempt to

purchase Carlisle’s Motion Control Division about a year and a half ago, but that doesn’t seem to be stopping its bid to play a larger role in the market segment. Has Wheel Torque Solutions found a solution to wheel offs? Four companies have joined together to unveil a wheel fastening system that they say will maintain higher torques and eliminate the need to re-torque wheels. Chicago Pneumatic, Alcoa, ITW CIP, and B and D Cold Heading unveiled the system at meetings of the Technology and Maintenance Council. The system is a combination of components and tools. Pac-Sleeve laminated lock nuts are combined with Alcoa aluminum wheels that are thicker where strengthened

bolts are applied, increasing grip length. The tools come in the form of sanders and polishers to clean mounting faces, as well as specially designed nut-runners and impact wrenches. “The key to strengthening the clamp force is maximizing the preload and grip length without comprising the structural integrity of the components,” explained Ross Hill, business development manager at ITW CIP. “Wheel Torque Solutions accomplishes this through the use of industry-leading components that have been tested to achieve maximum clamp force at torques greater than 600 ft.-lbs. “You can’t just cherry pick,” he added of the components and tools. “You have to have tools that don’t let you over-torque.” After the drum is prepared, a ½-inch

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EquipmentWatch driver is used to seat up to three long metal sleeves onto wheel bolts, reducing any potential tolerances between the hole and bolt. The wheels are slipped over the sleeves, nuts are lubricated and spun onto the bolts, and then they are tightened with a Blue Tork electric nut runner using about 600 lb.-ft. of torque. The electronic tools scan and confirm the torque values of each installation. The specially designed nuts promise to be 30% stronger than conventional fasteners. Most important, they help to maintain the loads that hold everything together. The threads will even maintain their torque when exposed to more than the traditional three drops of oil. The system has been in development for more than a year, with an unnamed fleet that had faced a catastrophic wheel loss.

Volvo, Mack tracking repair information with online folders Volvo and Mack dealers will now have the opportunity to better track every step in a vehicle repair, using an online system known as MVASIST that will become mandatory at each dealership in 2010. The online electronic folder is gradually filled with every related piece of communication, including the estimate, repair order, inspection details, photos and the invoice, and offers instant access to Volvo or Mack recalls and campaigns. Using this online portal, for example, a dealer can check on warranty coverage, contact a district service manager to ask about any goodwill to cover some of the repair costs, and then communicate with the customer. Each note can be tracked

in context with the next. The tool also offers the chance to track down the source of any misunderstandings about what took place and when. A dealer will save at least an hour in communication time every time he uses the tool, adds Dwight McAlexander, director of dealer systems and processes. The system comes in three levels. A basic version includes a fleet manager, notifications about service events and the all-important electronic folder that tracks all related information. The plus version includes a dashboard that tracks external service, and fleets can initiate an electronic service request, informing a dealership that the truck is on the way. The premium version includes data on fleet-defined procedures, campaigns and PM schedules.

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Profitability

Better balanced recovery still a year away, warns Conference Board of Canada economist BY JULIA KUZELJEVICH

or the many motor carriers reliant on transborder trade, the light at the end of tunnel remains somewhat dim, according to the insights on the economic recovery shared by Glen Hodgson, senior vice-president and chief economist at The Conference Board of Canada. While economic growth has returned in the US – reaching 5.7% in the last quarter – Hodgson said there has not yet been a strong recovery in private investment and consumer consumption, and added that the US will pay a high price for the heavy government investment that has taken place to boost the economy. Hodgson made his remarks at the Conference Board’s recent Supply Chain Management Forum held recently in Toronto. “At the peak of the housing bust in the US, one third of mortgages were subprime, ‘NINJA’ mortgages, i.e. no-income, no-job mortgages. The one piece of the US financial workout that’s not yet been settled is the housing market. There’s no true stability,” said Hodgson. While there is still a significant overstock of housing inventory in the US, the supply is down to six months, and housing starts are predicted to rise, but not at a great rate, he said. The labour market in the US lost 8.4 million jobs in the last year, leading to huge erosion in consumer confidence. “US consumers make up 70% of US GDP, and 15% of the world’s, so a drop in consumer confidence is significant. China will eventually take this over as Chinese consumers move from saving 42% of their income and gain access to credit. Americans are actually saving again – about 5% of their actual paycheque,” said Hodgson, who predicted a “temperate recovery and consumption” for the US, which is now borrowing about 1.5 billion dollars annually, a hole that represents about 10% of GDP. “They will have to have a serious debate

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about taxation,” he said. The US will grow at about 2.8 % this year, but the balance of “too much government” is wrong, and represents what Hodgson called a “U-shaped recovery.” He said the US won’t experience sustainable growth before 2012. In Canada, meanwhile, the country was also in a hole. In January 2009, the threat of a shift in government “saw the Tories behave like Liberals, spending their way to growth,” said Hodgson. He said there will be 2.8% growth for 2010 in Canada, and 3.3% next year but “better balanced.” The Canadian currency is now a “petro-loonie,” i.e. closely tied to oil prices. “Assumptions about oil are that it will rise steadily. We’re forecasting the dollar will rise to around 98 cents at the end of 2010,” said Hodgson, who noted that the Canadian dollar will remain anchored at a new 95-cent level with upward pressure. “It will be a challenge for organizations to do business with a strong currency. We’re at a time where global currencies are under attack. Don’t plan on an 80-cent dollar, plan on 95 and have a plan for the dollar at par as well.” With regard to banking activity on interest rates, with 5% annualized growth announced in Q4, the Conference Board of Canada forecasts that the banks will raise rates in Q3 and will raise them very quickly. “Our view is that banks will raise rates in tandem with rates in US, not to put pressure on the Canadian dollar, but rates will rise,” said Hodgson. Growth in the Canadian economy should be a signal to companies to invest in machinery and equipment, “but I see a lot of firms trying to cash-flow manage. Investment was down 17% in 2009, against our 15% forecast. We have not seen a rise in equipment investment. Governments are the ones trying to spend money now, with capital investments, and governments will be the dominant inves-

tors up to 2017,” said Hodgson, who added that this kind of growth comes at a price. “Collectively, we’re in deficit. Canada was paying down debt, but government lost revenue in corporate and personal revenue. We’re now deeply in deficit. The question is how quickly we’ll return to balance, said Hodgson. While stimulus spending should stay in place for this year to make sure the economy works, Hodgson said, “We should be talking about when we can balance the budget again. With tax increases off the table, that puts a lot of pressure on the budget. The government is starting to muse about an ‘innovation agenda’ because Canada lacks in productivity growth.” To get more innovation, he advocated that governments should put more pressure on carbon taxation and use. “We see a recovery in private investment and consumption going forward,” he said. In five to 15 years, the rise of India and China, an aging demographic within the industrial world, and integrative trade and global value chains will be additional factors to deal with. Supply chain management becomes “critical to success,” said Hodgson, who noted that firms having an international strategy “built around integrative trade will be in better shape.” “The whole fundamental model for doing business today has changed. Canadian structural challenges include fiscal deficits and debt, an upward shift in the loonie, NAFTA ‘drifting’ with North American trade stalling as the US focuses on security, the dominance of global value chains, and energy and climate change policy.” Hodgson stressed that the US EPA (Environmental Protection Agency) has the power to legally regulate greenhouse gases without Congress. “It has the power right now to put hard caps on the industry,” he said. MT

Profitability

industry leaders John Abate, president MSM Canadian Transport, on surviving the downturn and growing in the upturn BY LOU SMYRLIS

MT: MSM is heavily involved in transborder trade, yet the recovery appears to be taking hold in the US at a very slow pace. What’s your view of the new normal in the transborder freight business? John Abate

Abate: There is still strong pricing pressure, but service is again becoming the focus of our customers. Our customers are getting busier – there is growing optimism from our customers. Any business operating in North America has been driven to look for cost savings and efficiencies with an understanding that the current business volumes are more important today than in the past. They are not about to jeopardize those customers they have left. Customers are planning ahead and are now looking for long-term solutions with solid companies – many have been burnt by the deal of the day. Customers are starting to realize that no one has a magic formula and you get what you pay for – value is driving the agenda. MT: Does capacity remain an issue for transborder carriers? How do you see that being resolved? Abate: Slow or low Canadian exports has reduced the number of trucks available in the US to return to Canada for the growing import trade. This puts upward pressure on inbound rates to Canada. The easy solution would be the strengthening of the US dollar. As the two currencies remain close to par, Canadian exports to the US will continue to struggle and of course affect the balance of trucks being able to get down into the US. It’s tough to get a truck out of Canada right now. It will also help when the financial institutions that are holding the paper get some confidence in the market and pull the plug on the carriers that they are allowing to stay in business, because there is no market for their used trucks right now. Too many carriers are in business today that have no right being in business. MT

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Profitability

Explore new markets, monitor risk, says FedEx Express Canada president BY JULIA KUZELJEVICH

here are many lessons the transportation industry can learn from what just happened in the world economy, according to David Binks, president of FedEx Express Canada. “Growth is returning, but the biggest issue was a tremendous failure to manage risk, and that relates to the financial markets. One of the biggest risks for the Canadian market is the reliance on a single international market, i.e. the US. As we tie ourselves so closely to them, we put ourselves on the edge of disaster when the economic cycles go around. When demand for the US drops, its currency drops, Canadian business competitiveness drops and Canada suffers from an export point of view. Almost 50% of GDP in Canada relates to exports, 80 % of which go to US,” Binks said. Binks was a guest speaker at the recent Conference Board of Canada’s Supply Chain Management Forum in Toronto. Binks noted that the Canadian government is beginning to take some tentative steps to branch out into other world markets. He called Prime Minister Harper’s trips to India and China “the right sort of move,” because Canada is overdue for new trade agreements, and should take advantage of its “friendly, non-adversarial relationship with much of the world.” In the area of supply chain management, said Binks, “One of the most impactful trends we’re seeing over the next decade is the rapid growth of the middle class in developing economies around the world; a massive opportunity, with an additional 800 million members in the Asia-Pacific region alone. When you combine that with the Internet, they will use that ability to go online and buy products like crazy. The Internet will also 24

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give small businesses in the Asia Pacific region the ability to compete for that market, to reach out for new markets and niches. The big businesses that are around are going to find they have a whole new slew of competitors,” he said. But the win-win proposition is that the more access developing markets have, the more the economy is going to grow. “We can’t think about the same problems the same way we used to when we open up access. Traditional perspectives need to move on,” said Binks. “As we open up access, and create new consumers, we wake up to the fact that those consumers are a totally different consumer. We’ll also begin to realize that the new consumer is from a different generation, from a different culture, from a different country. We’d better be ready and be flexible enough in our supply chains to win that business,” he said. Sustainability is a proposition that should also not be ignored, noted Binks. “Sustainability is here to stay because it makes economic sense, it’s a good business decision, and that’s before the politicians get involved in it,” said Binks. “Forward-looking companies are aggressively managing their waste management, but the companies are starting to turn their attention to their suppliers, asking them what they’re doing about supporting those objectives. I don’t see an RFP or RFQ come across my desk that doesn’t ask what FedEx is doing to manage sustainability.” How do you get a competitive advantage? “Have smart, adaptable supply chain strategies. Turn a good marketing strategy into a competitive advantage because of your supply chain. Good strategy provides you

access to do business, to interact, communicate and do trade,” he said. The supply chain also needs to be smarter in trade expertise. “Governments do have a role to play in this, but even in those places where we have trade agreements, it’s difficult. What amazes me is I actually see more companies going back to the old practices of stockpiling inventory near borders, overstressing the transportation system, getting back to JIT deliveries, and forcing prices up. Here we have truck drivers sitting at the Mexico border for hours to go through six different checks. But we have people reluctant to go near certain markets because of the paperwork. My recommendation is to get savvier about the technology you can use to solve issues around regulatory, trade and compliance issues. We launched electronic trade documents this month which allow customers to attach their documents electronically, winning them some points on their sustainability,” said Binks. As companies regaining their focus after the economic downturn they should ask themselves if their sight is good enough. “What hit you on the back of the head is a global market that is totally integrated, creating both risk and opportunity. Don’t assume that the risk of relying on one market is just one of missed opportunity – in this global environment your competitors can be and will be located anywhere. In the Canadian economy, if we’re going to survive we have to expand our horizons, turning supply chain strategy into a competitive edge. When you take a smart supply chain strategy and align it with the other competitive advantages we have in Canada, that will be your opportunity to win in the global economy,” said Binks. MT

GreentoGold

Vision 2030 Future of Trucking Symposium foresees a growing addiction to oil, increased urbanization and fully intelligent transportation systems shaping the industry By

Lou

Smyrlis

Technology Canada – looked 20 years into the future of transportation, focusing specifically on the challenges that will drive change and the energy solutions that will drive mobility. David Hughes, formerly a geologist with the Geological Survey of Canada, addresed the Symposium just before the panel and also contributed to the discussion on how oil depletion and climate change will define the future. Benecchi outlined a number of factors certain to impact the future direction of transportation in Canada, including population growth, urbanization, energy consumption, energy policy, and technological innovation. By around 2030, Canada’s population will have grown by five million and the country will be home to about 39 million people, according to Statistics Canada estimates cited by Benecchi. But that demographic will be considerably different from today’s and is certain to impact the available pool of labour, transportation mobility and

redicting the shape of the future is an imperfect science, littered with predictions so off the mark they are laughable. Consider the famous assertion back in 1899 by Charles Duell from the US patent office that, “Everything that can be invented has been invented.” Or the statement made in 1895 by Lord Kelvin, president of the Royal Society, that, “Heavier-than-air flying machines are impossible.” Nevertheless, transportation companies do require a vision of the future and the various factors that could shape their business in order to strategize for future growth and protect against possible threats. And that is exactly what a panel of experts at the Future of Trucking Symposium in Winnipeg attempted to provide. The panelists – Antonio Benecchi of Roland Berger Strategic Consultants, Bill Van Amburg, senior vice-president with CALSTART, and Rick Whittaker, vice-president of investments with Sustainable Development

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MAR/APR 2010

GreentoGold

government policy. Within 20 years, we can expect to see the setting of a dramatic benchmark in the country’s demographics. For the first time in the history of our country, the percentage share of our oldest citizens will be greater than our youngest. As of the 2006 Census, Canadians over age 65 made up 13% of our population, while Canadians 14 years or younger made up 17%. After 2015, senior citizens will outnumber our youth to the point that by 2031 senior citizens will comprise 23% of our population, while youth 14 years or younger (our future workforce) will make up just 15% of the population, according to Statistics Canada estimates. The 15-64 age bracket, which currently makes up 69% of Canada’s population, will also decline down to 62% by 2031. By 2030, the country’s natural growth will turn negative. We just won’t be having enough babies to keep up with the annual death rate. The growth of our population would then become dependent on immigration. One in five Canadians by 2030 will be a visible minority, and visible minorities will become the largest selection of people entering the workforce. This will impact the face of the labour pool available to the transportation industry, but also future mobility in our transportation network. Benecchi said most of the new immigrants will settle in urban areas and he foresaw even more densely populated cities than we have now. Ontario and British Columbia can expect to see the greatest amounts of immigration. In fact, Ontario’s urban areas will be home to 15 million people by 2030 or about 40% of the Canadian population. “This will define where business will be and where transportation corridors and services will need to concentrate,” Benecchi said. “With urbanization comes congestion. For goods delivery, it means continued constraints and costs going up and a further push towards reducing emissions.” Speaking of emissions, Benecchi’s vision of the future includes a continually growing need for oil. He forecasted a greater than 30% increase in energy demand by 2030 compared to 2010. A bit more than quarter of that total energy demand would be from the transportation sector. And he also saw petroleum-based fuel playing an even larger role in the energy consumption of 2030. He

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expects up to 50% of our energy consumption to come from petroleum-based fuel compared to the 42% reliance we had back in 2004. “The addiction to oil will continue to grow, despite increased efforts on renewable energy. And so fuel costs will go up,” Benecchi warned. Hughes, who has studied Canada’s energy resources for 32 years, doesn’t soft peddle the future likelihood of oil shortages and steep pricing. The existing paradigm of cheap energy fuelling constant economic growth is over, according to Hughes. Global new oil discoveries peaked back in 1965 and since then, our depletion rate of existing reserves has been accelerating, Hughes pointed out. About 64% of oil production in 2008 was from countries which had already surpassed their peak. “The US is most optimistic about when we will reach world oil peak production. It believes it won’t be until 2044. Most other countries believe it will be much sooner, perhaps within the next few years,” Hughes said, adding some experts believe we already reached that peak back in 2008. The cold reality is that there are 5.3 times as many people consuming 8.6 times as much energy today compared to 1850. And yet China and India, with their massive populations, are industrializing and aspiring to consume energy at the current levels of western industrialized nations. By 2008, China was importing 53% of its oil demand. “The world would need six Saudi Arabias to keep up with the expected increase in demand by 2030…And even if we quadruple unconventional oil production (e.g., Venezuelan heavy crude and the Alberta Tar Sands) it would add just 12.6% to world oil production,” Hughes said. With such dire energy challenges, Benecchi foresees environmental policy and regulation continuing to be a factor in shaping the transportation industry’s future. “We expect to see more and stricter regulations. To limit global warming, CO2 emissions have to be reduced on a global basis and transportation, of course, is a key contributor. There is not a lot left to do in the area of smog. Significant progress has been made

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on emissions standards for smog and the emission standards are becoming quite comparable among the developed countries. No further regulation is expected,” Benecchi says. “But the next focus will be on carbon reduction, through improved fuel efficiency. In the US, we expect a standard by 2013 and enforcement by 2016. By 2030, most countries will have enforced strict CO2 standards.” If we carry on at our current pace, we can expect a 45% increase in global CO2 emissions until 2030, which would likely lead to a disastrous 5° C global warming. Major reductions to CO2 emissions are required to keep global warming below the 2° C rise most climate scientists believe is safe. Currently, transportation activity contributes approximately 37% to Canada’s total energy-related GHG emissions inventory, according to government data cited by SDTC’s Whittaker. Roughly half of transportation emissions are attributed to freight transportation, and more than half of those are attributed to trucking, so the industry carries a large bull’s eye. The SDTC’s 2030 vision for Canada’s trucking industry includes the following goals: • Reduce energy intensity by 40% in Class 8 and 80% in Classes 6 and 7; • Reduce absolute energy consumption by 50% from projected levels by the year 2030; and • Reduce GHG emissions by a corresponding 50%. “The vision can be achieved through the development of new technologies, the adoption of advanced policies and regulations, and the emergence of more sophisticated risk management

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techniques for investors,” Whittaker said. SDTC estimates that about $1.5B is needed to fully commercialize the new technologies in its portfolio of high assay projects. Benecchi foresees a distinct future for alternative power in commercial transportation. For example, the share of hybrid vehicles in sales of Class 4 and 5 vehicles is forecasted to grow from the current 1-2% to 15% by 2015 and 20-25% by 2020. Van Amburg from CALSTART also forecasted a “blossoming” of natural gas options along with the ability to blend renewable natural gas. But he cautioned that hybrid truck production is still too low to realize prices that would make it feasible for industry to seriously invest in such trucks. However, he believes only modest volumes – 3,000 to 5,000 unit sales per year – are necessary to move prices to within business cases’ needs. He called for government incentives to provide a big kick-start to this number by helping drive volume up in a targeted effort. Hughes, meanwhile, was not as optimistic about the ability of alternative fuels to meet our growing energy needs. “You really have to look at the scale of what we do with renewables versus what we do with hydrocarbons,” Hughes reasoned. “Renewables will only add about 6%. Renewables are no panacea.” Van Amburg said there is no simple, all-encompassing solution to the transportation industry’s energy requirements. “There is no silver bullet. What you need is a silver buckshot. We need to have a lot of different solutions in play. What’s needed to make the transition? We need multi-year coordinated plans with aligned investments, requirements, incentives and polices, even if we are looking at multiple technologies,” Van Amburg explained. CALSTART is a non-profit clean transportation organization. Its stated goal is to create a clean technologies industry. Based in California, with projects across North America, its focus is on commercializing technology as well as helping fleets implement new technologies. More efficient movement is also needed to reduce GHG emissions and Benecchi foresees the confluence of two events contributing to this. First are federal and provincial government investments in trade corridor infrastructures design to speed up commerce. By 2030, he also expects to see further advancements in technology – such as electronic collision notification and warning, driver assistance and auto-piloted vehicles – to create a fully intelligent transportation system. The most important thing is to figure out how to radically reduce consumption, according to Hughes. “Not burning fossil fuel is the biggest source of future energy. The climate change dialogue, for the most part, excludes the likelihood for diminished energy use,” he said. “The energy sustainability dilemma will be the defining issue of our time as it limits growth.” mt

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Exhausting Experience

Engines meeting ’07 emission standards are plagued with more maintenance issues, road breakdowns and loss of fuel economy, fleets report at TMC By John G. Smith

he transition to engines meeting 2007 emission standards was expected to be relatively trouble-free when compared to the early days of Exhaust Gas Recirculation. Yes, the 2007 standards introduced the industry to Diesel Particulate Filters (DPF), but earlier generations of emissions-controlling equipment were rushed to market. This time, there was more testing. Even fuel supplies were upgraded to give the components some added protection. Curtis Cummings, project manager for power vehicles at FedEx Freight, certainly offered a “good” grade when reporting on his experience during the annual meeting of the Technology and Maintenance Council (TMC). There was no change in Preventive Maintenance intervals. The fleet even continued to use existing CI-4 Plus oils without experiencing any filter plugging. Durability improved and fuel economy was up 1.8%. Steve Duley, vice-president of purchasing at Schneider National, admittedly had a few more challenges. The base engines are reliable, but there have been defects linked to the DPF sensors and fuel dosing components, he said of the 1,876 power units now in service. The new engines also represented a 3% increase in work orders and more DPF regenerations than expected. Still, service was good and reliability has been improving. The transition to the new technology has obviously presented some fleets with more challenges than others. In a poll of 120 fleet representatives attending the TMC meeting, about 60% said they faced more challenges with 2007 emissions hardware when compared to previous models. Sixty-nine per cent cited more maintenance issues, even though 67% noted that maintenance intervals were relatively unchanged. Fifty-eight per cent experienced more road breakdowns compared to the 35% who thought the experience was about the same. Frank Nicholson faced his share of nightmares at TransAm 30

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Trucking, a long-haul refrigerated carrier that has recorded 120 million miles on 971 of the engines. “The list of problems is varied and lengthy,” the fleet’s vice-president of maintenance said. “Our overall scorecard for ’07 iron is unacceptable. There have been constant parts availability issues and we have been working our way through various campaigns and issues.” Extended warranty packages skew true costs, but downtime has increased by 125%, with the length of time in the shop averaging four days and reaching as long as two weeks in extreme cases. “We incur out-of-route and deadhead miles just to cover a load and to maintain our on-time delivery percentages,” he added. What went wrong specifically? Nicholson pointed to a litany of problems. Additional Preventive Maintenance steps were required for the thermostat, clean gas induction components such as the piping assembly, the crankcase filter, check valve and DPF. Parts costs jumped 37% and labour costs jumped 50% when the new equipment was compared to engines built prior to the 2007 emission guidelines. The added maintenance requirements might even be a surprise to some users, he suggested: “Many fleets and even dealerships are not aware of the crankcase ventilation filter and the crankcase filter check valve.” It took three years before a supplier informed him about the check valve in the engine block, consisting of a small screen with a brass fitting. It is now cleaned every 30,000 miles. “Driveability has been acceptable – when you can drive it,” he said. “The EPA 2007 engine has been plagued with various campaigns and updates right from the start, and still continues to this day.” Meanwhile, oil analysis programs showed unacceptable levels of iron, chromium, copper and aluminum. Some increases were as

much as 30% over allowable limits. “We operated without SOS criteria for two or three years,” he notes, referring to how the allowable limits were unknown. Thermostats are also requiring preventive maintenance every 200,000 miles to address overcooling. “Oil is emulsifying and plugging the filter,” he added. “When it fails, it’s in a stuckopen position.” One of the few positive notes was that there was no measurable difference in fuel economy, but he largely contributes that to a more fuel efficient chassis. The regeneration of the DPF is still thought to consume more fuel. Of course, most fleets seem to have challenges of one sort or another. YRC Worldwide, an LTL carrier with 1,688 of the 2007 engines, required some additional engine programming to allow the Diesel Particulate Filter to regenerate when the vehicles were parked, said procurement manager Dan Miller. “We weren’t getting enough regeneration going down the road based on climate condition, being cold, or light loads and short hauls,” he explained. Drivers also had to be trained to notify the fleet when related warning lights were lit. “Distribute literature to drivers. Post things on bulletin boards so they know what to expect. Let them see what the icon is going to look like in the dash so they kind of know what to expect,” he suggested. “And one of the things we’ve had to stay on top of in our shop environment is to make sure mechanics have their software updates.” Meanwhile, every driver at Schneider National receives one hour of training into the new engine technology, while general mechanics get a five-hour session and lead mechanics receive 35 to 40 hours of training. Granted, the 2007 generation of engines still offer some of the worst fuel economy in the fleet at Schneider National. When compared to older engines, 2004 models were accompanied by a 4% increase in fuel consumption, and 2005 engines improved somewhat with a 3% increase. The 2007 engines experienced a 5% sacrifice in fuel economy. “Fuel economy has not been where it needs to be,” Miller agrees, referring to his fleet’s experience. But his fleet has tried to offset the impact using everything from fuel efficient tires to training. As for the durability of the engines that are now in service? “I think that’s still being determined,” Miller says. “The jury’s still out.” MT

POST 2007 VS PRE 2007 TMC FLEET SURVEY

(120 responses)

better same not as good durability

44%

48%

fuel economy

24%

33%

43%

maintenance intervals

11%

67%

22%

maintenance issues

24%

69%

emissions hardware

33%

60%

driver satisfaction

10%

48%

42%

out of service

27%

66%

replacement parts

46%

48%

road breakdowns

35%

58%

mar/apr 2010

it’s electrifying New emissions regulations will also lead to electrical changes By John G. Smith

iscussions about the latest round of emissions regulations have tended to focus on the debate over the use of Diesel Exhaust Fluid (DEF), but several changes to vehicle electrical systems are also coming along for the ride. This year, the lead engine family offered by every manufacturer will need to meet new rules for Heavy-Duty On-Board Diagnostics (HDOBD), which will carefully watch over the emission-controlling equipment. All new engines will incorporate the related capabilities by 2014. The vehicle will monitor itself and problems with the system will be captured for anyone who downloads OBD data, says Mark Kachmarsky of Volvo and Mack Trucks. New threshold monitors will detect failures that cause emissions to exceed allowable limits, functional monitors will determine if an issue is indeed a failure, and component monitors will determine if sensors are working in the proper range. A fault picked up by the Engine Control Module will also be broadcast over the vehicle’s communication network, activating new Malfunction Indicator Lights in the dashboard. “The instrument clusters are changing a little,” notes Paul Menig, chief engineer of mechatronics engineering with Daimler Trucks North America. For drivers, that will mean some new ISOapproved symbols in the instrument panel to watch over the activities of emission controls, indicator lights associated with the regeneration of Diesel Particulate Filters, and even text messages in selected cases. Quite simply, more information is being collected and displayed than ever before. But the electrical changes are not limited to OBD alone. Updates will support another Aftertreatment Control Module, Diesel Exhaust Fluid injector, sensors to monitor levels of the fluid, and supply line heaters, says Kachmarsky. “They’re all talking. They’re all harmonizing the performance of the vehicle,” he adds, referring to the way the systems are interacting. For example, temperatures need to reach a certain point before the Diesel Exhaust Fluid can even be applied. “The look and feel [of diagnostics] is about the same, but there are some new features with some extra panels coming on,” Menig adds, noting how the new systems will measure the amount of DEF that is used. Combined, all the capabilities have led to widespread changes

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in the look of an electrical harness. “Look at how much fuel you need because it is tight on the chassis,” says Menig, referring to the DEF tank with its sensors and heater, four new sensors to monitor the SCR process, and three new sensors on the DEF metering unit, whether it is assisted pneumatically or electrically. Then add a couple of new computers in the mix. Front axle locations and cab height can affect where different pieces are attached. The DEF, for example, might be on one side of the fuel tank or the other, and that is going to affect the wiring harness, Menig says. “The first challenge you’re going to have is determining where everything is. “Pay attention to your manufacturer and your engine manufacturer to help you understand what you’re going to see on the vehicle,” he adds. “We’ve all done an excellent job to help routing and clipping. If you remove something while servicing, please put it back.” The electrical upgrades are not limited to engines that will use the new fluid. “Our main changes are on the engine harness,” says John Jacob, electrical components manager at Navistar, referring to the Heavy-Duty On-Board Diagnostics. New aftertreatment fuel dosers incorporate temperature and pressure sensors, and there is a boost control for the series turbo in addition to humidity sensors. The changes that have emerged have made it more important than ever for mechanics to watch for alterations to the electrical systems. Menig, for example, refers to a new Power Net Distribution Box that includes all the fuses. “This also becomes the load disconnect switch,” he says. “No longer do I have to have the mechanical switch and electrical switch that can be its own problem… now it is a plastic electrically-controlled switch that is driving a large relay. “Grounding is important as well to make sure you’re going to get the best opportunity to get all these computers working properly,” he adds, referring to a solid copper wire going to the starter and the redundant use of the chassis. Kachmarsky, meanwhile, referred to one truism that will apply to every shop. “Service tools are a must,” he said. “The training on these tools should be considered mandatory in any service facility or garage.”MT

ExecutiveView

Vaughn Sturgeon and Gordon Peddle

Following the announced merger of Warren Transport and D.D. Transport, contributing editor James Menzies caught up with the principals of the newly-formed Atlantica Diversified Transportation Systems. Warren’s Vaughn Sturgeon will serve as Atlantica’s president and D.D. Transport’s Gordon Peddle will serve as vice-president and chief operating officer.

Vaughn Sturgeon

between us! But we did keep it pretty quiet. VS: I agree with that and I think we did a better job of that than even we appreciated, because you’re not the first person to ask that question, a number of people have asked how we managed to do it. One of the reasons is we’ve been kicking this idea around informally, but quietly, for a few years, so we were fairly used to talking to each other about this both with the understanding that it had to be kept confidential until it was time to go. GP: Because of our close affiliation within the association, we were talking so much for that reason that nobody had reason to believe we were doing something other than (association business).

MT: How did this merger take form? Was it something that was in the works for a long time, or did it come together relatively quickly? VS: It’s been a while in the making. Gord and I have known each other for a long time through the industry and the association and MT: How do your skill sets complement each we’ve been talking for a lot of years about other’s? From a management perspective, ways we could work together. We seem to what do you each bring to the table going have common approaches to business and forward? thoughts on how we could improve things. VS: I think that’s one of the reasons that Last year, about halfway through the year, made this attractive to us. We believe our we began talking about this concept a little skill sets complement each other’s excepmore seriously and by November, we detionally well – maybe uniquely so. Gord Gordon Peddle cided to go forward with it and start getting grew up in this business and has a tremenall the structure around it in place. Of all the dous operational background and has a ways we looked at (working together), this seemed the best way to wealth of experience that’s hard to duplicate, but I also noticed do it – anything else would’ve been working around the edges. within his own organization a requirement for more expertise on the financial management side and vice-versa. In my organization, MT: I’m always curious with a deal of this magnitude, how were you I had noticed a need to continuously be improving the operational able to keep it quiet? Especially in Atlantic Canada which is a side of things. When we would talk, often we would get to talking about what we would like to see improve in our own organizations pretty close-knit community? GP: I’m not sure, but at the end of the day I guess we did a good and it would never take long to get around to saying ‘You seem to job of it! We did select a few colleagues within the industry and be good at this, but you could use some more of this’ and it was consulted with some colleagues that we trusted, so there were a almost a hand-and-glove thing, the way it fit together. That has made the start of this process work fairly well, because few people that knew. One of our colleagues in the association said we’re either getting to be pretty good friends or something was up we’re not stepping on each other’s toes in any way, it’s very clear Continued on page 36 34

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M A X I M I Z I N G P R O F I TA B I L I T Y W O R K S H O P Toronto, May 26th 2010 - Airport Marriott

Positioning your Trucking Company for the Economic Recovery

Canadian trucking companies are recovering from the worst economic downturn in 70 years. Many truck fleets experienced a sharp turn downward in business volumes and shippers took advantage of the situation to reduce freight rates to often unsustainable levels. We are now moving to what some experts have labelled a “reset economy.” The expectation is for a slow, bumpy recovery. During this period we will see permanent, fundamental changes to how businesses will operate. If you are looking for some proven strategies from industry leaders that may help guide you and your trucking company through this economic “reset,” mark this one day conference in your calendar. In addition to being able to learn some useful techniques and strategies, in an informal interactive setting, you will also have an opportunity to network with other fleet owners and executives.

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9:00 – 9:30 AM – Reigniting your Company’s Sales Engine, Dan Goodwill, President, Dan Goodwill & Associates Inc.

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9:30 – 10:00 AM – Creating an accurate Freight Costing Model, Kenneth M. Manning, President, Transportation Costing Group Inc.

2:15 PM – 2:45 PM – You survived 2009. Now what?, Rebuilding the Value of your Trucking Business, Elian Terner, Director, Investment Banking, Scotia Capital

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2:45 PM – 3:00 PM - Refreshments and Networking

10:45 AM – 11:15 AM – The Packaging Revolution, Jack Ampuja, President, Supply Chain Optimizers

3:00 PM – 3:30 PM – Results from Research Study on Transportation Management Software Systems for Trucking Companies, Jim Papineau, Director, Supply Chain Systems & Automation, Dan Goodwill & Associates Inc.

11:15 AM – 12:00 AM – Shipper/Participant Expectations in a Recovering Economy – Panel led by Lou Smyrlis, Editorial Director, Transportation Media

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5:00 Networking/Cash Bar

S P O N S O R E D B Y:

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Fleet Executive

ExecutiveView Continued from page 34

and we’re very happy with the way our duties are being divided up. MT: When you announced the merger, you said no layoffs were planned – how important was that? GP: Very important. Neither one of us is into a financial situation where we’re trying to streamline or anything of that nature. We’ve already done that the last two years, we’ve both streamlined to reflect the freight recession. VS: We’re already pretty lean. GP: At the end of the day, what it helps us to do is be able to bring people in. You have some areas you sort of neglect when you’re going into a lean state, this allows us to work on those items a little bit more. To get our people to buy into this whole process, we knew we couldn’t go into this without committing to no layoffs. VS: The fact is, most operations in general are pretty lean coming into the last year or two. We’re making the assumption that the point in time we’re at now is not going to last forever, there will be an upward trend to the cycle at some point in time and one of the reasons we did this was looking forward to that upward trend. Looking at our existing organizations, it was a no-brainer. We have good people, we want to keep those good people and over time we’ll probably need more good people, not less. MT: How’d you arrive at the name Atlantica Diversified Transportation Systems? VS: We went through a bit of an excercise and somebody in my organization came up with it. Atlantica generally refers to a region, Atlantic Canada, parts of Quebec and the northeastern US. Now we have a really nice regionality to our scope. We have tremendous coverage in Atlantic Canada into Quebec and a lot of business in the northeast (US), so the Atlantica name was good for us. GP: The Diversified part was exactly what we intend to do, we want to diversify our service offerings. I was more of a regional flatbed carrier where Vaughn was more of an international dry van, refrigerated carrier, so the term diversified meant a lot to us. VS: I think it’s very accurate too, because in Atlantic Canada, working side by side with a couple of my other companies here, we’re going to be able to offer service in almost every mode: we have excellent flatbed, dry van, refrigerated and some bulk capacity so it’s a very diverse operation. GP: As for Systems, we want to be able to expand our service offerings to more than just road transport in the coming years, hence the term Systems. MT: How has news of the merger been received by your customers and your employees? 36

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VS: Exceptionally well. I have to say, I have been expecting that it would go well, but I’ve been exceptionally pleased with how well it’s been received. We have not heard anything negative from our customer base, or more importantly our employees. They’ve all seen this as a positive thing. From the customer side, we’ve had some of them call us and ask already about the new services that are available. Newfoundland in particular, clients have asked, ‘Can we look for service into there?’ I’ve been really pleased with how positive it’s been. GP: I’ll mirror those comments. There’s been a lot of effort, thought and devotion that went into the communication of this process. We felt it had to be done right and we did a good job communicating this to our customers and to our staff in a positive light. I am very close to my clients, I’ve been working with some of my clients for 25 years and when you have challenges and good times, you share those with your clients, so it’s nice to be able to share a positive with our clients with this merger. They’re all for it. MT: So what’s next? What will take up most of your time in the next six months or so? Are you going to be buying new equipment, increasing capacity? GP: Vaughn has already made his first trip to Newfoundland (to visit clients) and we’ve travelled throughout Atlantic Canada. The internal management and administrative merge is going to take the biggest part of our time, not to forget focusing on our clients. VS: Unless something changes relatively drastically on the freight demand side (we won’t be adding capacity). We’ve both been lean, but there’s some capacity there we could handle with the equipment we have now. We’re looking at new equipment, but the priority for the first three to six months will definitely be to get our people comfortable with us and with each other and our customers as well, to make sure our existing customers and prospective new customers know ALL the new things we can do for them. And our employees as well, to make sure they know the opportunities that are there and all the people they can draw on as resources. I think that’ll probably take the next several months. Also getting their suggestions. One thing I’ve noticed about Gord, and we’re fortunate here too, we have a lot of good, smart people working for us who will come up with suggestions. With Gord and I, we have a common vision for where we want this to be and our people are seeing that and they all have tremendous buy-in to it. mt James Menzies is the executive editor of sister publications Truck News and Truck West. He holds a commercial drivers’ licence and has test driven trucks all over Canada, the US, Asia and Europe. An award-winning writer, he has also co-authored a book about trucks from around the world.

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7.8%

InsidetheNumbers

7.8%

Main reasons shippers cited for diverting freight from truck to rail in 2009

That’s how much

24%

Other

base rates for ground

Trying to service new markets

transportation (excluding fuel surcharges) fell between

Responding to customer requests

26% 14%

Decreasing rail prices

December 2008 and

Increasing truck prices

December 2009, according to the Canadian General

Change in corporate policy to faster inventory times

Freight Index. Average

Poor truck service or coverage

fuel surcharges plummeted

28% 7% 10%

Percentage of shippers spending more than half of shipping budget on specific mode

13.1%, resulting in an

Intermodal

overall decrease of 9.6%.

Air cargo

6% 4%

Marine

14%

Courier

s h i p m e n t s

Percentage of current truck shipments which shippers consider rail to be a viable alternative More than 50% 41% to 50%

Trucking Rail

42% 6%

3% of respondents 1%

31% to 40% 0% 21% to 30% 11% to 20%

7% 11%

1% to 10%

o f

16%

WHY THERE’S A CEILING TO HOW HIGH TRUCKING RATES CAN RISE

32% 46%

Four in 10 shippers spend more than half their shipping budget on truck transport. Rail and intermodal have been moving aggressively in recent years to cut into this commanding share and have had some success, particularly when truck transport prices were on the rise. More than half of shippers using trucking services in Canada feel that rail would be a viable alternative for at least a portion of their shipments, according to our annual research. About a fifth indicate that this would apply to more than 10% of their current trucking shipments. It’s well known that trucking rates were hammered down during 2009. Motor carriers naturally hope for a strong rebound in 2010 and beyond as the economy recovers and trucking sheds its current excess capacity. However, our research also shows there is a ceiling to how much trucking rates can rise. Increasing truck rates were the main reason given for switching to rail, cited by 28% of shippers who had moved away from trucking. But in 2008, when rates were still climbing and fuel surcharges were having a greater impact on pricing, increased pricing was given as the main reason for moving away from trucking by almost 50% of respondents. For more Canadian sourced data on modal preferences, rates, surcharges, shipment volumes, capacity and contracts,see our annual Transportation Buying Trends report available for $99 through www.trucknews.com. 38

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