Motortruck May June 2013 by Annex Business Media

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Spend more time on the road and less time worrying about the bottom line. Castrol’s full line-up of Heavy Duty lubricants are field-tested and fleet approved. Beyond providing your equipment with extreme protection and extended drain intervals, you’re decreasing maintenance costs and looking out for your bottom line. Less fuel, fewer top-ups and more time on the road all add up to lower operational costs and a more efficient fleet. For more information on Castrol’s Heavy Duty line-up call 1-888-CASTROL or visit www.castrol.ca

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May/June 2013

Volume 82, No. 03

COVER STORY 18 Proof positive

contents

Legal challenges could clear the way for broader drug and alcohol tests. Is that a good thing?

Features 25 FOCUS ON FUEL Natural gas offers a cheaper fuel supply, but there are equipment, maintenance and infrastructure issues to consider. Plus: diesel is set to continue to dominate market, even if prices soar.

28 DELIVERING THE WIND Looking at a complex supply chain operation: wind turbine transport.

32 MUCH TO CHEW ON Canadian fleets are preparing to ramp up on food hauling regulations.

Departments 6 THE VIEW WITH LOU Get the insights and contacts you need to grow in a slow economy at the 2013 Surface Transportation Summit.

9 THE BOTTOM LINE Four ways to generate quality sales leads.

12 RISKY BUSINESS Before you sign your next contract, make sure you understand the dangers of indemnity clauses.

14 TAKING CARE OF BUSINESS

Supply chain services offer new and better revenue streams for carriers. But you have to understand the math.

16 LEADERS Wheels Group’s Richard Patenaude and Dan Goodwill of Dan Goodwill & Associates discuss the future of freight in the retail sector.

22 THE HUMAN EDGE It’s time to throw away the old playbook when trying to fill job vacancies.

34 GEARED UP Truck and engine OEMs are working to create a new breed of ‘Super Truck.’ Is 10 mpg far away?

36 DASHBOARD The latest stats on general freight, railway freight, US truck tonnage and manufacturing.

38 INSIDE THE NUMBERS Exploring the link between greater greenhouse gas emissions and market gains in transportation. trucknews.com

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May/June 2013 ❙ FLEET EXECUTIVE 3

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

BLOGS

**NEW** Transportation attorney Doug Marcello kicks off his tenure as a trucknews.com blogger with posts on CSA, HoS, and more.

You said it… “Expecting perfection from mere mortals for the slightest of indiscretions or imperfections while affecting the reputations of CVORs...may compromise employment and business. Consider the human element of 16 hours a day and it may be quite possible to unintentionally omit an innocuous entry into a logbook. Consider the condition of roads in Canadian frost zones which affect steering and suspension components or the use of calcium chloride which destroys external electrical components in any assessment of the facts. Consider the training that insists on graduated licensing for motorcycles, but nothing for new truckers. There are variables in this equation that appear to be conveniently omitted which make good people just walk away from this job. I think a better definition is somewhere between ‘victim mentality’ and ‘survivor.’ – ANGELO DIPLACIDO’S COMMENTS ON DOUG MARCELLO’S BLOG, “DRIVER AWARENESS – A KEY FOR CSA CONTROL.”

TransRep’s Ray Haight shares thoughts on the importance of mentorship following the loss of friend and mentor, Don Urquhart.

HR expert Carolina Billings outlines the top five ways to attract the best talent to your team.

Web TV:

Transportation Matters BIG MOVE, BIG AWARD: Precision Specialized Division has won SC&RA’s Hauling Job of the Year Award for hauling a 110,000-lb Vertical Impregnation Tank (VIT) 180 km. $2.5 MILLION SHOP CLASS: Bramalea Secondary School has officially opened it’s $2.5 million truck shop. WINGING IT: Bison Transport’s Mark Irwin has created a trailer-top snow removal system, designed to be faster, more efficient, and cheaper than traditional methods. PRIME INC. FOUNDER TALKS CSA: Prime Inc. president Robert Low discusses how a carrier’s CSA score can add value in the eyes of shippers.

SOCIAL MEDIA FIND US ON FACEBOOK facebook.com/trucknews

Fleet Executive editors are now on the radio! For a list of stations and on-air times go to truckerradio.com. 4 FLEET EXECUTIVE ❙ May/June 2013

trucknews.com

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New online episode every Thursday www.trucknews.com/videos/ 300,000+ views

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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.

THE VIEW WITH LOU

MAY/JUNE 2013

VOL. 82 NO. 03

EDITORIAL DIRECTOR

Don’t miss the 2013 Summit

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

Get the insights and contacts you need to grow in a slow economy

Adam Ledlow (416) 510-6890 adam@TransportationMedia.ca FEATURES EDITOR

e are coming through a slower than expected first half of the year with a great deal of uncertainty about what the next quarter will bring. Lingering downward pressure on rates continues to affect carrier revenues just as it’s time to replace trucks that have gone considerably beyond previous life cycles and are becoming a drain on maintenance budgets. The country’s fleet managers and executives are clearly earning every penny of their paycheques these days trying to dodge multiple obstacles to business growth. And it looks like they will have to keep on dodging. Economic experts are calling 2010 – 2020 the Low Growth Decade. It’s a time that calls for the most innovative of business strategies to get ahead. We are hoping to be of some help in that regard with our next Surface Transportation Summit, which we put on in partnership with Dan Goodwill & Associates. The all-day event, scheduled for Oct. 16 at a new venue, the Mississauga Convention Centre, will bring together carrier, shipper and industry supplier executives to discuss the industry’s most pressing issues and share insights on how to solve them. We start off the Summit with an economic forecast provided by one of Canada’s leading economists and look at the implications for shippers and transportation providers as they prepare their 2014 business plans. Our most popular session from last year’s Summit, The View from the Top, is back, featuring CEO perspectives on major transportation trends. For this track, we assembled a blue chip group of transportation company executives from the LTL, truckload, rail and insurance industries, as well as arranged for insights from a leading global management consultancy. We round out an information-packed morning with expert panels examining the growth potential of dedicated transportation and intermodal services. Many of North America’s leading shippers

have outsourced their private fleet operations to dedicated fleet management companies. Our panel consists of a major shipper and the leader of Canada’s largest dedicated fleet management company. The two parties will outline the keys to a successful implementation and provide an overview of some of the best practices in private fleet management. Intermodal operations are enjoying similar growth. Still, for many companies, intermodal transportation remains a niche component of their operations with intermodal revenues representing about 3% of the total North American freight spend. Is this about to change and are you making the most effective use of this transportation option? Our panel of experts will dig into those questions. The afternoon will include several concurrent tracks, including insights on best practices to cross-border transportation; leading an effective transportation sales operation; carrier scorecards and compliance management, and the current environment for mergers and acquisition strategies. We close out the day with one of the hottest topics in transportation today: An in-depth look on running a successful Freight RFP. The market reality is that Freight Bids or RFPs have become increasingly popular as a mechanism to negotiate freight rates and service. Even companies with as little as $50K in annual freight spend are putting their business out for bid. Is this the best way forward? To answer this question, we have assembled a panel with extensive experience with freight bids to share their insights on how to improve the freight procurement process. But that’s not all. The Summit is designed to be of practical use to both shippers and carriers alike and last year attracted more than 200 transportation and supply chain executives. So it’s sure to present delegates with the ideal business networking opportunity. To register, go to http://www.surfacetransportationsummit.com. FE Lou Smyrlis, MCILT, Editor • lou@transportationmedia.ca

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

Roy Gaiot rgaiot@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 80 Valleybrook Drive Toronto, ON M3B 2S9 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 businessto-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. We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund (CPF) for our publishing activities. ISSN Number 0027-2108 (print) ISSN Number 1923-3507 (digital)

6 FLEET EXECUTIVE ❙ May/June 2013 Member/Canadian Business Press

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MAIL BAG

Why should shippers care about trucking’s driver demand gap dilemma? I tackled that subject in a blog following the release of a Conference Board of Canada study which forecasted that the driver shortage could be as high as 33,000 by 2020. That means for-hire carriers won’t be able to grow with the demands of their shipper customers. I commented that I don’t know how the for-hire carrier industry will solve this demand gap since it has been talking about it for at least 20 years to no avail, and shippers have much to lose in the process. Several readers commented on the blog. Some of their comments are included below. Lou Smyrlis, editorial director I think Lou did an excellent job with this blog. It’s scary that we’re coming to crunch time and nothing substantial has been done to make some serious improvements in the promotion of OTR trucking as a viable profession. I say crunch time because the economy is slowly getting better and I see it in little spurts that basically whenever there is any surge in inventory movement, trucks become quite scarce fairly quickly. Unfortunately, over the last six years there has been such a shortage of consistent work that shippers and business in general hasn’t felt what a 30% work force shrinkage really amounts to. As an operator of a trucking fleet, my number one priority has shifted from sales to recruitment. It is going to become a world where those who can find, train and keep quality drivers will do well, those who can’t will not fare as well. I really encourage shippers to align with quality trucking firms who have assets sooner than later. One quick question: what has the independent trucking market done? I know many large 3PLs and shippers who have a Rolodex of independent guys that they give work to. Has this helped or hurt this situation? I really think this is an issue that has been overlooked on the whole by industry in regards to pricing and talent. Frank Chiappetta, president of All City Logistics

This is the most significant problem the industry has, but it certainly did take a back seat to the economic woes of the past several years. It is now back with a vengeance. I have said this before and will reiterate that trucking is engaged, yet only enlightened shippers are likewise. Each time a new agenda comes out for a conference or seminar being held, I quickly scan the topics. Any truckingrelated or originated conference has this subject very much 8 FLEET EXECUTIVE ❙ May/June 2013

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involved. Any shipper-related conference, this subject is nowhere to be found. Lou is attempting to raise the level of engagement, but what is it going to take? Freight sitting on docks to get action? That will be way too late. Bryan Richards, vice-president, Yanke Group of Companies

Transportation’s shortage of qualified drivers stems back to poor adherence to entry-level requirements for the profession. New provincial standards are now set at 200 hours for prior to apprenticeship (G to A license training), which dovetails nicely to Apprenticeship 638A Tractor Trailer Driver. This program is a 2000 industry development tool. Registered Truck Schools can further participate with organizations like the Truck Training School Association (TTSAO.com) and Professional Truck Driving Institute (PTDI.org), which verify the adherence to training standards. The key is now industry engagement, with substantial tuition tax credits (up to 30%) at registered schools, and $10,000. With the emerging validation of Tractor Trailer Driving as a bonafide trade in Ontario, which included from G to A training standards and on-the-job training standards, the industry now has the ability to create a qualified driver system. We have the ability to engage youth with trucking as a first-career choice. A government-sanctioned curriculum for the first time makes way for added technologies, logistics, business and customer service skills to add to a driver’s skill set. A Professional Transport Operator course is now being offered jointly at triOS College and the Ontario Truck Training Academy. This is a 40-week course. Yvette Lagrois, vice-president, Ontario Truck Training Academy

Judging by the absence of responses from industry leaders to the Conference Board study, they are as dumbfounded now as they were 20 years ago when the driver shortage began to make the front pages in trade publications. God forbid that truck drivers earn more money. Better to send recruiting teams to Europe or perhaps eliminate the sacred two-year driving experience requirement. Unfortunately, we can’t simply follow Wal-Mart’s example and outsource to China and Bangladesh – or can we? There’s something about cheap wages that breaks down all barriers including national borders. Jake Goertzen

To read and comment on our industry blogs, visit blog.trucknews.com. trucknews.com

13-06-07 8:48 AM

BOTTOM LINE

Fill your sales pipeline 4 ways to generate quality sales leads By Mike McCarron

eeping the sales pipeline gushing with leads is a lot more complicated today than it once was. Back in the day, banging on doors at the local industrial park was a sure-fire way to get lobby meetings. The tools of the trade were the Yellow Pages, a memorized sales script, and a good pair of steel-toed leather shoes. You could cold-call because the hunted actually answered their phones. Unconventional methods of leadgeneration included tailing competitors’ trucks and rummaging through garbage bins late at night. That era is long gone. In fact, it’s dead. Today, phoning a prospect and asking to “steal” a few minutes so you can learn a little more about his business is sales suicide. You’ll lose any chance of getting business before the sales cycle ever gets started. Despite the march of time, one rule of selling has not changed: the amount of business you close will never be greater than the amount of new prospects you need to generate. No fresh, exciting opportunities equals zero new business. The math does not lie. How do you keep the prospect pipeline flowing? Here’s what every sales professional should be doing to generate quality sales leads:

Look Under Your Nose Wowing old customers has never been more important for getting new customers. If you’re a rainmaker and a trusted, credible business advisor to your customers, they will repay the favour by helping to replenish your pipeline. Referrals from existing customers have the highest probability of turning into business. Customers have loads of contacts inside and outside the office just waiting to be tapped. Instead of making cold calls and chasing low-probability returns, recognize that the best sales leads are the ones staring you right in the face. You just have to earn them.

Extend a Handshake Social media is not a prospecting tool, it’s a networking tool. Networking is about gathering contacts, information, and opportunities. It’s also about sharing ideas with like-minded people – namely, customers with freight. I think LinkedIn is the most effective online networking tool available right now. It’s today’s handshake, and allows you to build on existing relationships and establish credibility with people you have never met. What makes LinkedIn especially powerful is the fact you can communicate and engage with trucknews.com

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decision-makers during “off” hours, saving prime-time hours for face-to-face time.

Say Something Once you’re all connected-up, it’s time to get creative with the keyboard. Every sales rep needs to develop a personal, content-driven lead-generation program. By “content” I mean good ideas. There are lots of ways to go about it. Create and participate in industry chatrooms. Write a blog. Source and distribute timely magazine articles. Send your customers reports on their industry. Build credibility in the transportation community by sharing your insights with customers, suppliers, and yes, even your competitors. Don’t overlook your personal interests. They may have nothing to do with trucking, but sharing what you’re passionate about in your free time could spark a conversation that turns into business. I bet there are a lot of guys in your Corvette club who have freight to move.

Fix Your Online Rep Referrals, handshakes, having something to say – these are all ways to build your reputation as a salesperson and raise your profile as a freight expert. If you’re “findable,” leads will fall into your lap. If a prospect types your name into Google and likes what he sees, he’ll take the next step and call. The trouble is, too many salespeople have holes in their online reputation. Their LinkedIn profiles are inaccurate and incomplete, they follow porno starlets on Twitter, and look hammered in every Facebook picture. Your virtual public image is your personal brand. If you have a spotty online image, you’ll never know how many opportunities you’re losing. Generating sales leads today takes creativity, imagination, and hard work. It’s also more fun than it used to be. Prime your pump with referrals, a solid online reputation, and something credible to say. It doesn’t even have to be about freight. Wouldn’t you rather be writing a blog on Corvettes than sifting through a garbage bin? FE

Mike McCarron was one of the founding “M”s in MSM Transportation before the company was purchased by the Wheels Group. Based in Toronto, he currently works for Wheels in mergers and acquisitions and can be reached at mmccarron@wheelsgroup.com. Follow Mike on Twitter @AceMcC. May/June 2012 ❙ FLEET EXECUTIVE 9

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On October 16th 2013, please plan on joining Canada’s top Transportation Executives for a day of education & networking. We have created an agenda that truly addresses the many challenges facing both Shipper and Carrier executives.

SUMMIT AGENDA

Introducing the 2

FREIGHT BIDS: Is there a better way for carriers and shippers to work together? CARRIER PERFORMANCE MANAGEMENT: Metrics that deliver results INTERMODAL TRANSPORTATION: Expanding beyond its niche

Fabi Richenberger President, Northbridge Insurance

Mike Owens

V. P. Physical Logistics, Nestlé Canada Inc.

Carlos M.

Senior Eco Scotiab

THE VIEW FROM THE TOP: The CEO’s perspective on major transportation trends DEDICATED TRANSPORTATION: Outsourcing fleet management to a third party

Tom Coates

VP and COO, Lakeside Logistics

CROSS-BORDER FREIGHT TRANSPORTATION: Best practices

Jeff P

Sr. V Sales & M Bison Tra

TRANSPORTATION SALES: Can you adapt to the new normal? MERGERS & ACQUISITIONS IN TRANSPORTATION: How big are the opportunities?

Tibor Shanto

Principal, Renbor Sales Solutions

Don Morrison

VP Sales & Marketing Contrans

Angelo Sa

President, Bai Products L

LOOKING AHEAD: Economic forecasts for 2014

Registration: 7:30 am • Presentations: 8:20 am sharp

MISSISSAUGA CONVENTION CENTRE 75 Derry Road West, Mississauga, ON

Summit.indd Trans Summit 20 spread.indd 2

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Trans Summ

cing the 2013 team of presenters...

Owens

cal al Logistics, anada Inc.

Coates

d COO, Logistics

orrison

& Marketing trans rans

06-05 9:10 AM

Carlos M. Gomes

Neil McKenna

Keith Reardon

Senior Economist, Scotiabank

V. P. Transportation, Canadian Tire Corporation

V. P. Intermodal Services, CN Rail

Jeff Pries

Oryst Dydynsky

Charles W. Clowdis, Jr.

Sr. V. P. Sales & Marketing, Bison Transport

Principal, DAP International Trade Consulting

Angelo Sarracini

President, Bailey Metal Products Limited

Barry O’Neill

Executive Vice President, Hub Group

Grace Tomaszun

Manager, N.A. Transportation McCormick & Company

Doug Munro

Managing Director, North American Markets, IHS Global Insight (USA), Inc.

President and Owner, Maritime-Ontario Freight Lines Limited

Wes Armour

Jacquie Meyers

President & CEO, Armour Transportation Systems

President, Meyers Transportation Services

Jeff Lindsay

President and CEO, Canada Cartage

Michelle Arseneau Managing Partner, GX Transportation Solutions

Anna Petrova

Senior Supply Chain Leader, Ferrero

Ron Tepper

Executive Chairman & CEO, Consolidated Fastfrate

Douglas Nix

Vice Chairman, Corporate Finance Associates (CFA) Chairman of CFA’s Transportation and Logistics Industry Practice Group

Mike McCarron

Consolidation Consultant, Wheels Group

2013 SUMMIT

SPONSORS

For more information and to register, please visit www.SurfaceTransportationSummit.com

PRODUCED BY MOTORTRUCK FLEET EXECUTIVE, CANADIAN TRANSPORTATION & LOGISTICS & DAN GOODWILL & ASSOCIATES

Summit.indd Trans Summit 21 spread.indd 3

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

RISKY BUSINESS

It’s no way to stay in business Shippers are looking to shift risk to carriers. Before you sign your next contract, it’s essential you understand the dangers of indemnity clauses By Rick Geller

isk transfer is an accepted financing technique usually associated with purchasing insurance to transfer the risk to an insurance company. This transfer of risk is accomplished through indemnity clauses, utilizing contract language, hold harmless agreements and requests for additional insured status. These clauses are inserted into shipping contracts that carriers are required to sign if they want the business. Theoretically, the parties to a shipping contract enter into the agreement on equal footing and are free to accept or reject terms considered unfair or too risky. The reality is that over-capacity places trucking companies at a distinct disadvantage. Shippers argue that trucking companies can increase their freight rates to compensate for the additional exposure, but the reality is that many trucking companies blindly sign these contracts just to stay in business. It is essential, however, that carriers recognize that unfair indemnity clauses: •C reate a moral hazard because shippers are not held accountable for proper loading techniques and/or their duty of care to protect persons and property on their premises; •H ide potential loss exposure by shifting the risk to carriers who are unable to take measures preventing losses created by the shipper (sealed or pre-loaded trailers); and • Prevent carriers from pricing freight charges properly. Indemnity clauses can also go beyond risk transfer; shippers can use them to obtain additional insurance coverage without premium, legal or administrative costs.

Trucking companies who sign these contracts have: •N o certainty about the safe operations of entities who load or unload the freight; •N o guarantee that losses will be fully covered under their insurance program; •N o ability to forecast their “cost of risk” – leading to no ability to calculate the return on lanes or customers; and •N o protection from existing, well-functioning, comparative negligence laws. Before signing, consider having the contract reviewed by your legal counsel for language that broadens your exposure, as well as by your insurer to identify exposures that fall outside your coverage. Ultimately, government action is needed. An increasing number of US states, recognizing the inherent dangers associated with these indemnity clauses, have enacted anti-indemnification laws to level the playing field. When will the Canadian government step in to protect the trucking industry? FE Rick Geller, president of Trucksafety.ca, has been providing innovative and cost-effective solutions to the trucking industry for more than 30 years. He is the recipient of the Canadian Trucking Human Resource Council’s “Champion of Human Resources” award, vice-chair of the Toronto Chapter of the Fleet Safety Council, vice-chair of the Fleet Safety Council Conference Committee, and serves on the executive committees for both the Ontario Truck Driving Champions and the Toronto Regional Truck Driving Championships. Rick can be reached at solutions@trucksafety.ca.

MERCANTILE MERGERS & ACQUISITIONS C

MERCANTILE MERGERS & ACQUISITIONS Mercantile Mergers & Acquisitions Corporation are a mid-market M&A brokerage firm. The company specializes in the purchase and sale of mid-market companies, including the Transportation industry. In addition, the company advises on business valuations, mezzanine, and equity financing, management buyouts, restructuring of debt, family business re-capitalization and workouts.

Contact (in confidence): Mark Borkowski, President at: (416) 368-8466 ext. 232 or mark@mercantilema.com Mercantile Mergers & Acquisitions Corporation

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TAKING CARE OF BUSINESS

Seize the opportunity Supply chain services offer new and better revenue streams for carriers. But you have to understand the math. By Mark Borkowski

ore and more companies (large and small) are outsourcing all or part of their supply chain functions. In today’s competitive economy, the constant need to improve productivity and do things “faster, cheaper and better” has created a growing market for specialist providers of third-party logistics services. Some of the key attractions include: • Reduced capital investment in real property, capital equipment and information technology infrastructure. • Access to specialized “best-in-class” expertise and new technology (e.g. RFID). • Better visibility for the customer on supply chain costs. • Opportunities for process improvement and better risk management (e.g. labour disruption). This, of course, presents opportunities for carriers willing to expand into more supply chain-related offerings, such as warehousing, freight forwarding, and dedicated transport. One of the key challenges for customers in completing a third-party outsourcing arrangement is negotiating the pricing arrangements. There are generally two pricing models in the supply chain context that need to be understood.

Base Fee Plus Unit Pricing In the first model, the price charged by the service provider includes two components: (i) a base fee (usually paid monthly) to cover fixed costs such as facility lease costs and capital equipment leases; and (ii) a variable fee (also usually paid monthly) to cover costs (such as labour) that flex with changes in product volume moving through the supply chain. Another adaptation of this model is per unit pricing with minimum volume guarantees. If the minimum volumes are not achieved, the customer must compensate the supplier. The key advantages of this price model are the ability to combine price certainty (for both customer and supplier) with the flexibility to adapt to changing market conditions. The disadvantage from the customer perspective is the lack of visibility on the supplier’s cost structure and profit margins.

‘Cost-Plus’ Transactions An alternative pricing model for supply chain outsourcing is the “cost-plus” transaction. In this approach, the outsourcing ser14 FLEET EXECUTIVE ❙ May/June 2013

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vice provider is compensated for its costs plus an agreed percentage margin (sometimes capped at a total dollar amount). The advantage for the customer in a cost-plus transaction is that it has full visibility on the supplier’s costs and profit. The challenges to implementing this model include: • Agreeing on the yearly budget and productivity measures. • How to encourage the supplier to reduce costs (e.g. gain sharing). • How to allocate shared costs (e.g. supplier IT platform) between customer and supplier where many customers may share the same supplier infrastructure.

Discretionary Termination Another important financial issue that frequently arises in supply chain outsourcings involves termination rights. More and more customers are demanding maximum flexibility in their supplier relationships, and in particular, the right to terminate supplier contracts on short notice. Since a supply chain outsourcing may require significant long-term investment by the supplier (e.g. real estate, IT systems etc.), there is a risk that early termination will expose the supplier to substantial financial losses. To mitigate this risk, suppliers will often require the customer to compensate it for unamortized capital costs if the customer wants an early termination right. Customers will want to ensure that they understand the nature of these costs before agreeing to this approach. The outsourcing of supply chain functions offers many potential competitive advantages to customers. Pricing will generally be one of the most important considerations in making the decision to outsource, and there are different pricing models that may be appropriate depending on product profile, operational risks and the customer’s financial goals. Since outsourcing is ideally a long-term relationship, both customer and service provider have a vested interest in ensuring that the chosen pricing model provides appropriate financial benefits to both parties. FE Mark Borkowski is president of Mercantile Mergers & Acquisitions Corporation. Mercantile is a mid-market mergers and acquisitions brokerage firm. He can be contacted at (416) 3688466 ext. 232 mark@mercantilema.com.

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FLEET SAFETY COUNCIL 22nd Annual Educational Conference October 24-25-26, 2013 Kitchener, ON

PREDICTIVE BEHAVIOUR ANALYSIS

Driver behaviour is a causal factor in 93% of all crashes and 96% of the triggers for roadside inspections Do you want to: • Lower your CSA Basic Scores • Reduce crashes and violations • Improve driver retention Bonus Session - Exploring Transportation Careers Showcasing drivers, mechanics and logistics... discover how to attract young people to consider transportation as a career.

Learn: • How driver behaviour links to crashes/violations • How to recognize and manage driver behaviour before the crash happens • How to transform driver performance management into an effective and sustainable behaviour change program

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13-06-04 AM 13-06-07 11:02 9:16 AM

LEADERS

A new department highlighting the insights of industry leaders on key industry issues.

RICHARD PATENAUDE AND DAN GOODWILL By Lou Smyrlis

RICHARD PATENAUDE

The first half of the year has been generally disappointing in terms of freight volumes and pricing for Canadian carriers. Editorial director Lou Smyrlis interviewed Richard Patenaude from The Wheels Group and Dan Goodwill of Dan Goodwill & Associates at the recent Food and Consumer Packaged Goods Association conference. He asked if things looked better in the retail sector and how much hope there is for the second half of the year. Here’s what they had to say: DAN GOODWILL

FE: OUR TRANSPORTATION BUYING TRENDS RESEARCH SHOWS THAT A SLIGHTLY LARGER PERCENTAGE OF SHIPPERS WERE OPTIMISTIC ABOUT GROWING THEIR FREIGHT VOLUMES IN 2013 THAN WAS THE CASE IN 2012. YET, THE FIRST QUARTER APPEARS TO HAVE BEEN SLOWER THAN EXPECTED OVERALL. IS THE CONSUMER AND PACKAGED GOODS INDUSTRY GOING WITH OR AGAINST THIS TREND?

Patenaude: Being in food and consumer products has a sense of isolation more than, for example, automotive, as people still need to eat. There is a bubble there. Looking at it from the CPG customers we deal with, heading into this year, there was a good deal of optimism that things were going to be better in terms of growth and freight volumes. Now, whether that is being realized, I would say for the most part I believe so. The first quarter has been on par with what the expectations were and we continue to see a positive outlook from a CPG standpoint. FE: WHAT ARE YOUR EXPECTATIONS FOR FREIGHT VOLUME GROWTH IN THE CPG INDUSTRY IN THE SECOND HALF OF 2013?

Goodwill: I look at a series of economic reports on an ongoing basis and most economists are forecasting GDP growth in the 1.5-2.5% range for the rest of the year. There is no reason for 16 FLEET EXECUTIVE ❙ May/June 2013

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extreme optimism. I think there will be a small uptick, but not much more than that. FE: OUR RESEARCH OF TRANSPORTATION BUYERS SHOWS THAT SHIPPERS EXPECT LTL TO SHOW THE GREATEST NET GROWTH AMONG ALL MODES. IF COST CONTAINMENT REMAINS A PRIORITY FOR SHIPPERS, WHY WOULD LTL BE SEEN AS THE MODE TO LEAD GROWTH? OR IS THE UNCERTAIN ECONOMIC OUTLOOK LEADING TO SMALLER ORDERS AS A PRECAUTION?

Patenaude: Looking specifically at the retail marketplace, when we talk about the growth of LTL, I assume we are looking at the growth of LTL volumes. When you look at retailers such as Loblaws and Walmart in terms of transportation strategy, they are trying to order more often in lesser amounts as a way to have smaller inventories. When I look at the research mentioned, there is validity to it, because that is what the customers are telling us is happening. FE: RESEARCH FROM THE US SHOWS FREIGHT VOLUME GROWTH DURING THE ECONOMIC RECOVERY IS NOT BEING EQUALLY SHARED ACROSS THE BOARD. SMALL TL CARRIERS ARE STILL HURTING. ARE WE SEEING THE SAME TREND AMONG CANADIAN SMALL CARRIERS? trucknews.com

13-06-07 9:22 AM

Goodwill: When we consider large shippers, they have specific requirements. They have peaks in volumes where they need extra trailers dropped off on a Friday or Saturday night. The key thing is that larger fleets have more scope and flexibility and are in a better position to meet those needs than smaller carriers. That’s what is behind this. Also, larger trucking companies tend to have a stronger financial underpinning and so they are in a better position to purchase or lease equipment. During the recession a lot of the small trucking companies disappeared. You didn’t hear of too many of the big guys disappearing. That’s not to say that large shippers should not use small carriers. FE: WHAT IS THE CASE FOR USING SMALLER CARRIERS?

Patenaude: I think it depends on your corporate layout as far as supply chain is concerned. For us as a 3PL, it’s very important for us to use smaller carriers for a variety of reasons. For one, they are very loyal. If you can get them in a niche area that works exclusively well for them, they have low overhead and you can help them grow strategically. You can’t get to be

“

spurts through acquisitions and new product launches, but all of these things are being done on the hope that they will stay even with the profitability of last year. To maintain profitability, we have to keep thinking about cost. FE: SHIPPERS BELIEVE TRUCKING WILL HAVE THE GREATEST PRICING POWER IN 2013. WHAT IS CURRENTLY GIVING TRUCKING THE GREATEST LEVERAGE AMONG ALL THE MODES TO RAISE ITS PRICING?

Goodwill: I think in Truckload it’s easier to add and delete from the fleet. A TL carrier can scale up and down easier and keep their capacity in check. I think that’s why they have greater pricing power. I would add that a lot of truckers got hurt during the Great Recession. The lesson they learned is that chasing revenue, adding equipment to the fleet and hoping shippers will continue to place freight on the trucks is not something they should do anymore. They are now talking about yield management. They’re looking for the maximum yield on every truck and want to make sure that every truck that goes out is balanced for headhaul and backhaul and rates

A lot of truckers got hurt during the Great Recession. The lesson they learned is that chasing revenue, adding equipment to the fleet and hoping shippers will continue to place freight on the trucks is not something they should do anymore.

a medium-sized carrier without being a small carrier first and you can’t be a large carrier without first being a medium-sized carrier, so we have to foster that growth so we don’t end up with just a few large carriers at the end of the day. From a cost perspective, and in certain marketplaces, it makes a heck of a lot of sense to use smaller carriers. But, of course, you have to balance that with the large asset carriers. I think the problem that large CPG shippers face within their own systems is that sometimes their own transportation management systems are so constraining that you almost need an Act of God to get a carrier approved and put through the system. So when you are dealing with that, it’s easier to deal with a larger carrier. FE: THE SHIPPER PULSE SURVEY CONDUCTED BY THE CANADIAN INDUSTRIAL TRANSPORTATION ASSOCIATION, IN PARTNERSHIP WITH OUR MAGAZINE IN 2012, SHOWED SHIPPERS WERE STILL CLEARLY FOCUSED ON COSTS AND PROFITS. HAS THIS CHANGED OR IS THAT STILL THE ATMOSPHERE WE ARE DEALING WITH?

Patenaude: I would say shippers are still focused on costs and profitability. I think in the retail environment, we have a particularly challenging environment ahead as we see that “flat” is the new “up” and it’s taking more effort to stay flat. CPG companies we are talking with are going through growth trucknews.com

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are quality in both directions. They are looking at a shipper’s business and thinking will this help me improve my profitability? If it isn’t, they are moving on to the next shipper. For this reason, they are keeping a tight lid on capacity. They will grow with shippers, but they will not add equipment on spec’. FE: BASED ON SHIPPER ATTITUDES UNCOVERED IN THE SHIPPER PULSE SURVEY, THERE APPEARS TO BE SOME RESISTANCE TO HOW FUEL SURCHARGES ARE BEING HANDLED. SURCHARGES FOR FUEL HAVE BEEN IN PLACE FOR MORE THAN A DECADE. IN YOUR VIEW, WHAT DOES THE APPARENT RESENTMENT – FOR EXAMPLE, 61% OF SHIPPERS BELIEVE CARRIERS ARE USING FUEL SURCHARGES AS A BACKHANDED WAY TO SQUEEZE ADDITIONAL REVENUES – INDICATE FOR THE FUTURE?

Patenaude: There is a certain frustration over fuel pricing in general that carries into this discussion. I can see how in certain environments where shippers are dealing with a variety of providers calculating their own fuel surcharge, it can create some difficulties and perceptions. Ultimately, my recommendation to shippers is come up with your own fuel formula. Don’t go reinvent things, but come up with something that makes sense for you and that you can justify and then deploy it within your carrier base. FE May/June 2012 ❙ FLEET EXECUTIVE 17

13-06-07 9:22 AM

COVERSTORY

PROOF POSITIVE By John G. Smith

18 FLEET EXECUTIVE ❙ May/June 2013

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Legal challenges could clear the way for broader alcohol and drug tests.

Is that a good thing?

ary Langer is quick to defend alcohol and drug tests for crossborder drivers. As rare as the threat of impaired truckers may be, these programs help to ensure drivers remain sober behind the wheel, says the human resources manager at Kriska Transportation. Related Employee Assistance Programs can even provide addicted drivers the help that can lead to life-altering changes. One of her fleet’s employees actually came forward for this help before recording a positive test. While all Kriska drivers are included in the testing pool, ensuring that each of them can cross the border, Langer wonders whether it is time to expand the programs to every Canadian trucker no matter where they operate. Picture a school bus being passed by a truck that has an impaired driver at the wheel, she says. “Does it make any difference if they are kids based in the US or kids in Canada? I don’t think so.” Testing has been a reality for US-bound fleets since 1996, when Canadian drivers were first required to blow into Breathalyzers and provide urine samples after collisions, on reasonable suspicion (when seen acting drunk or high), or after returning to work in the wake of a positive test and related treatment. Luck plays a role as well. Half of a cross-border driving pool is randomly selected for drug tests every year, and another 10% is tested for alcohol. It’s a process that has cleared several legal hurdles along the way. Canada’s federal government initially promised to adopt the US rules and introduce a supporting legal framework, recalls David Bradley, CEO of the Canadian Trucking Alliance. When that failed to materialize, Canadian fleets were left scrambling to meet the US rules without any legal support from their home country. The legal debates which followed tended to focus on the balance between highway safety and human rights. But most of those questions were addressed a decade ago, when the Canadian Human Rights Tribunal considered the case of Salvatore Milazzo, a bus driver fired after testing positive for cannabis. The tribunal ruled the tests were a “legitimate” tool to promote road safety and discourage employees from using drugs or alcohol at work. Drug tests may not be able to prove that someone

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is actually impaired at a specific moment in time, the tribunal agreed, but proof of recent substance use does raise a red flag. A related policy that emerged in 2009 cleared the way for screening employees in any “safety-sensitive” positions, as long as employees were treated for addictions rather than fired. But Canada’s legal system has yet to deliver the final word on broader testing regimes. Suncor Energy is appearing before an arbitrator in a bid to introduce random alcohol and drug screening in Fort McMurray, Alta., and the Canadian Supreme Court recently heard a challenge against random alcohol tests at an Irving Pulp and Paper mill in New Brunswick. The case with the clearest link to Canada’s truck drivers involves Suncor, which wants to randomly test 3,400 workers, including heavy-duty mechanics, equipment operators and drivers. Three out of seven deaths at the Alberta site had involved workers under the influence of drugs or alcohol, and the company recorded 100 “security incidents” involving alcohol or drugs between May 2010 and June 2012. Marijuana, crack cocaine and vodka had all been found on worksites patrolled by drug sniffing dogs, and 6% of the workers who faced tests after accidents or on reasonable suspicion had failed. But the company ran into a legal obstacle when planning to begin random testing for all employees and contractors between October 2012 and January 2013. A court injunction put everything on hold. At the crux of this legal challenge is the question of which employees work in safety-sensitive positions. Suncor argues the number approaches 85% of workers, while Communications, Energy and Paperworkers Union of Canada (CEP) Local 707 says the number is substantially less. In the eyes of the Canadian Human Rights Commission, safety-sensitive positions are those “in which incapacity due to drug or alcohol impairment could result in direct and significant risk or injury to the employee, others or the environment.” Anything else would be discriminatory, and the Canadian Human Rights Act prohibits discrimination based on a disability like an addiction to drugs or alcohol. There is a difference between testing for reasonable cause, after an incident, or using a random pool, CEP Local 707 presMay/June 2013 ❙ FLEET EXECUTIVE 19

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COVERSTORY

ident Roland LeFort insists in an affidavit for the case involving the New Brunswick mill. “These three types of policies are different, an employer’s interest in imposing them is different, and their impact on employees’ privacy rights is different. Thus, it cannot be assumed that an employer can automatically justify a random alcohol testing policy once it is determined that the workplace is dangerous or safety-sensitive.” “Random drug and alcohol testing does not improve safety outcomes,” he said in another statement from the union. “That is clearly an invasion of privacy.” The case with broader implications in the Canadian workplace, largely because it is in the hands of the Supreme Court of Canada, involves random alcohol tests at the Irving mill – and the employee cited in that case was not even drunk on the job. Perley Day recorded a Blood Alcohol Content (BAC) of 0.0 when tested in 2006, but the self-described “teetotaler” saw no reason why he should have been tested. Irving, meanwhile, points out that five employees showed up for work under the influence of alcohol between 1991 and 2006. None of the 114 employees tested during two years of the policy had failed. “That [case] might further open the doors for some of the other motor carriers who operate solely in Canada to intro-

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duce policies that include random testing,” says industry consultant Barb Butler, one of Canada’s foremost experts on workplace alcohol and drug policies. Broader testing programs make sense when it comes to arguments about highway safety, she adds. Domestic truck drivers certainly share Canadian roads with cross-border drivers. Steve Farris, vice-president of safety and risk management at International Truckload Services (ITS), supports broader tests even though positive results continue to be extremely rare. “It’s a safety-sensitive position,” he says of trucking. “We’ve tested some guys for what we thought were suspicious circumstances and we’re not afraid to do that if we need to.” “I have to think that the drug and alcohol program testing

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criteria has probably done a great deal to prevent accidents, injuries and fatalities,” he adds, referring to programs as an effective deterrent. But the double standards of Canadian and US testing regimes present an unavoidable challenge. “Are we creating a Canadian ghetto?” asks Bruce Richards, president of the Private Motor Truck Council of Canada. Under the current structure, drivers who struggle with addictions can simply shift to fleets that limit themselves to domestic lanes. No testing required. Then there’s the question of whether 17 years of cross-border tests have made US highways any safer. In 1990, 2.8% of the drivers of large trucks involved in fatal crashes had a Blood Alcohol Content above the legal limit of 0.08. The percentage has not poked above 2% since 1996. Cross-border truck drivers are also recording fewer positive drug tests than ever before. One of Canada’s largest third-party testers reports that 2.3% of tested drivers tested positive for drugs in 1996. The rate dropped to 0.5% in 2010. The improving results have even come in the midst of tougher tests. Programs once limited themselves to looking for traces of drugs known as the NIDA 5 – amphetamines, cocaine, codeine, marijuana and PCP – but have since expanded to include ecstasy and heroin. Four other drugs including the pain reliever oxycodone are expected to be added soon, along

with the laboratory tests of swabbed samples from a driver’s mouth. The latest changes were approved by the US Health and Services secretary, but have to make their way through regulatory processes. An effort led by Wisconsin Republican Congressman Reid Ribble, while currently stalled, raises another option. He wants a pilot program to test hair follicles, and the bid involves more than simplifying test procedures. A half-inch of hair pulled from a driver’s head will detect drug use over 30 to 90 days. Urine tests offer a window of fewer than five days, depending on the drug. Regardless of the testing process, the US shows no signs of easing its demands. While voters in Colorado and Washington State are pushing for legalized marijuana, the US Department of Transportation has no plans to consider where a positive-testing driver smoked a joint. The state stances will have “no bearing” on the testing, Office of Drug and Alcohol Policy and Compliance Director Jim Swart said in a December 2012 memo. The number of collisions linked to drug and alcohol use is dropping, but “human factors” remain, US Transportation Secretary Ray LaHood said in another statement. Employees will continue to use illicit drugs or alcohol, he says, and that means employers need support in the form of testing programs. FE

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TROUBLE FILLING THOSE PESKY VACANCIES? START BY THROWING AWAY THE OLD PLAYBOOK 22 FLEET EXECUTIVE ❙ May/June 2013

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THE HUMAN EDGE

f you can’t find enough white male bums to fill your organization’s vacant seats, you may be chasing the wrong people. That was the upshot from Sher Zaman, senior director of HR, safety and compliance, for Supply Chain Management (SCM), in a presentation he made to the Van Horne Institute’s “Engage: Women in Supply Chain” conference in Calgary. Zaman pointed out that there’s a whole world of diversity out there waiting to apply for gigs – it’s just a matter of learning how to reach out to it. “If your referrals or your network that’s being referred are of the male or white majority,” Zaman told the conference’s audience, “then you’re really not tapping into other pools out there.” He was quick to note that looking beyond traditional gender and ethnic roles to find new blood isn’t meant as a kind of reverse discrimination; rather, it’s just a way to fill positions in a workforce that’s facing severe personnel shortages in the near future, thanks to an aging workforce and burgeoning business. “This isn’t a women’s issue,” he said, “it’s a talent issue, and that’s how we approach it at SCM.” SCM is working actively to address its talent shortage, Zaman said, and he outlined some of the company’s strategies and experiences, using them as practical examples of how a company can cast a wider net than it may have traditionally in its attempts to fill holes in the organization. Adding women, young people and visible minorities to the workforce has to start with a commitment and a strategy, Zaman said, and he noted that, while SCM is still new to such things, the company has definitely jumped into the fray with both corporate feet. As with so many other things, however, the strategy started small. “Back in October, we launched our first women’s workshop,” he said, “and it was really just to start some dialogue and discussion around the business.” Zaman said the company discovered plenty of diverse viewpoints during that dialogue, some positive, some indifferent, and “some not really understanding what the challenge was and why we would even look at developing programs to tap into other recruitment sources.” But from that beginning, they’ve either begun looking into or actually kicked off programs based around diversity management and inclusion, including a focus on women. To ensure their message got out to a broader range of potential new hires, Zaman said, SCM started to use some outsidethe-box thinking. “Traditionally, we would place an advert in the mainstream media and hope that would attract the talent that we needed to come into our organization,” he said, “but we’re now more specific and segmented in our approach, so we look at the market in different levels, different channels.” trucknews.com

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By Jim Bray

This includes reaching out through community centres and through broader advertising tactics – including taking out ads in different languages. Zaman said they’re also tailoring those ads more for the desired audience, in that “we’ve (pictured) people within our own organization that reflect the broader community.” The company also expressed publicly its commitment to diversity and inclusion in ways that are “visibly clear” when you enter their Web sites, read the president’s statement or see their advertising. It seems to be helping. Zaman told the audience about the company’s operation in Cornwall, Ont., which not too long ago was struggling to find talent. “It’s an aging population,” he explained, “so we really tried to reach out further. We expanded our search into the Montreal area, we started tapping into visible minorities, forming alliances with immigration groups, we offered our building as a language school to teach English as a second language to some of those community agencies.” And within about a year, he said, “We increased our visible minority hiring by about 17% and those individuals, in turn, are bringing good people into our business.” Another factor Zaman said has traditionally worked against recruitment in the supply chain management field has been the fact that few people grow up aspiring to such a career. “I think we have a moral responsibility within our profession as well as a business responsibility to operate with the best talents,” he said, “but I think, traditionally, supply chain business hasn’t been something that people have discussions with their parents about.” Zaman thinks that should – and can – be changed, not only by supply chain careers having a greater focus in educational institutions (which is starting to happen), but by today’s supply chain professionals becoming role models who can illustrate to others the benefits of such careers and help mentor them once they enter the profession. Some new thinking is also in order. “We, as a business, tend not to take risks,” Zaman said. “We’re looking for someone with May/June 2013 ❙ FLEET EXECUTIVE 23

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THE HUMAN EDGE

Instead of looking at when the person goes home, perhaps they should look at what that person actually got done while at work.” 10 years experience in supply chain, ideally within the systems that we operate. And that has worked to a certain degree; those people are successful for the most part, they contribute to our business. But we need to change that model. We’re looking for competency across a broader spectrum of softer skills such as leading teams, developing others and managing chains.” Keeping good folk around Once you’ve found that great new hire, you need to develop and retain that talent. There are probably as many ways of doing this as there are people, and Zaman highlighted some of the things SCM has learned when it comes to helping such employees flourish in the company. One is to challenge your managers to look at things differently, to shatter biases and stereotypes. For example, “Women are more likely to be stereotyped as being family-focused and unwilling to travel,” Zaman said, noting that “it can be an unconscious barrier to women being successful in broader roles: do I want to invest all this time (in a female employee) when I think they’re going to have a baby in the next few years?” Another lesson SCM has learned is to be more flexible when it comes to its expectations. “As recently as three years ago, mobility had been a factor in some of our high potential development programs,” Zaman said. “That is changing as we realize mobility shouldn’t be a factor if you’ve got strong candidates who may be settled in a certain area.” Flexibility can also mean making accommodations for people’s career and life needs. “Men can’t have babies at this point,” Zaman said, “so there’s a natural gap for people who wish to take an opportunity to have children.” He noted that, during his research, he found there’s actually an impediment to careers for women in developing further and “that one-year career break really impacted women in a fairly profound way, both in terms of career development and the pace of that development. And also salary, which is disturbing from a moral perspective.” Allowing more flexible working hours can also help encourage good people to join – and to stick around. And that could even make a company change how it looks at productivity it24 FLEET EXECUTIVE ❙ May/June 2013

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self. “We were having a succession planning meeting last year,” Zaman said, “and we got onto the topic of a particular individual. This person leaves a little bit earlier than everybody else, maybe around four o’clock, and that seemed to be the hang up for the succession planning group in discussing whether or not we were going to invest in moving this person forward.” Then someone suggested that, instead of looking at when the person goes home, perhaps they should look at what that person actually got done while at work. “The whole dynamic of the group changed and our succession planning meetings changed drastically from that,” Zaman noted. “So it really wasn’t about the fact that this individual left (early) because they had family commitments, it was about what they got done during the time they were here and how they managed their business – and they managed it effectively, very effectively.” Likewise, Zaman said, another individual was described by some of the succession planning committee as being a little bit meek and mild-mannered. “But again, who cares? What were the results? How did they deliver? This individual is incredibly talented, gets results, has a great, fantastic relationship with the client. So again, if it’s a question of just a person’s style, why should we be using that as a negative against individuals?” It turned out to be a real eye-opener, Zaman said, which helped SCM learn to think differently about how it evaluates people and measures the results of their work. And, of course, this can be applied to any employee, regardless of ethnic background or sex – including white males. Zaman said this focus on flexibility extends beyond looking at the number of hours – or years – the various bums are occupying the seats; it also requires looking at different ways of getting the job done, whether through such strategies as allowing someone to work from home or through some broader accommodation. “We’ve looked at more part-time schedules for our shift workers,” he said. “We also do a lot of sabbaticals because we have a diverse population; lots of people want to take pilgrimages or extended leaves of absence to go home.” SCM also incorporated a culture of inclusion into its values, and celebrates its multiplicity through a “diversity week” held each May. The company also commemorates such things as Black History Month, Chinese New Year and International Women’s Day. To Zaman, a more diverse workforce isn’t just great for business and for succession planning in a time when more and more vacancies come open; it’s just plain good. “What’s good practice for women in supply chain or any organization is generally good practice for the broader business,” he said, “and while gender diversity is incredibly important for SCM…it is only one facet of the journey that we’re taking around diversity and inclusion. We are challenging our businesses to think differently and to challenge the way we’ve done things in the past.” FE trucknews.com

13-06-07 9:41 AM

GREEN to GOLD

NATURAL FIT?

Natural gas offers a cheaper fuel supply, but there are other factors to consider By John G. Smith

rimac Transportation was working with liquefied natural gas (LNG) before it actually began to burn the fuel in truck engines. The experience can be traced to the fleet’s 2007 acquisition of Logex, which specialized in hauling cryogenic liquids. But there is a difference between hauling the fuel and using the fuel to haul freight. “We had the knowledge base of how to handle the fluids, but not necessarily how to drive the trucks,” explained US maintenance director Randy Tumbarello, during a presentation to the Technology and Maintenance Council of the American Trucking Associations. Granted, it has been a relatively positive experience. Drivers enjoyed the extra pulling power from 15-litre Westport engines which offered an extra 200 lbft of torque when compared to their 13-litre diesel predecessors. “The trucks handle just like any other diesel truck,” he added. The engines are even quieter. That is the good news. While the fuel is cheaper, the equipment itself is not. Ryder, for example, has seen natural gas tractors cost an extra $50,000 to $60,000, large straight trucks costing $30,000 to $40,000 extra, and small straight trucks costing another $10,000 to $20,000 when compared to diesel equipment. The added fees do not end there. It can cost $250,000 to $500,000 to prepare a service facility, adding safety equipment like methane detectors and air exchange systems, and this is on top of the $25,000 to train and equip technicians. The dedicated trucknews.com

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parts add another $10,000 to maintenance-related inventories. At Trimac, the shift to LNG has been accompanied by new maintenance costs such as the need to stock spark plugs, fuel filters and dedicated engine oil. The quality of the fuel can have a “dramatic impact” on the life of the fuel filters, Tumbarello added. The maintenance issues hardly ended there. Early generations of the equipment also tended to generate invalid fault codes, which caused engines to de-rate and limit speeds to less than 10 km/h. The problems were so widespread at first that the fleet kept a spare diesel-powered truck on hand for every four natural gas units. Thankfully, that challenge has disappeared. Another unexpected issue came from drivers who thought the fuel was leaking because they smelled sulfur. But the odour, linked to an additive known as mercaptan, is only found in compressed natural gas (CNG). It was eventually traced to offgassing batteries. One of the more annoying ongoing maintenance requirements appears to be the need to inspect fuel tanks every three years or just under 58,000 km, in a rule clearly designed with automotive applications in mind. “There’s work that needs to be done there to correct that,” said Scott Perry, Ryder’s vice-president of supply management/ fleet management solutions, referring to the need to extend inspection periods for the tanks. Few commercial fleets will ever reach the three-year mark before the mileage threshold. The safety-related considerations do not end with tank inspections, either. Drivers need to wear protective apparel when May/June 2013 ❙ FLEET EXECUTIVE 25

13-06-07 11:34 AM

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refueling LNG tractors because the fuel is stored at between -130 and -160 Celsius, which can lead to severe frostbite. The time needed for refueling also changes. A 450-litre (120 US gallon) tank of LNG can be filled in about 15 minutes. While most CNG cylinders tend to be refilled overnight, there is the option to turn to fast-fill stations, which can complete the job in just 12 minutes. The challenge with the fast-fill stations is that the process generates heat, meaning that a cylinder will only be able to accept 80% of its maximum volume, and this limits the truck’s effective driving distance. Perhaps the biggest challenge of all comes when looking for the fuel in the first place. The US boasts about 10,000 outlets offering diesel fuel, which means supplies are always close by. Those considering natural gas will need to look at how fuel searches can affect Hours-of-Service and out-ofroute miles, said Perry. A 10-km side trip looking for fuel may not be a problem when travelling down an open road, but it can create a scheduling nightmare in a traffic-congested area. The level of service can vary widely between CNG stations, added Michael Birk, senior national fleet sustainability manager at Frito-Lay. Some are built to support commercial vehicles, while others are strictly designed for cars. It is why his fleet committed to buying specific volumes of fuel over five to seven years as long as suppliers built the stations where FritoLay wanted them. Seven of the sites will open this year. The shops certainly require a number of investments before any related work begins. “We’re not dedicating a bay. We’re making the entire facility compliant,” Perry explained, referring to needs for explosion-proof lights, fire sensors, exhaust fans and gas detectors. Ryder facilities will exchange all of the building’s air within 15 minutes of a sounded alarm, protecting against the threat of methane or carbon monoxide. Even adjoining office areas need audible and visible alarms, while the administrative staff members who work there must know how to respond if an alarm sounds. Alarms and air exchange systems are actually tied into fire suppression systems. There is another cost to be paid with a natural gas truck. The thermos-like cryogenic fuel tanks for LNG may cost about $20,000, but they weigh in at about 1,000 lb. for every 40 Diesel Equivalent Gallons (150 Diesel Equivalent Litres). A CNG truck, meanwhile, can weigh about 200-600 lbs. more than its diesel counterpart, depending on the configuration. Of course, the added weight is a lesser concern for trucks which “cube out” before reaching their maximum gross vehicle weights. “We can’t put enough chips on the truck to overweigh it,” Birk said. The challenges have hardly scared Frito-Lay away from the fuel. The fleet will be running one in five trucks on natural gas by the end of this year, as it moves toward a goal of cutting gasoline and diesel demands in half between 2008 and 2020. A new 9-litre engine is seen as a particularly good fit for the company’s hub-and-spoke delivery model, while the fuel itself offers an environmentally friendly option at an affordable cost. FE trucknews.com

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13-06-07 11:34 AM

GREEN to GOLD

FUTURE willDiesel FUELS industry dominate even if prices soar, Petroleum Council says

By John G. Smith

on’t expect the smell of diesel to disappear anytime soon. A recent study by the US National Petroleum Council suggests that diesel will remain the trucking industry’s dominant fuel source in the coming decades, even in the face of rising costs and the growing popularity of alternatives like natural gas. More than 300 people and 100 companies participated in the study, which looks out as far as 2050 – projecting fuel demands, supplies, infrastructure and technology. The final results had to consider economic factors, energy security and the environment, as well as different actions which would stimulate advances in equipment. On top of that, they had to weigh the market conditions needed to slash transportation-generated greenhouse gas emissions in half. Researchers looked at everything from gasoline and diesel to biofuels, electric vehicles, natural gas and hydrogen, and the steps needed to make any of the alternatives commercially viable. Each energy source has advantages and disadvantages, said Jim McCarthy, Eaton’s engineering manager – advanced drivetrains. But even considering a worst-case scenario of $6 per US gallon (about 3.8 litres), diesel leads the way. “You’re getting a good bang for the buck,” he said when presenting results to the American Trucking Associations’ Technology and Maintenance Council. Natural gas is expected to be the most popular alternative fuel, thanks, in part, to the promise of stable prices as domestic producers tap into pockets of gas trapped in North American shale. The US Department of Energy says that fuel’s price has also “decoupled” from the cost of oil and diesel, meaning the economic advantages can continue to grow. There are other advantages to natural gas, including lower greenhouse gas emissions, said Bill Taylor, managing partner for the consulting company kVA. But some of those are countered by costlier equipment ranging from fuel tanks to engine upgrades. Of course, equipment costs cannot be considered on their own. Looking out to 2020, a diesel-powered vehicle and three trucknews.com

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years of fuel would cost $311,000, based on middle-of-theroad projections for oil costs. (That’s based on 200,000 km a year and diesel at $3.56 per US gallon.) Its natural gas counterpart would cost $66,835 more. Considering high oil prices and diesel costs of $5.60 per US gallon in 2025, the diesel equipment would cost $380,000. The natural gas option would cost $31,000 more. “Adoption of natural gas is highly dependent on the future price of oil,” Taylor said. “If oil stays low, the economics go by the wayside.” Diesel engines simply cost less, are based on well-proven technology, and are optimized to run on the fuel. But diesel equipment will have to be enhanced in the face of rising prices and demands to lower greenhouse gases. It is why several industry consortiums are looking to demonstrate “super trucks” capable of delivering up to 10 mpg (23.5 litres/100 km) as early as 2016. (See pg. 34 for more details). There is certainly room to improve. Today’s diesel engines waste about 60% of a fuel’s available energy. “Diesel trucks and engines are always evolving,” McCarthy said, referring to gains made through improvements like low-friction bearings and advanced transmissions. Other improvements can be realized using hybrids, optimized drivelines, systems to recover waste heat, wide-based tires and advanced fuel systems. “You can’t just pick one technology,” he said. “It’s going to take bits and pieces of these technologies to get there.” The question is which of the 40 studied technologies will make the most sense. “How much does it cost to add new technology to a vehicle, and what’s the bang for the buck?” McCarthy asked. In the near term, fuel economy gains of 7-10% can be realized through changes like tire choices, variable valve actuation, improved Exhaust Gas Recirculation (EGR) systems and electrification. And most of those options are “relatively cheap,” he observed. Changes like idle-reducing auxiliary power units, updated transmissions and drivelines can bring the trucks into the range of 8 mpg (29.5 litres/100 km). Long-term solutions could mean recovering lost energy, using more long-combination vehicles (LCVs), and incorporating hybrids. Those will cost “a lot” of additional investment. There are also practical considerations to consider. “In a laboratory, we can talk about all sorts of things,” Taylor said, referring to options like hydrogen fuels and electric vehicles. “Are these technologies going to be ready for prime time and ready for use in large volumes?” At this point, they tend to lack the energy density of diesel, making it difficult to store enough “fuel” on a truck. “Battery and fuel cell technologies still lag heavy-duty requirements,” he said, referring to a key limitation. But they will likely have a role to play in light-duty vehicles. Selected medium-duty deliver trucks may also be strong candidates for hybrid designs because of a combination of environmental benefits and economics alike. Meanwhile, light urban delivery trucks are targets for full electrification if they run a set number of miles per day. FE May/June 2013 ❙ FLEET EXECUTIVE 27

13-06-07 11:34 AM

GREEN to GOLD

DELIVERING T Wind turbine transport is a complex supply chain operation By Carroll McCormick

n June 9, 2011, the MV BBC Orinoco sidled up to a wharf at the Port of Thunder Bay with 14 wind turbine units (WTGs), including nacelles (the bungalow-sized generator that perches on top of the tower), hubs, spinners, 2.3-megawatt (MW) power units and 42 blades. The ship, operated by Germany-based BBC Chartering, had picked up the load in Aarhus, Denmark for Siemens Wind Power in late May, steamed across the Atlantic, up Highway H2O and across Lake Superior. Two other ships, the Alaskaborg and the Adriaticborg, operated by Wagenborg Shipping North America, delivered 29 more WTGs to the Port of Thunder Bay that May and June. From there, Anderson Haulage, based in Gormley, Ont., trucked the lion’s share of the components – over 250 loads – to a 99-MW wind farm in Greenwich, northeast of Thunder Bay for owner Renewable Energy Systems Canada. The wind farm became operational later that year. 28 FLEET EXECUTIVE ❙ May/June 2013

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Those deliveries contributed to 1,267 MW of new wind energy installed capacity in 2011, bringing Canada’s total installed capacity to 5,403 MW. That’s enough to power 1.2 million homes, according to the Canada Wind Energy Association (CanWEA). Canada’s wind energy industry remains in a huge growth phase. CanWEA reports that by 2015, the country’s total installed capacity will top 15,000 MW. Behind these astounding numbers operates an enormous supply chain effort. A single modern WTG can weigh in at 317,515 kilograms (components weigh from 6,800 to 86,200 kg) and stand 122 metres high. The blades can exceed 49 metres in length. WTG components are passed between trains, ships and trucks, each either specially outfitted for the job or purpose-built from scratch. Voyages such as those BBC Chartering make from Europe to Canada range from 3,500 to 4,400 nautical miles and can take up to 16 days. Cargo securing and lift plans have to be developed and a ship with on-board cranes is dispatched to the port. Loading can take up to four days and involves many specialists; e.g., cargo superintendent, cargo surveyor, lashing trucknews.com

13-06-07 11:33 AM

Bullying an 86,000-kg nacelle up a hill.

G THE

crew and port stevedores. The trips have to be timed so ships arrive during the open season of the St. Lawrence Seaway. At the far end of these voyages, the timing of the arrival of expensive cranes and specialists must be carefully scheduled. BBC Chartering does 15-20 shipments a year in support of the Canadian wind industry. They originate from Northern Europe and the Far East and are shipped to Hamilton and Thunder Bay. BBC Chartering also makes shuttle shipments from Canadian WTG component manufacturers. After delivery to a port, components are stored in lay down areas until they can be loaded onto trains, trucks or even another ship, as was the case for the Wolf Island, Ont., wind farm. Those WTGS – 86 in all – first travelled in 11 shipments from Esbjerg, Denmark to the port of Ogdensburg, N.Y. From there, Hamilton-based McKeil Marine moved loaded trucks on a roll-on roll-off barge – 87 loads worth – to Wolf Island. Tim Heney, CEO of the Thunder Bay Port Authority, discusses the Greenwich shipments: “There are a lot of lay down areas involved. The components came in large quantities. Blades take up the most room and have to be kept in balanced sets of three. You can get in your own way in a hurry.” WTGs also leave the Port of Thunder Bay by rail. In 2009, for example, CN moved 102 blades 3,220 kilometres to Dawson Creek, B.C. There, they were offloaded and trucked to the 34-MW Bear Mountain Wind Farm. CP moves wind energy components over 1,930 km to its largest rail transfer facility, located in Wilson, Alta. Otherwise, says CP’s David Walker, trucknews.com

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director of project cargo, “In [an area where] CP does not have a dedicated rail transfer facility, we identify a temporary rail transfer siding as close to the wind project as possible and dedicate it to that project.” The Wilson transload facility, owned by Transmark, is about 15 km southeast of Lethbridge and about 200 km east of Calgary. Transmark has 12,800 m of track space and 20 tracks on an 89-hectare property. Lethbridge-based Gilmar Crane Services keeps a 285-tonne crane crawler on site all the time. During a WTG transfer, more Gilmar cranes, trucks and a couple dozen men bend to the task. Timing and coordination are mantras in the WTG transport business, where trips of thousands of kilometers and sourcing of major components from several countries is common. “The timing of arrival of each component is very critical. Our logistics specialists work intimately with the customer and any other third-party providers at the origin and destination locations to coordinate and execute to the optimal plan. Shipping WTG

components by rail requires incredible focus and attention to detail,” comments Dan Bingeman, assistant vice-president of supply chain solutions at CN. With little room to spare on erection sites, components are stored and sorted at ports and transload facilities. “Trains have to arrive in a certain order. A lot of this has to do with how erections are being done,” says Dallas Sherwood, general manager, Transmark. CP constantly updates its clients, some of which let CP handle the next phase: road transport. Other clients handle the last leg of the trips themselves. “We give the customer a daily report of where the train is so they can schedule the riggers and crane operators,” Walker says. Between 2004 and mid-2012, CN moved more than 3,700 carloads of WTG components. Its biggest shipment was 60 carloads of components from New Westminster to Chetwynd, B.C. in 2010. Its longest Canadian trip was a 3,166-km, sixday journey from Thunder Bay to its Dawson Creek, B.C. transload facility. CN has transloaded shipments that other rail carriers have picked up at US ports, including Beaumont, Texas; Stockton, Calif.; and Vancouver, Wash. Its Canadian destinations range from British Columbia to Nova Scotia. Winter is no obstacle to rail shipments, but as blade lengths increase in newer models, so will the challenges to rail transporters. “To date, CN has not been presented with a WTG blade design our trains are not able to handle. We have heard [about May/June 2013 ❙ FLEET EXECUTIVE 29

13-06-07 11:33 AM

GREEN to GOLD

TRUCKING WTGS TAKES SPECIALIZED EQUIPMENT, SPECIAL PERMITS, SPECIAL DRIVERS, POLICE ESCORTS AND EXTRA HORSEPOWER TO MUSCLE THE TREMENDOUS LOADS UP TO THEIR HILLTOP HOMES. Tower components travelling through Glen Nevis, Ont.

plans] to manufacture blades as long as 60 metres. These long blades will have greater swing outs on track curvatures and will certainly be more difficult to handle everywhere across our network,” Bingeman says. CP’s entry into the WTG market was in 2005, with an overland trip for 63 railcar loads of blades, hubs, towers and turbines for 12 WTGs. It began at the Port of Houston, with an interchange in St. Paul, Minn. to CP. CP pulled the shipment 4,506 km to the Rushlake Creek Wind Power project near Swift Current, Sask. By May 2012, CP had moved about 4,800 carloads of WTG components. One of CP’s main clients is Denmark-based Vestas. Its North American operations include manufacturing facilities for blades, nacelles and towers in Colorado. Most Vestas shipments that CP handles are interchanged with BNSF Railway at Sweet Grass, Mont. or St. Paul, Minn. In Canada, Walker notes, “We work collaboratively with CN. In Montreal, we interchange with CN for points east.” Last year, for example, CP handed off WTG components to CN for transport to Amherst, N.S. CP also interchanges WTG components with the Quebec 30 FLEET EXECUTIVE ❙ May/June 2013

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Gatineau Railway. It has a spur running directly to wind tower manufacturer Marmen in Trois-Rivieres, Que. In fact, its largest shipment was a 67-car unit train of tower tops and mid-sections and a 63-car train of bases between Marmen and Randolph, Minn. in 2010. CP has access to about 400 specialized cars. “Rail cars to load dimensional wind components must be customized. We have a 60-car unit train dedicated to handling sections for 80- and 100-meter towers. Each specialized flatcar has modified saddles that allows the unit train to carry 20 top, 20 mid and 20 base sections,” Walker explains. Ninety percent of CP’s infrastructure has been proven to clear up to 4.6-metre wide tower sections, and handle blades up to 49 metres long. The last leg of every WTG journey is by road. It takes specialized equipment, special permits, special drivers, police escorts and extra horsepower to muscle the tremendous loads up to their hilltop homes. Route surveys determine which roads the loads can take. Height is not the issue; rather, it is length, particularly of those long blades. There is no consistency between provinces or states on permits, according to Frank Devries, business development, heavy haul and wind energy with Cambridge, Ont.based Challenger Motor Freight. “They each have their own little twist. Most provinces and states deem [WTG components] super loads, usually defined as over 100,000 lbs [454,360 kg] and 120 feet [36.6 m] long. You can’t travel in inclement weather such as in rain or snow.” Multi-axle flatbed carriers move the nacelles, which can top 86,200 kg. Purpose-built tri- and four-axle, double-framed tractors pull the tower sections, which are bookended with twopiece wheeled devices called Schnabels. One piece connects to the front of a section and the other to the rear to build a trucknews.com

13-06-07 11:33 AM

trailer. “A Schnabel allows you to carry the component lower to be installed this year, 652 WTGs will be transported. At 12 loads the ground, and carry larger-diameter loads. There is no need per WTG, that is 7,827 truckloads. for a structure under the load,” Devries explains. According to Quebec-based Groupe Robert, which entered Long before the first loads arrives in Canada, the last few the WTG transport market in 2009, it has ambitions that speak kilometres of roads to the wind farm are upgraded or built from to even closer partnerships among the transportation modes. It scratch. “On some sites, we will build the roads. We have to will be interesting to see where this cooperation leads as the have wide corners and the grades can’t be too steep. Typically, multimodal WTG transport industry continues to mature. FE we will also make the access big enough for the large cranes,” says Dean Seely, senior construction manager with Calgary, Alta.-based power generator and electricity wholesaler TransAlta. TransAlta built 21 kilometres of road for its 68-MW wind farm in New Richmond, Que. in 2011, in anticipation of receiving the WTGs the following year. TransAlta typically schedules the cranes, riggers, etc., months ahead of time. “Transport schedule problems depend sometimes on the amount of equipment being transported. If there is enough equipment that we can run unit trains, we get more control. Where we do have problems is if we have just a few cars. They can be put on a sidetrack and that can be frustrating. It is the same thing with ships. If everything on a ship is ours there is no stopping at other ports – it is pretty easy to plan,” Seely says. And is Proud to Sponsor Trucking the components to the wind farms is becoming big business in Canada. It requires about a dozen trailer loads to move one disassembled WTG: three or four tower sections, a nacelle, three blades, a hub/spinner and some miscellaneous loads. The road journey to the Dokie Ridge Project, northeast of Prince George, for Plutonic Power, added up to www.drivingforprofi t.com www.truckingforwishes.com 420 truckloads and roughly 13,154,200 kg expert information in an helping dreams come true for children of cargo. Challenger Motor Fright did the affordable fashion with life threatening illnesses move, which kept crew and equipment out of Ontario for 80 days. The home stretch of that marathon delivery was up a sometimes-greasy Disability • Downtime • Buydown 4.5-kilometre road that gained 1,067 m of elevation, with an average grade of 18%. Some trucks were both pushed by a flatbed truck loaded with concrete blocks and pulled by a 550-hp articulating tractor. NAL Downtime Lounges Devries foresees demand outpacing HWY 401: Woodstock, TA Truck Stop, Exit 230 the supply of specialized carrier equipCornwall, Fifth Wheel Truck Stop, Exit 792 ment. Some easy math suggests that, assuming a generous 2.3MW per WTG to

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13-06-07 11:33 AM

PROFITABILITY

Canadian fleets prepare to ramp up on food hauling regs

MUCH TO CHEW ON By Julia Kuzeljevich

otor carrier fleets are keeping a close eye on how new legislation will develop into concrete regulations on the transportation of food. The US Food Safety Modernization Act, enacted Jan. 4, 2011, is slowly being put into effect, with a final rule expected to be in place by 2014. At the Technology & Maintenance Council in Nashville, Tenn. this spring, attended by Transportation Media’s James Menzies, Bud Rodowick, manager of fleet performance with Thermo King, said carriers, especially in refrigerated hauling, should be communicating with their customers to find out how they’ll be affected. “This is a huge act, that’s very complex and enormous in size,” Rodowick said, and it gives the Food and Drug Administration “sweeping new powers,” including the ability to send people to prison for felonies related to the careless or negligent handling of food. Under the new rules, food companies will be required to demonstrate care of their products through the entire supply chain. “You’re a big part of that, but you just haven’t been made aware of it,” Rodowick said to trucking company executives and maintenance managers in attendance. There are 450 sections in the act, and four key ones impact transportation providers. These sections include: preventative controls and hazard analysis, traceability, sanitary transportation of food and the intentional adulteration of food. “This is going to be burdensome,” Rodowick said. “This is a great opportunity for you to be talking to the food facilities you haul for and saying ‘What does your preventative

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control plan look like and am I going to be a part of that?’” Affected Canadian fleets are looking closely at the implications of this Act, as well as regulations expected within Canada. “There seems to be a fair amount coming down the pipe that could affect us,” said Ron Lennox, vice-president of Regulatory Affairs at the Canadian Trucking Alliance. “I wish it were as simple as a single regulation coming down. There are really three initiatives we have our eyes on right now,” Of the US FSMA, Lennox, said the section on sanitary transportation and food “will in some way, shape or form impact carriers. Other parts of the Act have requirements for food shippers to have preventative controls in place and you could have shippers in some cases pushing out requirements for carriers operating for them,” he said. In Canada, the passage of the Safe Food for Canadians Act in 2012 makes it easier for the federal government to pass regulations affecting food safety. Vans and equipment used for any activity related to food production and transport are affected. “Clearly, they are thinking about how food moves, not just how it is grown,” said Lennox, adding there are as yet no specifics in terms of when we will actually see regulations, but they are expected between 2013 and 2016. “Probably the most important piece is the Canadian Food Inspection Agency’s inspection modernization initiative, which will bring different inspection models into a single process. There are also certain requirements such as that requiring anyone who manufactures processed food and falls under federal jurisdiction to have preventative control plans. I would see parties that are manufacturing and processing trucknews.com

13-06-07 10:07 AM

N food pushing out requirements to companies that are transporting it. The language used in the documentation is similar to that in the food transportation safety program HACCP (Hazard Analysis and Critical Control Points) methodology that we use,” said Lennox. The CTA’s food safety program was developed about eight years ago in partnership with the CFIA to allow carriers to adopt HACCP for the integrity and safety of food in their possession. CTA’s approach was to develop a “core program,” the food safety building blocks relevant to all trucking operations, as well as a series of commodity-specific modules which could be introduced depending on the requirements of individual carriers. “We’ve undergone a project lately to upgrade and automate the program. It’s under beta testing with some carriers and under a technical review process with CFIA right now – food scientists are looking at it. The whole point of engaging in this is to have a program that carriers can use that will allow them to respond to the more stringent requirements,” said Lennox. As yet, there’s no definite date on when the automated program will go live, but Lennox predicts within the next year. “To do the conversion and customization, it took us a couple of days, then a couple of days to document the processes. Rolling it out took about a six-month time frame,” said Trevor Bent, human resource and risk manager with Eassons Transport, of the HACCP implementation. “We’ve got one initial audit, one initial certification and one follow-up audit under our belts,” he said. The company, based in the Maritimes, has four terminals, several hundred employees, and 134 tractors. trucknews.com

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Other procedures around the terminals, such as general hygiene and smoking, tied in to the program, as did the safety committee’s work on food safety and auditing. In the meantime, fleets are continuing to maintain current food safety procedures and to examine where additional protocols may have to come in. “In essence, we’re trying to determine from our food shipping customers across the border what their understanding of the requirements is and what that would mean for the carriers involved. We’re just starting some dialogue with those clients we’re hauling food for north or south of the border,” said Jeff Pries, vice-president, sales and marketing, Bison Transport. He noted that Bison has long been an active carrier in the cross-border food and beverage marketplace and that anything that could infringe on food integrity is not compromised in their operations. “We’re already doing a lot of really good things from the standpoint of chain of custody, using the appropriate seals, FAST-approved drivers. For us, it’s connecting with our customers and focusing our attention to make sure we’re in tune with what their interpretation of the rules is,” he said. “We already had temperature control set up for our reefer business,” said Bent. “A lot of the folks in the reefer business have moved to downloadable technology. You have the whole timeline the freight’s been on your tractor and you can graph it out. Anyone touches a button and it’s tracked.” Anticipation of the United States’ mandatory requirement for a documented food safety program “sort of escalated moving this along,” said Bent. He noted that trailer sanitation procedures also play an important role in the food safety chain. “Trailer sanitation procedures have to be documented. Our customers are asking for this, and we’ve automated the history of when a trailer has been washed and when it hasn’t been. To comply, you can have checklists and a sheet, but we felt the best way to do our due diligence was to automate it. You have to the key trailer number into the pump, and the driver security number so we know who you are. This goes into the security database,” said Bent. Drivers are also asked to document, at four to six hour checks, the box temperature of the loads, he said. Driver response to the programs has been good, said Bent. “We tied ours into a performance management system. Temperature audits affect their bonus, so there is incentive there and compliance is very good,” he said. “We’re getting contacted by a lot of trucking companies because their shippers in the US are telling them they need a food safety program by a certain time or they won’t be able to use them,” said Brad MacCallum, president of Kasar International, which developed the Trucking Food Safety Program under contract for the Canadian Trucking Alliance “A lot of the programs in existence today will need some modifications when the new regulations come out, particularly when going into the US. Everyone is waiting to see what they are going to say,” said McCallum. FE May/June 2013 ❙ FLEET EXECUTIVE 33

13-06-07 10:07 AM

BIG GAINS, SUPER TRUCKS Manufacturers close in on trucks which will offer 10 mpg

By John G. Smith

t a time when a truck’s typical fuel economy floats around 6 mpg (39 litres/100 km), the promise of 10 mpg (23.5 litres/100 km) may seem like a pipe dream. But the dream may be closer to reality than you think. Fifteen industry manufacturers have joined together in the 21st Century Truck Partnership, experimenting with everything from engines to heavy-duty hybrids, vehicle power demands, creature comforts in sleepers, idlereducing technology, and new lightweight materials such as carbon fibre and high-strength steel. There are four projects in all – led by Daimler, Navistar, Volvo, and a joint venture between Cummins and Peterbilt – and each of them expect to have working prototypes within

34 FLEET EXECUTIVE ❙ May/June 2013

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two years, a recent meeting of the American Trucking Associations’ Technology and Maintenance Council revealed. “There’s a lot of new work going on here. It’s not just tweaking what we already have,” said Ken Howden, director of the 21st Century Truck Partnership in the US Department of Energy’s Vehicle Technologies Office. Each truck includes several technologies. The Cummins and Peterbilt project includes components such an enhanced Eaton transmission, Dana driveshaft, Delphi fuel cell, Alcoa wheels and Bridgestone tires, as well as a new energy recovery system. “The challenge is to get a lot of the heat energy out of the exhaust system,” Howden says. And the technology needs to be durable. Gains in the Cummins engine will focus on things like turbocharger efficiencies and enhanced pumps. New sensors trucknews.com

13-06-07 10:16 AM

This SuperTruck, designed by Peterbilt and Cummins, uses waste heat recovery and other technologies to improve fuel mileage.

and upgraded electronics will also work closer with the transmission to find the truck’s “sweet spot.” And heat from the truck’s exhaust or Exhaust Gas Recirculation will be recovered and transformed into mechanical power, while parasitic losses are being attacked with things like variable-flow lube pumps and low-friction cylinder kits. The size and shape of piston bowls are also being changed. A Waste Heat Recovery System for a linehaul truck would look much like an air conditioning loop, explained Jeff Seger, Cummins’ executive director of customer engineering and controls. Refrigerant is fed through a pump at 300 psi and heads to a heat exchanger to capture “high-quality heat.” At that point, the refrigerant transforms into a vapour which spins a turbine to create power. As it loses heat, the vapour is fed into a condenser where it turns back into a liquid and flows back to the pump. For its part, the turbine combines with gear reducers and belts to deliver driving power to the crankshaft. Under a heavy state and when fully loaded, it could help a truck improve fuel economy by 5%. Closely integrated transmissions will support down-speeding, lower weights, and enhance communications, he added, referring to automated transmissions as a key “enabler” of this approach. Cruising speeds of 1,370 rpm could drop to 1,270 or as low as 1,170 rpm. And every 100 rpm drop will improve fuel economy by 1%. Daimler’s project involves partnering with Great Dane Trailers on a complete tractor-trailer package to be tested by Schneider National. A combined solution may be a logistical challenge for some fleets, but it would be an option for dedicated operations. For its part, Navistar is working with Meritor on a truck with a hybrid powertrain. And Volvo’s Super Truck team is drawing on European experience, incorporating everything from a new transmission to “Freight Wing” aerodynamics, and a Waste Heat Recovery System of its own. There are certainly gains to be made. A mere 42% of the energy in a load of diesel is turned into useable power. The remainder is wasted through friction and parasitic losses in pumps and Exhaust Gas Recirculation loops, coolant, heat transfer through the radiator, and exhaust. Friction accounts for 8% of the lost energy, heat transfer wastes 24%, and exhaust amounts to another 26%. Heavy-duty trucks consume 1/5th of the fuel consumed in the US, and the world’s commercial transportation needs are expected to consume 70% more energy in 2040 than they did

in 2010. “In developing countries, their demand for diesel is even higher than ours,” Howden said. And there are few advantages to looking at other modes of transportation. Doubling the volume of today’s intermodal shipments, for example, would increase the railways’ share of the market by just 0.3%, he said. But each equipment-based option presents unique challenges for engineers. As valuable as any enhanced aerodynamics may be, they also have to meet practical demands. “It can’t just look good,” Howden said. “This thing needs to work as a truck.” Engines and transmissions may offer the biggest potential gains, but they are the most expensive. Eaton’s chief technology officer Tom Stover expects hybrids to play a larger role in vocational vehicles by 2025 and even emerge in linehaul vehicles. The good news is that the motors for hybrid systems are more affordable and less complex than ever. But there are still limits on battery technologies. Equipment will also need to rely on faster and smoother shifts, placing a larger focus on automated transmissions. “GPS-enabled cruise control may just be the first step,” he said. Other controls could base decisions on traffic density, or the information shared between surrounding vehicles and infrastructure. Eaton is already testing a system that will communicate with traffic signals to see if the light is about to change. As valuable as the equipment may be, the most important piece of the puzzle will still be sitting in the driver’s seat. “You can put all the technology you want in a truck, and a driver who is careless or indifferent about fuel economy can destroy that ... the era of unrestricted decisions about gear shifting are likely coming to an end,” Stover said. It hardly means that more traditional sources of fuel economy gains will be abandoned in the meantime. Selective Catalytic Reduction (SCR) equipment added to meet 2010 emission standards improved fuel economy by 5%, Seger noted. The US Environmental Protection Agency’s (EPA) next round of standards, to come in 2014, will also focus on reducing carbon dioxide, and that means improved fuel economy. Over the next four years, EPA mandates will require fuel efficiency to improve by 10-23%. The second phase to come in 2019 will see that improve by another 10-20%. The gains won’t even be limited to diesel. “The pressure for development for fuel economy improvement is going to be felt across the spectrum,” Stover said. He expects the gap between diesel and natural gas engines to close in the next 10 to 15 years. “It’s going to be a different world. The trucks are going to look different. If we do it right, we’re going to create a lot of value for our customers.” FE

The world’s commercial transportation needs are expected to consume 70% more energy in 2040 than they did in 2010

trucknews.com

Geared.indd 35

May/June 2013 ❙ FLEET EXECUTIVE 35

13-06-07 10:16 AM

TransCore’s Canadian Freight Index dips in April TransCore Link Logistics reported weaker Canadian Freight Index volumes for the spot market in April. The month-overmonth load volumes had a 7% decrease and the year-overyear volumes fell behind April 2012 levels by 14%. The equipment postings for April increased by 6% compared to figures from the previous month, and the year-overyear equipment postings saw a significant increase of 11%. As a result of these index changes, the equipment-to-load ratio declined considerably for April to 2.35 from 2.08 of the previous month. Overall load volumes for cross-border postings and intraCanada postings averaged at 70% and 25%, respectively. Cross-border loads destined for provinces within Canada were down 21% year-over-year compared to April 2012. In contrast, cross-border year-over year loads from Canada to the US were up substantially by 16%. Intra-Canada year-over-year load volumes for April were down 2% while equipment increased substantially by 24%. TransCore’s Loadlink freight matching database constitutes the largest Canadian network of carriers, owner/operators, freight brokers and intermediaries. More than 13 million full loads, LTL shipments and trucks are posted to the Loadlink network annually. As a result of this high volume, TransCore believes the Index is representative of the ups and downs in spot market freight movement. The first six columns include monthly index values for years 2008 through 2013. The seventh column indicates the percentage change from 2012 to 2013. The last column indicates the percentage change from the previous month to the current month. For the purpose of establishing a baseline for the index, January 2002 (index value of 100) has been used.

Total cost of ground transportation rises 1.2% in March The total cost of ground transportation for Canadian shippers increased by 1.2% in March when compared with February results, results published by the Canadian General Freight Index (CGFI) indicate. The Base Rate Index, which excludes the impact of accessorial charges assessed by carriers, increased by 1.0% when compared to February. Average fuel surcharges assessed by carriers have seen an increase from 21.53% of base rates in February to 22.43% in March. “All segments showed increases, with cross-border LTL leading the way,” said Doug Payne, president and COO of Nulogx. “Total costs are now 1.3% higher than a year ago.” 36 FLEET EXECUTIVE ❙ May/June 2013

Dashboard.indd 36

TransCore Canadian Spot Market Freight Index 2008-2013

% % 2008 2009 2010 2011 2012 2013 Change Change Y-O-Y M-O-M

Jan

214

140

171

222

220

228

-4%

25%

Feb

217

117

182

248

222

198

-11%

-13%

Mar

264

131

249

337

276

245 -11

Apr

296

142

261

300

266

229 -14%

-7%

May

316

164

283

307

301

Jun

307

185

294

315

295

Jul

264

156

238

245

233

Aug 219 160 240 270 235 Sep 203 180 234 263 200 Oct 186 168 211 251 215 Nov

143

157

215

252

215

Dec 139 168 225 217 182 TransCore Canadian Spot Market Freight Index 2008-2013

The CGFI is sponsored by Nulogx, a transportation management solutions provider, and is used by shippers and carriers to benchmark performance, develop business plans, and secure competitive agreements. It was developed with the assistance of Dr. Alan Saipe. The most recent results are available at the CGFI Web site: www.cgfi.ca.

Railway freight shows strong y-o-y gain Canadian railways carried 28.2 million tonnes of freight in March, a 5.3% gain from the same month in 2012. Rail freight loaded in Canada as well as those received from the US contributed to the increase. Within Canada, combined loadings of non-intermodal freight (i.e., cargo moved via box cars or loaded in bulk) and intermodal freight (i.e., cargo moved via containers and trailers on flat cars) rose 4.4% to 24.6 million tonnes. The gain occurred solely on the basis of non-intermodal loadings as intermodal loadings fell during the month. Non-intermodal loadings advanced 5.5% to 22.2 million tonnes in March. The rise was principally tied to four commodity groups – coal, potash, fuel oils and crude petroleum, and iron ores and concentrates. The combined growth in tonnage for these groups alone was higher than the total drop in tonnage from all commodities that fell during the month. In total, 30 commodity groups rose while 34 saw a decline. Of those commodities that saw a drop in activity, wheat and trucknews.com

13-06-07 10:18 AM

DASHBOARD

US for-hire truck tonnage fell 0.2% in April, on the heels of a 0.9% gain in March, according to the latest data from the American Trucking Associations. The seasonally-adjusted index totalled 123.2 in April, compared to 123.5 in March. The highest ever recording was 124.3 in December 2011. Compared to April 2012, the seasonallyadjusted index was up 4.3%, marking the largest y-o-y gain since January. Year-to-date, compared to the same period in 2012, tonnage is up 4%. “The slight drop in tonnage during April fit with trends from RBC CANADIAN MANUFACTURING PMI™ Canada’s manufacturing output slightly improves in April 58 57 56 55 54 High 56.9

52 51 50

2010 trucknews.com

Dashboard.indd 37

2011

2012

OCT

JUL

APR

JAN

OCT

JUL

APR

JAN

50 = no change from previous month

49 OCT

Source: RBC, Markit

April manufacturing output stagnates, despite marginal rise in new orders

The RBC Canadian Manufacturing Purchasing Managers’ Index suggests that the Canadian manufacturing sector stagnated in April but that’s an improvement from the contraction observed in March. The headline RBC PMI – a composite indicator designed to provide a single-figure snapshot of the health of the manufacturing sector – registered 50.1 in April and, posting only slightly above the 50.0 no-change mark, signalled broadly no change in overall manufacturing business conditions. However, the PMI nonetheless rose from a survey-low of 49.3 in March, which was consistent with a modest deterioration in operating conditions. The RBC PMI found that manufacturing output levels in April were largely the same as March, despite the volume of new orders having increased, albeit only marginally. Employment was also little-changed, seeing only a slight rise in staff numbers since March. On the price front, the rates of increase for both input costs and output charges eased, with the rate of input price inflation, in particular, the slowest in nine months. “Canada’s manufacturing sector kept its head above water in April, registering some improvement over the surprising series low recorded last month,” said Craig Wright, senior vice-president and chief economist, RBC. “While the overall gains made in April Low were tepid, we expect manufacturing output 49.3 to pick-up, augmenting export activity and supporting Canada’s growth prospects.” The headline RBC PMI reflects changes in output, new orders, employment, inventories, prices and supplier delivery times. The monthly survey is conducted in association with Markit, a global financial information services company, and the Purchasing Management Association of 2013 Canada (PMAC). FE APR

US truck tonnage dips slightly in April, but y-o-y results up 4.3%

other industries that drive a significant amount of truck freight, such as manufacturing and housing,” ATA chief economist Bob Costello said, noting that in April, compared with the previous month, factory output slipped 0.4% while housing starts plunged 16.5%. “After rising significantly late last year and in January of this year, truck tonnage has been bouncing around a narrow, but elevated band over the last three months. It is also worth noting that the year-over-year comparisons are much better than expected just a few months ago and I’m hearing good comments about freight so far in May.”

JAN

colza seeds (canola) incurred the largest declines, with their reduced shipments accounting for more than half of the total drop in tonnage. Intermodal loadings decreased 4.8% to 2.4 million tonnes. Reduced containerized cargo shipments were the sole factor behind the drop as trailers loaded onto flat cars rose during the month. The Western Division accounted for 59.2% of the domestic freight loadings, up 4.0% from the same month in 2012 to 14.5 million tonnes. The remainder was loaded in the Eastern Division, which increased 4.9% to 10.0 million tonnes. For statistical purposes, cargo loadings from Thunder Bay, Ont., to the Pacific Coast are classified to the Western Division while loadings from Armstrong, Ont., to the Atlantic Coast are classified to the Eastern Division. Rail freight traffic received from the US rose 12.1% to 3.6 million tonnes – the highest amount of freight shipped from the US for the month of March. The gain was brought on by increases in both non-intermodal and intermodal loadings.

May/June 2013 ❙ FLEET EXECUTIVE 37

13-06-07 10:18 AM

Distribution of Freight Tonne-Kilometres by Mode, 2000

34% 28%

MARINE

39% .3%

AIR

.2%

Transportation

Pipelines

Residential

Agriculture

Forestry

Construction

Total energy use in the Canadian economy

Commercial

0% 5 10 15 20 25 30 35 40 45

Manufacturing

Petajoules 2010

743 1,465 32 81 246 1,267 120 989 124 2,516 7,585

Annual growth %

14.2 2.1 15.6 13.5 16.8 -4.5 -4.4 -1.6 -9.4 3.1 2.1

Total

Sector

Petajoules 2010

Total

Rail

Sector

Marine

Total energy use in the Canadian economy Aviation

Canadaâ&#x20AC;&#x2122;s freight sector has grown considerably over the past two decades. Total freight moved, in tonne-kilometres, increased by 54% from 1990 to 2010. Total freight moved by truck has shown particularly strong growth, increasing by 166% over that period. But there has been a price to pay for that success and that has come through a significant increase in greenhouse gas emissions. GHG emissions from the freight sector have increased 70% between 1990 and 2010. Interestingly, trucking, which is the most often used mode, has actuallyimproved its energy efficiency per tonne-kilometre by 25% over that time period, but these efficiency improvements have not been enough to offset the emissions produced from the rapid growth in demand for the movement of goods. The accompanying tables, provided by Transport Canada, show a snapshot of energy use and GHG emissions by industry and mode.

44%

RAIL

Mining

Greater GHG emissions tied to market gains in transportation

27%

Road

The price of success

and 2009

28%

ROAD

Public Administrations

INSIDE THE NUMBERS

2,111 204 118 84 2,516 2.8

Annual growth %

-0.7

0.5

GHG EMISSIONS (MT CO2E) BY ECONOMIC SECTOR, 2008

Other Non-combustion 55 Mt

9.1

GHG EMISSIONS (MT CO2E) BY TRANSPORTATION MODE

22%

Agriculture 75 Mt

Oil & Gas 158 Mt

Marine, 6 Mt Air, 9 Mt Rail, 7 Mt

Transportation, 171 Mt On-Road Freight 64 Mt

Industry 76 Mt Electricity 120 Mt

0.1

Other, 6 Mt

On-Road Passenger 79 Mt

Residential, 43 Mt Commercial, 36 Mt

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