Motortruck January February 2014 by Annex Business Media

MOTORTRUCK

JANUARY FEBRUARY 2014

CANADA’S BUSINESS MAGAZINE FOR FLEET OWNERS

Fair Pay:

PROFITABILITY: Lessons in cost management THE HUMAN EDGE: Different generations, different management techniques

The pros and cons of paying drivers by the hour

TOP

Professional Connection SEE PAGE 45

PM#40069240

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Our annual report on the country’s largest carriers finds the first signs of capacity increases and a willingness to grow by acquisition 14-02-03 12:52 PM

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Volume 83, No. 01

January February 2014

contents 23

Cover Story 23 TOP TIER CARRIERS

Fleet Executive’s annual listing of the biggest trucking companies in the country, as measured by trucking assets. Also, a look at the holdings of some of the players in the industry known for their growth through acquisition business models. Features 18 Profitability Lessons from the railways on how to keep costs down.

20 Green to Gold 20 Leading by Example | Cold Star Freight on Vancouver Island is on the forefront of natural gas adoption. 21 Turning trash into gas | Refuse hauler progressive Waste Solutions plans convert methane gas into natural gas, and use the converted product as fuel for its trucks.

34 Merge Lanes Ahead

Departments 6 THE VIEW WITH LOU

Industry experts take a long hard look at M&A activity in the Canadian trucking industry, and make a few predictions about what’s going to happen in the near future.

8 CHECK CALL

36 The Hour Has Arrived

9 RISKY BUSINESS

Hourly pay is a contentious issue in the industry, but we look at the pros and cons of giving drivers a steady, predictable way of earning their wages.

10 THE BOTTOM LINE 12 THE HUMAN EDGE 15 TAKING CARE OF BUSINESS

42 Freight Bids A Surface Transportation Summit panel talks about RFPs and how to make the bidding process better.

38 GEARED UP 46 INSIDE THE NUMBERS

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

BLOGS

Oil industry expert and new blogger Roger McKnight writes about why the US keeps delaying the XL pipeline. http://blog. trucknews.com/ roger

You said it... “Idle reduction seemed to be higher on the radar screen a few years ago. What happened? When I stop at truck stops when it’s hot or cold I’d say that most of the trucks are idling and not using alternatives. I do work for a company that provides an alternative but it’s more than that. It’s the right thing to do for multiple reasons. The trucking industry should be making idle reduction a priority and even more importantly, the government should be facilitating it. I cringe when I stop at a filled-up truck stop and see drivers having to sit there and breathe their own and each other’s fumes. Since the government is regulating a driver’s workday a consequence of these regs is a very poor, unhealthy rest environment that wastes fuel, and they should be doing more to improve these conditions.” – JOE LICARI’S COMMENT ON CHRIS BURRUSS’ DRIVING FOR PROFIT PRESENTATION. http://tinyurl.com/CBurruss

Web TV:

Transportation Matters Transportation attorney Doug Marcello warns about the legal issues and hazards that come with winter driving. http://blog. trucknews.com/doug

FREIGHT BIDS: The carriers’ side of the story, from the Surface Transportation Summit http://tinyurl.com/CarrierBids

CELEBRATING SUCCESS: Kriska asks Mississauga mayor Hazel McCallion to help mark the company’s anniversary http://tinyurl.com/Kriska35

Dan Goodwill, veteran transportation consultant, looks at what omni-channel retail means for carriers. http://blog. trucknews.com/dan

RFPS: Two leading shippers explain why and how they use them. http://tinyurl.com/ShipperRFPs

MEET THAN: A three-part interview with O/O of the year Than Vermilyea http://tinyurl.com/MeetThan1 http://tinyurl.com/MeetThan2 http://tinyurl.com/MeetThan3

SOCIAL MEDIA FIND US ON FACEBOOK facebook.com/trucknews

FOLLOW US ON TWITTER @FleetExecutive | @TruckNewsMag | @JamesMenzies | @LouSmyrlis @JuliaKuzeljevic | @KathyPenner January/February 2014 ❙ FLEET EXECUTIVE 5

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MOTORTRUCK

THE VIEW WITH LOU

The deal on deregulation

is written and published for owners, managers and maintenance supervisors of those companies that operate, sell and service trucks, truck trailers and transit buses. SEPTEMBER/OCTOBER 2013

VOL. 83 NO. 01 PUBLISHER & EDITORIAL DIRECTOR

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

We did need it. Just not sure it’s as good as it’s made out to be Lou Smyrlis

Publisher & Editorial Director • lou@transportationmedia.ca

Carolyn Gruske (416) 510-6809 cgruske@TransportationMedia.ca GEARED UP EDITOR

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

he trucking and taxicab industries, despite the obvious differences in the sizes of vehicles used and the distances travelled, share similar operational challenges: managing capacity, reducing empty miles, and operating across jurisdictional borders. Yet the two industries have travelled two very distinct roads since the 1980s. Trucking was deregulated while the taxicab industry remains very much in the clutch of market supply controls. A recent study from the Conference Board of Canada, We Have Been Here Before: Supply Chain Management in Transportation, pulls no punches in choosing which has proven the better path. The study concludes that deregulation has proven to be good for both motor carriers and shippers: prices fell while productivity increased. While there are some who argue that the real reason deregulation was ushered in was to break the backs of unions with little or no benefit to the consumer, the study points out that from 1986 (the last year of regulation) to 2003, trucking industry total factor productivity increased by an average 1.7% per year. Prices meanwhile increased by just 0.8% per year on average in nominal terms and actually dropped in real terms. And this took place despite average increases in input prices such as fuel, labour, and the cost of new trucks, of 2.6% per year. Despite facing higher costs, motor carriers were forced by the competition created by deregulation to innovate to the point that their productivity gains not only helped them overcome rising costs but to pass a substantial part of those productivity gains on to their customers. The Canadian consumer has benefited from this and I think that is evident in the low prices we pay for many goods today. Deregulation was not the only contributor to this but it has played an important part. The study estimates a whopping 87% of productivity gains have been used to hold down output prices in the face of rising costs. And yet

6 FLEET EXECUTIVE ❙ January February 2014

deregulation also helped for-hire trucking grow from a $9 billion industry to nearly $30 billion (in nominal terms) over the same period. By contrast, the consequences of continued stringent market regulation in the taxicab industry include high capitalized values of licences— ultimately paid by higher prices charged to customers—and higher taxicab miles stemming from restrictions on picking up passengers in neighbouring municipalities. In other words, the study finds the regulated taxicab industry is both more expensive and less efficient than it should be. And that’s where trucking would have been today had deregulation not done away with the inefficiencies of the previous system. So I agree deregulation was best for the trucking industry. I’m just not sure it’s quite as good as it is made out to be. Does passing on 87% of productivity gains to hold down prices make for an industry worth investing in for the long term? Does it make for an industry economically healthy enough to continue to invest in innovation or its people? Interestingly, the study itself points out that prior to deregulation truck drivers and their helpers earned wages estimated to be 50% above the competitive level. Not too many drivers these days who will tell you they earn a fair wage. Deregulation did break the unions, the inefficient practices that went with them, and the higher-than-competitive wage levels. But I don’t think anyone would argue that drivers today make what they should given the difficulty of the work they do. The pendulum has swung too far the other way and the unfortunate side effect has been that fleets are too hard pressed in such a competitive environment to be in a position to really address driver compensation. I can’t see ever turning back the clock on deregulation. But let’s be clear-eyed about the sacrifices we’ve made and the pitfalls that still lie ahead. FE

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 Ian Putzger John G. Smith Carroll McCormick Harry Rudolfs NATIONAL SALES MANAGER

Don Besler (416) 699-6966

ACCOUNT MANAGER

Brenda Grant (416) 494-3333

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Kim Collins (416) 510-6779

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Mary Garufi

VIDEO PRODUCTION MANAGER

Brad Ling

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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 business-to-business information services. The contents of this publication may not be reproduced or transmitted in any form, either in part or full, including photocopying and recording, without the written consent of the copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without prior written consent. Motortruck Fleet Executive is indexed by Micromedia Limited. PUBLICATIONS MAIL AGREEMENT 40069240 Return Undeliverable Canadian Addresses to: Circulation Dept. – Motortruck Magazine, Suite 800 – 12 Concorde Place, Toronto, ON M3C 4J2 USPS 016-317. US office of publication, 2424 Niagara Falls Blvd., Niagara Falls, NY. 14304-0357. Periodical Postage Paid at Niagara Falls NY USA. Postmaster send address corrections to: Motortruck, PO Box 1118, Niagara Falls NY 14304. Member Canadian Business Press. Subscription Inquiries – (416) 442–5600. We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage. ISSN Number 0027-2108 (print) ISSN Number 1923-3507 (digital)

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October 15, 2014 Mississauga Convention Centre

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CHECK CALL

Predicting the future Prognostics are on their way Carolyn Gruske

Editor • cgruske@transportatiomedia.ca

wo issues ago, in The View With Lou column, Fleet Executive publisher and editorial director Lou Smyrlis wrote that a new editor would be taking over the dayto-day operations of this magazine. That’s me. Hello. Some of you may know me as the former editor of MM&D, a sister publication about the warehousing and distribution side of the supply chain. An introductory column presents an editor with an opportunity to write about the future—either the future of the industry, or the future of the publication—but it seems too soon to be making grand pronouncements about either, so instead I’ll let somebody else take the floor and talk about what’s to come. Nandini Tare is an industry analyst specializing in commercial vehicle telematics at the research and consulting firm Frost & Sullivan. According to Tare, and a new report entitled Prognostics in the European and North American Trucking Industry— Big Data is Creating all the Difference, by 2017 prognostics will be the next hot technology trend to sweep the trucking industry. Prognostics, or predictive analytics, are the business intelligence tools that let a fleet manager know when a truck is about to have mechanical issues. They are designed to predict the potential failures (both major and minor) of components, with enough advanced warning that trucks can be scheduled for maintenance before they break down on the sides of highways. Prognostics systems will also connect with manufacturers and service centres to ensure that parts are on-hand for the jobs, and that warranty work is handled automatically. At least that’s the plan. Tare says while the technology may present some business challenges, it should prove to be a benefit to all parties. “OEMs will monitor it, making sure they are not randomly supporting warranty claims. They’ll ensure there is a legitimate claim being made. And if there is a driver that is causing harm to a particular component, the OEM is not going to be liable for it,” she says, adding OEMs will use the data to design better components, reducing the need for future warranty claims. Tare admits more scrutiny of warranty claims isn’t “a really happy thing for a fleet manager, but using prognostics could be a win-win situation too. Since the engine is the most expensive component, a fleet manager isn’t going to take it lightly if there is an issue that could potentially crop up if he runs it for another 1,000kms. He will make sure it’s taken care of completely.”

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One caveat Tare adds is that insurance companies may want to know what the prognostics systems diagnose, as “a truck that is faulty could potentially cause accidents, which would mean insurance premiums would go higher. I think very soon, as the services evolve, you will see a lot of insurance companies requiring telematics.” At this point, Tare says the prognostics market is pretty young and undeveloped, but that is starting to change. Already she sees vehicle manufacturers and Tier 1s working with telematics vendors to establish what type of data can be pulled from the trucks, and how it can be analyzed, interpreted, delivered, and, in the process, monetized. She says it makes perfect sense for telematics companies to be involved because “the telematics box is already connected to the vehicle. It’s the same device that will be used. It’s not another piece of hardware that will be fitted to the truck.” The only cost will be the development of the backend analytics used to interpret the data. She predicts telematics vendors like Telogis, Trimble, Teletrac, Shaw Tracking and PeopleNet, will offer prognostics as part of their premium packages (ranging from $40-$80 per truck) or as à la carte services priced between $3 and $12 per truck. For managers running mixed fleets, it would be much easier to rely on a telematics vendor to deliver a single source of prognostics information rather than to contend with data from multiple OEMs. Of course, nothing this complex is ever simple. Industry partners will need to work together to create, if not open data standards, at least communications protocols to take data generated by engines and components and turn the information into useful, accurate predictions. Fleet managers will need to learn how to use the new information to make smart fleet maintenance decisions, all while trying not to get swamped in a big data overload. While Tare is confident in saying that 2017 will be the year prognostics hits in a big way, I’m slightly sceptical. Having spent a lot of years covering the computer and IT industries, where I saw so many technological trends and breakthroughs take much longer than expected to be fully (if at all realized), I tend to take timeline predictions with a large dose of salt. But I’m happy to be here with you watching the march to prognostics unfold, and, I’m certain, reporting about its progress. FE

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RISKY BUSINESS

SOLUTIONS TO HELP CARRIERS TURN SAFETY INTO A PROFIT CENTRE

Managing responsibility Companies can’t leave drivers solely responsible for HOS compliance By Rick Geller

lmost 25% of the trucking companies I visit have an Hours-of-Service (HoS) BASIC Score that exceeds 65%, placing them in “Alert” status with the FMCSA. In almost every case, it is sufficient to raise their Inspection Selection System (ISS) scores to the point where they are flagged for inspection whenever their equipment comes to the attention of an enforcement agency. This has three major impacts on the company’s operations and/or profitability: 1. Lost time/revenue. Full inspections can delay the driver between one to three hours. Assuming the truck travels, on average, 45mph, the carrier (and the driver) loses the revenue for anywhere from 45 to 135 miles. If the carrier undergoes 20 inspections a year, the revenue loss jumps to between 900 and 2,700 miles! 2. Difficulty recruiting. How anxious do you think drivers are to come work for a company when they know that every time they cross a scale, they are going to lose time/revenue and probably be ticketed? 3. Lost business. With increasing frequency, shippers are monitoring profile scores and refusing to deal with carriers that have high BASIC Scores. Despite this, many of these same carriers seem unable or unwilling to implement corrective measures. Far too many carriers still view hours of service as the driver’s problem, since it is usually the driver that pays the fine. This leads to current management practices including: • Conducting log audits and following up with individual drivers who incurred violations. But all of this comes after the fact. By the time drivers submit their logs for processing, it may be two months after the infraction before the review occurs. • Fighting violations in court. • Providing drivers refresher training on the HoS regulations. Invariably, whatever follow-up occurs is limited to the individual drivers that received the violation. But this approach pre-supposes that the driver is the only player in the events that led to the violation—and that it is always the driver’s fault. Times have changed, as have legal and regulatory expectations. To correct HoS issues, carriers must realize two things:

1. The expectation today is the carrier manages HoS, not the driver, and 2. HoS violations are indicative of an operations issue. Only a full process review will reveal the underlying issues that are causing the problems. Carriers should implement a program that tracks, records and recaps drivers’ hours-of-service at the dispatch level. The program can be as simple as having the drivers call in to report HoS and tracking the data on a spreadsheet. This will ensure that you know how many hours each driver has available. Provide drivers and operations staff with trip planning training. The increasing complexity of HoS regulations make it nearly impossible to complete the trip legally without knowing, on each leg of the trip, what the destination is for that day, where and when fuel and meal stops will occur, and where to take the 30-minute break required prior to the 8th hour of driving. Don’t assume that because the drivers have previous experience that they have received hours-of-service training at some point during their careers. Provide training in both the hours-of -service regulations and your company’s preferences and policies. Full process reviews require examination of routing, scheduling, as well as your dispatch policies/procedures. Providing too much time for the trip can be just as bad as not providing sufficient time. When people are provided with too much time, they re-calculate departure times based on what they believe they will actually need. This often leads to speeding and hours of service violations when drivers miscalculate the amount of time they will need. Involve your customers and manage their expectations. They are often unaware of the constraints caused by HoS regulations. Educate your customers and make them part of the solution. FE

Rick Geller, CRM has been providing innovative and cost-effective risk management solutions to the trucking industry for more than 30 years. He serves on the board of directors for the Canadian Trucking Human Resources Council, is the vice-chair of the Toronto Chapter of the Fleet Safety Council and vice-chair of the Fleet Safety Council Conference Committee, as well as an Executive Committee member for both the Ontario and Toronto Regional Truck Driving Championships. January/February 2014 ❙ FLEET EXECUTIVE 9

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BOTTOM LINE

It depends There’s no magic formula to determining the price of your business By Mike McCarron

t’s like clockwork. Whenever someone calls me about selling their company, they respond to my spiel with the exact same question: “What’s my business worth?” My answer is always the same but never the one they expect: “It depends.” There is no magic formula for determining the price of a business. In fact, what a buyer eventually pays has zero correlation to the estimated pre-sale value. Everything depends on what someone will pay for it. Many different methods are used to value enterprises. The one favored in the transportation industry involves applying a multiplier to normalized EBITDA (earnings before interest, taxes, depreciation, and amortization). In the simplest terms, think of EBITDA as your company’s earnings after your 72-foot yacht is taken off the books and your accountant applies some formulas you don’t understand. It is what it is, and will show the world what type of business you’ve been running the past five years. There’s very little negotiating when it comes to your normalized EBITDA. The multiplier is a different story. Think of the multiplier as the neighborhood in which you live. The market determines the price of the houses: bigger, fancier abodes sell at the top of the price range, while old, unkempt tear-downs sell near the bottom. Your final sales price will depend on whether you built a mansion or an outhouse. Of course, one man’s shack is another man’s castle. If you’re thinking of selling your transportation company, be prepared to fight for and defend your multiplier. Here’s where I would focus when you negotiate: Don’t Ask: I’ve never known a company that absolutely had to make an acquisition, but every day I speak with owners whose only option is to sell. Far too often the circumstances— not planning—dictate that a deal must get done. When you stop negotiating and start asking, you lose your negotiating power. Asking is no way to get into the multiplier high-rent district. Team Negotiation: If your potential buyer bought five companies last year, it probably looked at hundreds of deals. On the other hand, if you’ve been moving freight all your life you probably don’t have a clue how to sell your company. Loading up your team with a seasoned group of M&A 50goal scorers is painfully expensive. However, it’s worth every penny because it gives you the best chance of getting a higher multiplier once the puck starts moving. The mere fact you

10 FLEET EXECUTIVE ❙ January February 2014

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have them on your team sends a strong message that you’re serious and won’t get pushed around. What’s Next? When a potential buyer can see that it can leverage synergies between your two companies, it’s usually willing to pay a higher multiplier. Using that to your advantage will depend on how much the buyer is willing to share its long-term plans with you. Often, buyers are closed-lipped, fearing that you’ll get an advantage if you know their next steps. That’s when you need to draw on your industry experience to try and figure out their anticipated savings. The more you can uncover about their intentions, the more negotiating power you’ll have. Naughty Movies: One challenge every purchaser faces is figuring out how to sustain the long-term value of your company. Most of this discussion will focus on the size and make-up of your customer base. Bigger is better in more than naughty films. Buyers perceive larger companies as being less risky. They not only attract more interest, they also get higher multipliers. Relying on a small handful of customers who are also golfing buddies will cost you money. Buyers will drool if you have a large base of repeat, dependable customers in a growing sector of the industry. How? The multiplier will depend on the terms of payment and the tax structure you negotiate. Getting most of the cash up front sounds like a great idea but will reduce the price. Companies will pay higher multipliers when they can distribute the proceeds over time, making portions of it contingent on the performance of your former company. Too many owners balk at earn-out options before considering all of the ramifications, including the restrictions in the non-compete agreements they’ll be signing. I always tell people it’s probably best not to ask a question if they think they won’t like the answer. Considering the look on their faces when they ask me what their business is worth, I might start suggesting they put on some Depends before they ask that question. 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. trucknews.com

14-02-03 1:40 PM

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THE HUMAN EDGE

Effectively managing employees of all ages

By Angela Splinter, Trucking HR Canada nderstanding the needs, values and expectations of the different generations in your workforce is a valid approach to solving some recruitment and retention problems. The trucking industry now has four generations working side by side, and the differences among them can create the potential for misunderstandings, conflict and different expectations regarding work. Looking at this issue as part of your HR management can provide you with an added advantage when competing for and retaining talent.

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THE FOUR GENERATIONS AT WORK ARE: • Veterans (16% of Canadian population) born between 1922 and 1945 • Baby Boomers (30% of Canadian population) born between 1946 and 1964 • Generation X (21% of the Canadian population) born between 1965 and 1980 • Generation Y (26% of the Canadian population) born between 1981 and 2000 Consider these points to help you attract, manage and retain workers from different generations: Step 1: Understand the factors and events that have formed each of the four generations and how these play out in their attitudes, values, beliefs and behaviours. There is a lot of material on this topic, including training programs and seminars with an HR focus. Educating yourself and your staff can help you in developing an effective approach for your organization.

Step 2: Segment your workforce. Assess your own workforce to determine your demographics, identify potential conflict areas among teams and adapt training programs accordingly. Step 3: Don’t underestimate the power of mentoring. Mentoring is a great way to offer support and development to younger and more junior workers by linking them with knowledgeable, experienced employees. Formal mentoring programs have been shown to help improve retention rates and allow employees to become more productive workers. This can be key to retaining Gen Ys, as this is a generation that has often been protected from failure (i.e. no-fail educational policies, sports competitions where every team gets a medal). This risk-averse generation should be encouraged, coached and mentored. Boomers meanwhile welcome the opportunity to add value and expect to be recognized for their achievements. Providing them with the opportunity to mentor young workers is something they will appreciate. Step 4: Design reward and recognition programs with generational differences in mind. Rewarding and recognizing your employees goes a long way in keeping them happy. Considering generational differences

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THE HUMAN EDGE

Gen X employees are always looking to develop their marketable skills. Offer them opportunities to take on a new challenge or project in your recognition program can make it that much more effective. When looking at how you reward your employees, use rewards that matter. For example, Boomers are known for their work ethic and rewarding that is motivating to them. They like visible recognition such as impressive job titles, parking spots, helping them get featured in an industry publication or local newspaper. Your Gen X employees are always looking to develop their marketable skills. Offer them opportunities to take on a new challenge or project, or provide them additional training. Recognition also includes providing feedback. While the Boomers are accustomed to receiving feedback less frequently, such as an annual performance review, Gen Y requires feedback more often. This “just-in-time” generation is accustomed to feedback at the push of a button. They do not need a meeting with their boss to hear how they are doing. They are happy to receive feedback by e-mail.

Step 5: Consider flexible approaches to training. All employees look to their employers to help them learn and develop. Being sensitive to the preferences of the different generations when it comes to learning will help. In particular, Gen X expects to receive learning and development opportunities from their employer—they are all about building their marketable skills. Other factors to consider include varying comfort levels with technology and different learning styles. For example, coaching is a preferred style of learning for Boomers—they thrive on the interactivity inherent in this process. Gen Y, on the other hand, seeks learning experiences that incorporate technology, allow for collaboration and help translate new skills into immediate results. As you look to incorporate a new approach to manage the different generations in your workforce, just be careful not to over-stereotype. What matters is that companies develop work environments and practices that recognize and leverage the talents and skills of all employees so that you can effectively recruit and retain the workers you need. FE

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14-02-03 1:12 PM

TAKING CARE OF BUSINESS

Borrowing for profit The ins-and-outs of leveraged buyouts By Mark Borkowski

f you are a CEO, business owner or executive looking to sell your company, your potential buyer group will most likely include private equity firms. To gauge the potential interest level of private equity firms, you should develop an understanding of what private equity firms look for in an acquisition and why. Here is a primer on the acquisition method typically used by private equity firms, the leveraged buyout. A leveraged buyout (LBO) refers to a transaction in which an investor (typically a private equity firm) acquires a controlling interest in a company and a significant portion of the acquisition is financed through debt. In order to borrow the money, the investor (who will now own the company) will pledge the assets of the company as collateral to the lender. For larger, established companies, lenders will also look to collateralize the loan via the company’s operating cash flow. The lender will have the first right to the cash flow generated

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by the company for both interest and principal payments. Therefore, if the lender believes in the future cash flows of the company, they will be willing to lend beyond the value of the assets of the company. In this scenario (known as a “cash-flow loan”), lenders will base the amount the investor is able to borrow on a multiple of the company’s cash flow. A leveraged buyout is generally the preferred acquisition method of private equity firms as borrowing money (known as “leverage”) to consummate an acquisition enhances the returns to the equity holders—as long as the debt doesn’t overwhelm the company. To illustrate the impact leverage has on equity returns let us use a simple example: Suppose two private equity (PE) firms, Firm A and Firm B, both find two completely identical companies. Each firm acquires one of the identical companies for $10 million. PE Firm A uses all equity capital and writes a check for $10 million.

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p15

On the other hand, PE Firm B borrows $5 million from the bank to finance a portion of the acquisition. PE Firm B then only has to commit equity capital of $5 million. In five years, both private equity firms look to realize a return on their investment. They go out and sell their respective companies for $20 million. In analyzing the performance of the two transactions, we look at the initial cash invested, the amount of cash returned and the time period. Two common measures of performance are internal rate of return (IRR) and cash-on-cash return. Comparing the performance of PE Firm A and B:

Initial Investment Sale Price Bank Re-payment Net Amount Realized

PE Firm A PE Firm B $ (10) $ (5) $20 $20 - $ (5) $20 $15

IRR Cash-on-Cash Return

15% 2x

25% 3x

As you can see, PE Firm A realizes $20 million with the sale and PE Firm B realizes only $15 million (since it had to repay the bank the $5 million borrowed to make the acquisition). However, PE Firm B had the superior return profile. In analyzing performance, you have to consider not only the total amount of capital realized, but also the dollar amount that was invested. PE Firm A turned $10 million into $20 million in 5 years. PE Firm B turned $5 million (half the amount of PE Firm A) into $15

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million (three-quarters of the amount of PE Firm A) during the same period. Admittedly, this is a simplified example as it does not take into account interest payments on debt, the tax-shield benefit of using debt in the capital structure, the increased risk of bankruptcy that occurs when companies take on debt, the ability to make dividend payments and other capital structure nuances. Even if we added these factors, the outcome will remain the same. The addition of leverage enhances the return to equity holders. The next logical question (and an important one for business owners looking to potentially sell to a private equity firm) is: what makes a company a potential candidate for a leveraged buyout transaction? Typically, companies that are attractive LBO targets will have 3 critical characteristics: • Stable cash flows • Ability to increase earnings • Strong management teams Each of these traits requires a more thorough discussion, and I’ll address them in future columns. FE

Mark Borkowski is president of Mercantile Mergers & Acquisitions Corp. Mercantile is a mid-market M&A brokerage firm. He can be contacted at mark@mercantilema. com www.mercantilemergersacquisitions.com.

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14-02-04 11:12 AM

PROFITABILITY

$ Unlock your inner profit Get to know—and appreciate—cost management By Lou Smyrlis

hile growing revenues may be the more exciting part of running a transport business, understanding and managing your costs—whether you are a large fleet operator or an owner/operator—can be just as critical to business success. And cost control can be particularly important where there is a significant degree of competition from other trucking firms, which may be keeping rates in check, according to David Colledge. The president of Colledge Transportation Consulting spoke at BCTA’s recent Managing Profitability Conference in Surrey, B.C. and outlined how to get a handle on costs. The impact of vigilant cost management is directly evident on the bottom line. “If you can improve your operating margin by just five cents per kilometre and you operate a truck 200,000km a year, it adds $10,000 to your bottom line. And if you operate a fleet of 50 trucks the savings would amount to half a million a year,” Colledge pointed out. Truckers have long bemoaned the better than 20% profit margins of the Canadian Class 1 railways while trucking companies are fortunate to make, on average, five to seven cents on the dollar. Colledge, whose transportation costing experience began in the rail sector, used railways as an example of how to do cost management right.

Nothing wrong with learning from the competition.

“The railways have transformed the arcane science of railway costing into something of an art form. They have in place very sophisticated costing frameworks. But it is the way they apply 18 FLEET EXECUTIVE ❙ January February 2014

Profit.indd 18

these frameworks not only to manage costs but to make pricing decisions on whether to accept or reject incremental business that I think is the most interesting,” he said. “It was amazing to me the level of detail that was put into their ‘activity based’ costing system. Unit costs were computed to five decimal places.” There are several different methodologies which can be used to establish the relationship between costs incurred to provide a transportation service. Colledge explained the most common techniques used by the railways.

Direct analysis

This method is used where the variability of costs is already determined. A unit cost is developed for a certain activity. For example, yard locomotive fuel for switching operations would be determined based on the total yard diesel fuel divided by yard diesel unit miles. In a trucking context, it might be line haul costs divided by linehaul truck kilometres.

Direct assignment

This method is used for specific cost items where it is implied that the costs are 100% variable. For example, train crew costs that can be developed from crew trip ticket data by train run for specific geographic areas and the application of wage rates from union agreements. For trucking, driver hours can be obtained from logbooks and applying the relevant wage rate per mile or per hour. It is also possible using this method to develop specific costs for linehaul labor and terminal labor that would be applicable to TL and LTL operations.

Regression analysis

This approach is used where the cost variability is unknown. It is applied to multiple years of data to smooth out “lumpy” costs and to determine which costs are variable and which are fixed. An example could be in-house truck maintenance shops or maintenance of terminals. This approach is important when it comes to allocating certain common or overhead costs, such as terminal operating costs. “In reality, a costing system would be a combination of these three methods,” Colledge said. There are two types of costs, of course, which make up total costs: variable costs and fixed costs.

Variable costs

These vary with changes in traffic volume with a relevant range. They generally include labor costs, fuel and materials. The variability of the costs depends on the time horizon: as the time horizon is extended, more costs tend to become variable. trucknews.com

14-02-03 1:18 PM

Fixed costs

These do not change with changes in traffic volume. For the firm as a whole, these costs will continue in the short run even if the firm stops producing. Fixed costs typically include such items as capital costs associated with plant and equipment, administrative salaries, insurance and some taxes. “The notion of variable and fixed costs is also important when traffic density (or volume) is considered. If the annual traffic volume is low, there is a smaller base over which to spread fixed costs and the average cost per tonne or per unit of cargo is higher,” Colledge explained. “This would be important for LTL carriers operating a network of terminals. After he provided a thorough explanation of costing techniques and types of cost, Colledge outlined three steps to cost development. STEP 1 > Determine the physical resource or work units consumed in the shipment of goods from origin to destination. Several factors influence the costs for any particular movement being analyzed, including: route miles; equipment type and ownership; payload and equipment tare weight; average travel speed; wait times and origin/destination to load/unload cargo; and waiting time at intermediate transfer points. The payload and tare weight affect fuel consumption rates and fuel costs. The work units are developed based on the available details of the specific situation as well as accepted industry averages. It is also very important to determine whether there is a return revenue movement. If there is no backhaul opportunity, the full round-trip cost should be assigned to the headhaul movement. STEP 2 > After determining work units, the next step in the costing experience is to apply these output parameters to unit costs. In a truck operation, truck miles would be applied to an average cost per truck mile, which could be specific by route. The level of detail can be whatever management deems important and wishes to differentiate. Costs can also be determined for different lines of business, such as general freight, heavy haul, etc. This is important because different operating divisions involve the use of different types of equipment and would each have somewhat different cost and competitive conditions at play. STEP 3 > There may also be specific miscellaneous and overhead costs to be added. The overall output from the cost mode includes vehicle-based costs such as tractor payments, fuel, tires, maintenance, licences and insurance, driver-related costs and fringe benefits and other costs items such as dispatching, terminal and warehousing costs. Your costing system, of course, will only be as good as the data fed into it. “A good costing system depends on having good data,” Colledge said. “This is essential to develop accurate costs that can be used by management to make pricing and operational adjustments in response to changing market conditions and opportunities.” FE

Profit.indd 19

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14-02-03 1:18 PM

GREEN to GOLD

Leading by example Cold Star Freight introduces CNG to Vancouver Island By James Menzies

old Star Freight is breaking new ground with its purchase of 10 natural gas Mack tractors. The company is the first to bring natural gas fuelling infrastructure to Vancouver Island, and is also among the smaller Canadian fleets to adopt the increasingly popular alternative fuel. Kelly Hawes, president of Cold Star Freight, attended the Natural Gas Vehicle Infrastructure Conference Oct. 1–2, to discuss his company’s natural gas strategy. Cold Star runs 35 trucks, transporting perishable products between the Lower Mainland of B.C. and Vancouver Island. It partnered with energy company FortisBC in an incentive program that pays 75% of the cost premium associated with natural gas trucks. Cold Star also reached a deal with FortisBC to build a fastfill compressed natural gas (CNG) fuelling station on the Island. For a small fleet such as Cold Star, the incentive program and a close collaboration with a fuel supplier was key to taking the leap, Hawes said. ”I can tell you that without that program, we wouldn’t even have entertained this idea,” Hawes said. “For a small company like ours to take on a challenge with such a huge capital [investment] would be too big a risk.” Hawes estimates Cold Star will reduce its diesel consumption by about 380,000 litres per year once it takes delivery of its natural gas-powered trucks. Originally, the trucks were expected to arrive in December, but a delay at Agility Fuel Systems’ Fontana, California-location, where the trucks were sent to have their CNG fuel tanks installed, meant Cold Star only received its first vehicles in January. Hawes said he expected to have possession of the full fleet by mid-February. Cold Star is already looking to possibly add another 10 natural gas trucks to operate out of its Nanaimo location in 2014, with a CNG fuelling station to be constructed at its terminal there, but it wants to get its initial trucks into service first before committing to a second order. Hawes said his company enjoys a strong relationship with its

20 FLEET EXECUTIVE ❙ January February 2014

Green.indd 20

local Mack dealer, and was comforted by the fact it could switch to natural gas without a radical departure from its traditional spec’. “We were thrilled when they came to the table with a Cold Star’s Mack has 45 DGE solution. They also have a tanks and an ISX12 G engine. maintenance shop in Victoria they are converting to look after all our maintenance requirements. We were able to spec’ out the exact truck we currently have, except we’re adding the natural gas.” The one change is that the CNG tanks required a slight wheelbase extension. Cold Star has chosen the Cummins Westport ISX12 G engine, mated to a 13-speed transmission, with 45 DGE (diesel gallon equivalent) tanks. One frustration for Cold Star has been that natural gas costs considerably more on the Island than on the Lower Mainland. Hawes said he considered setting up routes that would enable the trucks to fuel up on the mainland, but wanted to help develop a natural gas fuelling infrastructure on Vancouver Island. “Once we have this here, we want to go out even to our competitors and say ‘There is a solution here,’” he said, adding FortisBC is trying to establish more consistent pricing between Vancouver Island and the Lower Mainland. While Hawes is optimistic about the potential for natural gas, he admitted he still has some concerns. The trucks run 20 hours a day, so unplanned downtime will be extremely disruptive. ”We don’t have time to have them in the shop.” Cold Star will have to change how it services its vehicles. Currently, repairs are often done by mobile mechanics, but work on natural gas trucks must occur in approved facilities. Hawes also is cognizant the province could begin taxing natural gas if it gains traction as a transportation fuel. Another challenge is how to share the savings with customers and establish a fair fuel surcharge model. Hawes said he’s also unsure of when to sell the diesel trucks the natural gas vehicles will be replacing. He plans to keep the diesel tractors for a few months before selling them so that the company has a backup in place while it learns the nuances of natural gas. While this experiment is still very much in the early stages, Hawes said he feels natural gas is a viable option for smaller fleets, not just the big guys. ”I do believe there’s an opportunity for smaller fleets to get involved in natural gas, but it’s important for the OEMs and fuel providers to understand the unique challenges of small fleets,” Hawes said. “For example, we don’t have the capital to withstand a period of trial and error. We don’t have excess equipment for downtime. Those are huge, huge challenges for us.” Still, Hawes said Vancouver Island is home to many small fleets and owner/operators, and as the fuelling infrastructure is developed, there should be some excellent opportunities for them to take advantage of the potential savings. FE trucknews.com

14-02-03 1:22 PM

Turning trash into gas Refuse hauler Progressive Waste Solutions to convert garbage into CNG By James Menzies

RENTALS

magine being able to turn the product you haul into fuel for your fleet. That’s exactly what Progressive Waste Solutions will be doing by next summer, at its Lachenaie Landfill north of Montreal. Speaking at the Natural Gas Vehicle Infrastructure Conference, Dan Pio, vice-president and COO with Progressive, outlined plans to convert methane gas produced at the landfill, into natural gas that will be fed into a pipeline for distribution, creating a new revenue stream for the company. ”The very materials we collect today will fuel our trucks as early as next year,” Pio said. “That’s a profound statement, and a far cry from where this industry was 30–40 years ago.” The project will generate enough natural gas to power Progressive’s entire Canadian fleet. Progressive Waste Solutions claims to have the largest fleet of compressed natural gas (CNG) trucks in its industry. Last year, it deployed 70 CNG refuse trucks to serve the Coquitlam, B.C. area, and in April, it took delivery of 61 nat-gas trucks for its Barrie, Ont. operations. Pio said natural gas trucks account for about 13% of Progressive’s Canadian fleet. That’s expected to grow to 16% by the end of this year. ”In a typical year, we buy 350-400 vehicles from a replacement standpoint, and in 2014, we anticipate 50-55% of those units will be CNG-fuelled.” While the trucks are more expensive, a return-to-base application such as refuse collection is well suited for the fuel, providing an attractive return on investment. Municipalities appreciate that the conversion helps lower greenhouse gas emissions, and residents like the quietness of the engines—though, that last attribute has necessitated some community outreach. ”Public education is important,” Pio said, noting the trucks can be so quiet that residents may not be aware of their presence. Progressive Waste Solutions built its own CNG fuelling stations in B.C. and Ontario, but would like more third-party stations come online. ”We do have small fleets with 10–15 trucks, so the emergence of some of these pay-as-you-go stations is something I support and would like to see more of,” said Pio. When constructing a fuelling station, Pio suggested working closely with your gas supplier and to build redundancy into the system, so that trucks can still be fuelled if one pump or section of line is taken out of service. Deploying natural gas trucks means working closely with gas, vehicle and body providers. Driver and technician training is also required. Still, despite all the work that goes into planning and executing the deployment of natural gas trucks, Pio remains undeterred. ”We’re all-in with natural gas,” he said. “For us, natural gas is clearly a differentiator in our space.” FE

Green.indd 21

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TOP

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14-02-03 1:48 PM

TOP

TIER Intro by Lou Smyrlis

PUBLISHER & EDITORIAL DIRECTOR

TURBULENCE From the sponsors

MACK Mack Trucks Canada has been serving the needs of the fleet market in Canada since 1921. Over the years, Mack has built up an extensive dealer network of almost 100 sales, parts and service locations across the country. Many truckers and fleet owners started their careers and businesses with Mack B models and R models. The Mack Pinnacle, with its redesigned interior and bigger cab, is an ideal fleet truck that is available in both daycab and sleeper configurations. The all new Mack MP series of engines with ClearTech emissions technology provides up to 505 hp and better fuel economy. They are well suited for both local and long-haul applications. Mack is also one of the first truck manufacturers to make anti-roll stability a standard feature on all of its 2008 and later highway truck models.

24 FLEET EXECUTIVE ❙ January February 2014

2014 TOP 100.indd 24

While Castrol is well known to most people around the world as the lubricant of choice for their car, pick-up truck or SUV, some people may not be as familiar with Castrol’s groundbreaking products for the Commercial/Heavy-Duty marketplace. Whether on-road or off-road, Castrol has developed a complete line of unique commercial lubricants that is second to none when it comes to protecting the vehicle investment of the owner/operator, commercial fleet or mining corporation. Castrol’s Heavy Duty lubricants are designed for the single purpose of making your fleet as reliable and profitable as possible. By understanding the increasing technological demands of today’s engines, and working directly with OEM manufacturers, Castrol has employed the latest information, along with extensive knowledge of commercial lubricants to develop a full line of products to help you get the most out of your equipment. Congratulations to all Top Tier 100 fleets highlighted and continued success in 2014. trucknews.com

14-02-07 9:44 AM

Canada’s largest carriers are growing more optimistic about their future; and more aggressive in their plans to buy each other out

anada’s 100 largest trucking companies are once again growing their fleets, albeit not as aggressively as during past economic recoveries. Our ninth annual Top Tier report which offers a comprehensive look at the capacity of the nation’s largest for-hire carriers, found an almost 8% increase in the number of tractors operated by Canada’s largest for-hire carriers, rising to a total of 47,854 vehicles from the 44,337 reported the previous year. Class 8 sales in Canada have been growing every year since their precipitous drop in 2009 but, as noted in this space last year, these sales were best attributed to pent-up demand to renew aging vehicles rather than a willingness among fleet executives to significantly grow their fleet size. And in fact, Class 8 truck sales in 2013 will show their first drop since 2009. In recent years our research has also shown a great divide when it comes to purchasing new trucks and this continues into 2014. The interim results from our annual Transportation Buying Trends Survey, conducted in partnership with CITA, CITT and Cormark Securities, shows that Canada’s larger carriers

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(fleets with 100 or more vehicles) are significantly more optimistic than their small carrier counterparts (fleets with less than 10 trucks) when it comes to freight volume growth, improved rates, and business optimism. For example, 67% of large carriers responding to our survey so far see freight volumes growing in 2014 compared to just 37% of small carriers who think likewise. Just as significantly, 56% of large carriers expect to raise their rates in 2014 compared to just 37% of small carriers. The average business optimism for 2014 among large carriers is 6.78 (on a scale of 1 to 10) compared to just 5.50 for smaller carriers. It comes as no surprise that large carriers are far more likely to be purchasing new trucks than smaller carriers. So far our survey has found 56% of large carriers plan to purchase new tractors in 2014 compared to just 21% of small carriers. Aside from the distinct differences in tractor purchasing plans between Canada’s largest and smallest carriers, the other major trend certain to impact the face of Canada’s trucking industry is the recently renewed vigour of mergers and acquisitions activity. Large deals such as Transforce’s purchase of Clarke and Vitran’s Canadian operations, Vespeeten’s bid for Moe’s and Celadon’s purchase of Yanke have dominated the headlines in the last few months. We expect the company names that appear in our Top Tier report to show significant changes over the years to come. This comprehensive guide is not intended as a mere tally of vehicle counts. In fact, we have chosen not to list the top 100 carriers by size. The top 100 carriers are listed in alphabetical order because we believe that after a certain threshold, optimum fleet size is a reflection of the different markets these fleets are meant to serve. I would also like to thank the sponsors of our Top Tier report, Peoplenet Communications, Mack Canada and Castrol who continue with their support. Their involvement is instrumental in helping us deliver such a comprehensive report. We hope our report serves as a tool not only for the largest carriers to keep tabs on their competitors but also as a tool for the smaller and medium-sized fleets to contrast their buying strategies with the industry’s largest and gain a fuller understanding of industry issues as they rebuild their companies. FE January February 2014 ❙ FLEET EXECUTIVE 25

2014 TOP 100.indd 25

14-02-03 1:48 PM

The Top 100

LEGEND:THE TOP 100

Customer Line 800-895-2739 506-857-0205 800-665-8085 604-324-1333 800-668-0099 780-826-3889 800-665-0415 800-462-4766 800-265-2743 888-277-6484

Website www.apexltl.com www.armour.ca www.arnoldbros.com www.arrow.ca www.ayrmotor.com www.breckels.com www.bigfreight.com www.bisontransport.com www.blm.com www.brsmith.com

Operating Area Multi-Regional Multi-Regional, North America, International Multi-Regional, North America North America North America Multi-Regional North America Multi-Regional, North America, International North America Multi-Regional, North America

Ser D,TL D,E D,E D,D TL D,D D,F, D,E D,E D,F,

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Concord, ON Mississauga, ON Calgary, AB Concord, ON Brampton, ON Oakville, ON Sherwood Park, AB Kingsley Falls, QC Coteau-du-Lac, QC Kitchener, ON Cambridge, ON Concord, ON Woodbridge, ON Hagersville, ON Woodstock, ON Mississauga, ON Belleville, ON Hartland, NB Brampton, ON Hartland, NB Vernon, BC London, ON Calgary, AB New Hamburg, ON Calgary, AB Plessisville, QC Quebec City, QC Boucherville, QC Lethbridge, AB New Westminster, BC Markham, ON Brampton, ON Wroxeter, ON Belleville, ON Trois-Rivieres, QC Saskatoon, SK Toronto, ON Winnipeg, MB Prescott, ON Woodstock, ON Puslinch, ON Edmonton, AB Brampton, ON Oshawa, ON Gore Bay, ON Brampton, ON Thunder Bay, ON Belleville, ON Dieppe, NB Concord, ON Aldersyde, AB Mississauga, ON Napierville, QC

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www.calyxinc.com www.canadacartage.com www.canadianfreightways.com www.cn.ca www.canpar.com www.caravanlogistics.ca www.carontransport.ca www.cascades.com www.cat.ca www.celadoncanada.com www.challenger.com www.clarkelink.com www.fastfrate.com www.contransflatbedgroup.com www.contrans.ca www.con-way.com/en/freight www.cooney.ca www.dayross.ca www.dayross.ca www.dayrossgroup.com www.dctchambers.com www.dougcolemantrucking.com www.entrec.com www.erbgroup.com www.gibsons.com www.boutinexpress.com www.groupeguilbault.com www.robert.ca www.hrtrans.com www.herculesfreight.com www.highlandtransport.com www.hbc.com www.hyndman.ca www.itstruck.ca www.transforcecompany.com www.kindersleytransport.com www.kingswaytransport.com www.kleysen.com www.kriska.com www.contrans.ca www.contrans.ca www.landtran.com www.loomis-express.com www.mackiegroup.com www.manitoulintransport.com www.m-o.com www.mckevitt-trucking.com www.shipmts.com www.midlandtransport.com www.muirscartage.com www.mullentrucking.com www.musket.ca www.normandintransit.com

North America Multi-Regional, North America North America North America Multi-Regional, North America, International North America Multi-Regional, North America North America Multi-Regional, International Multi-Regional, North America, International Multi-Regional, North America, International Multi-Regional, North America North America North America Operating Group North America Multi-Regional, North America North America North America Operating Group Multi-Regional, North America Multi-Regional Multi-Regional Multi-Regional, North America Multi-Regional, North America Multi-Regional, North America Multi-Regional, North America Multi-Regional, North America, International International North America Multi-Regional, North America Multi-Regional Multi-Regional, North America Multi-Regional, North America, International Multi-Regional, North America North America Multi-Regional, North America North America Multi-Regional, North America North America North America International Multi-Regional, North America, International North America International Multi-Regional, North America North America Multi-Regional, North America Multi-Regional, North America Multi-Regional, North America North America Multi-Regional, North America North America

D,E D,D LTL D,E P D,D D,D L,LT D,D D,E D,D D,F, D,E F,TL

THE TOP 100 were chosen according to vehicle counts which included straight trucks, tractors, trailers and intermodal containers domiciled in or controlled from Canada. Top 100 carriers are listed in alphabetical order. Both parent company and holdings shown if large enough. Companies not reporting new capacity figures for more than 2 years are removed from the list.

26 FLEET EXECUTIVE ❙ January February 2014

2014 TOP 100.indd 26

Headquarters Brampton, ON Moncton, NB Winnipeg, MB Vancouver, BC Woodstock, NB Bonnyville, AB Steinbach, MB Winnipeg, MB Kitchener, ON Simcoe, ON

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Fleet Name Apex Motor Express Armour Transportation Systems Arnold Bros. Transport Arrow Transportation Systems AYR Motor Express B&R Eckel’s Transport Big Freight Systems Inc. Bison Transport Inc. BLM Group Bruce R. Smith Ltd. Calyx Ground Transportation Solutions (National Fast Freight, Totalline) Calyx Transportation Group Canada Cartage Canadian Freightways (TransForce) Canadian National Transportation Ltd. Canpar Courrier (TransForce) Caravan Logistics Inc. Caron Transportation Systems Cascades Transport Inc. CAT Inc. Celadon Canada Challenger Clarke Transport Inc. Consolidated Fastfrate Inc. Contrans Flatbed Group LP (Contrans) Contrans Group Inc. Con-Way Freight Canada Cooney Group of Companies Day & Ross Freight (Day & Ross) Day & Ross Dedicated Logistics (Day & Ross) Day & Ross Transportation Group DCT Chambers Trucking Doug Coleman Trucking Ltd. Entrec Transportation Services Ltd. Erb Group of Companies Gibson Energy Inc. Groupe Boutin Inc. Groupe Guilbault Ltee. Groupe Robert H & R Transport Ltd. Hercules Forwarding Inc. Highland Transport (TransForce) Hudson’s Bay Company Hyndman Transport (Celadon) International Truckload Services Inc. (ITS) JC Germain (TransForce) Kindersley - Siemens Transportation Group Kingsway Transport (TransForce) Kleysen Group LP Kriska Laidlaw Carriers Tank LP (Contrans) Laidlaw Carriers Van LP (Contrans) Landtran Systems Inc. Loomis Express (TransForce) Mackie Group Manitoulin Transport Group Maritime-Ontario Freight Lines McKevitt Trucking Meyers Transport Ltd. Midland Transport Ltd. Muir’s Cartage (Calyx) Mullen Trucking LP Musket/Melburn Transportation Ltd. Normandin Transit

trucknews.com

14-02-10 8:42 AM

LTL, D,D LTL, D,L,

D,D E,LT DB, D,E DB, D,E D,I, D,D I,L,T LTL, E,L, D,I, D,E D,E D,D E,F, I,LT DB, L,TC DB, TL D,E P D,E D,E D,D D,F, D,E D,E D,TL TL I,F,L E,L, CODES

A capacity and capability guide for the country’s largest motor carriers International

International

International International

Service D,TL,LTL,W D,E,F,I,L,LB,LTL,P,TC,TL,W D,E,F,L,P,TC,TL D,DB,F,I,L,LB,TL,W TL D,DB,E,F,I,L,LB,LTL,TC,TL,W D,F,I,L,TL,W D,E,I,L,TC,TL,W D,E,F,LTL,TC,TL D,F,L,LTL,TC,TL

Straight Trucks 110 150 3

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

International

D,DB,F,LB,TL E,LTL,TL DB,L,LB,LTL D,E,L,LTL,TC,TL DB,LB D,E,F,I,L,LTL,TC,TL D,I,L,LTL,TC,TL D,DB,E,F,I,L,LB,LTL,TC,TL,W I,L,TC,TL,W LTL,TL E,L,TC,TL D,I,L,TL D,E,HG,L,TL D,E,F,I,L,TC,TL D,DB,F,HG,LTL,TC,TL E,F,HG,I,L,LTL,P,TC,TL I,LTL DB,F,I,L,TC,TL L,TC,TL,W DB,LB,TL TL D,E,F,L,LTL,TL,W P D,E,HG,I,L,LTL,TL,VC,W D,E,F,I,L,LB,LTL,P,TC,TL,W D,DB,E,F,I,L,LB,LTL,TC,TL D,F,L,LTL,TC,TL D,E,L,LTL,TC,TL D,E,I,L,LTL,P,TC,TL,W D,TL TL I,F,L,LTL,W E,L,LTL,TC,TL,VC CODES

By WordSmith Media Inc.

Tractors 200 900 225 400 215 251 200 1250 125 250

Trailers 500 3000 485 1050 700 1300 400 3500 400 770

Containers 100 400

733

14 371 53

154 1717 296 900 74 250 300 130 378 715 1500 333 483 251 1493 176 220 1177 420 1668 246 150 300 645 675 270 325 1200 550 202 170 45 196 380 191 637 269 225 400 234 246 300 55 225 825 438 180 190 730 230 3800 210 328

1723 2207 1,002 7000 310 750 650 575 1200 1800 3300 782 920 422 2541 359 1000 2162 1140 3486 680 400 600 1134 1818 650 1200 4000 1200 398 427 604 520 1250 528 1760 646 800 1300 362 619 725 339 420 2230 952 500 624 1817 405 7500 350 900

150

790 5 1

3 40 1 39 191 140 507 44 157 75 5 5 15 53

41 12

15 840 30 109 146 6 7 209 7 500 1

Terminals 14 26 5 33 3 16 6 6 2 7

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

171

V,R,C

171

9 24 25 16 50 3 6 4 8 9 5 11 17 5

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

11 7 34 15

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

20 118

7000 50

190 386 490

1200 7 61 400 550

20 450

6 424 35 173 450

5 9 13 11 15 7 13 24 8 24 4 5 2 7 2 19 12 9 3 4 3 14 78 4 71 22 4 10 29 3 140 3 1

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

Operating Area: Regional – One province/state; Multi-Regional – Selected provinces/states; North America – Canada, U.S.; International – Canada, U.S., Mexico/Other. Types of Service: D – Dedicated Contract; DB – Dry Bulk; E – Expedited; F – Flatbed; HG – Household Goods; I – Intermodal; L – Logistics; LB – Liquid Bulk; LTL – Less than Truckload; P – Package; TC – Temperature Controlled; TL – Truckload; VC – Vehicle Carrier; W – Warehousing. Web Services: Web Visibility – Tracking & tracing (V); Web Reports – Downloadable reports (R); Web Custom – Customizable reports (C).

January February 2014 ❙ FLEET EXECUTIVE 27

2014 TOP 100.indd 27

14-02-03 1:48 PM

Top 100

continued

Fleet Name Northern Industrial Carriers Paul’s Hauling Ltd. Penner International Inc. Purolator Courier Quik X Transportation & Quick Trax Intermodal (TransForce) Rosedale Group Rosenau Transport Ltd. Schneider National Inc. SGT 2000 Inc./ SGT Group Shadow Lines Transportation Group Simard Transport SLH Transport Inc. Sokil Transportation Group Speedy Transport Inc. Thomson Terminals Ltd. Total Logistics Trucking TransForce Inc. Transfreight Transport Bourassa Transport Hervé Lemieux Trans-West Inc. TransX Group of Companies Travelers Transportation Services Trimac Transportation Ltd. TST Overland Express (TransForce) UPS Freight VA Inc. Van Kam Freightways Ltd. Verspeeten Cartage Ltd Vitran Express Canada *** Warren Gibson Ltd. Williams Moving and Storage Wilson’s Truck Lines Ltd. XTL Transport Inc. Yanke Group of Companies (Celadon) ** YRC Reimer Express Lines Ltd.

Headquarters Edmonton, AB Winnipeg, MB Steinbach, MB Mississauga, ON

Customer Line 780-465-0341 204-633-4330 866-729-7134 888-744-7123

Website www.nictrucking.com www.paulshauling.com www.penner.ca www.purolator.ca

Operating Area North America Multi-Regional, North America North America International

Ser D,E D,D D,E D,E

Mississauga, QC

800-461-8023

www.quikx.com

North America

LTL

www.rosedalegroup.com www.rosenau.org www.schneider.com www.sgt.ca www.shadowlines.com www.simard.ca www.slh.ca www.speedy.ca www.thomsongroup.com www.totallogistics.com www.transforcecompany.com www.transfreight.com www.bourassa.ca www.transportlemieux.com www.groupetranswest.com/en/ www.transx.com www.travelers.ca www.trimac.com www.tstoverland.com www.ups.com www.vatransport.com www.vankam.com www.verspeeten.com www.vitran.com www.warrengibson.com www.williamsmoving.com www.wilsonlogistics.ca www.xtl.com www.yanke.ca www.yrc.com

Multi-regional, North America Multi-Regional Multi-Regional, International International North America Multi-Regional Multi-Regional, North America North America Multi-Regional, North America Multi-Regional, North America Multi-Regional, North America Operating Group International North America Regional North America Multi-Regional, North America, International North America, International North America North America International North America Multi-Regional, North America Multi-Regional, North America North America Multi-Regional, North America North America Regional North America North America Multi-Regional, North America, International

D,E D,E D,D D,E D,E D,E D,E D,E LTL D,E D,E

Website www.atssolutions.ca www.besner.com www.deckx.com www.empiretrans.com www.fluke.ca www.gosselinexpress.com www.transportgregoire.com www.groupegoyette.com www.gtltransportation.com www.ics-canada.net www.contrans.ca www.muskoka-transport.com www.transforcecompany.com www.pronorth.com www.sameday.ca www.sunbury.ca www.trans4.com www.bernieres.ca www.bourret.ca www.tcfl.com www.julessavard.qc.ca www.transportmichel.com

Operating Area Multi-Regional North America Multi-Regional, North America Multi-Regional, North America, International North America North America North America Multi-Regional North America Multi-Regional, North America North America Multi-Regional, North America Multi-Regional, North America Multi-Regional North America, International North America North America North America International Multi-Regional, North America Multi-Regional, North America North America

Ser E,I,L D,L, D,E, D,E, D,D F,L,T TL LTL, D,I,L P TL F,L,T D,H F,LT E,HG DB, D,I,L D,L, E,HG L,LT DB, L,LT

Mississauga, ON 877-588-0057 Edmonton, AB 800-371-6895 Guelph, ON 800-461-3168 St-Germain-de-Grantham, QC 800-363-4216 Langley, BC 800-663-1421 Lachine, QC 888-282-9321 Kingston, ON 800-661-2146 Edmonton, AB 800-661-9923 Brampton, ON 800-265-5351 Rexdale, ON 800-771-7487 Toronto, ON 888-827-8521 Montreal, QC 514-331-4000 Kitchener, ON 888-890-0400 St-Jean-sur-Richelieu, QC 800-363-9254 St-Laurent, QC 800-561-2923 Lachine, QC 905-602-5427 Winnipeg, MB 800-665-7392 Brampton, ON 800-265-8789 Calgary, AB 403-298-5100 Mississauga, ON 888-878-9229 Mississauga, ON 800-742-5877 Laurier Station, QC 800-363-8175 Surrey, BC 888-229-9889 Ingersoll, ON 800-265-6701 Concord, ON 800-263-9588 Alliston, ON 800-461-4374 Coquitlam, BC 866-967-6683 Etobicoke, ON 416-621-9020 Toronto, ON 800-361-5576 Saskatoon, SK 800-667-7988 Mississauga, ON 877-330-3321

D,E D,E D,F, I,TC DB, D,E D,D LTL E,I,L D,L, D,E D,I, E,I,L F,I,T D,E D D,TL D,E LTL

The next 25 Fleet Name ATS Retail Solutions (TransForce) Besner (TransForce) DeckX (TransX Group of Companies) Empire Transportation Ltd. Fluke Transportation Group Gosselin Express Grégoire (TransForce) Groupe Goyette GTL Transportation Inc. ICS Courier (TransForce) Laidlaw Carriers Bulk LP (Contrans) Muskoka Transport Papineau International (TransForce) ProNorth Transportation Inc. Sameday Worldwide (Day & Ross) Sunbury Transport Ltd. Trans 4 Logistics (TransForce) Transport Bernieres Transport Bourret Inc. Transport Couture (TransForce) Transport Jules Savard Transport St-Michel Inc.

LEGEND:THE TOP 100

** 2012 numbers

28 FLEET EXECUTIVE ❙ January February 2014

2014 TOP 100.indd 28

Headquarters Toronto, ON St-Romuald, QC Winnipeg, MB Grimsby, ON Hamilton, ON Thetford Mines, QC Plessisville, QC Saint-Hyacinthe, QC Dartmouth, NS Toronto, ON Woodstock, ON Bracebridge, ON Saint-Jerome, QC North Bay, ON Mississauga, ON Fredericton, NB Mississauga, ON Quebec City, QC Drummondville, QC Saint-Éphrem-de-Beauce, QC Jonquiere, QC St-Michel, QC

Customer Line 800-265-6085 800-463-4460 800-993-3259 800-263-0240 800-263-4843 800-463-3138 800-461-8813 800-387-0346 902-468-3100 888-427-8729 888-209-3867 800-461-5808 800-363-3666 800-265-9370 877-726-3329 800-786-2879 905-212-9001 418-684-2420 800-567-1470 418-484-2104 800-463-9621 866-554-9903

CODES

*** Tentative purchase by TransForce

trucknews.com

14-02-03 1:48 PM

Service D,E,I,TL D,DB,E,L,LB,TL,W D,E,L,TL,W D,E,LTL,TL

Straight Trucks

Trailers 500 575 825 1171

Containers

164

Tractors 100 251 375 460

LTL D,E,I,L,LTL,TC,TL,W D,E,F,LTL,P,TC,TL,W D,DB,E,I,L,LB,TL D,E,F,HG,I,L,LTL,TL,W D,E,I,LTL,TL,W D,E,I,L,LTL,TL D,E,I,L,LTL,TL,W D,E,F,I,L,LTL,P,TC,TL LTL D,E,F,L,TC,TL,W D,E,F,I,L,LTL,TC,TL

160

512

304

55 60

250 300 390 358 289 353 700 175 179 300 200 3860 222 168 300 150 1520 275 1076 321 145 250 350 280 428 280 94 190 425 326 627

650 1200 1100 1100 962 350 3300 600 624 800 375 11060 2065 382 250 400 4200 800 2579 1022 282 795 700 518 1345 1250 225 690 1200 755 1281

Tractors 32 90 150 68 150 80 83 60 85 1 133 140 98 125 60 150 135 98 110 79

Trailers 165 265 200 311 300 300 264 283 250 3 279 350 270 350 169 350 263 255 300 318 300 350

5 65 5 100 80 2 3615

International

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

Service E,I,L,LTL,P,TL D,L,TC,TL D,E,F,I,L,TL D,E,F,TL D,DB,E,F,L,LTL,TC,TL F,L,TL,W TL LTL,TL D,I,LTL,TC,TL P TL F,L,TL D,HG,L,LTL,TC,TL F,LTL,TL,W E,HG,L,LTL,P,TC DB,E,F,L,TC,TL D,I,L,LTL,TL D,L, LTL,TC, TL E,HG,I,L,LTL,TL,W L,LTL,TL DB,F,LTL,TL,W L,LTL,TL,W

CODES

1 39 9 6 19 2804 25 10 102 113 12 35

Straight Trucks 151 1 10

314 3 3 176 10 10 1 100

435 230 120 560

Terminals 4 6 7 123

Web

V,C

14 23 3 8 6 7 13 5 5 10 6

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

12 1 3 3 13 5 49 17 48 5 12 1 21 2 9 2 5 8 21

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

Terminals 15 4 4 1 1 3 2 8 2 30 2 3 2 5 32 4 1 3 2 2

Web V

V,R,C V,R V,R

671

900 110

540 100 250 210

Containers

112 65

45 28

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

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

January February 2014 ❙ FLEET EXECUTIVE 29

2014 TOP 100.indd 29

14-02-03 1:48 PM

The next 25 Fleet Name Tri-Line Carriers LP (Contrans) TVM Ltd. TYT Group

continued

Headquarters Rocky View, AB Cottam, ON Drummondville, QC

Customer Line 800-661-9191 877-272-6266 855-898-4768

Website www.contrans.ca www.tvmltd.ca www.groupetyt.ca

Operating Area Multi-Regional, North America Multi-Regional, North America North America

Serv FB,T D,L, D,E,

TransForce owned companies Fleet Name TransForce Inc. A&M International ATS Retail Solutions Bergeron Besner Canadian Freightways Canpar Courrier CF Dedicated Services CF Truckload & Logistics CK Logistics Concord Transport Durocher International E&L Logistics Ganeca GHL Transport Golden International Grégoire Highland Intermodal Highland Transport ICS Courier JC Germain Kingsway Bulk Kingsway Transport Kobelt Transportation La Crete Transport Loomis Express McArthur Express McMurray Serv-U Expediting Mirabel Logistic P&W Intermodal / MTMX Logistics Papineau International Pedersen Transport Quik X Logistics & Axiom Warehousing Quik X Transportation & Quick Trax Intermodal Rebel Transport Roadfast St-Lambert Stream logistics TForce Energy Services Trans 4 Logistics Transport Couture Transport Nordique TST Expedited Services/TST Air TST Overland Express TST Truckload and Load Brokerage Westfreight Systems Winalta

Headquarters Montreal, QC East Angus, QC Toronto, ON Amos, QC St-Romuald, QC Calgary, AB Brampton, ON Edmonton, AB Edmonton, AB St Laurent, QC Toronto, ON St-Felix-de-Kingsey, QC Brossard, QC Carignan, QC Anjou, QC Bois-des-Filion, QC Plessisville, QC Markham, ON Markham, ON Toronto, ON Trois-Rivieres, QC Pintendre, QC Toronto, ON Sherbrooke, QC Lacrete, AB Brampton, ON Cambridge, ON Fort McMurray, AB Anjou, QC Oakville, ON Saint-Jerome, QC Claresholm, AB Mississauga, QC Mississauga, QC Edmonton, AB Mississauga, QC Saint-Romuald, QC Mississauga, ON Denver, CO Mississauga, ON Saint-Éphrem-de-Beauce, QC Saint-Jerome, QC Windsor, ON Mississauga, ON Mississauga, ON Calgary, AB Edmonton, AB

Customer Line 514-331-4000 800-832-3865 416-679-7600 819-727-9404 800-463-4460 888-868-7923 800-387-9335 780-637-8749 780-637-8749 877-856-7580 416-679-7400 800-267-2042 450-462-0941 800-561-7444 514-351-4501 450-628-0787 800-461-8813 800-268-6794 800-268-1729 888-427-8729 819-370-3422 800-263-3642 800-856-5559 819-566-6688 780-928-3989 855-256-6647 800-668-9691 780-791-3530 514-353-8186 905-815-9412 800-363-3666 877-965-2583 800-461-8023 800-461-8023 780-464-5171 800-461-8023 888-338-3381 905-625-1770 303-770-6511 905-212-9001 418-484-2104 800-363-3666 888-486-8911 888-878-9229 888-878-9755 403-279-8388 780-447-3521

Website www.transforcecompany.com www.transforcecompany.com www.atssolutions.ca www.transforcecompany.com www.besner.com www.canadianfreightways.com www.canpar.com www.cfmvmt.com www.cfmvmt.com www.cklogistics.ca www.concordtransportation.com www.durocherinternational.com www.ellogistics.ca www.ganeca.ca www.camionnageghl.com www.transforcecompany.com www.transportgregoire.com www.highlandtransport.com www.highlandtransport.com www.ics-canada.net www.transforcecompany.com www.kingswayvrac.com www.kingswaytransport.com www.kobelttransportation.com www.latrans.com www.loomis-express.com www.mcarthurexpress.com www.mcmurrayservu.com www.transforcecompany.com www.mtmx.ca www.transforcecompany.com www.pedersentransport.com www.quikx.com www.quikx.com www.rebeltransport.ca www.quikx.com www.st-lambert-transport.com www.transforcecompany.com www.tforceenergy.com www.trans4.com www.tcfl.com www.transforcecompany.com www.tst911.com www.tstoverland.com www.tstoverland.com www.westfreight.com www.winaltatransport.com

Operating Area

Ser

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

L,TL E,I, D,D D,L LTL P D,W D,F L E,L, F L HG LB D,F TL I,L,T E,L, P D,D DB, I,LT L LTL P D,E D,E D,T F,I, D,H LTL L LTL F,TL TL F,L L,W F D,I, L,LT D,L D,E LTL D,T F,LT F,L

Contrans owned companies Company Name Contrans Group Inc. Brookville Carriers Flatbed LP Cornerstone Logistics LP ECL Carriers LP

CODES

Headquarters Woodstock, ON Truro, NS Oakville, ON London, ON

Customer Line 800-819-5259 800-565-7554 877-388-2888 800-265-0934

Web Address www.contrans.ca www.brookville.ca www.cornerstonelogistics.com www.contrans.ca

Operating Area

Ser

North America North America North America

FB,T L TL

Operating Area: Regional – One province/state; Multi-Regional – Selected provinces/states; North America – Canada, U.S.; International – Canada, U.S., Mexico/Other. Types of Service: TL – Truckload; VC – Vehicle Carrier; W – Warehousing. Web Services: Web Visibility – Tracking & tracing (V); Web Reports – Downloadable reports (R); Web Custom –

30 FLEET EXECUTIVE ❙ January February 2014

2014 TOP 100.indd 30

trucknews.com

14-02-03 1:48 PM

D – De Custom

International

ervice: m–

Service FB,TL D,L,TL D,E,F,HG,I,L,LTL,P,S,TC,TL,VC,W

Straight Trucks

Service

Straight Trucks 3,615 1 151

L,TL E,I,L,LTL,P,TL D,DB,F,L,TL D,L,TC,TL LTL P D,W,L D,F,L,TL L E,L,LTL,TL F L HG,L,TL LB D,F,L,LTL,TL TL I,L,TC E,L,TC,TL P D,DB,F,HG,LTL,TC,TL DB,LB I,LTL L LTL,TL P D,E,L,LB,LTL,TL,W D,E,F,LTL D,TL F,I,TC D,HG,L,LTL,TC,TL LTL L LTL F,TL TL F,L L,W F D,I,L,LTL,TL L,LTL,TL D,L,LB,TL,HG D,E LTL D,TL F,LTL,TL F,L

Service FB,TL L TL

Tractors 151 124 70

Trailers 208 285 370

Containers

Tractors 3,860 31 32 48 90 296 74 6

Trailers 11,060 127 165 101 265 1,002 310 59 98

20 60

89 116

30 35 103 83 61 170 1 191 61 269

85 48 195 264

36 55 88 4 19 75 98 45

56 339 248 5 48

160 19 16 16

304

194 10 1 4 140 19

330 135 79 41 8 321 62 111 9

512 60 265 29 4 468 263 318 117 12 1,022 141 150 19

Tractors 1,493 56

Trailers 2,541 62

Containers

118

53 790

1 1

314 12 840 28

Straight Trucks 39

Containers 671

Terminals 1 15 2 4 25 50 1 2 1 6 1 1 1 1 1 2 1 4 30 2 3 12 1 5 78 1 1 1 1 2 5 1 12 2 1 1 18 13 1 2 1 2 17 1 5 1

124 427 3 528 172 646

270 115

Terminals 2 2 6

172 32

28 11

Terminals

Web V V,R.C

Web

V V,R,C V,R,C

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

V,C V V, C

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

Web

2 1 3

D – Dedicated Contract; DB – Dry Bulk; E – Expedited; F – Flatbed; HG – Household Goods; I – Intermodal; L – Logistics; LB – Liquid Bulk; LTL – Less than Truckload; P – Package; TC – Temperature Controlled; Customizable reports (C).

January February 2014 ❙ FLEET EXECUTIVE 31

2014 TOP 100.indd 31

14-02-03 1:48 PM

Contrans owned companies Company Name Glen Tay Transportation LP Laidlaw Carriers Bulk LP Contrans Flatbed Group LP Laidlaw Carriers Tank LP Laidlaw Carriers Van LP Peter Hodge Transport Limited S&S Enterprises Tri-Line Carriers LP Tri-Line Disposal Inc. Tripar Transportation LP Wilburn Archer Trucking Deuce Disposal Ltd.

Headquarters Perth, ON Woodstock, ON Hagersville, ON Woodstock, ON Puslinch, ON Milton, ON Saint-Barthelemy, QC Rocky View, AB Edmonton, AB Oakville, ON Norwood, ON Slave Lake, AB

Customer Line 800-450-9483 888-209-3867 800-263-8383 800-465-8265 800-263-8267 800-387-6933 450-885-3911 800-661-9191 780-444-8805 800-387-7210 800-463-8136 888-849-3125

Web Address www.contrans.ca www.contrans.ca www.contransflatbedgroup.com www.contrans.ca www.contrans.ca www.peterhodgetransport.com www.contrans.ca www.contrans.ca www.contrans.ca www.contrans.ca www.contrans.ca www.contrans.ca

continued

Operating Area North America North America North America North America North America North America North America Multi-Regional, North America North America North America North America North America

Day & Ross owned companies Company Name Day & Ross Transportation Group Day & Ross Freight Day & Ross Dedicated Logistics Fastrax Sameday Worldwide

Headquarters Hartland, NB Hartland, NB Brampton, ON Florenceville, NB Mississauga, ON

Customer Line 866-329-7677 866-329-7677 800-332-6841 506-392-2600 877-726-3329

Web Address www.dayrossgroup.com www.dayross.ca www.dayross.ca/dedicated www.dayross.ca www.sameday.ca

Ser DB, TL FB,T DB, TL DB, TL FB,T TL LTL, DB, TL

Operating Area

Ser

North America North America North America North America, International

LTL, D,L, F E,H

CODES

12-PEC-005 MotorTruck HalfSprdAD.indd 1 2014 TOP 100.indd 32

14-02-03 1:48 PM

Service DB,LB,TL TL FB,TL DB,LB,TL TL DB,LB,TL TL FB,TL TL LTL,TL DB,LB,TL TL

Service LTL,TC,TL D,L,W F E,HG,L,LTL,P,TC

CODES

Straight Trucks

34 4

Straight Trucks 507 91 40 76

Tractors 64 133 251 234 246 78 23 151 58 40 47 26

Trailers 110 279 422 362 619 137 54 208

Tractors 1668 1177 420 11 60

Trailers 3486 2162 1140 15 169

Containers

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

Web

Containers

Terminals

Web

34 15

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

104 66

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5/15/12 1:25 PM 2014 TOP 100.indd 33

14-02-03 1:48 PM

TOP TIER

Buying growth Analysts discuss M&A activities in the Canadian trucking industry By Carolyn Gruske

Despite a handful of high-profile deals that made headlines across the country, the mergers and acquisitions (M&A) activity in the Canadian trucking industry isn’t exactly booming. “I thought it would have been a stronger year than it was,” said Oakville, Ontario-based Douglas Nix, vice-chair of Corporate Finance Associates. “We’ve seen across all fronts, a decline in M&A activity in 2013 over 2012, and 2012 wasn’t a knock-it-out-of-the-park kind year. Organizationally, it’s not just Canada, but North America, where I think the numbers are off 40%. The hope is 2014 is going to be better.” Mark Borkowski, president of Mercantile Mergers & Acquisitions Corp., in Toronto has also seen M&A activities slow. “The transportation industry, at one time, was the most active. That’s changed. It’s not at the moment. Although people in transportation think transportation deals are booming, they’re booming in ports, they’re booming in outlying types of businesses. They aren’t booming, by any means, in pure transportation, except by two major buyers—TransForce Inc. and Greenbriar Equity Group—who have had their pick of the litter.” Opposing viewpoint Eric Castonguay, a Toronto, Ontario-based partner at PwC Canada, has a different view. He feels M&A is healthy. “Lately, there has been a fair bit of deal activity. In Canada there have been some public market deals that have transpired. There are a number of fundamental aspects to the market that have recently driven deal economy and will continue to drive activity in the next 18 months,” he said. “Most of the activity we are seeing is in the medium-size market. Those would be deals in the $20–$200 million range.” M&A landscape What everybody can agree upon, however, are the market conditions that make deals possible. Low interest rates are beneficial to companies seeking leverage financing. The lending market has opened up since the tightening caused by the 2008 recession. Mature markets with few opportunities for growing market share organically (especially without driving rates down or competing for customers or drivers) create an atmosphere for growth through acquisition. Companies that survived the economic downturn and have begun to thrive again have strong balance sheets and are well capitalized. And businesses owners 34 FLEET EXECUTIVE ❙ January February 2014

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(many of whom founded their companies when the industry was first deregulated) planned to sell as their succession and retirement strategies were completed are finally ready to do so. The deals When deals do happen, they tend to have one common element: all of the businesses that are acquired are well-run. “Buyers really differentiate between well-run trucking companies that have invested in rolling stock and TMS and things that optimize their business, and that have clients with sticky relationships, as opposed to just hauling broker business. For companies that have really underinvested, it’s more difficult to sell at this point,” said Castonguay. Beyond the criteria of being well-run, having a niche or specialization tended to help companies court business suitors. “Specialized freight and specialized markets tend to be attractive because there are larger barriers-to-entry and typically higher switching costs for the customers,” said Castonguay. Businesses that have expanded beyond trucking to offer warehousing, logistics, or non-asset-based services also seem to have more to offer the market. “Logistics is very hot. And people that do different, specialized logistics are doing very, very well,” said Borkowski. “Transportation companies, in order to stay afloat, are buying warehouses. It gives them a leg up,” he said. “Logistics companies are all over the market, trying to buy up the more specialized transportation companies.” Nix said, “the non-asset-based market is really strong. Valuation multiples are high. It’s the opposite of what you’re seeing in the asset-based operations. It’s a dynamic market right now.” Valuations Many factors influence how much a company is worth, but the basic sale price is derived in a fairly straightforward manner. First, a calculation is made based on the company’s earnings before interest, taxes, depreciation, and amortization, or EBITDA. Then a multiple is applied to the EBITDA. The multiple tends to reflect how large the business is, how solid its customer base is, and what type of business it’s in. While PwC’s Castonguay says companies today are worth more than they would have been in the past, Nix and Borkowski say prices are dropping, in part due to falling multiples. “Multiples on average, for an average transportation company, used to be 4.3-4.4%. They’re now 3.5-3.6%. That’s a very big drop. So now owners say, ‘I’m not going to sell, I’m just going to keep it,’ and that’s what they’re doing,” said Borkowski. To put multiples in perspective, Nix looked at the deal that saw TransForce acquire Vitran.

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FEATURE

The hour has arrived— or has it? By John G. Smith

A driver’s paycheque can be an unpredictable thing. Maybe hourly pay is the answer.

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t’s a rare thing for employees to say they would be willing to accept less money, but a Kriska Transportation driver recently offered that very thing. The driver was happy enough with his annual take, amounting to about $60,000 a year, but fluctuating weekly payments were driving his wife to distraction. Even if an equalized compensation plan came with some sort of financial penalty, the driver told a fleet manager that he would be willing to accept the cost. Peaks and valleys in pay cycles are commonplace throughout the trucking industry, particularly in jobs behind the wheel. And, productivity-based payments— whether by the mile, per load, or as a percentage of revenue— offer an added incentive to use time wisely. (Don’t delay when securing a load or sitting at a truck stop. If you want to make money, you need to move freight.) But the approach also exposes drivers to the burden of everything from traffic congestion to seasonal shipping demands which areProStar+ beyondDay theirCab control. trucknews.com

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Increasingly, the burdens are becoming commonplace, rather than the rare exceptions they used to be. “The list of non-driving activities is just getting longer and more time-consuming,” said Kriska Group CEO Mark Seymour, who is also chair of the Canadian Trucking Alliance’s Blue Ribbon Task Force on the Driver Shortage. “We pay for a lot of things other than just driving a truck and driving a mile, but who’s to say how long they take?” An extra $7.50 for crossing the border may be enough if the crossing takes less than 30 minutes, but it amounts to pocket change after a three-hour delay; a fixed fee-per-distance seems fine at highway speeds, but downright depressing in the middle of a traffic jam; a payment for refueling faces a similar problem if there is a long lineup at the pumps. Aside from these examples, a long list of supplemental payments can leave inexperienced drivers wondering exactly what they can expect to make. “For the time they put in, compensation packages for most truck drivers, but especially long-haul drivers, are no longer competitive with other industries,” the Blue Ribbon Task Force concluded after it explored the role that compensation models play in attracting future drivers. “On average truck drivers make [or slightly exceed] the average annual wage for all workers. However, they tend to work significantly more hours to make that wage. In addition, truck drivers are not always compensated for all of their time on the job.”

Hourly pay Debates about potential solutions often turn to some form of hourly pay, but the answer is not straightforward. “An hourly pay system is not a panacea for solving the driver shortage across the industry. Unlike some industries where there is more flexibility to work longer hours during periods of peak demand, truck driver hours are capped by the hours of service regulations,” the task force report observed. “The reality is that drivers do inevitably arrive at some sort of per-hour calculation of what they are paid. Carriers must be competitive with each other. The key is not necessarily how drivers are paid, but how much they are paid.” Some fleets already pay hourly wages for work in short-haul applications or when the tasks are limited exclusively to driving. J. F. Kitching & Son Ltd., an aggregate hauler in Queensville, Ont., has been paying drivers this way for decades and has no plans to change, even though many competitors pay per load or on a percentage. The latter models create a highly competitive environment, argues Lynn Paxton, who oversees safety and compliance. “It’s never a good environment where people become territorial and concerned about their ability to secure loads versus their co-worker. It doesn’t support our business model in terms of promoting a safety culture and a team setting.” A predictable pay structure even helps to retain drivers, she added. “I want to have a stable workforce here, and I want to know that people are going to come to work and be able to work a reasonable day that’s compliant with the legislation, go home at the end of the day, have a good quality of life, and not be concerned with how many loads they’re going to get tomorrow.”

“If we can pay the same or less [than Kriska’s long-haul competitors] and bring some calm and peace to our existing workforce, then why wouldn’t we do that?” Seymour asked. “It’s probably the easiest change we could all make.” But an hourly pay structure for long-haul drivers would introduce a different challenge. Unlike their P&D counterparts, who are able to watch drivers coming and going each day, how do long-haul companies best monitor productivity in faraway locales? Put another way, said Seymour, “How do we make sure Hourly wages we’re getting an hour’s work?” in the shop It’s one of the reasons why The discussion about hourly he thinks line-haul drivers pay is not limited to the should rally behind calls for driver’s seat. During a mandated electronic on-board session at this year’s annual recorders (EOBR). Some truck- meeting of the American ers have balked at the idea, Trucking Associations’ much like an earlier genera- Technology and Maintetion of workers who compared nance Council, shops also logbooks or satellite tracking debated the choice beto the prying eyes of Big Broth- tween paying technicians er. Seymour said the latest an hourly or flat rate. Scott tool could give fleets the confi- Witt, vice-president and dence to support different pay general manager of Virginia structures. “Basically, you log Truck Center, pays hourly onto your EOBR, you’ve ef- with bonuses, offering fectively made yourself avail- other rewards for jobs able to work. Now it’s up to completed quicker than us to make sure you’ve got expected. “If it’s 10 hours something to do and you’re to do a clutch and they do it in eight, they are going productive while doing it.” There is no reason for fleets to get paid (extra),” he said. Bryan Leskowsky, director to think drivers will laze about without the incentive of proof service with Peach State ductivity-based pay, said Rob Freightliner, prefers a flat McDonald, president of Apps rate. “I call it capitalism Transport Group, which deliv- at its finest. Technicians are ers LTL shipments along the motivated to perform,” he Windsor-Quebec City corri- said. Six months after the shop shifted from an hourly dor, among other services. “Treated well and given pay to a flat rate, one-third enough work, the guys will of technicians had left, but it still billed $200,000 per work as hard as they can.” They shouldn’t be expect- month with the remaining ed to shoulder the burden of 10 technicians, all of whom being tied up at a shipper, or made more than they delayed because of poor rout- had under the previous ing instructions from a dis- model. The model just requires a combination patcher, he added. While his fleet pays drivers of the right tools and quick by the hour, it has ways to access to required parts— reward the most productive not to mention the chance workers. Performance is track- to juggle multiple jobs and ed by monitoring key perfor- keep busy when parts are mance indicators (KPIs) such on order.

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GEARED UP

No light weight Volvo’s Optimized Series VNM 430 drops pounds without sacrificing power By James Menzies

hen it comes to removing weight from a Class 8 truck, how do you determine the value of a single pound removed? That’s one of the questions Volvo sought to determine when optimizing its regional haul tractors for lighter weight. To find an answer to this question, Volvo approached several weight-sensitive customers, whose answers ranged $6$12 for every pound saved. The fact customers were willing to pay a premium for lighter-weight trucks sent Volvo on a quest to develop the Optimized Series of regional haul tractors—a line of eight VNL and VNM tractors that were designed to be as lightweight as possible. The new line includes: the VNL 300, 430, 430 mid-roof and 630 mid-roof; and the VNM 200, 430, 430 mid-roof and 630 mid-roof. This new series of regional-haul tractors runs the gamut from day cabs to 62-inch mid-roof sleepers, suiting everything from local drivers to those who are on the road for two to three nights at a time. The VNM trucks have a 10-inch shorter bumper-to-back-ofcab (BBC) than the VNLs, but share the same cab. The easiest way to differentiate them at a glance is that the hockey stick-

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shaped vents on the side of the VNL hoods are simple rectangles on the VNMs. With the exception of the VNL 630, each of these trucks is powered by the Volvo D11 engine. But most intriguing of all, they each provide up to 1,200 lbs in weight savings, which means more payload for bulk and tanker operators and improved fuel efficiency for those running heavy. How’d Volvo find 1,200 lbs of weight savings in its Optimized Series? Chris Sadler, product marketing manager, regional haul, said the savings came from: vendor components (190 lbs); aluminum components (150 lbs); wide-base tires and aluminum wheels (300 lbs); an aluminum fifth wheel (240 lbs); and a 6x2 axle (380 lbs). That’s 1,260, if you’re keeping score, and doesn’t even take into consideration the 300 lbs in weight that moving from the D13 to the smaller D11 will net. Granted, Volvo knows not every customer will want or require every one of those weight-saving options. “You may need that 13-litre engine or some other features that are not in these spec’s,” Stadler acknowledged. “But the key point here is, you’re going to see value in taking weight out of the truck.” How much value? That, of course, depends on application. Examining customer scenarios where payload is paramount, trucknews.com

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Stadler said a fuel hauler could increase its profits by $95,000 per year if it increases payload by just 320 lbs. His calculations are based on carrying an extra 50 gallons of fuel per trip, making three deliveries a day, 250 days a year. That totals 37,000 gallons of extra product delivered at the end of the year. Those are heady numbers, and offer insight into why bulk haulers would consider paying extra for a lighter-weight truck. And they’ll pretty much have to. The reality of lightweighting is that aluminum components, wide-base tires and the like are generally more expensive than their more conventional, but heavier counterparts. “Aluminum can be very pricey in this market, so usually what happens is when you get into lightweight [spec’ing], you’re going to pay a little bit more,” Stadler noted. Bulk haulers understand the value of additional payload, but the bigger question, at least here in Canada, is will they trust the unfamiliar components such as 6x2 axles or the D11 engine? Volvo says it has customers in the US Upper Midwest running 6x2 vehicles without any issues relating to traction—one of the most common concerns among fleets. These trucks use the Meritor FueLite 6x2 with electronics that shift weight to the powered axle in low-traction situations. It should be noted, not every province allows 6x2s at this time, though that could change. Every truck in the Optimized Series line-up features the FueLite 6x2 rear axle, but customers can order the weight-reducing components à la carte and still enjoy some savings. Canadian customer may also be uneasy about using a D11 engine in place of the popular D13. The D11 has some faithful fans here in Canada. I recently visited auto parts hauler Verspeeten Cartage and was surprised to find many of the trucks in its yard were D11-powered. I would have said count me among the skeptics that a D11 would provide sufficient power to pull 80,000 lbs across even moderately hilly terrain—at least ’til I had the chance to drive one of these vehicles over about 100 miles of more-than-moderately hilly terrain in Virginia. The truck I drove was the VNM 430 mid-roof sleeper and I was pulling an unbaffled loaded tanker trailer grossing about 78,000 lbs.

John Moore, marketing product manager, powertrain, admitted Volvo would likely have suggested the D13 if I were to run these hills on a regular basis. But they wanted to prove the D11 could handle the grades, and it certainly could. The I-Shift held top gear up most of the hills and I was able to hold my own with traffic. The engine strained while pulling some of the steeper hills I encountered on my drive, but I never felt like a moving chicane—at least not to other truck traffic. The speed limit is 70 mph in Virginia—trucks included—and so yes, I was getting passed, but not because the engine was grossly underpowered. The D11 engine was actually nice to drive on the flatter sections of road. It seemed a tad quieter than the D13 and it wasn’t a big downgrade in terms of terms of torque or power. Moore bristles at any suggestion the D11 is a “throwaway” engine or bored-out 9-litre. “It’s one of our most reliable engines,” he said. “It’s actually reverse-engineered from our 13-litre. If you look at the size of the bearings on this, the bearing surfaces are larger than those of the 13-litre Paccar MX or the 13-litre MaxxForce. They’re also equal to the size of the DD15 and DD16. These engines can easily get a million miles without any problems.” Volvo backs the D11 with the same base warranty it offers on its 13L. But it does have its limitations. Volvo holds firm on its 80,000 GVW rating for the D11 and it doesn’t suggest running it over the Rockies on a regular basis. It’s best suited for regional haul applications grossing no more than 80,000 lbs and with cruise speeds of 63 mph or less. “We don’t want to underpower a vehicle, because drivers are going to hate it and they’ll think it’s a bad engine. It’s not, but it can be put into the wrong application, so you have to be very careful here,” Moore said. Volvo’s keen on promoting the D11 engine because it is well suited for a wide range of regional haul applications and that’s a segment where the truck maker wants to grow its presence. Volvo recently expanded its popular XE (exceptional efficiency) powertrain package to include the D11. This involves mating the engine to an I-Shift overdrive transmission with a ratio of 0.78:1 and axle ratios of 2.64-2.80. Spec’d this way, the sweet spot is widened and the engine runs about 200 rpm slower, providing a fuel savings of about 3%. But the XE package isn’t for everyone. Moore said it works best in applications where vehicles are running at high speeds and delivering diminishing loads. Spec’ing trucks, as if it wasn’t complex enough to begin with, is even more so today with the advent of more sophisticated powertrains and a broader array of lightweight components. Volvo seems to want to challenge truck buyers to re-evaluate some of their traditional spec’ing decisions. That may mean different spec’s within the fleet for different customer sets. “The day of having one truck for everything is pretty much gone,” Moore said. “Customers can’t afford to lose money every year because the truck is not optimized.” FE January/February 2014 ❙ FLEET EXECUTIVE 39

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14-02-04 11:15 AM

GEARED UP

+ 15L

Proving ground Volvo builds test track to show off trucks’ capabilities By James Menzies

olvo Trucks North America is constructing a road course and vocational track at its New River Valley Truck Plant, where customers can put new vehicles through their paces with or without a commercial driver’s licence (CDL). Work on the track began in the spring, after plant managers devised a plan to keep costs low while building a “stateof-the-art” facility. Lars Blomberg, vice-president and general manager of the plant, said “It’s always difficult to get money approved, so we sat down together with the union and it turned out we have six to 10 people—maybe more—in the plant who are really skilled when it comes to driving excavators and graders. So we created a team of six people and we started to make some sketches and drawings of how it should look.” Next, a call was placed to Volvo’s construction equipment group, and a good deal secured on equipment rentals. Before long, the dirt behind Volvo’s sprawling 1.6 million square foot truck plant was being rearranged and the track began to take shape. Two months of near-steady rain slowed progress, but the track is now drivable, and on schedule to be completed by next summer. When complete, it will feature a 1.1-mile paved road course (with banked corners so trucks can easily achieve highway speeds) including an off-road vocational truck track within its perimeter. This marks the first time Volvo will have a place of its own to demonstrate the capabilities of its VHD vocational truck in an off-road environment. It also means customers—including fleet owners who may not have a CDL—will be able to get behind the wheel of Volvo vehicles without venturing onto the Interstate. 40 FLEET EXECUTIVE ❙ January February 2014

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Computer rendering of the test track facility. ABOVE: The track has an off-road section allowing buyers to test the capabilities of vocational trucks in challenging environments.

TOP:

“We will keep an off-road section for our VHD, because we know we can talk a lot about the VHD and we can talk a lot about the I-Shift (automated manual transmission), but it’s a completely different thing when you use the I-Shift on a fully loaded dump truck,” Blomberg explained during an exclusive visit to the track. “I think you don’t realize the benefits of the I-Shift until you sit behind the wheel and try it.” Though it’s still incomplete, Volvo recently gave a group of customers an opportunity to drive the track. Their reaction was “very, very positive,” Blomberg said, adding “I do believe this will sell a lot of trucks for us if we can get customers inside the truck and give them the complete customer experience.” trucknews.com

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The facility received a very important visitor in recent weeks. Olof Persson, Volvo’s global president and CEO, wasn’t apprised of the undertaking until he arrived at the plant for a visit. “He liked it,” Blomberg said with some relief. “I took him out on it and he got an opportunity to drive it himself, and he really liked it.” I also had the chance to drive the track, from behind the wheel of a Volvo VHD dump truck, powered by a D13 engine with 500 hp and 1,750 lb.-ft. of torque. The truck was equipped with Volvo’s I-Shift transmission, so I got to see first-hand how several of the I-Shift’s features contribute to greater productivity and safety in construction applications. Among the features I experienced were Power Launch (accelerating up an incline, out of a muddy mess) and a feature that allows the operator to rock the truck back and forth out of a sticky situation. This is achieved thanks to the incredibly quick clutch actuation, which allows for the transmission to alternate between reverse and forward gears almost instantly. The VHD itself is a vehicle that probably doesn’t get as much attention as it deserves, overshadowed as it is in the construction market by the popular Granite, produced by sister company Mack. Among the VHD’s attributes are a wider cab than what is available with the Granite, and a large, one-piece windshield. The interior of the VHD is spacious and comfortable and it’s a handsome truck when viewed from the outside.

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Another of the features that was apparent during my off-road drive was the articulation of the rear axles when crossing uneven terrain. This VHD rode on a 46K Volvo T-ride rear suspension. The off-road section of the track includes grades of various lengths and pitches, some bumpy, rocky sections, dips of varying intimidation levels and lots of mud—Mother Nature’s contribution. The I-Shift transmission can handle gross combination weights of up to 164,000 lbs, but Volvo has some reservations if it will be required to handle those types of loads in soft sand. “You can do almost anything with this, but for dump applications the concern is where you want to take it and how soft the sand is where you want to take it,” explained John Moore, marketing product manager, powertrain. And unlike fully-automatic transmissions, the I-Shift can also be mated to engines that produce 1,850 lb.-ft. of torque. The VHD has never reached its full potential in the vocational truck segment. But when Goran Nyberg was appointed Volvo’s North American president of sales and marketing last year, the vocational segment was one in which he asserted Volvo must become a stronger player. Volvo now has at its disposal a powerful tool with which it can demonstrate the capabilities of the VHD in a harsh, off-road environment that closely matches—or surpasses—those in which this truck will be asked to operate on a daily basis. FE

14-02-03 1:32 PM

SHIPPER-CARRIER ROUNDTABLE

FREIGHT BIDS

Building better partnerships Freight Bids: shippers love them; carriers hate them. In a panel session specifically dedicated to rate negotiations at our recent Surface Transportation Summit, leading shippers and carriers spoke candidly about the issues surrounding RFPs. In this second and final installment they outline a better way forward Lou Smyrlis, Transportation Media’s publisher and editorial director, moderated the panel on behalf of Fleet Executive FE: ONE OF THE PET PEEVES OF CARRIERS IS THAT THEY FEEL IF THEY ARE NOT THE INCUMBENT CARRIER, THEY DON’T HAVE A FAIR CRACK AT THE PROCESS. HOW DO YOU DEAL WITH THAT ISSUE AND ALSO WITH INCUMBENTS WHO DON’T PUT THEIR BEST NUMBER ON THE TABLE BECAUSE THEY DON’T WANT TO RISK ROLLING

GRACE TOMASZUN Manager, North America transportation sourcing, McCormick & Company

MIKE OWENS Vice president of physical logistics, Nestle Canada Ltd.

MICHELLE ARSENEAU Managing partner, GX Transportation Solutions.

BRUCE JANTZI Senior vice president, operations, Erb International

BACK ON RATES?

Owens: The proof is in the pudding. If you’ve switched from a long-term carrier, that sends a message to the industry. You need to be prepared to do that. When you do go to an RFP, you better be prepared to act upon it. The incumbents, rather than sitting back in the weeds on rates, may be a little more worried about providing additional services the shipper may not even be aware of, but which have a cost to them, when someone during the RFP process is simply looking at the data and nothing else. It’s

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Rate Neg.indd 42

time again that their customer-focused approach, along with their dedicated support team, strives to work hand in hand with their customers to unearth ways that they can help improve how they service and add value to their customers. Coupled with over 23 years experience and dedicated support to the Transportation and Logistics Industry, Shaw Tracking is committed to working with their customers to perform at unprecedented levels. Shaw Tracking continues to act as founding sponsor of the “Shipper-Carrier Issues Roundtable” for the eighth consecutive year. Shaw Tracking is pleased to continue to support the important insight and dialogue brought forward by prominent industry stakeholders. To learn more about Shaw Tracking, visit www.shawtracking.ca trucknews.com

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important if you are providing those kinds of extra services that you be very transparent so that doesn’t get overlooked in the bid process. Tomaszun: Our company has been around for 125 years. We pride ourselves on the strong relationships that we establish with the folks we do business with. There are carriers we have done business with for quite some time, one carrier in particular we have worked with for about 50 years. That being said, we are very involved in the industry. We know the markets, we know the ups and downs and my expectation is that folks that have been partners with us for a long time really take a serious look at the services they offer and the prices they are coming to us with because we have been willing to take very drastic measures and we have parted ways with carriers we have done business with for a long time. In this economy, which is very challenging, everybody needs to make sure they are establishing a relationship and not just relying on the things that have been done over the years. We are all under a lot of pressure, both shippers and carriers. FE: FROM A CARRIER POINT OF VIEW, WHAT WOULD YOU LIKE TO SEE IMPROVED IN THE BID PROCESS?

Arseneau: The first thing I would like to see, and which I think would help shippers get the best responses in the tenders they are putting out there, is before selecting the carriers you would like to quote, set aside time for each carrier you are including so you can bring them in to meet with your group. Sit down and have a general Q&A session on what is involved in the business they are quoting on, what are the requirements, what are your objectives and what you are hoping to accomplish through this process and try to make it as transparent as possible. That conversation needs to be had. In terms of the software used in the RFP process, the shipper submits the questions and waits for the answers to come back from the carriers and you file through and read what is important to you. I understand that is saving the shippers time following that process but it really creates a disconnect between the shippers and the carriers by doing it that way. Being able to sit down and have a roundtable discussion with the people making the decision and judging the freight tender and the people who are actually submitting it—the sales people, the operations

or general manager, the pricing person—is where it has to start. Afterwards, I think the same thing applies. Is it just the carrier submitting the pricing and the package that goes forth? Sometimes I wonder if it ever gets read because there is so much information in there. To have an actual presentation of your proposal where you get to meet with the same key people you met with before and discussing the key things you have to offer provides the opportunity for the shipper to get to know your company better. Unless you have 100 companies quoting on your business you should provide the opportunity to do that. Jantzi: I realize everyone’s time is limited but we love for shippers to come and visit our facility. We are very proud of our facility. We like to introduce them to our operations folks and to give shippers a view of how we operate because not all carriers are the same. Our company has been in business for a long time and we invest a lot in technology and that’s something we have to continue to do and we like to show that to our shippers. We also invest a lot of money in safety for our vehicles, and there is a cost to that, and that cost is reflected in RFPs. It’s frustrating when we submit pricing and sometimes I see a difference of $500 a lane. There is a reason for that. Are you just buying a truck with no safety attached? There are a lot of questions that sometimes are unanswered. I also don’t like doing the bid packages every year. I like to see two years with something built in for an inflation increase. The other thing I don’t like is RFPs that include multiple rounds to see if we can drive the price down. I base my pricing on my costs, and where I can reduce my costs on filling in empty lanes, and usually when I submit pricing whatever my first round bid is that is usually what I go with. I don’t normally drop our pricing after the first round. FE

video stream See the Freight Bids discussion on Web TV. Watch for upcoming episodes of TMTV.

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Rate Neg.indd 43

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p17

The hour has arrived—or has it?

as pounds-per-man-hour, drops-per-man-hour, and other driverinfluenced costs such as tire wear, fuel economy and idle time. “Our objective is not to have them run like a bat out of hell. It’s to have them productive but safe. I don’t want them feeling if they get into a traffic jam it’s costing them money, so we think the base hourly [pay] is kind of the starting point, and if you’re more productive you get rewarded on top of that,” McDonald said. One worry about paying long-haul drivers by the hour is that such a wholesale change could introduce unexpected costs, leaving an opening for competitors who are more than happy to undercut steeper rates and take the freight. “I don’t think any of us can afford to pump more cost into our system without completely understanding what that cost may be,” Seymour said. Paxton admits that even some of the aggregate fleets which pay by the load could have a pricing advantage if drivers are encouraged to squeeze in an extra trip per day. Rushed drivers who are paid by the load are simply more likely to make mistakes, she said. Hourly pay builds a “safety culture” which offers dividends in the form of lower insurance rates and better Commercial Vehicle Operator’s Registration records. Maybe a change in the payments to long-haul drivers is inevitable, but who would take the first step? “If somebody decides to be first, that leads the charge, then God love them for that,” Seymour said. “I don’t know if it’s going to be me. I’d love it to be me because I’d love to be a hero.” FE

p34

Buying Growth

“The Vitran-TransForce deal was one of the higher price valuation deals. When the dust settled, their valuation multiple was something over seven times. What we’re seeing in the private market, the higher quality assets could be selling for up to five times normalized EBITDA. The more standard ones, at the low end maybe 3.5 times EBITDA, to 4.5 times, in that range.” The buyers Essentially there are two basic types of buyers: companies in the transportation industry and private equity firms. Private equity firms take a short-term approach to acquisitions. They want to buy a company, make it more profitable and then resell it relatively quickly. Borkowski described a typical private equity firm’s approach to an acquisition. “They buy with a lot of leverage. They buy with a little bit of cash down. They will produce about 25% of their own cash down. They will go to the institutional markets. They will borrow mezzanine financing that will probably amount to another 40%. They’ll come up with 65% and they will give the seller 65% of the purchase value in cash, but the vendor is in third place with his final 35%. He’s in the third position behind the mezzanine financing if they don’t make it work.” Besides stripping new acquisitions of excessive headcount and unneeded assets, private equity firms tend to merge smaller companies into bigger ones, making them more attractive to subsequent buyers, and even to customers. “Canadian trucking companies need to grow in size to effectively compete in the marketplace,” said Nix. “You need a larger size in order to make the investment in technology, a larger size to get access to driver pools, and a larger size to access economies of scale on maintenance and repairs and tire programs and insurance. I think it’s foundational.” Businesses that are already players in the transportation industry tend to want to either add new capabilities, or to dominate a particular part of the market, which is what Borkowski said TransForce is attempting to do. “TransForce became the king in the package and courier business. They got into that business in a serious way. They made a number of acquisitions and are now competing with UPS. They acquired Dynamex, Canpar, ATS, Loomis Express, ICS Courier, all next day companies, except Dynamex, which is sameday.”

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Future outlook Nix expects 2014 will see more M&As. Castonguay too sees the coming year as a good one, and so does Borkowski who’s confident there will be at least one big deal. “Purolator will be bought by either TransForce or by a US private equity firm. Right now it’s the weak sister and the rumour is Purolator is a target.” FE

Ref: SMSA34H

2014 TOP 100.indd 44

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2014 TOP 100.indd 45

> kpenner@trucknews.com

14-02-03 1:48 PM

INSIDE THE NUMBERS

9.5%

12.2%

17.6%

5.3%

8.4%

Under $100,000

$100,000– $500,000

$500,000– $1 M

$1M– $5M

$5M– $10M

$10M– $20M

$20M– or more

Up more than 20%

Up 10–20%

FREIGHT FORWARD With the Canadian economy expected to grow at less than 3% GDP again in 2014, forecasting freight volume growth is a challenging task. Yet it appears shippers are relatively optimistic about freight volume growth this year, according to the results from our annual Transportation Buying Trends Survey, conducted nationally in co-ordination with CITA and CITT. Almost 6 in 10 shippers surveyed expect their freight volumes to increase, mainly in the range of 5–10%. How will that affect pricing? Most shippers see competition levels among transportation suppliers at normal levels, with a significant number reporting above normal competition.

37%

41% 16%

2.5%

17.5%

57.5%

Well above normal levels

Above normal levels

Around normal levels

5.0%

Below normal levels

33.7%

4.2%

3.2%

ANNUAL COMPARISON OF SHIPPERS EXPECTING SHIPMENT LEVEL INCREASES COMPARED TO PREVIOUS YEAR (% of shippers)

The freight forecast looks fairly positive.

SHIPPER VIEWS ON CURRENT LEVEL OF COMPETITIVE ACTIVITY AMONG TRANSPORTATION PROVIDERS (% of respondents)

45.3%

Down more than 20%

25.7%

Down 10–20%

14.9%

Down 5–10%

14.9%

Stay about same

5.4%

Up 5–10%

SHIPPER PROJECTIONS FOR SHIPMENT VOLUMES IN 2014 (% of respondents)

ANNUAL TRANSPORTATION SPEND (% of respondents)

2014

56%

2013

53%

2012

50%

2011

60%

2010

46%

2009

27%

2008

43%

2007

52%

2006

58%

17.5%

2005

60%

Well below normal 4% levels

No opinion

2004

71%

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