Motortruck March April 2014 by Annex Business Media

MOTORTRUCK

MARCH APRIL 2014

CANADA’S BUSINESS MAGAZINE FOR FLEET OWNERS

KENWORTH T880 test drive

NAVIGATING the leasing landscape Saving money through TIRE MANAGEMENT

Professional Connection SEE PAGE 37

Can you build it in the face of the ubiquitous RFP—and avoid the race to the lowest rate in the process?

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Make no compromise with the

MICHELIN X Multi Energy Z ®

In a highly competitive environment, lowering operating costs is crucial to your bottom line. The MICHELIN X Multi Energy Z provides the mileage performance and durability you need for regional operations without sacrificing the fuel efficiency of a line haul steer tire. Paired with the MICHELIN X Multi Energy D drive tire, they provide the optimal low rolling resistance solution for the Super Regional application combining line haul and regional driving conditions. ®

See how choosing the right tire changes everything for you and your customers. Visit www.michelintruck.com for more details. TM

*Compared to the MICHELIN XZE 2 tire. Based on industry standard rolling resistance testing of comparable steer tires. Actual results may vary, and may be impacted by many factors, including road conditions, weather and environment, driver performance, etc. ®

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thout de the ons.

Volume 83, No. 02

March April 2014

contents

Cover Story 22 W INNING HEARTS AND WALLETS THE OLD-FASHIONED WAY

Between changes forced by a slumping economy and businesses implementing strict ethics policies, customer relationships are no longer cemented by extravagantly wining and dining clients. Today’s way of dealing with business partners harkens back to the traditional practices of being honest and trustworthy.

Features 19 Leaders At the Driving for Profit seminar, Tom Kretsinger Jr., past chair of the Truckload Carriers Association and president of American Central Transport Inc., talks about disruptive business practices and the philosophy behind risk-taking.

26 In the black

Presenters at the Technology and Maintenance Council conference explain why making the right decisions about tires can save the fleet money.

Departments

28 Profitability

4 WHAT’S ON TRUCKNEWS.COM

Tips about how to pick the right leasing partner, plus a look at how two different fleets make leased equipment work for them.

6 THE VIEW WITH LOU

32 Green to Gold

8 CHECK CALL

The Go With Natural Gas initiative explains some of the basics involved with adding alternative fuel vehicles into a fleet, including the numbers that could drive the switch.

10 MAILBAG 12 THE BOTTOM LINE 14 TAKING CARE OF BUSINESS 16 THE HUMAN EDGE

35 Geared Up James Menzies reviews the Kenworth T880 to see if it’s a worthy replacement for the time-tested T800

18 RISKY BUSINESS 38 INSIDE THE NUMBERS

March/April 2014 ❙ FLEET EXECUTIVE 3

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

BLOGS

Features:

EADING THE BUSINESS ROADMAP HR Q&A: How to support and promote managers HR professionals answer questions about people management and training. Part One of an ongoing series. http://tinyurl.com/HR-Q-A-part1 Ray Haight says it’s time for the trucking industry to abandon its victim mentality. http://blog. trucknews.com/ray

The Lac-Megantic Effect Tragedy will bring government scrutiny on entire transportation industry http://tinyurl.com/Meg-effect The Last Word: Edgar Murdoch A look back at the life of an Ontario man who was both a professional singer and professional truck driver. http://tinyurl.com/TNMurdoch Used trucks prove to be a valuable commodity Vehicle scarcity keeps resale prices strong http://tinyurl.com/UsedClass8

Transportation attorney Doug Marcello explains why taking a post-accident statement from a driver is a bad idea. http://blog. trucknews.com/doug

Tibor Shanto says sales people shouldn’t set their sights on second place. http://blog. trucknews.com/tibor

Web TV:

Transportation Matters READING THE BUSINESS ROADMAP Shaw Tracking vice-president Mike Ham says business leaders need both technology and an open mind to achieve their goals. http://tinyurl.com/ShawRoadmap PAY FOR PERFORMANCE Tom Kretsinger Jr. talks about implementing a system that pays drivers based on how well they do. http://tinyurl.com/Kretsinger CANADA CARTAGE CELEBRATES CENTENNIAL Former co-owner Fred Leslie talks about key moments in the company’s history http://tinyurl.com/CanCart100

SOCIAL MEDIA FIND US ON FACEBOOK facebook.com/trucknews

4 FLEET EXECUTIVE ❙ March/April 2014

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

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h2blu.ca Please visit us at H2Blu.ca or call us at 1-888-99H-2Blu for more information about pricing programs and equipment offers or to make an appointment with your local Wakefield Sales Rep. Produced and distributed by Wakefield Canada Inc.

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MOTORTRUCK

THE VIEW WITH LOU

It’s only natural

is written and published for owners, managers and maintenance supervisors of those companies that operate, sell and service trucks, truck trailers and transit buses. MARCH/APRIL 2014

VOL. 83 NO. 02 PUBLISHER & EDITORIAL DIRECTOR

Second guessing its viability is necessary in establishing whether natural gas is a diesel alternative Lou Smyrlis

Publisher & Editorial Director • lou@transportationmedia.ca

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

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

ow will natural gas shape the long-haul trucking industry of the future? The answer to that question is less clear following the recent Mid-America Trucking Show. Natural gas has been riding a wave for the past two years as the leading alternative to diesel for several good reasons: It’s a mature technology; the engine shares 80% of its componentry with its diesel counterpart; there’s a proven return on investment on high-mileage applications; and vast shale formations in North America are keeping price well below that of diesel. At the Green Truck Summit last month fuel experts were forecasting that natural gas trucks could soon comprise 10% of the Class 8 truck market. The only point of contention was just how long it would take to get there, with some suggesting it could be as quickly as three years. The waste and refuse sector has been the quickest to adopt natural gas vehicles in Canada. There are now more than 300 such trucks in use compared to just a handful a few years ago. The highway tractor segment is the second fastest growing in the country with more than 200 highway tractors operating in four provinces. But the head of Daimler’s global truck and bus business poured some cold water on that optimistic thinking with his comments to business leaders gathered for the annual Heavy Duty Manufacturers Association breakfast at the MidAmerica Trucking Show. “My alternative fuel is diesel and we will continue to perfect that technology,” Dr. Wolfgang Bernhard, head of the market share leader in North America, told the HDMA, adding that the hype surrounding natural gas as a fuel alternative for trucking is gone and realism is setting in. That realism includes an infrastructure where there are still 200 times more diesel stations than natural gas stations. Bernhard added that long-haul applications for natural gas are not currently viable. It was just a couple of months ago that Cummins decided to put development of its 15L natural gas engine on hold, leaving the market devoid of a 15-litre product after Westport announced

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last year it was discontinuing production of its own 15L GX engine. That’s certainly not good news for fleets looking to switch to natural gas for heavy-haul applications. The day before Bernhard addressed the HDMA, Martin Daum, president and CEO of Daimler North America, said natural gas seems a more viable option for local delivery applications. Yet medium-duty truck operators may not run enough miles to deliver a sufficient return on the investment when one considers the initial cost of moving to a natural gas engine. Is there then a future for natural gas in the trucking industry? Dr. Bernhard himself acknowledged that although “the buzz was bigger last year”, natural gas is not going away. Canada’s heavy duty natural gas pioneers such as Groupe Robert and Vedder Transportation Group are continuing on despite the disappointing news about the 15L natural gas engine. Vedder believes a 13L engine can fit many of the fleet’s current needs and is looking to extend the life of its 50 existing Westport GX 15L engines until a suitable replacement becomes available. Groupe Robert will also be making due with the 13L alternative while pressing Ottawa to reduce investment costs by lifting some of the emissions requirements on LNGfuelled trucks so that they no longer require SCR and DPF systems. What may also determine how natural gas will shape the trucking industry is the commitment from Ottawa (and more importantly Washington) to continue to reduce greenhouse gas emissions. Natural gas tractors on a well-to-wheel basis, compared to diesel powered trucks, generate 15-25% fewer emissions. A natural gas highway tractor that operates 200,000 km per year will produce 65 tonnes less carbon with natural gas than it does with diesel. A natural gas fleet could make it easier for carriers working with large environmentally conscious shippers to secure their business. And that too will color the way carriers consider the natural gas option. FE

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

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

PRODUCTION MANAGER

Kim Collins (416) 510-6779

CIRCULATION MANAGER

Mary Garufi

VIDEO PRODUCTION MANAGER

Brad Ling

RESEARCH MANAGER

Laura Moffatt

VICE PRESIDENT PUBLISHING

Alex Papanou PRESIDENT

Bruce Creighton Head Office: 80 Valleybrook Drive Toronto, ON M3B 2S9 Motortruck Fleet Executive is published by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd., a leading Canadian information company with interests in daily and community newspapers and 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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trucknews.com Member/Canadian Business Press

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CHECK CALL

Get to know yourself before the gorilla arrives As the transportation management software industry matures, a dominant player is likely to emerge Carolyn Gruske

Editor • cgruske@transportatiomedia.ca

hen a trucking company looks at buying some new software, it considers the economics of the decision (how much will it cost?), the computer software integration aspect (will it work with what we have?) and the marketing possibilities (how can we promote this to our customers?). Rarely, however does it take a philosophical approach to the decision. But maybe it’s time to take that route. Ann Grackin, CEO of ChainLink Research Inc. in Newton, Massachusetts certainly believes so. “Picking software always involves the Socratic question to begin with, which is ‘who am I?’ I think that’s the biggest mistake users make is they don’t think about who they are and create some kind of short list because somebody says, ‘these are transportation software people,’ and then they become lost,” she told Fleet Executive in an interview. While company self-awareness is a very basic approach, it is one that will become increasingly necessary during the next few years as the transportation management software (TMS) industry evolves, and as choices and options for partners start to become limited as the market consolidates. In a recent piece of analysis, Grackin looked at the question of whether any one company could turn into a TMS gorilla and gobble up a large percentage of market. In her mind, Grackin says if a company can garner between 10% and 30% the transportation industry, it will be well on its way to being crowned the reigning King Kong. As to which company will climb to the top, she has a strong contender in mind: Canada’s own Descartes Systems Group Inc. “Without a lot of acquisition, we won’t get there. Descartes is acquisitive type of company,” said Grackin. Besides both growing organically and being willing to purchase other companies to add capabilities and reach into new market areas, Grackin said she sees Descartes becoming the industry leader because it’s a transportation company at heart. “There are other companies that have transportation solutions inside of them that are big, like Oracle, like SAP, like JDA. But they do other things. Oracle may be making $100 million a year off of their transportation software, which I doubt. SAP certainly isn’t. SAP makes a lot of money, and it is numero uno when it comes to supply chain planning, but when it comes to transportation, they’re an also-ran, late-tothe-game, kind of player. So even though there are people out there with phenomenal engines and global reach, they haven’t

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so far shown they can be the key player in transportation. “Descartes on the other hand, they don’t do everything, but they sure do a lot, and they stay focused on transportation. That’s the key with them—lot of the other guys defocused themselves, and that makes a huge difference. When somebody says ‘who am I thinking about [as a possible gorilla]?’ there are a few people that come to mind, and Descartes is one of them.” The other TMS vendor Grackin lists as a potential gorilla is MercuryGate International Inc. because it has a similar approach to both the industry and to the design of its systems. “They are all cloud. They were architected right from the beginning to be in the cloud, so therefore integration is absolutely essentially to their success. These companies are going to spend a lot of their time making sure every single connection in every type of format—EDI or HTTP, or spreadsheets—will work all the time. It’s not that other transportation software companies aren’t doing that as well, it’s just that certain ones really have invested a heck of a lot more time and expertise and dollars into making sure it works.” Even if one company does come to dominate the market, that doesn’t mean every trucking company should rush out and buy its software. As Grackin noted, it’s important to first understand the specific business needs and then see how well any vendor’s software meets those needs, including integrating with systems operated by shippers and freight forwarders, not to mention Customs offices, insurance brokers, and industry-specific regulatory and compliance bodies. Plus, of course, there are all the features individual trucking companies require to run their businesses smoothly, and these can range from dispatch functions, to cargo tracking, to vehicle monitoring and hours-of-service recording. Grackin says trucking companies really must understand their own needs and then ensure the vendors pay attention to those needs and don’t just attempt to wow with every bell and whistle possible. “Businesses purchasing software don’t write a well-thought-out RFP. That seems to have gone the way of the woolly mammoth, and I think that’s a huge mistake that companies make. Going back to Socrates and Plato, it’s all about know thyself. It’s a huge, difficult task. And it’s not necessarily something that should be 100% cast in stone because once the vendors come in and show their stuff, most time the companies are shockingly and positively enlightened because they are not necessarily aware of what the market has to offer. But on the other hand, not having a systematic approach to selecting technology is a colossal error.” FE

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MAIL BAG Strike stirs strong emotions The strike at Port Metro Vancouver by both owner/operator members of the United Truckers Association and unionized drivers belonging to Unifor-Vancouver Container Truckers’ Association (VCTA) has generated a lot of comments. Here are just a few. Carolyn Gruske, editor The [TruckNews.com] headline, “Shippers say container truckers’ demands will result in job losses,” that’s just an excuse. When are truckers gonna get cost of living increase? It’s been how long? Every other line of work sees increases, cost of inflation adjustments, and keeps changing with the times, but trucking...we are supposed keep working for peanuts! Justin

The dock workers’ union needs to be looked into as well. These workers are making big dollars, and they do not care about trucks waiting. A lot of pier workers have left the industry because of the treatment they have to put up with while

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waiting at a pier for an empty or a drop. The container workers can shut down a pier, and get whatever they want hourly. A trucker pulls up and they say ‘going on lunch for a couple of hours’ or ‘break for 45 minutes. See you later.’ If Canada wants to be efficient at all container piers, it needs group efforts for rail, docks and trucks. Cut out the crap, and get to work. There are many people out there that would love to make the kind of money that docks workers make. Truckers have been under-paid and have logged too many unpaid hours—more than any other industry, When you go to work even at Tim Horton’s you are on the clock. Most trucking companies demand you show up at 10:00 or so, but the first hour (or even longer) is unpaid. Worse yet, try mileage-only pay and calculate your unpaid hours. Keep fighting for change or the industry will never attract new drivers. Tony Godsoe

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

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BOTTOM LINE

CRM: Customers really matter The ABCs of using technology to manage your clients effectively By Mike McCarron

f you’re in the transportation business you’re also in the acronym business. It’s amazing how many of them are part of our industry lingo. In fact, there are so many that Gene Orlick, a trucking pal from Western Canada, produces an annual list of transportation acronyms. The 2014 version of Gene’s List contains 138 legit entries. Gene’s quite a guy so it should come as no surprise that he also has a few zingers like DBR (David Bradley Rant) to spruce up your read. Gene knows this racket as well as anyone but this year I was surprised by one omission. It’s time to reach out to Mr. Orlick and THU (tune him up). I’m talking about CRM, or customer relationship management, a system for managing interactions with potential, current, and future customers. My first CRM was a Rolodex filled with handwritten recipe cards. Today, CRMs have evolved into sophisticated technology platforms, and no doubt every company has a formal system for managing customer data and relationships. I, however, am not convinced that everyone truly appreciates the value of a well-executed CRM strategy. CRM can improve your ability to understand, manage, and protect your customers. It can also mean millions of dollars when it’s time to cash out and you have to prove to a potential buyer that your customer base has sustainable value. CRM can be your MVA (most valuable asset). Below are some things to consider if CRM is an acronym that ever windws up on your EMA (executive meeting agenda).

CRM: Costs really matter Think how much more a year it costs to drive a high-end European SUV versus a compact domestic shoebox. Bells and whistles are expensive to buy and cost even more to operate. As you debate the merits of technology and software, remember the most expensive options are the ones you’ll never use and your company can’t ATF (afford to drive).

operations as it does with sales. Time to make this acronym part of your company: BMI (brand management initiative).

CRM: Customers remain mine How often do you hear your company’s biggest customer also referred to as “Mary’s biggest customer”? Mary is your VP of sales. Her name is on the commission check you sign every month. A customer is a company asset, and your CRM will reinforce it at every level of your business. It will also give you better control of that asset so you’ll know what to do after Mary leaves and BAC (becomes a competitor).

CRM: Cement risk management Speaking of customer data, most companies have firewalls to protect important information. Unfortunately, most companies also have “key personnel” running around with customer information on their iPhones. Too many businesses have standalone sales systems operating outside of their main systems. A CRM application can provide a level of security company-wide that helps make sure your customer data is PFE (protected from everyone).

CRM: Costly rubbish medley The only thing I hate more than clichés are clichés I’m forced to use. When I think about CRM systems, there’s no better expression than GIGO (garbage in garbage out). In order to have value, information must be accurate, current, relevant, and accessible. It takes a lot of discipline before collecting and organizing quality data becomes part of your company’s DNA. You don’t want to get two years down the road and realize that your CRM is FWC (filled with crap). For your reading pleasure, I will post the 2014 version of the Gene’s list on my Twitter and LinkedIn accounts. Gene has promised to do the same assuming he is ITO (in the office) and not CAG (cheating at golf). FE

CRM: Call regular meetings

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.

Don’t make the mistake of thinking that CRM is just software. It’s a business strategy that merges your sales and marketing efforts with every other department. Mobilizing and deploying company assets to manage your CRM has as much to do with 12 FLEET EXECUTIVE ❙ March/April 2014

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TAKING CARE OF BUSINESS

Better B2B marketing plans The 11 steps that will lead to better results By Ian Gordon and Mark Borkowski

here is an adage that states, “you get what you plan.” And that is especially true when it comes to business-to-business (B2B) marketing plans. Weak marketing plans can make a company vulnerable, provide insufficient focus, impede efforts to cut costs and manage change strategically, and affect market and financial performance. Weak marketing plans are pretty common in business, while great marketing plans are rare. Great plans provide opportunities to penetrate further into existing markets and break through into new ones. They help businesses deepen relationships with customers and develop new ones. They also create innovative revenue streams. Below are 11 suggestions we think will help you achieve more from your B2B marketing plans.

• Financial Projections forecast results to be achieved in the forthcoming year with a comparison to the prior year. • The Implementation Plan details tasks to be performed to transition from the current to future states, along with responsibilities, timing and costs. • The Contingency Plan identifies major risks and plans associated actions in response to threats over the plan’s horizon.

4. Flow

Good marketing plans should anticipate risks and guide and manage marketplace change. They help align the organization, allocate resources, provide signposts to progress, and aid business control. Rapid industry change, supplier proliferation, shrinking margins and declining differentiation are not sufficient reasons to spend less time on planning—they are actually reasons to spend more.

Marketing plans should not have any discontinuities. Many plans have logic breaks between the business review and the marketing plan. There may also be gaps within the plan, the most common of which is aligning strategies to objectives, and tactics to strategies. Where gaps do exist, the company’s marketing plan starts to look more like a firm writing down its hopes rather than providing a factual foundation for achieving a new future that is right for the company, its customers and other stakeholders. If a firm can anchor all the statements it makes in its marketing plan in facts and can be sure that its statements follow logically from section to section and page to page, it will be more likely to develop a plan that is internally consistent, will survive competitive and marketplace challenge and will indeed create the results the firm wants.

2. Process

5. Distinctiveness

Marketing plans should not be sterile documents developed once a year and then shelved. They should be living documents—touchstones that are refreshed periodically to ensure that changed circumstances are incorporated.

A marketing plan should be so distinctive that it applies uniquely to the enterprise. Distinctive plans are most likely to occur if they see the enterprise from the outside in rather than the reverse.

3. Structure

6. Customer relationships

A thorough marketing plan contains the following elements: • The Business Review analyzes the current state and relevant trends occurring in the market: buyer behaviour, distribution channels, industry/supply, the environment of the firm and financial performance. The business review is based on facts that come from primary and secondary data. It concludes with a list of issues and opportunities for the firm to consider in the marketing plan. • The Marketing Plan describes a future business state, sets and describes measurable objectives, and describes strategies to achieve these goals. The plan notes target market, positioning, and strategies and tactics for customer relationships, products and product development, pricing, promotion/communications and distribution.

Marketing plans should pay attention to customer relationships, collaboration, and customer-specific interaction and value creation, including mass customization. It is unfair to customers and limiting to the company if all customers receive equal value. Doing so discriminates against the best customers while over-rewarding the worst. Businesses ought to triage customers into best, average and worst and then plan the value each individual customer should receive.

1. Recommitting

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7. Product Marketing plans should define what “product” means at each of a number of levels, including the core benefits customer receive, elements that comprise the product, augmented value such as delivery, installation, warranty and after-sales support. trucknews.com

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Ancillary value such as environmental causes and energy conservation could also be identified. Finally, the product may have adjunctive benefits like rewards programs common for consumer products but not often found in B2B spaces.

8. Price Marketing plans always pay close attention to price but even more focus may be warranted here. Companies with low variable costs in relation to fixed costs can often win business with low prices and then evolve the prices over time as customers gain appreciation of the firm’s value.

9. Marketing communications Three areas may merit more attention for communications in the promotion section of B2B marketing plans: social media, word-of-mouth, and direct communication that address customers’ behaviours specifically rather than via their perceptions and attitudes.

10. Competition Competitors can be a controllable aspect of a marketing plan if the company has learned to understand its competitors and their possible actions. Some firms use shadow marketing teams to extrapolate their competitors’ marketing plans, and use that information when predicting and planning counter-

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moves for their competitors’ likely actions.

11. Metrics Marketplace feedback must guide change. Firms ought to sense what customers think, say and do—ideally in real time. Customer satisfaction measurement can provide some of this feedback but this isn’t enough when satisfied customers still defect because they are even more satisfied with competitors. Accordingly, the company might consider using additional metrics to assess its performance, including customers’ satisfaction with the firm and competitors, the Net Promoter Score and customer share metrics. Remember, whether plans are weak or strong, companies will indeed get what they plan. FE Ian Gordon is president of Convergence Management Consultants Ltd. (www.converge.ca) and author of four books: Managing the New Customer Relationship, Relationship Marketing, Beat the Competition and Competitor Targeting. He can be reached at igordon@converge.ca Mark Borkowski is president of Mercantile Mergers and Acquisitions Corp. Mercantile is mid-market mergers & acquisitions brokerage. You can contact Mark or his staff at www.mercantilemergersacquisitions.com

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THE HUMAN EDGE

COMPETITIVE COMPENSATION Offering the right combination of base pay, variable pay and desirable benefits makes a company more attractive By Tamara Miller, CHRP, Trucking HR Canada

competitive compensation package can be used to attract new drivers and retain existing employees alike. But while compensation typically accounts for about 40% of a fleet’s operating budget, there is clearly no one-size-fits-all package that will work for every organization. The trucking industry’s wide range of schedules, routes, duties, equipment and rates simply introduce too many variables for that. As unique as the approaches can be, however, every package will include some combination of base pay, variable pay and benefits. A focus on each aspect will ensure that compensation is as competitive as it can be. Base pay is the basic hourly rate or salary that an individual makes, not including bonuses or incentives. For drivers, this includes mileage pay (rate per mile/kilometre) accessorial pay (for non-driving activities like dropping a trailer) and premiums (based on experience or a specific type of work). A great way to confirm that a fleet offers a competitive base pay is to conduct a salary survey. In some cases, fleets might share compensation details with a researcher in exchange for a copy of the results. Other options include scanning the internet to see if competing fleets post their compensation pack-

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ages online, asking drivers approached by other companies to share the nature of any offer, or contacting a third-party provider who can conduct salary surveys for a fee. Variable pay, meanwhile, is any type of incentive that is linked to performance. Fuel and safety bonuses offer two of the most common examples of this. Just keep in mind that illdesigned or poorly communicated variable pay can backfire. Programs which reward high mileage without a concern for speed or safety can risk drivers, equipment and freight. Benefits include non-cash compensation on top of base pay and variable pay. Examples include paid holidays, drug plans, pension plans, life insurance, wellness programs, and supplemental health insurance. Employees can value their benefits as much as the base and variable pay itself. The 2012 Sonofi Canada Healthcare Survey found that 61% of employees see health benefits as a “strong incentive” to stay with their current employers; in 2011 it found that 59% of employees would rather keep benefits than receive $10,000 in cash. With these factors in mind, there are a few key steps to consider when designing a compensation strategy that works for your company: trucknews.com

14-04-07 3:29 PM

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Compensation packages should be fair 1. Start with a compensation philosophy and equitable to employees, but the best Identify whether your fleet’s existing pay package is above, at, or below market values. Then combination of base pay, variable pay and decide where you would like it to be. Keep in mind that the decision might also need to conbenefits will also help achieve sider compensation offered in other industries. The Canadian Trucking Alliance’s Blue Ribbon Task Force business goals. concluded that truck drivers tend to make or slightly exceed the average annual wage for all workers. But drivers also tend to work significantly more hours to make that wage. Set the value too low and potential employees may opt for a different career altogether. 2. Decide what goals you want your compensation package to accomplish Compensation packages should be fair and equitable to employees, but the best combination of base pay, variable pay and benefits will also help achieve business goals. A safety bonus, for example, can encourage drivers to follow the safe practices that play a role in reducing collision rates and controlling insurance premiums. A fuel bonus can convince drivers to travel at slower speeds, burning less fuel, reducing equipment wear, and enhancing safety.

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3. Communicate your compensation package to existing and new employees If you know that you offer a competitive compensation package, share the information with existing drivers and job candidates alike. Include the results of a salary survey if it helps to prove the point. It can also be helpful to offer some explanatory information about a pay package, particularly when hiring drivers with limited experience. Drivers who know how many runs they can expect in a specific period of time will have a better idea of how much they will actually make per week or month. Above all, remember that a fair, equitable and competitive compensation package will always reward the behaviors that are critical to any company’s success. FE

14-04-07 3:29 PM

RISKY BUSINESS

Selling Safety to the CEO Running a safe operation is good for profits and productivity By Rick Geller

hile most companies claim to care deeply about safety, even amongst enlightened companies the prevailing attitude is that safety may offer an opportunity to save money but it does not make money. This creates a challenge for safety managers who, to be successful, must resist the urge to concede the truth of this argument and convince the CEO that spending money on safety is essential to the company’s financial performance. Traditionally, safety managers have resorted to two kinds of appeals to gain approval and funding for safety initiatives: fear and altruism. In these cases, the fear is specifically fear of liability or of the consequences associated with non-compliance. The altruism can be true altruism—the desire to do the right thing— or it can be image-based with the company wanting to be seen to be doing something for the greater good of the public. Although some mileage can still be gotten out of the old motives for safety, the modern business climate compels safety managers to develop a solid business case for safety initiatives. Simply stated, successful safety managers can demonstrate, using a solid business case, that safety makes money through increased productivity and through the ability to stop profit leaks. Most companies will recognize that effective safety programs have the ability to cut costs and provide bottom-line benefit. However, there is also a direct link between effective safety programs and increased worker productivity. In a recent study involving 200 companies (75 mid-sized and 125 large-sized), a whopping 95% of the executives said that effective safety programs have a positive effect on financial performance. Of those, 61% reported that they get a return on investment (ROI) of at least $3 for every single dollar invested in safety! When developing their business cases, safety managers must consider two major elements. The first element is quantifying the direct and indirect costs associated with the losses, as well as their impact on the company’s bottom-line profitability. Direct costs include physical damage, cargo damage, recovery costs, injuries, payment to injured workers, equipment downtime, and the costs of finding and training replacement workers. Indirect costs include loss of business reputation, loss of future business and contracts, damage to morale, and the decline in productivity that inevitably follows on the heels of serious crashes. Direct costs can be calculated relatively easily. Indirect costs are directly related to the direct costs. Estimates of indirect costs range as high as $10 for every $1 of direct costs. A more realistic figure would be in the $3 range. To demonstrate the impact on bottom-line profitability, sim-

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ply add the direct and indirect costs together to arrive at the total cost. Divide this by the profit margin of the company to determine the sales volume required to recover from the losses. Helping the CEO to recognize that safety has a positive ROI is only half of the battle. The second element that must be addressed by the safety manager is the fact that most business executives don’t understand how best to invest their safety dollars. Often, there is a gap between the business executive’s perception and the business reality as far as the cause of loss is concerned. The executive may believe that one type of loss is most prevalent when, in fact, it is a totally different type of loss that is really hurting the company. This can result in business executives feeling that dollars spent on safety did not provide any financial benefit to them. Effective safety managers must remember that business executives cannot be relied upon to make the most prudent safety investments. They need your help identifying the company’s needs and directing resources where they will do the most good. “Safety saves money” is a truism much like “buy low and sell high”. While you likely won’t get much argument, it is not likely to earn much influence either. To support a safety program, safety managers must provide management with tangible proof of the economic gain for the company by investing in safety.

Use this simple formula to demonstrate the ROI for safety investments: ($ Benefits - $ Program Costs) / $ Program Costs = Return on Investment (ROI) ($600,000 - $400,000) / $400,000 = 0.5 This example shows that for every $1.00 invested in this program, there is a 50% ROI in net benefit. While preventing losses is powerful stuff, making money is even more potent! Linking safety to productivity is almost guaranteed to capture management’s attention. And remember, halving loss frequency can increase productivity by up to 20%. FE

Rick Geller, CRM, has been providing innovative and cost-effective risk management solutions to the trucking industry for more than 30 years. He serves on the board of directors for both the Truck Training Schools Association of Ontario (TTSAO) and the Professional Truck Driving Institute (PTDI). He is also the incoming chair of the Toronto Chapter of the Fleet Safety Council, as well as an executive committee member for both the Ontario and Toronto Regional Truck Driving Championships. trucknews.com

14-04-08 11:23 AM

LEADERS

TAKING RISKS AND CHANGING THE RULES Tom Kretsinger Jr., past chair of the Truckload Carriers Association (TCA), talks about legal threats and drivers’ pay For the keynote session at the Driving for Profit seminar, Fleet Executive publisher Lou Smyrlis conversed with Kretsinger, president and COO of American Central Transport (ACT), before his term at the helm of the TCA concluded. Smyrlis: You followed both your father and your grandfather into transport law before you joined your father’s trucking company. What was the attraction? Kretsinger: They have some things in common. I’m from an industry—the legal industry—which has a bad image. And in trucking there are a few bad apples that spoil the bunch. I did come to it in an unusual way, I practised law for 17 years. My practice had a lock when trucking was deregulated. It was kind of the wild west. The 80s and 90s—that’s when you saw the J.P. Douglases and the Swifts and Schneiders and Knights, and so on, grow like crazy. When you get into the business I did, it takes a couple of years to adjust, because lawyers are trained to avoid risk, and as you all know, we are in a very risky business, and unless you park the trucks and take the keys away, it’s hard to avoid that. Lawyers tend to focus on ‘how can I stop anything bad from happening because we charged you for that advice?’ We don’t want bad things to happen and then get blamed. But it was a good background and I think law teaches you a number of things. It teaches you to be forward-thinking. It teaches you to hear both sides of an argument before you your conclusion. It teaches you to go after facts. And it teaches you sometimes to be able to take a position you may not personally agree with, but that’s the best position at the time. Smyrlis: You’re right. Lawyers are adverse to risk. Their whole purpose is to make sure the risk is mitigated. How do you overcome that background and all of the sudden being willing to take risk as a businessman? Kretsinger: I think what I do is weigh risk a lot. I look at my world somewhat still like a lawyer. I look at it as a castle, and I need to build my moats. I see the things that could attack us. It’s true for all of you. We live in an environment where there’s a lot of enemies that could offend you at any time. But the risk

is getting different in business. There is a lot of legal risk—for example, owner/operators. We are 70% owner/operators. In America a lot of government people want to do away with owner/operators, and they want to make them employees. Why? They want the money. But I want the drivers and the drivers want to be owner/operators and they are very productive, efficient people, so looking at something like that, you have to say: if I stay in the owner/operator business, which is increasingly risky, where is that threat coming from? Payroll taxes? Obamacare? Workers’ comp? Unemployment? What does that look like? How many dollars does that not insure? If I switch over to the company model, on the other hand, what does that cost? Where is that risk coming? Other examples [earlier in the day] mentioned the ‘equal opportunity screw truckers agency’ [the US federal Office of Equal Rights] we have. They sued Old Dominion for pulling an alcoholic out of the truck because he was disabled. What would a defence lawyer tell you about putting alcoholics in trucks? Don’t hire anybody with a DWI in the last 10 years. What does the EOEC (Equal Opportunity Employment Commission) say? Oh let him go to rehab, be nice to him. You get these issues of safety versus fairness. And everybody wants to be fair and everybody wants to be safe but sometimes you can’t be both. So you have to weigh in: what are the odds of having this guy in a truck. He’s going to have a wreck. The lawyer is going to say that. And what’s is the wreck going to cost? And is that insured? On the other hand, if I don’t [put the driver in the truck], what’s going to happen? It’s becoming a sophisticated business and that’s why I think networking, like what you’re doing here, like what we do at TCA, is becoming a critical survival skill. I don’t think you can sit in your office by yourself apart from your colleagues and have your people butter you up because they all work for you, and understand how do deal with these things. You need to be out with your peers like you are today. Smyrlis: Speaking about learning how to take risk, I found there are several situations where you are taking some risk. Prior to the recession, ACT’s recruitment policy was to hire quality drivers with industry experience within the last year. Continued on page 20 March/April 2014 ❙ FLEET EXECUTIVE 19

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14-04-07 3:41 PM

LEADERS

Since then, you’ve developed a driver recruiting program that targets returning military veterans and former drivers. And these folks may not have been behind the wheel for years. Why the change in approach? Kretsinger: We’re all dealing with drivers and you’ve got to continually look at what you’re doing. I think the difference pre-recession and now is we always hired new drivers. Now everybody wants those same drivers. It used to be companies would just hire anyone. With CSA and all of that they don’t do that anymore. We’ve come up with a couple of programs. Historically if a guy didn’t have recent experience, we would not hire him. We started a program we call ReActivate—our company is called ACT—where we would take these guys, put them out and train them for two weeks. We’d have a protocol and if the trainer felt they could meet that, we’d let them drive. They’ve turned out to be great drivers. We tried the military. I can say that has not worked. Now I don’t know, maybe these people after four or five tours of Afghanistan don’t want to get in a truck and leave their family. I don’t know what the problem is but we can’t seem to find an interest in those folks. Maybe other companies have been more successful. On driver pay, that has probably been the most radical change. What all of us are seeing—I know you’re seeing it— is our costs go up faster than our rates. We call that margin squeeze. That’s not sustainable. So what is the answer to that? The only logical answer is you have to get more productivity. You have to get more from what you have. The thing we noticed a few years ago is some of our worst drivers are some of the best paid, because of tenure. And some of our best guys, were lower paid because they had only been with us a while. So we went to a pay-performance model where our company drivers’ pay resets every six months, based on how they perform. We do it in the office all the time. You look around at your employees. Some are better than others. Probably your pay reflects that. But we’ve always, as an industry, treated all drivers the same. But they’re not the same. Some work harder than others. Some get better fuel than others. Some are safer and some are more professional and show up on time. We’re experimenting with that. Smyrlis: That makes a lot of sense. But there’s also the reality that someone who used to make X amount now because you’re basing it on performance is now perhaps going to make less than he was getting. Kretsinger: One thing we’ve found as Americans, we’re a little slow. They’re always happy when their pay goes up and always unhappy when their pay goes down. It took us a couple of years to figure that out. Actually the way we’ve got it set, we pay from US$0.36 to US$0.45 cents. My US$0.45 cent drivers are more efficient and make me more money than my US$0.36 cent ones. So we try very hard to get them up, but if 20 FLEET EXECUTIVE ❙ March/April 2014

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a guy goes from US$0.40 to US$0.36 and he leaves after trying, that’s probably a good thing for us because he’s getting terrible fuel economy, or whatever. Smyrlis: What results are you seeing? I imagine part of the reason you did this other than wanting to pay in a more fair way, is to drive an attitude change—that the better performer you are, the more money you’ll make. Are you seeing a change in attitude amongst your drivers in how they’re driving? Kretsinger: Mostly. The key to this is you have to have something that is very hard to get, and that is fleet managers acting like managers. They want to act like dispatchers, but we’ve been working very hard on that. We’ve seen people—we have one lady who never got six miles per gallon get eight all year. She has improved. I found some old hillbilly from Jonesboro, Arkansas, been with us 15 years, I just learned he drives with his jake brake on. Are you kidding me? He thinks that’s what it’s supposed to be. And you can’t convince him otherwise. He wont’ be happy with his pay. Smyrlis: You mentioned you need managers to actually manage for this to work. Give me an idea of some of the things you need your managers to be doing with the drivers. Kretsinger: One of the things we’ve struggled with for a couple of years, and we’ve got fixed now is technology. We needed a driver’s scorecard that you can see—that they can see—is objective and accurate to work off of. We finally got one. A couple of other things: phone recording, so if you call in we record it for quality assurance purposes, and we actually are. There is a place on the scorecard to put in notes about when they talked to a driver and what they said, so we can reference it and we can go back an listen, to help them improve. Ten years ago, we didn’t have any idea what they were doing. Now with the data and technology, the driver is not alone in his cab. The fleet manager is not alone at his desk. We have visibility into that, and once you see what people are doing, these things just suggest themselves. Smyrlis: How did you get buy-in from the truckers? Kretsinger: The timing was good. In the recession, our freight dropped 25%, so we cut our fleet from 400 trucks to 300. So we called on the drivers who we laid off—who were obviously not our best ones. Everybody took a paycut. I took one. Drivers took one. Office took one. It was bad times. It was survival. When the clouds started to lift in 2010, and drivers looked to return, we said, ‘OK, we’re going to put everybody back and raise the drivers’ [rate] but I have to have something in return. No more will I ever just give raises for the sake of it. FE trucknews.com

14-04-09 9:57 AM

Lost his cell phone so he can’t check in. Again.

Lost an hour due to road closings.

Lost 15 lbs on his diet, but having a slice of the strawberry pie anyway.

We deliver mobile fleet solutions that drive your bottom line. Driver productivity, back office efficiency, fuel consumption, compliance, safety – now each decision is based upon real-time intel. From customer service to industry innovations, PeopleNet helps you drive smarter.

The more you know, the better your fleet runs.

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– Size D

14-04-09 9:57 AM

WINNING HEARTS AND WALLETS THE OLD-FASHIONED WAY Retaining existing customers and gaining new ones may come down to just how much your company can be trusted By Jason Rhyno

22 FLEET EXECUTIVE â?&#x2122; March/April 2014

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trucknews.com

14-04-07 3:42 PM

COVER STORY

ith apologies to comedian Jeff Foxworthy, if you get a surge of negative emotions when you see the acronym ‘RFP’, you might be in the trucking industry. “These new RFPs that are out, that go out to a 150 carriers at a time, are killing the industry,” says Paul Enright, who holds the dual titles of co-owner of Direct Right and vice-president of its marketing and sales operations. “A lot of the larger organizations are under tremendous scrutiny to reduce costs right along the board. There are a lot of companies that are headed that way and I don’t know where it’s at, truthfully.” A 35-year veteran of the industry, Enright remembers starting out in sales at company where “we were expected to have a minimum of three lunches a week plus two major entertainments, meaning taking the guy to a football game or hockey game on the weekend with your wife. Now, that is done. There is a code of conduct that the major guys follow. You might be able to get a logistics guy out for lunch, but it’s tougher today due to corporate policy. It’s business ethics.” Enright says that sometimes there still are opportunities to bond with customers during entertainment nights, but he admits the practice is seen less and less as a way to build relationships that translate into contracts or loads. The combination of imposed standards for corporate ethics, cost reduction pressure on logistics budgets, and the increasingly elaborate RFP process is making it tougher for carriers to retain the customers they’ve had for years, never mind winning the loyalty of new customers. So how does a carrier lock down a customer’s heart and wallet? “Customer loyalty and customer service seem to take a lesser role than the actual dollar and that’s a direct result of their corporate mandate. They see a five or six million dollar spend and they figure they can save 10% on it. I think the traffic people are under pressure to cut costs,” says a logistics officer with a large meat shipper, who agreed to be interviewed for the story on the condition of anonymity. “We’re always looking for the best price. We want to pay hamburger prices and get steak.” But, he acknowledges, sometimes the shipper has to pay steak prices. “We’ve had situations before where we went with the guy who was undercutting the guys we used for years, but they failed to do what we required as a customer. You’ll always have those people that undercut but you’ll also always have those people that you are loyal to.” Not particularly confidence building words, but still they still emphasize that relationships do count when push comes to shove. A study by Mastio & Company, an international research and consulting firm, found that when it comes to customer loyalty, there are specific “conscious differentiators” that customers consider when choosing a carrier. The 4th Edition Canadian LTL Customer Value & Loyalty Study identifies and

quantifies the perceptions and needs of less-than-truckload (LTL) customers. Four-hundred companies were rated in the last edition, and only 42 out of that 400 had a sufficient number of ratings to even be included in the report. Findings are based on interviews with 956 customers providing over 2,700 total observations. “When we ask somebody directly what’s important to them on a scale from one to 10, ‘shipments delivered with no shortages or damages’ was the highest stated important attribute,” explains Kevin Hunstman, vice-president of sales at Mastio. Things like “accuracy of invoices” and “easy-to-understand pricing” are baseline requirements in the study. “It’s like tires on a car. If you are going to go buy a car tonight, you expect the car to have tires that are at par with the other competing offerings. Now if those tires are bald right off the bat, that car comes out of the mix. “Then there are low-impact factors, which, just like the tires, don’t need to be better, they just need to be at par. The online tracking systems? You don’t need to have the best, and I’m not sure how much more business it gets you, it just has be at par. The detailed reports? That’s not where you change people’s minds to do more business with you.” Where you change people’s minds are those conscious differentiators, he explains. “If you look at them, being honest and trustworthy is a soft skill. Drivers are courteous? Soft skill. Problem resolution? Soft skill.” Then there are the operational things, like making deliveries when promised. “You would think those would be baseline requirements, and in most industries they probably would be, but here it’s such a critical factor.” With shippers running much leaner than they used to, “they really rely on that collaborative relationship,” Huntsman adds. During the 2013 Surface Transportation Summit, Meyers Transportation Systems president Jacquie Meyers, who hasn’t pulled punches when sharing her thoughts on RFPs, noted that “customers are now calling in their strongest carriers and working with them to make their supply chain stronger and more resilient, and to drive out costs together.” Business attributes like honesty and trustworthy, courteous staff, and effective problem solving go a long way to becoming one of those called-upon carriers. But perhaps the most important of those attributes is honesty. Asked what’s the quickest way to get off his call-list, the anonymous meat shipper mentioned two things in particular: “Lack of communication and BS. I do not want to be BS’d to. If there is a problem, tell me, be up front with me and at least I know. I’m going to be mad, but at least I know. Don’t try to pull the wool over my eyes. When I find out a trucker is lying to me, it builds a lot of distrust, and when I can’t trust you, I can’t do business with you.” Direct Right‘s Enright attributes his company’s recent growth to honesty. “Sometimes the sales people sell what they are not supposed to sell, sometimes the sales guys say, ‘Yeah, we can do that,’ and I keep telling them, ‘No, we can’t.’ You March/April 2014 ❙ FLEET EXECUTIVE 23

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14-04-07 3:42 PM

COVER STORY

‘‘

Customer loyalty and customer service seem to take a lesser role than the actual dollar and that’s a direct result of their corporate mandate. They see a five or six million dollar spend and they figure they can save 10% on it. I think the traffic people are under pressure to cut costs.

gotta be honest with them; being honest with them is the most important thing. If you can’t do something, turn it away. Honesty is the best policy and that’s why we are successful and continuously growing every year.” Becoming a consistently reliable and trustworthy carrier

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contributes to what Mastio’s loyalty study calls a “net-promoter score.“ A high net-promoter score means that your company has customers that would recommend you to other possible customers. “ Really, what drives a high-net promoter score, is ease of doing business,” Huntsman explains. “That’s so encompassing, but it’s so true. If you make it easy to do business with you, I want to give you more share of wallet. “If my price is the same and your price is the same, who is someone going to do business with?” Hunstman asks. “They are going to do business with someone who is easy to do business with, someone who is responsive, the company that has knowledgeable people, and the company that wants to have a relationship. That’s really what it boils down to.” FE

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14-04-07 3:42 PM

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14-04-07 3:42 PM

Track your costs and find the profit with a tire benchmarking program By John G. Smith

andy Obermeyer’s work at Batesville Logistics involves lifespans in more ways than one. He certainly tracks every tire from the moment it’s mounted to the day the retreaded casing is finally scrapped. But the idea of final days even plays a role in the company’s cargo. The Batesville, Indiana-based company ships caskets to markets in Canada and the US. Obermeyer is hardly the only fleet manager to realize that a tire’s life plays a key role in today’s operating budgets. Premature failures increase expenses for replacements and roadside service calls; extra rolling resistance reduces fuel economy; damaged casings limit cost saving retreading opportunities. The only operating costs to outpace tires are wages and fuel.

26 FLEET EXECUTIVE ❙ March/April 2014

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It’s why the Technology and Maintenance Council (TMC) invited Obermeyer and other maintenance managers to share lessons gleaned from their respective tire benchmarking programs. A careful study of everything from purchase histories to maintenance activities can guide the choices which maximize tire life and performance alike. Kirk Altrichter, maintenance vice-president at Crete Carrier Corporation, referred to another benefit. “The other thing is making sure we’re running the right tire to begin with,” he told the crowd of fellow maintenance managers in Nashville, Tennessee. The “right” tire choice can be dictated by everything from budgets to applications and axle weights. Consider Kevin Tomlinson, who oversees the 200 power units and 450 trailers trucknews.com

14-04-07 3:43 PM

TIRE MAINTENANCE

that deliver building products for South Shore Transportation. The flatbed trailers head out with 54,000-pound loads but return empty, radically changing the tire’s footprint along the way. This is why he focuses on options that promise to reduce shoulder wear. Obermeyer looks to find a balance between a low cost per kilometer and better fuel economy when choosing tires for his 82 tractors, 119 trailers and 311 pups. But the complete cost needs to consider number of factors. In addition to the price of a virgin tire, there are costs for ongoing maintenance and retreading. Then there are the values of casings, used tires, and warranties. Even the price of shocks needs to be included if a fleet proactively replaces the components to extend tire life, he said. The tire-related maintenance costs do not end there. Jim Ricapito, tire maintenance specialist with FedEx Ground, referred to the way flying shreds can also tear apart wiring and air lines. When that happens, a two-hour roadside service call can stretch to four hours, increasing labour costs and downtime alike. The cost of purchasing and maintaining components designed to extend tire life will play a role as well. Tomlinson offered the example of a liftable forward axle which could help to reduce the uneven wear he sees on trailer tires. This might reduce tire costs but would have to be compared to the cost of installing and maintaining the lift axle itself. Each speaker on the TMC panel said he controls tire costs through retreading, although their individual benchmarks have led to different approaches. Tomlinson retreads casings from the tractors but scraps those used on the trailers. “When the tire gets off the trailer it’s pretty well junk,” he said. Obermeyer retreads casings that have been in service for up to 60 months with a maximum of two repairs, none of which can be on the shoulder or include a section repair. Trailer tires are the exception to this rule. Those casings can be retreaded within 72 months with a maximum of two repairs, one of which can be on the shoulder, and one of which can include a section repair up to 33mm in size. FedEx Ground, which buys three times as many retreads as virgin tires, tried to retread trailer casings up to seven years old, but discovered an associated increase in roadside breakdowns. “We lose a lot of casings through over-the-road repairs,” Altrichter added. “Getting casings back is huge. It drives down your costs tremendously.” It isn’t the only way to recover value from a worn tire and reduce the overall cost per kilometre. “Maybe we even want to run the drive tire down to a certain point and sell them as used tires,” Obermeyer said. Of course, a tire needs to survive daily demands before there are any discussions about a new life as a retread. Few factors will have a bigger influence on tire longevity than inflation pressures. These fleet managers selected different pressures to reflect their operations and weights. Batesville keeps tires on steer axles, trailers and dollies at 100 psi, with drive tires at 95 psi. South Shore maintains most of its tires at 100 psi as well, with

the exception of the wide-base tires that are inflated to 125 psi. Crete, meanwhile, inflates its steer tires to 110 psi, with the trailers at 95 psi. FedEx Ground maintains more than 256,000 wheel positions at 85 psi, largely because the trailers cube out long before reaching maximum weights, said Ricapito, noting that lower pressures ensure a better footprint against the road. But he stressed that lower pressures should only be used after matching the figures in tire load inflation tables to the heaviest-possible loads. Each fleet manager on the panel certainly recognized the value of a calibrated tire gauge. Obermeyer wants to see the pressures checked each time a truck crosses a fuel island, arrives in a shop, or when his local tire supplier visits once a month. Drivers are expected to check the pressures during pre- and post-trip inspections, too. But he doesn’t think drivers always follow the rule. “If you just stick a pressure gauge in the truck and hope they use it, you’re kidding yourself,” he said. Tomlinson offered a similar observation. Are pre-trip tire inspections happening? “Possibly,” he said. “I’m sure that the post-trip never happens.” The maintenance managers are clearly more focused on the job, carefully tracking pressures at each opportunity. In one audit, Obermeyer discovered 19 “flat” tires that were still pressurized above 50 psi. Only a tire gauge would identify a problem like that. “Our challenge is to go in with our garage managers and also the tire companies we’re working with to inspect as many tires on a daily basis as possible,” Ricapito added. There are technical solutions to under-inflated tires, of course. Responding to the data in its tire program, Batesville Logistics is now testing automatic tire inflation systems on 24 pup trailers. Half of Tomlinson’s trailers already have the devices installed. Data can also identify other ways that drivers are shortening tire life. Tomlinson refers to curb-related damage on sidewalls as just one example. “I put that all on the driver,” he said. His fleet has responded with extra lessons about how to use mirrors, but has admittedly been fighting a losing battle. Tomlinson, meanwhile, watches for the signs of uneven tread wear which could indicate alignment problems. “Pay attention to the steers and drives,” he said. The more detailed the tire program’s data, the better. Ricapito tracks dispatched miles as well as the distances recorded by the electronic control modules for anti-lock brakes. Altrichter stresses the value of using vehicle maintenance reporting standards (VMRS) codes, making it possible to accurately cross-reference maintenance activities. Ricapito said he uses documents from his tire dealers to conduct monthly audits, asking them to show him specific tires in the reports. If the tire can’t be located, the supplier has seven days to match the records. “Hold them accountable,” he said. “We won’t accept mediocrity.” They are the types of commitments that can help keep maintenance budgets in the black. FE March/April 2014 ❙ FLEET EXECUTIVE 27

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14-04-07 3:43 PM

PROFITABILITY

Navigating the leasing landscape Two trucking companies speak about their approaches to leasing, while those in the business give advice about how to pick your leasing partner

By Carolyn Gruske

hen companies enter into negotiations to lease trucks or trailers, it’s typical for them to open up their businesses and their books so the leasing company can better understand their business models and their equipment needs. But what businesses need to realize is it’s equally important to get to know the leasing company before signing any contracts.

Financial stability and accountability

Even though leasing companies like to use terms like “relationship” or “partnership” to describe the arrangements be-

TECHNOLOGY EXPERIMENTS ON WHEELS

lenn Weddel takes a traditional approach to fleet management. The president and owner of Cam-Scott Transport Ltd. in Whitby, Ontario believes in the value of owning power units and trailers. “I don’t want to wake up one day and be a trucking company that doesn’t own any assets. It’s a control thing, maybe—you lose a bit of control if you don’t,” he said. “The difference between owing and leasing, to me, is with owning we are always building an asset: the value of the company. If it’s all structured properly we are building the asset of the company. We look back 20 years and say if we had leased everything for the past 20 years, we wouldn’t have anything today. We wouldn’t own anything.” The Cam-Scott fleet consists of 125 Class 8 power units, 200 reefer trailers, and 25 straight trucks divided between two companies: Cam-Scott Transport Ltd. and Cam-Scott International Inc. But even with the preference for owning, Weddel is currently running 10 trucks on four- and five-year, full-service leases as a technology experiment, and as a way to avoid buying future mistakes. “Because technology has changed significantly with the engines and the after-treatments and with who is building what, I think we, as an industry, have lost ability to say “this is the truck we’re buying and that’s it,” he said. “There are Class 8 trucks from different manufacturers that if you bought them two years ago, they wouldn’t even be worth half of what you paid for them because the engine technology didn’t prove well, and the efficiency didn’t prove well. And you’d be stuck with them.” To avoid that happening to Cam-Scott, which carries refrigerated product, Weddel has leased a smorgasbord of equipment from Penske. His leased fleet includes Volvo tractors with Volvo

28 FLEET EXECUTIVE ❙ March/April 2014

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tween them and their clients, it’s critical to remember that these connections are first and foremost business ties, and as such they should be built on financially stable ground. Beyond looking at their big financial picture, it’s also beneficial to get a sense of the leasing company’s day-to-day operations. Although the leasing company’s profit and loss statements and quarterly reports can offer a big-picture look at what its operations are like, businesses should examine their future partners through a macro lens as well. And this means looking at their fleets and how they manage them. Although he was speaking about Ryder Canada’s own policies and operations, vice-president of business development

power, Freightliners with Detroit engines and Peterbilts using Cummins’ technology. “Depending on how this works out, it will help us when we do make a purchase. We look at this as a low-risk deal, although I’m not sure everybody would agree. We can take multiple units from different manufacturers, test them out, see which are the best ones, and maybe it will point us in the direction of who is building the best trucks.” His scepticism about new truck technology developed after dealing with recent models repeatedly breaking down. “I have a 2012 new truck that is no longer under warranty. In two months I spent $10,000 trying to fix a problem with it. The truck literally broke down in five different places in North America on its trips. It came down to a wiring problem—turned out it’s sensors and systems—and it was misdiagnosed four or five times.” The $10,000 repair bill including towing charges. According to Weddel, the problem of new technology being unreliable and breaking down is so bad his company put in place procedures to deal with the consequences—Cam-Scott now holds a weekly meeting to discuss the equipment failures, something that wasn’t required seven or eight years ago—and that customers have come to expect late shipments. “At one time most of our customers were expecting 98% on-time for any reason whatsoever. Now we’re having to phone them up and say ‘my 2013 truck just broke down in Northern Ontario, and there is nothing I can do about it. The DEF system that delivers the DEF fluid that makes the clean exhaust froze, the computer on the truck shut itself down and it’s -45°C. We’ll let you know when we can get these things going.’ “The only good news about that is we’re all in the same boat. There are no stats, but I think our customers are seeing more service failures from trucking companies than they ever have. trucknews.com

14-04-08 11:24 AM

Chris Faire’s approach can be used by any fleet manager hoping to get a better sense of a potential lessor. “We really recommend that, on a regular basis, we sit down with the customer and share what our KPIs are like and explain what our key performance indicators are,” he said. “Are we getting the trucks in for regular servicing? Is our preventive maintenance currency up? What kind of breakdowns have we had? Have we done any repairs between the PMs? How many subs did we put in—if any at all? “Those KPIs tell the story of how we’re doing. So if we’re sitting down regularly and saying, “we are accountable, here are the KPIs, and here’s how we’re doing, the customer gets pretty comfortable that things are operating as they should be. Or very quickly you get the discussion going about what the gap is and how you fix it.”

LEASING

Flexibility and accommodation

Once a contract has been signed, generally both parties are expected to stick with the terms and conditions set forth in the document. Businesses, however tend to operate in a less static world than those laid out in legal agreements. Change Continued on page 30

So when I phone up, they almost understand it now: ‘Yeah, I’ve heard this before. I get it.’” While the leased trucks aren’t helping the company build any value in assets, Weddel calculates they are saving CamScott money in a few different ways. First there is an immediate monthly savings of between $300 and $500 per truck in the difference between a typical lease fee and a traditional payment on a purchase truck. When breakdowns, happen, the company is no longer on the hook for towing charges, or charges on short-term rentals. The one other significant savings at this point is in the shop. “I can add 10 trucks, but I don’t have to add another mechanic, which is a problem—finding qualified guys to look after the stuff. And the newer trucks take more and more training for your garage staff to look after. So now we introduced three new suppliers with all new technology, three new engines, and we didn’t have to be trained on any of that,” he said. “So if all of the sudden the dust settles on who is making the best truck and the best engine—at least from a Cam-Scott perspective—and we decide we’re actually going to purchase some Volvos, for example, as assets, we will actually invest in the repair and diagnostics technology. We don’t need to worry about what the Detroits or Cummins will need.” Besides looking at the raw numbers, having a variety of leased trucks allows the drivers to try out new models. “We are going to measure what the drivers think about the trucks, and how the trucks stand up: do they shake, do they rattle, do they make a lot of noise? How much do the drivers like it? Drivers are at a premium too. Our drivers have to be happy drivers. To be a happy driver, they don’t want to break down, because they don’t make any money when they break down, and they want to be comfortable in a unit,” said Weddel. FE

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14-04-08 11:24 AM

PROFITABILITY

TRANSFERRING RESPONSIBILITY

s warehouse manager for Asian food importer JFC International (Canada) Inc., Steve Ritchie has a large number of responsibilities. The company operates two distribution centres (one in Mississauga, Ontario, and one in Burnaby, British Columbia) and two smaller depots in Calgary, Alberta and Saint-Laurent, Quebec. But beyond managing the inventory flowing into and out of the facilities, Ritchie is also responsible for the company’s truck fleet. Which is why he opted to lease rather than buy. “In the early days, it was very tough, particularly on myself, to make sure the trucks were maintained and kept up and running properly, and the safeties were where they should be. And it was actually taking more time away from managing the warehouse to manage the trucks. “I was also finding when they would go in for service, it would take longer and longer times to get them back. Trying to find rental trucks was very difficult because we require a reefer unit on them as well,” he said. JFC had a history of owning its own vehicles, and making the switch to leased trucks, which happened about ten years ago, required a switch in the corporate business philosophy, although the advantages that came with leasing made a compelling argument. “When we started looking at doing a full-service lease, things were very appealing to me and also to our company— now they’ve realized that we’ve always got trucks and when they do go down, we get a substitute right away, and we’re not losing that vehicle. We don’t have to try to rework routes that have already been put together for those trucks, we don’t have to pull loads apart and try to fit them into other trucks, which creates a bit of a mess,” he said. Currently, JFC uses what Ritchie describes supercubes (vans capable of carrying up to 7,000lbs), 26’ tandems, and straight trucks with 24’ boxes. The trucks come from a variety of manufacturers, including Hino, Fuso, Kenworth and Isuzu, but JFC

tries to keep the general configurations consistent, especially with regards to the reefer systems and the layouts. Besides having variety in its fleet, JFC also uses a selection of leasing companies. There are relationships in place with PacLease in Ontario, with Ryder in British Columbia and with Brossard in Quebec. “The companies we are with now, their expertise, their setup, and their personnel in those areas seem to mesh well with what we need. We’ve tried other companies and flip-flopped back and forth with PacLease and Ryder and found out who was better to meet our needs,” he said. Despite the differences in partners and geography and even equipment, JFC has found the financial commitments to be very similar across all of its leases. “There is actually not too much difference in cost, even with the hourly rates for the reefers and the fixed costs for the kilometres. It varies a little bit, but we’re not talking huge amounts, maybe pennies here and there. For the most part it has remained fairly the same.” JFC tends to sign 60-month leases, covering not just the service of the trucks but also the registration. The company insures the trucks on its own. When it comes to doing the administration work on the leases, JFC is still using a “pen and paper approach” and hasn’t ventured into using the online management tools offered by the leasing companies. Even though it’s old-fashioned, the approach seems to work well. “We have the office staff go through the leases. We have GPS that we use to track the kilometres. It has actually been pretty easy to follow. It has not been a continuous battle to figure out everything because we submit based on what it is: the fixed rate is the fixed rate and the kilometres are submitted every month. When the bill comes in, it’s pretty simple. My office staff hasn’t complained about it yet. We have some other stuff we lease, including dock equipment, we hare having trouble with. Those are hard to follow.” FE Continued from page 29

and fluidity are facts of life, and sometimes that means there is a need to revisit a lease. While that should be avoided if at all possible, it is important fleet executives have the ability to broach that discussion with their leasing companies, and that the leasing companies are, at the very least, willing to have that talk. Trailcon Leasing Inc. president Al Boughton says that while leasing companies work to ensure they are providing the right equipment to their customers, sometimes errors are made. “It does happen. Sometimes we’ll have a case where a customer’s business changes. They’ll put in the equipment and the next thing you know, they have the ability to double-stack, or their product mix changes and instead of shipping 40,000lb. loads, they now realize they can put 65,000lbs. on the trailer. But the trailer’s only got two axles, so that won’t work. So what do you have to do? 30 FLEET EXECUTIVE ❙ March/April 2014

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trucknews.com

14-04-09 9:58 AM

v “We can put tridems on, so that’s not a problem and we’ll switch it out. We’ll make an agreement with them and put the tridents on,” Boughton said. “If it’s just the wrong equipment, we’ll switch it out. Does that happen? Absolutely?” Anything that can be done before the lease is signed to ensure that the right equipment is being provided is, of course, better than fixing the situation after the fact, and it’s here that leasing companies can demonstrate their expertise, and show they are capable of working with their clients. Jim Molinaro, senior vice-president of sales for Penske Truck Leasing, said that spec’ing the equipment is becoming a more complicated task, and a leasing company should be willing to take the time to work through all of the options available to help its customers derive the most benefit from the technology and vehicles. “The industry has really changed in the last four or five years, spec-wise. There are a lot of very valuable options out there that can really help the customer reduce his overall cost,” he said offering up the automatic transmission on Class 8 trucks as a prime example of a cost-saving option. “We want to make sure our sales team can really articulate not just the spec, but the value of that spec and where it really makes sense.” Molinaro added it’s becoming common for customers to want more than just data and information. They want to experience the equipment operating in the real world, and that’s a service a leasing company can sometimes provide. “More than ever, I think customers are really looking for things that are tangible—that they can go upstairs to their officers and show them the economics of why one works better than the other. So we do a lot of demos with the current vehicles and the current technology,” he said. “We’ll go into our rental fleet and work out an arrangement where the customer can use one of our vehicles and run it for a certain window of time to show the economics of the new technology and the new vehicles that are out there today.”

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Just as every fleet has its own speciality and area of service, leasing companies too can have expertise in certain areas, so if you need something specific, it helps to work with a lessor that understands the business. Some, for example, may have more experience with temperature-controlled trailers for food. Others may have worked extensively with oil and gas or construction fleets. Even beyond a specialization, the most important factor to consider when picking a full service or maintenance leasing partner (as opposed to one who is just supplying the equipment and is not responsible for its care) is how well its network overlaps with your routes and lanes, because no matter what ever extra ‘value-adds’ the leasing company offers, such as insurance, handling registrations, driver safety training, or government regulation updates, it won’t help if a truck breaks down in an area where the lessor has no affiliates who can fix the truck, or no replacement vehicles within a reasonable driving range. If you can’t rely on your leasing partner, you may as well be on your own. FE

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14-04-09 9:58 AM

GREEN to GOLD

Nat gas facts Go With Natural Gas members offer advice about using and adopting the alternative fuel By Carolyn Gruske

Ducharme

Dysiewicz

Stephanian

eing cheap, plentiful and producing fewer greenhouse gas emissions than diesel, natural gas is becoming more and more attractive to fleet operators, but many in the industry still have questions about how it can best be used. In an attempt to provide some answers, Go With Natural Gas, a collaborative industry-government initiative, has been holding a series of information seminars across the country. At the Toronto-area seminar, Pierre Ducharme, eastern hub manager for the initiative explained why natural gas seems to be the hot topic of the day. With the energy industry estimating over 100 years’ reserve of shale gas, and a weaker demand for Canadian natural gas in the US (thanks to its own shale gas deposits) leading to lower prices, producers and distributors need a new market, and they’ve picked transportation. Beyond any marketing push, Ducharme said the reason why transportation companies are beginning to look seriously at the fuel source comes down to dollars and cents. “In one barrel of oil that will cost you anywhere between $95 and $105 nowadays—and that’s the price of the commodity, not the diesel price—there are 5.8 million billion BTUs of natural gas. That’s the equivalent of $23 at today’s [natural gas] price of $4 per million. That’s a big driver,” he said. “Another significant change is now we’ve got natural gas vehicles with much improved performance. We are now working on the fourth generation of natural gas engines, and their performance can match the performance of comparable diesel engines.” Along with diesel engine developments, which Ducharme said have been built upon the foundations laid by Vancouver, B.C.-based Westport Innovations in the 1980s when it was de-

32 FLEET EXECUTIVE ❙ March/April 2014

p32-33_GreenGold.indd 32

veloping heavy-duty natural gas bus engines, storage cylinder technology has also matured. “Lightweight containers. We used to have to store natural gas in heavy steel cylinders, and those cylinders needed to be inspected on a regular basis with hydrostatic tests and by visual tests. Now we work with a new generation of cylinders with a plastic or aluminum core that are wrapped with carbon fibre, making them very, very strong.” He explained that compressed natural gas (CNG) is best used for fleets operating regular return-to-base routes, while liquefied natural gas (LNG) is a better fuel for long distance fleets, as long as there are filling stations at both ends. “Aside from the economics, there are also emissions benefits. Greenhouse gas emissions on a well-to-wheel basis, compared to diesel, have 15-25% less emissions. A natural gas highway tractor that operates 200,000km per year will produce 65 tonnes less carbon with natural gas than it does with diesel. On top of that there is no evaporation with natural gas, and there is no risk of gas spilling or seeping into the water table or the ground with natural gas,” said Ducharme. So far, Ducharme said the waste and refuse sector has been the quickest to adopt natural gas vehicles. “There are now more than 300 trucks in use compared to only a handful a few years ago. In most cases, the trucks are going in at the rate of 25 per site at the same time, and 25 justifies the installation of a dedicated refueling station,” he said. “The highway tractor segment has been the next fastest growing in the country. There are an estimated 200 highway tractors operating in four provinces to date. While all the applications in Canada so far have been with LNG tractors, CNG tractors are also possible, depending on their duty cycle. trucknews.com

14-04-07 3:46 PM

GREEN to GOLD

Many fleets in the US are involved in CNG highway tractors, provided their driving range needs are met.” Enbridge Rob Dysiewicz, manager of NGT sales and marketing at gas utility company Enbridge, said the utility runs a large fleet of natural gas vehicles (including passenger cars). Out of more than 800 vehicles, over 600 are either dual-fuel or dedicated natural-gas systems. And Enbridge has been using the alt-fuel vehicles since the 1980s. “Out of 600-plus vehicles, our annual fuel savings total to be about $1 million—significantly more in the last couple of years since the price of gas has dropped to pretty much nothing. We’ve learned our lessons and are glad we persevered because today we sit with an infrastructure and a vehicle fleet that is providing us with a financial savings that is good for the rate payer, and you as a client, but we also have a positive impact on the environment,” he said, adding that fuel savings with natural gas are fairly predictable and consistent. “The rough rule of thumb is about a 40% savings in what you would be paying today in your fuel. That remains consistent for all of North America, although it varies based on what fueling option you choose. Ultimately we’re seeing a price of about 60 cents a diesel litre equivalent in terms of the price in your tank.” Dysiewicz said that one of the advantages to operating natural gas fleets is it makes it easier for carriers to meet green and environmental conditions of tendered projects. “We are seeing a lot more contracts being awarded to companies that offer either a percentage of, or all of their services with some sort of a greener fuel.” He also suggested it makes good business practice to lock

in fuel prices that correspond to contracts being bid upon. “The other component of the fuel cost savings is you can have those savings extend for the term of the contract. For example in the refuse industry, the contract is awarded for a period of time—seven, or eight or nine years—and with the way contracts can be structured today for the commodity itself, you can lock in the price of natural gas for that same duration of time. So now you have a perfect storm. You’ve been able to lock your price for the commodity for the duration of the contract, making the fueling costs pretty consistent. There is a component of electricity to operate the compressors, but outside of that it’s a regular maintenance schedule and it’s well-understood. As utilities, we’ve been compressing natural gas for various needs since the inception. The technology is very well-proven.” In addition to talking about natural gas’ advantages, Dysiewicz did address some of the concerns that fleet operators may have about natural gas. “Yes,” he said, “there is a little bit of a mileage penalty. OEMs will talk about a 10% reduction. We’re a little bit more conservative. About 12% is what we’re seeing in our fleet in terms of efficiency losses.” He said some operators are worried about the financial hits they will take by adding more expensive natural gas trucks into their fleets, but dismissed those worries by explaining that even with a premium of up to $40,000 on a new truck, it is possible to get a payback on the investment in two-to-three years for CNG and five years for LNG on heavy duty trucks. As for concerns about financing and prices for used natural gas trucks, Dysiewicz said those are being addressed in the market. “The main anxiety point we’re hearing is residual values of vehicles. They’re well understood with traditional Class 8 vehicles on diesel, but not so well understood on natural gas. Is there a resale market? What does that market look like? What do I do when that vehicle reaches its end life? “I can tell you for sure there are finance companies—GE Capital being one—that are looking at this in some shape or form. They are willing to guarantee the residual value of those vehicles if you speak with them. I think that’s very positive for the industry. It is eliminating that last unknown that still exists. “The same is true for your [refueling] station. You will find there are companies out there willing to finance that station for you in exchange for a long-term contract for fuel use. So the impact is maybe a little bit higher per litre pricing at the pump, but you probably can find somebody to do that for you at no cost.” He said that Enbridge itself has even been known to buy a station from a provider and rent it back to the customer. A station suitably sized to serve a large fleet could cost up to $500,000 to build. A station to serve a single vehicle is approximately $7,000. “But honestly, the payback periods are so aggressively positive most clients don’t really want that option. They want to own it outright because of the fuel savings and what they can derive long-term.” March/April 2014 ❙ FLEET EXECUTIVE 33

p32-33_GreenGold.indd 33

14-04-07 3:46 PM

GREEN to GOLD

Change Energy Greg Stephanian, a design engineer with alternative fuel consulting company Change Energy, reminded the audience that businesses need to consider their facilities if they are considering adopting natural gas vehicles. “The first thing you need to do if you’re looking at a facility, be it new or a retrofit of an existing facility, is determine the types of vehicles you’re going to be maintaining or servicing. Is it going to be CNG vehicles primaryily, or both CNG or LNG? You want to look at that because CNG has one set of characteristics you need to deal with. LNG has all those characteristics plus the fact it’s a liquid and if there is an LNG spill of any significance, it will initially spill out as a liquid. It will pool and go into low spots, and service pits and sewers. And as it absorbs heat from the environment, it will convert to a gas vapour, and will rise to the high spots.” The building design will play an important role in what safety procedures and equipment will be required. For example, Stephanian discussed how different rooflines will require different approaches to safety. “Is the roof of your maintenance facility an open-trussed flat roof? In that case, it’s relatively easy to put some gas detection and monitoring up top and ventilate that space out. Or

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does it have peaks and irregular spaces where natural gas would rise and pocket?” He also said that because the use of the natural gas isn’t yet commonplace, there will be a mix of guidelines and standards, with some cities and regions having well-defined rules and procedures and others not being as familiar with what codes and standards they need to reference. He also offered a couple of reminders about the nature of natural gas and how to keep safe when working with the fuel. “Concentration of natural gas in air typically needs to be around four or five per cent by volume for the lower flammability limit, up to about 15% on the higher flammability limit, so it’s got a fairly small flammability range, and we use that to our advantage in making sure your facilities are safe by having the natural gas detectors alarm at about 20% of that lower limit and shut down your system at 40% of that lower limit so we never exceed the lower flammability limits, so you’re not getting into the areas where you’re going to be concerned with actually having a flammable concentration in your facility even if you have a leak.” FE To read coverage from the rest of the presenters, including Cummins Canada, Compression Technology Corp. (CTC), and ENN Canada Corp., see http://tinyurl.com/TNgwng.

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14-04-07 3:46 PM

GEARED UP

A tough act to follow As the eventual successor to the time-tested T800, the Kenworth T880 has big treads to fill

By James Menzies

hen Kenworth announced the introduction of the T880, my initial reaction was ‘But why?’ Kenworth has, in its T800, one of the longest-running and most successful vocational trucks on offer. It has served both the truck maker and the industry well for 26 years, over which time more than a quarter million have been placed into service and, more impressively, an estimated 80% of them continue to be operated. “The T8 ain’t broke,” I felt then, “so why fix it?” Well, I finally had an opportunity to drive the T880, which will eventually replace the time-tested T800. To be clear, the T800 isn’t going anywhere for a while. It’s such a diverse truck, used for so many different things, that it will take some time for the T880 to be configured to fit every application in which the T800 currently performs. So as to not leave any holes in its coverage, Kenworth will keep both models in the lineup for as long as it takes for customers to become comfortable with the T880 and to stop asking for the T800.

This could take a while, because the T800 has many loyal fans, especially here in Canada. I count myself among them. And it was with that mindset that I stepped into a T880 dump truck just outside the Kenworth plant in Chillicothe, Ohio. This truck was an Ohio spec’ dump truck with three lift axles, a 24-ft. aluminum end-dump body, a Paccar MX-13 engine and Eaton UltraShift Plus automated manual transmission. The engine produced 485hp and 1,650 lb.-ft. of torque, and the truck was equipped with air disc brakes at every position. The truck was set up to comply with Ohio bridge law requirements, so the T880 you’ll find on dealer lots in Canada will look different. The cab, however, will not. The first thing I noticed upon climbing into the T880 is that the cab is noticeably larger, yet the dash is laid out intelligently so that I never found myself reaching for switches or controls. The bumper-to-backof-cab (BBC) measurement has been retained at 122.5 inches (a short-hood version with 116.5-inch BBC is also available), but the ceiling is a full two inches higher. Things like headache racks may have to be adjusted accordingly, but upfitters shouldn’t have any trouble attaching bodies to the larger cab. March/April 2014 ❙ FLEET EXECUTIVE 35

p35-36_gearedup.indd 35

14-04-07 3:46 PM

GEARED UP

“

Alan Fennimore, Kenworth vocational marketing manager, told me the new cab platform was designed from the inside out, and proof of this can be found all over the place. Exploring the new cab was like going on an Easter egg hunt: small treats could be found in the most unlikely of places. For example, a coat hook has been placed on the rear wall, a magnet replaces the traditional, breakage-prone sun visor hook over the driver’s side window and armrests are built into the doors at just the right height. These are small things that collectively provide a more driver-friendly work environment. Safety-wise, the most obvious and immediate upgrade as seen from the driver’s seat is improved visibility. The view from behind the wheel of the T800 was good, but the view from the T880 is even better. A new panoramic windshield and a seemingly slopier hood combine to provide excellent forward visibility. The cowl-mounted side mirrors have even been lowered slightly, to afford greater visibility over top of them, which will provide a better view of the job site, with no compromise in rearward visibility along the sides of the truck. The T880 has an automotive-inspired dash, which is modern looking and easy to clean. This seems to be a trend in the industry and a welcomed one as far as I’m concerned—I’m no fan of the plastic wood interiors that were the industry norm for so long. Having familiarized myself with the interior of the T880, and replaced my cynical frown with a cautious smile, I headed out on the highway for a 40-minute drive on area roads. What really leapt out on the road was the quiet ride of the T880. Paccar would like you to believe this is attributable to its MX-13 engine, and there could be some truth to that. But all diesel engines have gotten quieter, and my hearing isn’t supersonic, so I can’t tell you for certain the MX is any quieter than a Cummins without driving them back-to-back. But more impressive to me than the quietness of the engine was the complete lack of wind and road noise audible in the cab. I asked Fennimore how Kenworth achieved this, and he said it’s a byproduct of the new stamped aluminum cab construction and the fact the vehicle is more aerodynamic than the T800. An aerodynamic front end that slices through the wind more efficiently is likely to create less noise in doing so. Kenworth designers have painstakingly removed from the front end any place where air could become trapped and in doing so they also eliminated the noise air produces when it smacks up against a flat surface area. Look no further than the flush-mounted headlights for evidence of the attention to detail that went into removing obstructions that lead to drag, and subsequently to wind noise. About 15% of Kenworth’s vocational trucks are now spec’d with Eaton UltraShift Plus automated manual or Allison automatic transmissions. I’d be perfectly happy with either option—anything but a manual. I know I’m still in the minority, as the stats will attest, but I truly believe most vocational truck drivers who are averse to auto-gearboxes haven’t yet tried the latest generation versions. 36 FLEET EXECUTIVE ❙ March/April 2014

p35-36_gearedup.indd 36

More room. More visibility. And while it’s too early to say for sure, probably more money in their bank accounts.

”

The UltraShift Plus in the T880 I drove offered features such as intelligent hill start aid and creep mode. Hill start aid will hold the truck’s position when on an incline without rolling back while you move your foot from the brake to the accelerator. Creep Mode allows the vehicle to crawl along smoothly at low speeds, which is great for precision operations such as laying asphalt. If you prefer a manual transmission, you’ll like the air-assisted hydraulic clutch that’s new in the T880. It allows for easier shifting—once you learn to avoid the temptation to mash the pedal through the floor—with considerably less foot pressure required. The T880 I drove was empty, so it was difficult to evaluate the MX-13 engine. However, Fennimore told me that engine has undergone continuous tuning for vocational applications and is just now hitting its stride. Some dump truck operators, he said, are now getting close to 8mpg with the MX. The MX engine was brought to North America from Europe and then adapted to meet our vastly different operating requirements. “The duty cycles here are so complex, it takes a while to get them all dialed in,” he said of vocational applications in North America. “It’s really starting to come into its own.” For an empty dump truck, the T880 rode well on the highway, its suspension system effectively absorbing the worst of the bumps and providing a smooth and comfortable ride inside the cab. Back at the Kenworth plant, I took another walk around the T880. I noticed the hood has been redesigned. Instead of the onepiece attached to the T800, the T880 features a five-piece Metton hood. This at first seems counterintuitive, since Kenworth designers went to such great lengths to eliminate every nook and cranny where air can become trapped from the front of the truck and moving to a five-piece hood necessitates the addition of a couple new seams. But just one ding to the side panel, and the repair savings will more than offset many years of microscopic fuel savings that a smoother, one-piece hood may (or may not) provide. I stepped out of the T880 convinced there is a place for this model in Kenworth’s lineup alongside the T800. It is indeed an upgrade. In the T880, Kenworth hasn’t taken anything away from fans of the T8. In fact, it has given them more. More room. More visibility. And while it’s too early to say for sure, probably more money in their bank accounts, if the improved aerodynamics translate to actual fuel savings. Saying goodbye is never easy, but the arrival of the T880 makes it just a little easier to bid farewell the T800. FE trucknews.com

14-04-08 10:43 AM

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Canadian carriers on freight volumes and rates in 2014

Carriers across the country are growing more optimistic about freight volume growth. Overall, 40% of Canadian motor carriers expect an increase in 2014, according to our annual Transportation Buying Trends Survey. The optimism for freight volumes is highest in Western Canada where 48% of carrier executives indicated they expect an increase this year. Despite the expected increase in freight volumes, however, only 38% of Canadian fleet executives expect to push through an increase in core rate pricing this year. The majority expect an in increase in the range of 2.1-4%. In addition 41% expect fuel surcharges to rise in 2014. Our Transportation Buying Trends Surveys have been published for a decade and are conducted in partnership with the Freight Management Association of Canada, Cormark Securities and CITT.

Carrier expectations for freight volumes in 2014 Carrier expectations for direction of core rate pricing in 2014

All charts are a percentage of respondents.

31% INCREASE

STAY ABOUT THE SAME

53%

INCREASE STAY ABOUT THE SAME

38%

40% DECREASE

58%

DECREASE

Carrier expectations for direction of fuel surcharges in 2014

Carrier core rate pricing increase projections for 2014

22%

44%

22%

1-2% increase

2.1-4% increase

4.1-6% increase

41%

55%

> 6% increase

Carrier fuel surcharge pricing increase projections for 2014

INCREASE

STAY ABOUT THE SAME

11%

23%

33%

1-2% increase

2.1-4% increase

23%

4.1-6% increase

> 6% increase

DECREASE

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