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Truckload of challenges
Skilled driver shortage is a major concern for shippers
By John Whyte
You don’t have to tell for-hire carriers, especially those providing truckload (TL) services, how hard it is to make a buck. Canadian truckers face a list of challenges that grows longer by the day, and that doesn’t bode well for shippers.
An acute shortage of drivers, a capacity crunch, rising operating costs, hours of service regulations, appreciation of the Canadian dollar and border security delays are the most pressing issues for TL carriers. Some even predict the trucking industry’s “perfect storm” is near.
Because of an ageing workforce, the Canadian Labour and Business Centre predicts employers will need to replace more than 400,000 workers in the next 15 years. And when you look at Canada’s trucking industry, the numbers are even scarier. The Toronto-based Ontario Trucking Association (OTA) says the industry will need an infusion of 224,000 drivers by the end of 2008. If not, there will be even tighter driver capacity and fewer trucks on the road.
“At one time, truck drivers in most cases made more money than factory workers. As a driver, it was a great job to make an income,” says Stephen Laskowski, OTA vice-president. “I don’t think today, however, that we as an industry on a whole pay more than a factory worker. Nobody has an older workforce or faces a greater skilled labour shortage than we do. The labour crunch is everywhere, but unfortunately we seem to be leading the pack.”
Attracting new drivers means offering more attractive pay packages, Laskowski says. So it follows that shippers can expect rising rates. “We need a healthier expectation of a carrier’s return on investment (ROI). In the last 12 to 14 years, Statistics Canada reports the trucking industry hasn’t had a 10 percent return on investment in any quarter,” he says.
“With a shortage of drivers, truckers aren’t so willing to go out and add tractors. There’s no blood from the stone. If shippers expect a 10 to 15 percent ROI, then why shouldn’t carriers want the same? As we move rates up, there will be more money available to compensate labour [drivers].”
Skilled occupation
The federal government is impeding the trucking industry’s ability to recruit new drivers because it doesn’t consider truck driving a skilled occupation, Laskowski adds. This hampers Canadian carriers from hiring qualified drivers from other countries.
“It’s difficult to comprehend how the federal government can consider a juggler, a barber or a number of other jobs to be a skilled occupation, but not truck driving. Who could be more skilled than a driver behind the wheel of an 80,000-pound vehicle? The person has to possess many skills.”
Challenger Motor Freight Inc. in Cambridge, Ont. is proactively looking for additional drivers. With more than 1,300 trucks and 3,000 trailers in its combined TL and less-than-truckload (LTL) fleet, Challenger has purchased two new fully-loaded motor coaches to serve as mobile driver recruiting centres that will hit the highways in Ontario, Quebec and western Canada to drum up new drivers.
“We’ll use a couple of our seasoned drivers to ride in the coaches. They will interact with interested drivers and tell them about our trucking company,” says Challenger’s president Dan Einwechter. “In terms of the driver shortage, the numbers are staggering. And in the trucking business, we believe that he who has the drivers wins. You can have all the trucks in the world, but they’re not going anywhere if you don’t have drivers.”
The driver shortage has caught the attention of shippers too. According to Bob Ballantyne, president of the Ottawa-based Canadian Industrial Transportation Association (CITA), shippers are watching the situation.
“Shippers want competitive prices and efficient, consistent service. This will always remain our focus,” he says. “With that being said, the capacity [driver and equipment] shortage is a concern,” Ballantyne says.
”Because of the driver shortage, we’re hearing that carriers aren’t buying new fleet equipment. This creates a second major challenge for shippers. Even if the driver shortage gets resolved, we may find ourselves with a lack of trucks on the road to properly service shippers. We’re also watching the progress of hours of service regulations, as they will have an impact on drivers and the trucking industry.”
Jim Davidson, president of Mississauga, Ont.-based iWheels Dedicated (350 trucks and 600 trailers), a division of The Wheels Group, has been around the trucking industry for more than 40 years. Davidson says the capacity issue facing the trucking industry, primarily TL carriers, has never been more dire for carriers and shippers. “It’s all about drivers, drivers, drivers. If the North American economy truly became robust, I strongly believe that our industry would be a limiting factor,” he says. “Right now, the capacity doesn’t exist to move products. There will be trouble with any significant up-tick in the economy.”
According to Davidson, there isn’t enough new equipment on the road, even though there’s no shortage of trucks for sale. “What we’re dealing with as an industry won’t be resolved in the next two or three years. And it will cost money to make the problem go away. The compensation packages for drivers will go up. This will help over time, but the real issue is a lack of drivers to pull from. They’re just not there. Compensation, however, is only one piece of the puzzle. We have to also address driver lifestyle issues.”
Mississauga, Ont.-based Hershey Canada, a division of the Hershey Co., is just one company impacted by a lack of capacity in the trucking industry. “For shippers, the number one issue is capacity. I’m talking about equipment and drivers,” says Doug Wilcox, distribution manager for Hershey Canada.
“Carriers aren’t buying new equipment mainly because of a lack of drivers. I can understand the thinking. For example, why would I buy a production line, if I don’t have the people to work it?
“We’re a fully refrigerated shipping company and we don’t ship any dry goods. When you look at refrigerated, the capacity is tighter than dry. The problem is actually 10-fold. As shippers, we’ve had equipment capacity issues in the past, but it comes and goes. There have been times when there’s been a glut of equipment out there. The driver shortage, however, seems to be an issue that just won’t go away.”
Border delays
Delays at the Canada-US border are also causing problems for truckers. There have been growing pains with the Free and Secure Trade (FAST) program, which serves as a platform for a host of new US security measures.
Earlier this year, Canadian truckers were alarmed that thousands of domestic drivers might not receive their FAST registration to meet the January 30, 2005, deadline. At the time, the Ottawa-based Canadian Trucking Alliance (CTA) also called upon the US Customs and Border Protection Agency to examine the procedures under which it assesses monetary penalties for non-compliance with advance cargo information rules.
“There can be no doubt that there has been a loss of productivity and efficiency in the movement of goods from Canada to the US,” said David Bradley, CEO of the CTA in Washington, DC recently.
“The vision behind the December 2001, Manley-Ridge Smart Border Accord wasn’t to take the border back to what it was on September 10, 2001, but to develop a 21st century border that advanced both facilitation and security.
“A host of new security measures have already been introduced and several more are close to being implemented. How they’re implemented and enforced will be key to how effective they are in meeting the combined goals of improved security and trade efficiency. We must ensure that new US measures to enhance border security at our land borders don’t become a barrier to existing, integrated manufacturing processes. They must allow for the efficient movement of goods between the world’s two largest trading partners.”
Shippers are also monitoring the border delays. “At the Canada-US border, the security rules continue to rapidly change. As a result, truckers and shippers continue to experience hold ups,” says the CITA’s Ballantyne. “Some people haven’t signed up for the FAST program, which the US introduced to improve border security. A related issue is infrastructure congestion, especially at the crossing in Windsor, Ont.”
John Whyte is a Toronto-based freelance writer.
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