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Out on the highway
Trucking challenges call for more shipper-carrier cooperation
Ken Mark
To gain a leg up on the competition, shippers need to pay more attention to “Friends” re-runs rather than the “The Apprentice.” It seems relationships—not intimidation—are more likely to diffuse tension that’s been mounting on several fronts.
“The cost of transportation is increasing,” says Jim Davidson, Toronto-based president of trucking company, I-Wheels Dedicated Logistics. “For example, trucking is facing numerous challenges—driver shortages, fuel cost increases and a lack of capacity. There are no quick fixes in sight. In fact, if business volumes turn up sharply, capacity limitations could become a real barrier to further economic growth.”
At such times, being a regular customer can be lifesaver. It’s in the long-term interest of shippers to support stable and reliable truckers through long-term contracts, says Garland Chow, Vancouver-based director of the Bureau of Intelligent Transportation Systems and Freight Security at the University of British Columbia.
“Shippers should avoid engaging ‘below-the-radar’ price-cutters. They might not be around after the next market downturn,” Chow says. “During peak demand periods, truckers offer their services first to those with whom they enjoy long-standing relationships.”
In these difficult times, shippers must start looking more seriously at partnering with carriers to find common, innovative ways to deal creatively with problems.
Speed limiters
The most obvious challenge truckers face is the spike in oil prices. Carriers are passing added costs on through surcharges. Many believe it’s fairer than increasing rates. Yet some shippers aren’t satisfied.
“Not all of our members are happy with how surcharges are calculated,” says Bob Ballantyne, president of the Canadian Industrial Transportation Association (CITA) in Ottawa. “Most often it’s done as a percentage of basic freight rates. But that includes all kinds of other costs. We feel it would be fairer to base it on mileage or even on the actual cost increases.”
For a more long-term solution, in November 2005, the Ontario Trucking Association (OTA) proposed activating speed limiters on all trucks operating within Ontario (including those coming in and out of the province) at a maximum speed of no more than 105 kilometers per hour. The OTA estimates its proposal would result in annual fuel savings of as much as 10,500 litres of diesel fuel for a typical tractor-trailer, or about $8,400 per truck.
On March 2, the Canadian Trucking Alliance (CTA), announced all its provincial associations are backing the idea. The CTA represents more than 4,500 trucking companies across Canada.
“We want to eliminate speeding altogether; the environmental and safety benefits are simply too significant to ignore,” said CEO David Bradley. The speed limiters would reduce greenhouse gases and truck/car crashes, improve lane discipline and reduce tailgating, according to the CTA.
Support from shippers has varied since the idea was launched. “We agree in principle with the introduction of speed limiters,” says the CITA’s Bob Ballantyne. “But…we would prefer having it implemented continent-wide. In the meantime, we would like the police to do more about truckers that exceed speed and weight limits.”
Behind the wheel
While the speed limiter issue continues to unfold, the industry is still grappling with the time-worn problem of driver shortages. Shippers and carriers are putting a lot of effort into presenting truck driving as an attractive and viable career. “Today’s drivers want predictable and stable routes,” says Jeff Pries, Winnipeg-based vice-president of sales and marketing with Bison Transport.
“When they leave home on a trip, they want to know where they are going and when they will be back. Before, many of their trips were ad hoc—they could be going to anywhere at any time. So, we now try to arrange regularly scheduled trips to specific destinations, for example, regular Monday deliveries to Chicago.”
Shippers can also win over driver support more directly. “They can start by making their facilities more driver friendly and allowing them inside warehouses during bad weather, and to use the washrooms,” says Evan Mackinnon, Guelph, Ont.-based president and CEO of Mackinnon Group, recently named to the list of Canada’s 50 best-managed companies.
“Another way is not to waste drivers’ time. If companies are not ready to load and unload as scheduled, they should let us know. Even charging driver detention fees does not cover the entire cost of lost productivity.”
He says sharing information is becoming even more important with the introduction of ACE (automated commercial environment) by the US Customs and Border Protection Agency. “It will require advanced electronic notification about cargo, drivers and vehicles. If it is not correct or does not arrive on time, trucks may be delayed at the border or turned back.”
Other innovative tactics include positioning inventory more strategically. According to Neil McKenna, Brampton, Ont.-based director of operations and transportation with Canadian Tire Corp., one way of reducing trucking costs is to make bigger shipments, instead of more frequent smaller loads.
“In the past, many companies relied on just-in-time deliveries because they had the ability and resources to get products where they needed to go when they had to be there. But now that trucking resources are scarce and getting scarcer, we have to start looking at different business models,” says McKenna.
Canadian Tire now positions inventories closer to its stores. It requires extra planning, but provides more control over transportation costs and fewer out-of-stock items.
Looking at the bigger picture, it seems any strategy to improve shipping may be hampered by Canada’s infrastructure.
“Planning for a new bridge across the Detroit River at Windsor started in 2000. But the bridge will not be open until 2013. We fought and won World War II in six years. Taking 13 years to finish that bridge is unconscionable,” says CITA’s Ballantyne.
For now, many carriers are in a holding pattern of sorts, making due with what they have, and hoping their efforts around driver recruitment and infrastructure improvements pay off. Shippers who take an active role in helping to combat trucking challenges will reap the reward of long-term, successful partnerships. b2b
Ken Mark is a Toronto-based freelance logistics, technology and business writer.
Sidebar: Food shippers cooperate for lower trucking costs
Edmonton—Freight consolidation has become a reality out west. The Edmonton-based Food Processors Logistics Research Council (FPLRC) involves two carriers and several food industry shippers who have decided to consolidate smaller food shipments into larger, more economical loads.
In the first 32 weeks since its inception last June, the carriers transported 1,648 pallets of frozen and chilled products. The weekly scheduled service for each commodity grouping involves an average of three trucks per week—one to Calgary and two to Vancouver.
As a result, the food shippers are enjoying direct transportation savings of $41,551 or about 35 per cent compared to previous arrangements. Savings for individual shippers varied from 20 per cent to 47 per cent.
“We became involved because we would be delivering additional products to firms we were already servicing,” says Henry Van Steenbergen, Edmonton-based president of carrier company, Legal Freight Services Ltd. “That would result in cost reductions from fewer stops as well as less handling and mileage.”
The key to making the plan work was maintaining the same service levels shippers enjoyed before the pilot project. But it seems customers are satisfied despite the changes in delivery days and schedules.
“All our Calgary customers agreed to switching the shipping day from Wednesday to Tuesday,” says Paul Flesher, Edmonton-based president and general manager of Crust Craft Inc., a supplier of frozen pizza dough and par-baked items.
“The consolidated, scheduled weekly shipments helped us to control distribution costs better.”
Freight consolidation—even among competitors—is a trend that will no doubt burgeon in an era of tight capacity and expensive fuel.
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