Issuu

Motortruck

Fleet Executive C A N A D A ’ S

B U S I N E S S

EQUIPMENT We take Western Star’s 4700 for a spin on a construction site

JULY/AUGUST 2012

M A G A Z I N E

HUMAN RESOURCES How to find out what makes your potential hires tick

F O R

F L E E T

O W N E R S

GREEN TRUCKING Does natural gas deliver on efficiency and reliability?

e k a m s ’ t e L

L A E AD

The pace of mergers and acquisitions is expected to heat up. Read our expert advice for both buyers and sellers.

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When it comes to safety and compliance,

WHY BE AVERAGE? Ontario-based Mackinnon uses PeopleNet eDriverLogs, Automated Fuel Tax and Vehicle Management to maintain an impeccable safety record. (The Ministry of Transportation rates Mackinnonâ€™s log books at 98.5%, the highest ever earned by an over-the-road company.) If you think that sounds above average, it is. PeopleNet customers perform 58.4% better than the national average across three major safety indices. They experience 43.8% fewer vehicle out of service events, 66.7% fewer driver out of service events and 64.8% fewer moving violations.* And when it comes to safety and compliance, being average can be very costly. To join Mackinnon and other way-above-average PeopleNet customers, visit http://peoplenetonline.CA. *When compared against Canada benchmarks.

ÂŠ2011 PeopleNet Communications Corporation.

11-PEC-001 Motortruck FP AD.indd 1 ContentsJuly12.indd 2

A FLEET MANAGEMENT, MOBILE COMMUNICATIONS AND ONBOARD COMPUTING COMPANY

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MENT, S AND PANY

July/August 2012

Volume 81, No. 4

contents

COVER STORY 24 LET’S MAKE A DEAL

A look at best practices for mergers and acquisitions.

26 MERGER MELTDOWN

During a merger, transition can be overwhelming for employees and problematic for companies to manage. Follow these tips and avoid a merger meltdown.

Features page 28

28 BORDERING ON HARMONY?

Canada and the US have plans to harmonize and streamline business at the border. But will this mean more regulation for motor carriers?

32 TIRE TRIUMPH

Tire pressure systems can both deliver fuel savings and extend tire life, according to US research.

Departments THE VIEW WITH LOU…6 Editorial director Lou Smyrlis explains why the 2012 Surface Transportation Summit is Transportation Media’s most ambitious conference to date – and why it’s not one to be missed.

COMPETITION WATCH…8 TransForce spearheads project to convert methane to electricity; Manitoulin acquires Expedite Plus, Can-Tran Intl.; Bison spends millions on equipment upgrades, expanded facilities, new service; Contrans buys Peter Hodge Transport; and more.

page 14

THE BOTTOM LINE…10 MSM’s Mike McCarron on how understanding your brand can help shape your company’s future.

TAKING CARE OF BUSINESS…12 How to beat stress and create a healthy workplace.

THE HUMAN EDGE…14 Can hiring the behaviour, but training the skill lead to better retention?

MAINTENANCE MATTERS…16 Chuck Carman of CARS gives the lowdown on the operation and use of LED lighting.

page 16

GREEN TO GOLD…18 Westport claims natural gas has come of age, matching diesel’s efficiency, reliability; Private Motor Truck Council members to have access to the ‘inside track’ via partnership with technology tester Performance Innovation Transport; Transport Canada program identifies ways to greenify trucking; and more.

GEARED UP…33 Equipment editor James Menzies takes the Western Star 4700 – launched despite a downturn in the construction industry last year – for a spin to see if the company’s gamble can pay off. Plus: Navistar set to combine advanced EGR with SCR next year.

DASHBOARD…36 TransCore’s Canadian Freight Index rallies in May with double-digit increase; CGFI rates decrease in April; international cargo loadings boost rail freight traffic in April; US for-hire truck tonnage falls in May; and more.

INSIDE THE NUMBERS…38 What do shippers really value in their transportation providers? trucknews.com

page 33 July/August 2012 ❙ 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 You said it...

Are high prices driving down demand for new truck orders? Contributing editor James Menzies examines the downturn of Class 8 activity.

“You cannot make a good truck driver if it is not in him from the start. They soon get sloppy and very impatient with clients after a year or so of leaving school. Look at some of the owner/operators’ trucks and how some of them take so much pride in their equipment. All good drivers have a skill to sell a company and one should strive to become better and better on each trip. But if some companies do not care, why should some of the drivers? Good drivers move on.”

On-road editor Harry Rudolfs champions the group of trucking enthusiasts behind the Great Lakes Truck Club newsletter. Editorial director Lou Smyrlis argues that the Owner-Operator Independent Drivers Association’s opposition to EOBRs is actually hurting its members.

—Tony Godsoe’s comments on Dan Goodwill’s blog, “Drivers speak out on recruiting, training and student drivers.”

Web TV:

Transportation Matters PEAK PERFORMANCE:

We speak with CITT’s Catherine Viglas on how to achieve it.

BIG MAN, LITTLE TRUCKS:

Dave Gordanier pours patience into each and every model truck.

DEATH COMES TO BLOODMOBILE:

Brian Death of JD Smith and Sons makes his 100th blood donation to Canadian Blood Services, talks about why he does it - and why you should, too.

SOCIAL MEDIA AND TRUCKING:

TMTV hosts Adam Ledlow and James Menzies share tips for the trucking industry on using social media effectively after a recent speaking engagement.

FOLLOW US ON TWITTER @TruckNewsMag @AdamLedlow @JameMenzies @LouSmyrlis @JuliaKuzeljevic @KathyPenner Fleet Executive editors are now on the Find us on Facebook facebook.com/trucknews 4 FLEET EXECUTIVE ❙ July/August 2012

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radio! For a list of stations and on-air times go to truckerradio.com.

trucknews.com

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Motortruck

Fleet Executive

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

THE VIEW WITH LOU

JULY/AUGUST 2012

VOL. 81 NO. 4

Surface Transportation Summit 2012 Don’t miss the educational event of the year

hile I’ve been enjoying the sunny summer weather at my home in the beautiful Kawarthas, I must admit to thinking ahead to the fall and the 2012 Surface Transportation Summit. Why? To put it simply, because this is the most ambitious conference we have ever put together for transportation professionals and we can’t wait to share it with you Oct. 17 at the Capitol Banquet Centre in Mississauga. As with past years, we have joined forces with Dan Goodwill and Associates and our sister publication Canadian Transportation & Logistics to pull the event together. What’s different this year is that we will be bringing both sides of the transportation equation together under the same roof. Carlos Gomes, senior economist at Scotiabank, will again kick off the conference with his insights on where the economy in general and transportation in particular are headed. We will also be exclusively unveiling the results from our latest national annual Transportation Buying Trends and Equipment Buying Trends research at the event. Great speakers make for a great conference and I believe this is the strongest lineup of speakers we have ever put together. This year’s Summit will feature a new track that will provide CEO perspectives on some of the major modes of surface transportation. Douglas J. Harrison, CEO of Day and Ross General Freight, will address the LTL freight market; Greg Hewitt, president of DHL (Canada), will focus on where the courier business is going; and Mark Seymour, CEO of Kriska, will provide his perspective on the truckload market. This will be followed by a panel discussion on perhaps the most crucial issue for shippers and carriers: freight rate negotiations. Representatives from two of Canada’s largest shippers, Brian Springer, vice-president of transportation with Loblaw Companies, and Michael Tan, divisional vice-president of supply chain and transportation at Hudson’s Bay Company, will engage in a dialogue with representatives of two of Canada’s largest motor carriers: Dan Einwechter, CEO of Challenger Motor Freight, and Wes Armour, president and CEO of Armour Transportation Systems.

Lou Smyrlis, MCILT, Editor lou@transportationmedia.ca

The afternoon will feature parallel tracks focused on shipper and carrier issues. One track will address how major corporate transformations have been driven by changes in transportation strategy. Mark Gallant, director of supply chain transportation for Home Depot; Jack Ampuja, president and CEO of Supply Chain Optimizers; and Jim McKay, director of transportation at Wal-Mart Canada, will each address a major transportation initiative that they undertook to transform their companies or client operations. Business intelligence in transportation has become a new buzz word over the past couple of years. Steve Morandi, analytics solutions leader at Deloitte Managed Services, and Rick Tucker, senior vice-president of global technologies for Lean Logistics, will speak to how business intelligence in transportation is helping improve the performance of transportation operations. Human resources are one of the key assets of any organization. Ron Mosey, principal at RM2 Associates, and Marvin J. Huberman, a certified civil litigator, barrister, mediator and arbitrator, will lead a discussion on a broad range of important HR issues. Earlier in the day, Lee Palmer, president of Palmer Marketing, and Dan Goodwill will also discuss social media and its effective use for brand building, customer retention and recruiting. The final afternoon session focuses on safety. Rob Penner, vice-president of operations for Bison Transport, the winner of a prestigious TCA safety award, will speak to best practices in safety management. Mark Murrell, president of Carriers Edge, will discuss the best practices in safety management employed by the Best Fleets to Drive For. Jim Angel, product manager of safety and compliance apps at PeopleNet, will talk about next steps in CSA compliance. In addition to the excellent educational content, there will be opportunities throughout the day and at the end of the day to meet new carriers and shippers and to expand your personal network. To find out more and to register, go to www. surfacetransportationsummit.com. And also check the #Tsptnsummit hashtag on Twitter for important updates. FE

Editorial Director Lou Smyrlis (416) 510-6881 lou@TransportationMedia.ca Managing Editor Adam Ledlow (416) 510-6890 adam@TransportationMedia.ca Features Editor Julia Kuzeljevich (416) 510-6880 julia@TransportationMedia.ca Creative Director Stephen Ferrie sferrie@bizinfogroup.ca Advertising Creative Directors Carolyn Brimer Beverley Richards

Contributing Editors Ken Mark James Menzies Ian Putzger John G. Smith Carroll McCormick Harry Rudolfs Publisher Rob Wilkins (416) 510-5123 National Sales Manager Don Besler (416) 699-6966 Account Manager Brenda Grant (416) 494-3333 Production Manager Kim Collins (416) 510-6779 Circulation Manager Mary Garufi Video Production Manager Brad Ling Research Manager Laura Moffatt Vice President Publishing Alex Papanou President Bruce Creighton

Head Office 80 Valleybrook Drive Toronto, ON M3B 2S9 Motortruck Fleet Executive is published by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd., a leading Canadian information company with interests in daily and community newspapers and businessto-business information services. The contents of this publication may not be reproduced or transmitted in any form, either in part or full, including photocopying and recording, without the written consent of the copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without prior written consent. Motortruck Fleet Executive is indexed by Micromedia Limited. PUBLICATIONS MAIL AGREEMENT 40069240 Return Undeliverable Canadian Addresses to: Circulation Dept. – Motortruck Magazine, Suite 800 – 12 Concorde Place, Toronto, ON M3C 4J2 USPS 016-317. US office of publication, 2424 Niagara Falls Blvd., Niagara Falls, NY. 14304-0357. Periodical Postage Paid at Niagara Falls NY USA. Postmaster send address corrections to: Motortruck, PO Box 1118, Niagara Falls NY 14304. Member Canadian Business Press. Subscription Inquiries – (416) 442–5600. We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund (CPF) for our publishing activities. ISSN Number 0027-2108 (print) ISSN Number 1923-3507 (digital)

6 FLEET EXECUTIVE ❙ July/August 2012 Member/Canadian Business Press

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COMPETITION WATCH TRANSFORCE’s environmental services division has formed a partnership with Quebec-based Terreau Biogaz to convert methane to electricity from its Granby and Sainte-Cécile-de-Milton, Que. landfill sites. The electricity has been placed on the Hydro-Québec grid as of June 29. In its first year, the project will produce one megawatt of power, roughly enough electricity to power about 450 homes. That will double to two megawatts next year and, at its peak, the facility will generate three megawatts, according to company officials. The $10 million investment in the project will allow for the sale of electricity to Hydro Québec for a 24-year period. TransForce has commenced a similar project at its Moose Creek landfill in Eastern Ontario. Construction on the facility is underway and it is expected to be selling power into the grid by October. At its peak, the facility should generate close to seven megawatts of power annually, the company said. MANITOULIN GROUP OF COMPANIES has acquired EXPEDITE PLUS, a specialized service provider for the movement of highly time-critical shipments across the globe via air and ground. Manitoulin announced its partnership with Expedite Plus, of Milton, Ont., in October 2008, as a means to augment its own time-critical shipment capabilities. Expedite Plus will be a new division of Manitoulin Global Forwarding which now comprises global time-critical, international freight forwarding, warehousing and distribution. All Expedite Plus employees have transferred to Manitoulin Group of Companies. Officials said customers of Expedite Plus can “expect a seamless transition with immediate effect.” BISON TRANSPORT says it has spent nearly $100 million in the past 18 months on equipment upgrades, expanded facilities in B.C. and Ontario and the launch of a new LTL service. Equipment upgrades over the past year-and-a-half include 625 new trailers, each configured for long combination vehicle (LCV) use as well as 75 converter dollies. The company also replaced 515 EPA07 generation tractors with new trucks equipped with EPA2010 technology. The company plans to add another 100 or more units by the end of the year, according to Bison executive vice-president and COO Rob Penner. Bison plans to complete construction on a new Mississauga terminal in 2013. It’s located near the Dixie Rd./Hwy. 401 interchange and Penner said it will become the “primary eastern Canadian hub for Bison’s growing highway and regional fleets that serve the Ontario and Quebec marketplaces.” In western Canada, Bison has taken possession of a new truck terminal in Langley, B.C. seated on 6.5 acres of land and housing a 12,000 sq.-ft. office building and full-service maintenance shop. Perhaps most surprisingly, Bison is getting into the LTL business. The new service was recently launched between eastern and western Canada to compliment Bison’s dry van, heated, and refrigerated truckload services. Penner said it builds on Bison’s logistics division, called Bison ABL (Asset Based Logistics). MANITOULIN GLOBAL FORWARDING has acquired CAN-TRAN INTL., an international freight-forwarding enterprise based in Leduc, Alta. This is the second business based in Western Canada to be acquired by Manitoulin in the last two months. Founded in 1985, Can-Tran provides a full suite of solutions to Alberta clientele, including freight forwarding, Customs brokerage, ground transportation, and distribution and warehousing. With the majority of its customers in the oil and gas industry, officials say Can-Tran has gained significant expertise in complex project moves, especially those involving drill rigs. All Can-Tran employees will remain with the company, according to officials.

Jac

Presid

CONTRANS has announced it has acquired bulk trucking firm PETER HODGE TRANSPORT. The deal is expected to generate annual revenues of about $20 million. Peter Hodge runs 92 highway tractors and 140 trailers and provides bulk hauling using open-top dump trailers and liquid tankers. “This is a unique opportunity for us to strengthen our dump and tank hauling presence in Ontario by adding such a well-respected, service-oriented business to our group. For many years, we have operated a similar business in the Great Lakes region, but the shipping lanes and trailer types have differed from those typically handled by Peter Hodge Transport. This is a complementary addition to our service offerings,” said Contrans’ chairman and CEO Stan Dunford. TRIMAC TRANSPORTATION has inked a deal to transport a “significant volume” of limestone aggregate for Hammerstone Corp. in Fort McMurray, Alta. Trimac expects the new deal to generate about $36 million in revenue over the length of the threeyear contract. The agreement marks the beginning of a new strategic partnership with Hammerstone, Trimac said in a release. It anticipates its limestone aggregate hauling operations will reach full capacity in the third quarter of 2012. Hammerstone owns and operates a limestone quarry with more than 750 million tonnes of reserves in the heart of Alberta’s oil sands.

8 FLEET EXECUTIVE ❙ July/August 2012

V.P. Tra Canada

trucknews.com

Trans Summ CompetitionWatchJuly12.indd 8

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On October 17th 2012, please plan on joining the country’s top Transportation Executives for a day of education and networking. The 2012 Surface Transportation Summit is shaping up to be the best ever! After extensive research we developed an agenda that targets the issues that matter to you!

These include....

• 2013 Economic Outlook • Social Media in Transportation • Shipper Perspectives in 2013 • Top CEO Perspectives on Major Transportation Trends • Managing a win-win • Shipper-Carrier rate Negotiation

• Successful Transformational Shipper Strategies (Shipper Track 1) • HR Issues in Transportation Companies (Carrier Track 1) • Using Business Intelligence to improve Transportation Operations (Shipper Track 2) • Best Practices in Safety Management (Carrier Track 2)

Check out the top-notch team of presenters including...

Jack T. Ampuja

President, Supply Chain Optimizers

Mark Murrell

President, CarriersEdge

Brian Springer

V.P. Transportation Eastern Canada, Loblaw Companies

Dan Einwechter

Steve Morandi

Ron Mosey

Chairman & CEO, Challenger Motor Freight

Analytics Solutions Leader, Deloitte Analytics

Principal Consultant, RM2 Associates Inc.

Mark J. Gallant

Douglas J. Harrison,

Mark Seymour

Director of Transportation, The Home Depot Canada

Lou Smyrlis

Editorial Director, Transportation Media

President, Day and Ross General Freight

Greg Hewitt

CEO, DHL Express

Mr. Wesley Armour

President & CEO, Armour Transportation Systems

Rob Penner

President, Kriska Holdings Ltd.

Executive Vice President and Chief Operating Officer, Bison Transport

Jim McKay

Rick Tucker

Director Transportation, Walmart Canada Corp.

S.V.P., Global Technologies, Lean Logistics

Carlos M. Gomes

Lee Palmer

Senior Economist, Scotiabank

President, Palmer Marketing

Dan Goodwill

President, Dan Goodwill & Associates Inc.

Michael Tan

Div. V.P. Supply Chain & Transportation, Hudson’s Bay Company

Marvin Joel Huberman

Senior litigation lawyer

Jim Angel

Safety Security and Compliance Product Manager, PeopleNet

Date: October 17, 2012 l Registration - 7:30 am l Presentations start at 8:30 am sharp Venue: Capital Banquet Centre, 6435 Dixie Rd., Mississauga, ON L5T 2P4

For more information and to register, please visit www.SurfaceTransportationSummit.com Trans Summit promo MT Revised.indd 1

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BOTTOM LINE

Understanding your company’s ‘Mickey Mouse’ Knowing your brand will help steer your company’s future direction

By Mike McCarron

he day you become a parent is the day a trip to Disney gets automatically added to the family bucket list. These days, it’s almost mandatory that every kid feels the “Magic” and parties once with Mickey, Goofy, and the rest of the gang. As a parent, you stand zero chance of competing against one of the world’s strongest brands and the apparent guilt that goes with not taking the chickadees to the Magic Kingdom. This might surprise you, but every company has a brand whether they know it or not. It’s not the tagline or logo that’s plastered all over your Web site and every piece of steel you own. Your brand is what your stakeholders think of the entire experience they have when dealing with your company. Your brand makes a promise to the world about the benefits and the value that your products have to offer. It’s the DNA that shapes your company’s personality. The day you hang your shingle is the day you start building your unique character and culture. Ironically, in service industries like trucking, more brands originate through the day-to-day actions of employees than are hatched in strategic planning sessions at the boss’s favourite resort. For as long as you have been in business, every “magic” moment in some way has contributed to what people think of you today. Before you waste one plug nickel revamping your fancydancy five-colour logo, I suggest you dedicate some resources to getting a complete and thorough understanding of your company’s “Mickey Mouse,” the one thing that clearly identifies who you are. Because it’s important to understand who you are before you can begin to figure out who you want to be.

*Source Fifth P Solutions Inc.

History is important How has your company treated people in the past? If stakeholders have been consistently treated with integrity and respect, you’re likely well thought of and can build on your legacy. Conversely, if you don’t pay suppliers on time, ask employees to BS customers, and have a poor Dun and Brad score, you’re probably going to find that your DNA has 18 flat tires and your checkered past is impacting your bottom line. Be honest with yourself even if you don’t like the answers to the questions.

Brand is a bridge Your brand is the bridge between your customers and your employees’ experience. Since 82% of customers stop doing business with a company because of bad experience with an 10 FLEET EXECUTIVE ❙ July/August 2012

employee,* it’s critical to understand what your employees think about their company. Start the process by signing up for Survey Monkey (not a furry Disney character, but a free online survey service). With all your competitors banging on their door, customers don’t have the time to fill in a survey to tell you that your Ferris wheel is turning in the wrong direction. Instead, ask your staff to be frank about their place of work. Your employees’ perception of your brand will mirror that of your customers.

SWOT analysis One of the most effective ways to understand your current brand is to figure out where you rank among the elite fleets that play in your sandbox. A SWOT analysis will help you identify your Strengths, Weaknesses, the Opportunities open to you, and the Threats that should be keeping you up at night. It will also help you understand how you can distinguish yourself against the “best in the box” when it comes time to take your branding efforts to Phase 2.

Social media Social media has taken some of the power out of the boardroom and given it to Joe Anybody. You no longer have total control of your brand or what people say about you. The days of writing a complaint letter to the PR Department have gone the way of Morse Code – 79% of customers now will tell others of their negative experience with Fred Grumpy. In 2012, when ex-employees are upset with the way they were dismissed, they fire up Facebook and rant to their heart’s content. Even if your company isn’t tweeting away, you need to track what people say about your business on social media platforms. What’s being said about your company is an increasingly important part of its personality. Creating a compelling strategy for your brand should only start once you fully understand who you are. Disney understands branding better than anyone. Maybe it’s time to take a cue from Uncle Walt and all those furry critters and figure out what’s your Mickey Mouse! FE

Mike McCarron is the managing partner at MSM Transportation (www.shipmsm.com) in Bolton, Ont., which specializes in moving products between Canada and the rest of the world. He can be reached at mmccarron@ shipmsm.com or @AceMcC on Twitter. trucknews.com

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TAKING CARE OF BUSINESS

SO LONG, STRESS! Easy ways to beat job stress and create a healthy workplace By Mark Borkowski

orkplace stress can tear us apart. It plays havoc with our physical and emotional wellbeing – and ultimately sabotages our performance. If you feel like you are precariously juggling both work and personal/ family life responsibilities, you are not alone. According to a 2010 Statistics Canada study (“Sources of stress among workers”), “About 62% of those highly stressed workers identified work as the main source of their stress. These individuals were generally well educated – almost three-quarters had a college or university education − and were employed in white-collar occupations.” I recently contacted stress consultant and registered holistic nutritionist, Rosalie Moscoe to seek advice on how we can integrate ways to tame stress. “Work consumes so much of our life,” says Moscoe. “The phrase ‘work/life balance’ is a bit of a misnomer. It poses a contradiction as it implies that work and life are two separate worlds. In actuality, we live in several worlds: emotional, physical, vocational, financial, social and spiritual. Stress can come from any of these aspects of our life. Be aware when one aspect infringes upon another, i.e. longer work hours, health issues, home responsibilities or relationship problems.” Moscoe suggests the following tips to keep stress at bay: 1. Commit to unplugging from your digital life each day – at home and at work (hint: turn off your phone). Use this 12 FLEET EXECUTIVE ❙ July/August 2012

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break to focus on quality time with family and friends or just enjoy time to yourself without distractions. 2. Examine your workplace infrastructure to determine where you can recruit additional support. Learn the art of delegating. 3. Limit multi-tasking, which diminishes mental productivity, elevates brain fatigue and increases stress. 4. Take back your lunch. Do you regularly work through lunch and/or eat at your desk? Take a mid-day break, accompanied by healthy food choices. Whenever possible, join a group of colleagues or friends for lunch. Socializing is a natural remedy to stress. 5. If your work situation allows and you don’t find it too distracting, work from home a few days a week. Relieve yourself of the stress of the daily commute and use this time to concentrate on completing projects. 6. Look to ancient wisdom – learn to meditate and quiet the mind of constant chatter/dialogue. Start by taking a few deep, full breathes each day – exhale through the nose. 7. Exercise. It’s a life-long commitment to keep our bodies fit. 8. Limit alcohol and junk food. As a motivational speaker and workplace wellness and health promotion expert for the past 15 years, Moscoe advocates that there are many wellness strategies executives and management can initiate to help trucknews.com

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TAKING CARE OF BUSINESS

employees (and themselves) to balance their personal and professional lives. While larger organizations often have the resources to develop policies that serve to enhance employee wellbeing, even smaller organizations can positively influence the health of employees. “A healthy workplace is as healthy as its people,” says Moscoe. “Executives, management and employees are responsible for creating the atmosphere. Each person, regardless of his or her status in the workplace, needs to attend to personal health practices such as exercising, eating well, refraining from smoking, getting adequate sleep and limiting alcohol consumption. “In times of downsizing and fragile economies, it is very important to help remaining staff deal with stress and the extra work they often face. Many feel they must not complain even if they feel overworked, undervalued or underpaid,” Moscoe says. So, what can employers do?

1. Lead by example. Executives set a tone and pace that trickles down. Be aware of your impact. A healthy work climate creates a sense of vitality and psychological presence among associates.

trucknews.com

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2. Show employees appreciation and establish rewards for a job well done. 3. Match the right employee to the right job and distribute workloads as evenly as possible. 4. Carefully listen to employees’ issues or concerns (in person, not always through e-mails). “It is imperative for executives and management personnel to monitor their own stress levels and become aware of them in their people,” reiterates Moscoe. “Encourage employees to take adequate breaks, maintain healthy habits and take care of themselves.” Tough times need not break apart organizations. Instead, they can be a time of coming together, listening, talking and brainstorming for solutions. With a positive attitude, you can help create a stress-free, healthy workplace, for your employees and yourself. FE Mark Borkowski is president of Mercantile Mergers & Acquisitions Corporation. Mercantile specializes in the sale of midmarket companies. Mark can be contacted at www.mercantilemergersacquisitions.com.

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THE HUMAN EDGE

Hire the behaviour, train the skill The new ‘mantra’ in assessing job seekers can lead to better retention By Julia Kuzeljevich

f there was a tool that told you just what makes your potential employees tick, and how they are likely to perform at their jobs, would you use it? According to John Lobraico, managing principal with Predictive Success Corporation, and former owner and manager of OK Transportation Limited, that tool exists – and it’s called the Predictive Index (PI). It’s an assessment tool developed in 1955 to help managers identify the motivations and drives of their people. The Performance Requirement Options (PRO) part of the tool profiles the behavioural requirements needed for optimal job performance. Lobraico is an advocate of behavioural management tools like the PI, because they help companies recruit and retain employees by getting past obvious things such as appearance, and by delving into behaviour and personality. Trained on the Predictive Index behavioural assessment tool in 2001, Lobraico developed programs at OK Transportation for the selection and training of all employees. He eventually developed a consulting practice as a natural extension of his 25-year career in the transportation industry. He said Predictive Success Corporation is currently the sole provider of the Predictive Index in Canada. It’s a process that combines behavioural assessment with training and consulting.

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Essentially, the index allows a company to find out what makes up the DNA top performers – what they all have in common. The index measures for dominance (the need to control one’s environment), extroversion (social interaction), patience, and formality. “When you’re looking at dominance, high aggression may not translate to the characteristic that best fits a role where you need someone to follow guidelines, or provide great customer service,” said Lobraico at the recent Private Motor Truck Council conference. The new mantra is hiring the behaviour and training the skill. “If you are focused purely on skills, and you’re still having people issues, it’s time to focus on behaviours. If you were to survey your top performers, you would find that there are similar behaviours. I urge you to make sure you look at an assessment that’s been validated for the role, whether it’s for sales, driver, franchisees, etc. Clients provide the criteria for what success looks like, and we do the behavioural back end,” said Lobraico. People who fit the behavioural profile of a safe driver, for example, essentially had no accidents, and no service failures. “A lot of time, the challenges faced by business are affected by the quality of the people you can recruit,” said Lobraico. In a 2011 Accenture survey on global awareness, C-level trucknews.com

12-07-26 9:56 AM

THE HUMAN EDGE

executives said their top three concerns involved finding and retaining the right people. “I think a lot of companies have a talent management approach, but I’m not so sure that it’s always tied in with the goals of the organization,” said Lobraico. When it comes to succession planning, for example, the leading companies of the world are already looking at the next potential candidates in the pipeline for CEO. Assessments are a way to uncover competencies that may indicate potential for successful performance in a new position or one involving greater responsibility. They are useful not only for succession planning, but also for training and engagement. Lobraico said there are usually three levels of decision at work when a company is hiring. The first two levels involve the visible stuff, such as appearance, knowledge, education, and manners. It’s the level three stuff – such as attitudes and motivation – that can lead to problems and sometimes terminations. “People who are engaged sell more and have fewer accidents,” said Lobraico. So how can a company best leverage behavioural assessments? “In a role where the skills and knowledge sets are the same, such as in nursing, is it fair to say a nurse is a nurse is a nurse? No, behaviour affects the role from ward to ward. Assessment allows you to understand who is the leader, and there are different leader styles (i.e. collaborative, or more aggressive),” he said. Working conditions also impact on performance. Optimizing employee engagement is about understanding if the employee fits the culture of your workplace. But an employee who is the wrong fit for your organization is not always at fault. “We often have a ‘sink or swim’ attitude with our managers, as with our drivers. One of the things you’ll find in organizations with multiple locations is that what drives the culture is the behaviour of the leadership at that particular location. If you’re sitting in an office talking with somebody about why they don’t fit the organization, whose responsibility is that? So tools like assessment put the spotlight on your managers. Ultimately, if we have people problems, we have a management problem. Either A, they don’t know how to hire, or B, they don’t know how to develop the employee. You can’t be all things to all people; your organization has a personality, and there are going to be people that don’t fit,” said Lobraico. It’s important to understand that “We lead people, we manage process. Assessment allows us to identify the strengths of those who are better able to manage process and lead people,” said Lobraico. In his years of experience in the trucking industry, Lobraico also observed that automatically promoting people to a higher role sometimes didn’t have the best results. “We had a history of taking our best people, promoting them to failure, and then they would go to the competitor and trucknews.com

TheHumanEdgeJuly12.indd 15

become their best people. The fact is, we need to understand that what makes us successful in a role is the same thing that makes us challenged moving to another role.” All of us have a filter, and sometimes, the right person for the right job doesn’t interview well. “Wouldn’t it benefit your organization to have a tool that will tell you what that person will be like on the job? Anytime you’re hiring someone or promoting someone, you have to decide, are you putting them in a place where they can succeed?” said Lobraico. Anywhere from 35-40% of job success, after all, comes from motivating behaviour and drive. “If someone is coming in for a driving job, they probably can drive. We do our due diligence, but what we really haven’t determined is, will they do the job, and do they fit our organization? Is it motivating to them? That determines if they will do it and if they will perform.” “A lot of time, when you’re more casual in your organization, when there are shortcuts, there are many reasons why the perfect fits leave.” The Predictive Index allows companies to manage the gaps that exist between the job model or the behavioural demands of the job, and the individual model, or the natural behavioural strengths of a person. “We have had people tell us the tool is great but it takes us longer to make a hire. But the retention is great. If you want to make a significant impact in your business, you want to hire slow,” said Lobraico. As the trucking industry faces more competition from other sectors for fewer and fewer available and qualified potential employees, a tool that enables companies to better fit the person to the mould becomes all the more essential. “What you’ll find is, in the new environment we’re going to come into, it is our good people that are going to leave. It’s not going to be your poor performers,” said Lobraico. FE

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MAINTENANCE MATTERS

SEE THE LIGHT Do you know what you should about Light Emitting Diodes? By Chuck Carman, curriculum developer, CARS

ight Emitting Diodes (LEDs) have been used in the trucking industry for various purposes for over 20 years. However, many people still consider them to be “new.” LEDs are now being used for any of the exterior lighting, including the white forward lighting. The operation of an LED is very similar to a typical diode: they both have two terminals, an anode and a cathode. LEDs can be forward-biased or reversebiased. Current will only flow when forward-biased. An LED is a PN semiconductor that radiates light rather than just heat like a regular diode. When current crosses the PN junction of a typical silicon diode, heat is created. An LED, instead, uses various mixtures of elements like gallium, phosphorus and arsenic to produce different colours of light, including white, when current crosses the PN junction. Producing white light is done in one of two ways. One method is to use three LEDs where each produces one of the three primary colours (red, green and blue) and then combine the colours to produce white light. The other way is to use phosphor, which converts a

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blue light into a white light. LEDs appear brighter than incandescent bulbs since they produce a monochromatic light – only one shade of a colour. LEDs are a solid-state electronic device with no moving parts, so there is no coil filament to vibrate and break or short and open the circuit. This is, in part, why they are able to last so long. In many cases, the lamp will last the lifetime of the truck. Incandescent bulbs have a life expectancy of as little as 1,500 hours while an LED may last for 100,000 hours of operation. LEDs provide a number of advantages over traditional lighting. They draw considerably less current than incandescent bulbs. For example, two incandescent stop lamp bulbs may draw approximately 4.2 amperes while the comparable LED assemblies will draw approximately 1.0 ampere. Two incandescent taillights may draw 1.2 amperes, but a pair of LEDs may draw as little as 0.15 amperes. This drop in required current puts much less strain on the truck’s electrical system. Another benefit is that manufacturers can use the same LED to function as a tail lamp and

a brake lamp; they just need to feed the LED more current to produce a brighter light and act as the brake lamp. LEDs allow for more light (lumens) from a smaller assembly. Reducing the size of the light assembly allows for greater flexibility in design and a reduction in overall material used. LED advancement has further improved over the years; where 70 LEDs were originally used in combination stop/tail lamps assemblies, they can now be produced using only three. Some manufacturers are introducing new flexible paper-thin LED lights that can be applied with adhesives and follow the contour of most surfaces. These products can be produced using about 2% of the material used in producing a standard LED lamp assembly, while still meeting the same CMVSS/ FMVSS photometric specifications. One of the common concerns with the use of LED lighting is the lack of heat on the lens cover, which assists in the winter months to keep the lens clear of ice and snow. Some light manufacturers have added thermostatically controlled heating elements to the lens cover that activate when trucknews.com

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MAINTENANCE MATTERS

the temperature drops down to the freezing point to assist in the winter months. Others state that the more intense light produced by the LED is able to shine through most accumulations of snow and ice. LEDs do, in fact, produce heat (just not as much as an incandescent bulb) and this heat needs to be properly managed. Heat can damage an LED, reducing its available light output. Many LED assemblies, especially white forward lamps, produce so much heat that the casings must be made of metal rather than plastic and have large heat sinks attached to properly dissipate heat from the internal circuits. FE

THE LED LOWDOWN: Light Emitting Diodes (LEDs) contain positively charged acceptor doped semiconductor material (P-type) and negatively charged donor doped semiconductor material (N-type). These semiconductor materials are treated to form PN junctions. With the addition of various chemicals, different colours of light can be produced.

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July/August 2012 ❙ FLEET EXECUTIVE 17

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GREEN to GOLD

NATURAL GAS COMES OF AGE Westport claims natural gas powered trucks deliver same efficiency, reliability as diesel By Julia Kuzeljevich

atural gas has come of age as a transportation fuel, offering compelling savings and a competitive advantage, according to Allen MacKinnon, a regional field service engineer, eastern North America, with Westport HD. MacKinnon presented at the Private Motor Truck Council’s annual conference this June in King City, Ont. Westport HD-powered trucks are hauling up to 140,000 lbs with the same efficiency and reliability of diesel engines, and can be available within eight weeks for delivery in the yard, MacKinnon says. Westport has become a global leader in medium- and heavy-duty commercial vehicle engines operating on alternative fuels and is heavily focused on the transformation of markets for petroleum-fuelled engines to alternate fuels. The Vancouver-based company has invested $250 million and 20 years of development in alternate fuels. Westport is aiming for market penetration via OEM partnerships and joint ventures. The company currently has 400 patents, 130 specific inventions and 30,000 engines. “In trucking, natural gas has a lifecycle operating cost that is much lower than diesel, with the same horsepower, torque and fuel economy as the base diesel engine,” said MacKinnon. On greenhouse gas emissions, natural gas has approximately a 25% well to wheel GHG. “With downward pressure on natural gas prices, the forecast is for consistently low prices. A price differential of $1.50 between natural gas and diesel is not unheard of,” he said. Westport is currently engaged in producing and selling technologies for all types of applications. Its heavy-duty 15-litre engine, for example, is based on Cummins’ 2009 ISX engine. “We outfit it with all our natural gas components in Delta, B.C.,” said MacKinnon. The ISL G engine, meanwhile, runs a three-way catalyst aftertreatment, with no SCR and no DPF, said MacKinnon. It has more than 80% parts-commonality with ISL 9, and is compatible with CNG, LNG, or biomethane. The cost of maintenance related to ignition and overhead valve adjustments does add incremental maintenance cost for the ISL G versus the ISL 9, but MacKinnon said this cost is typically more than offset by fuel cost savings with natural gas. And natural gas engines are up to 10 decibels quieter at idle, he added. The ISX 12G, Cummins’ next product, is set for

commercial launch in first quarter of 2013. It’s currently undergoing field testing. Westport’s heavy-duty High Pressure Direct Injection (HPDI) technology, based on Cummins’ 2009 ISX engine, sees diesel fuel injected just prior to the natural gas. A “liquid sparkplug” provides compression ignition. Natural gas is injected at high pressure at the end of a compression stroke, with no pre-mixed air/fuel, and with just 5% diesel usage. The engine performance offers the same power and torque and the same efficiency as a diesel engine, said MacKinnon. Westport HD’s LNG tank technology essentially “works like a Thermos,” he said. The gas is stored as a cryogenic liquid, and the tank, with its internal hydraulic pump, pumps the liquid natural gas into the engine to run it. Each stroke turns it into compressed natural gas. At one to two fuel tanks per vehicle, the additional truck cost ranges from $75,000-$100,000, said MacKinnon. “You have to go through more volume of the less energydense liquid natural gas. A 120 gallon tank has a 300-mile range of 54 diesel gallon equivalent units (at 5.5 mpg US),” he said. In terms of volatility, MacKinnon said that the LNG tanks are in themselves extremely safe and resistant to damage. “They are drop tested from 30 feet and cannot have leaks. The amount of compressed natural gas on board (10 litres) is also relatively small compared to the amount stored on buses,” he said. Several fleets have made the transformation to operating natural gas trucks, said MacKinnon. “Vedder Transport is running 50 Peterbilt LNG tractors in milk haul and regional tank operations, and in waste hauling,” he said. Robert Transport has a 180 Peterbilt order running the Westport HD 15L engine. It also has more than 60 trucks currently running with LNG fuel supplied by Gaz Metro, said MacKinnon. Alberta-based Ferus Wellsite Cryogenics Solutions is transitioning their 80 tractor fleet to LNG, and the company expects more than 7,600 tonnes/year reduction in emissions – equivalent to 1,300 cars, said MacKinnon. Westport’s target customers are still the more regional or local fleets, as infrastructure for delivering natural gas is still in its infancy. “Westport is now investing tens of millions of dollars in support infrastructure. Shell has committed to building 200 of these fuelling stations at their truck stops over the next few years,” said MacKinnon. FE

18 FLEET EXECUTIVE ❙ July/August 2012

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GREEN to GOLD

THE INSIDE TRACK

Fleets wanting to test new technologies can take advantage of the pooled resources and studies at PIT. By Julia Kuzeljevich

rivate truck fleets interested in testing and implementing energy efficient technologies for heavyduty vehicles can benefit from services such as Performance Innovation Transport (PIT). The Private Motor Truck Council (PMTC) has developed an agreement with PIT – formally announced at the annual PMTC conference this June – for members to access the various services offered at PIT. PIT offers testing on a track managed by PNG technologies. “They manage Transport Canada’s motor vehicle test and research centre on 25 km of test tracks, and a variety of surfaces,” said Andrew Hickman, senior technician at PIT. In 2007, two fleets (Cascades and Robert Transport) were doing their own testing, and brought in FPInnovations, with its expertise in networking with R&D groups, to validate the protocols and processes and to be a third-party intermediary. “We created a test campaign called Energotest, testing 19 technologies in five days over 50 fleets who participated in the unveiling of the results several weeks later. This success led to the creation of a full program at the request of the industry in 2008; the program was called PIT,” said Hickman. Eight campaigns later, essentially PIT acts as a hub for fleets, clients and governments who are interested in cost and emissions reductions, said Hickman. It’s a member-driven organization and projects are aimed at creating solutions. In 2008, PIT received the AQME (Quebec Energy Association) Energia award for the project “Testing and Implementation of Eco-Energetic Technologies for HeavyDuty Vehicles,” said Hickman. “It takes the guesswork out of selecting the right technology for fleets,” Hickman said of PIT, allowing for a focus 20 FLEET EXECUTIVE ❙ July/August 2012

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on the implementation of innovative technologies for maximum ROI. PIT members comprise 30 Canadian and US fleets with more than 10,000 tractors and 30,000 trailers, as well as federal and provincial government agencies, and municipalities. “We can bring the cost of testing down by pooling our resources,” said Hickman. Recent work has also been done on the light vehicles side for municipalities, he added. Test customers come from all over the world to access dedicated tests on track, road, off road, and in climatic chambers. Consulting, training and workshops are also available, as are tech guides covering such topics as biodiesel, tire pressure management systems, and IV-ITS Implementation (i.e., onboard computers). PIT has done studies on duty cycle test procedures, an overview of boat tails, and on ECM. “There are also some long-term operational observations going on in evaluating the service of hybrid delivery trucks, on the development of a hybrid truck best practices guide, and on disc brakes,” said Hickman. In terms of testing on energy-efficient technologies, PIT is looking at aerodynamic drag reduction measures, rolling resistance measures, and technologies for improving powertrain efficiency. Under the Energotest model, “The main objective of testing on track is to conduct controlled test track studies to eliminate variables,” said Hickman. Technology suppliers are referred to PIT by fleet members. PIT organizes Energotest campaigns by bringing together fleets and tech suppliers several weeks each year. “We’re now doing some more developmental processes where fleets can rent the track for a time period and

test various technologies at once,” said Hickman. Since 2007, eight campaigns and about $1.5 million in testing has been paid for by suppliers, and some 150 technologies and best practices have been tested. “To be honest, you can’t do this as a single fleet. We try and take the pressure off the shoulders of the fleet – our engineers are already devoted to looking at new technologies,” he said. In 2012, two campaigns were scheduled for May 28-June 6 and Sept 10-19. The Energotest methodology for fuel consumption tests includes high speed test, duty cycle test (developed with Transport Canada) and test procedures based on SAE J1321: Type II (component testing), and SAE J1526: Type III (vehicle testing). “We can identify infinitesimal changes in driver behaviour that can affect the testing,” noted Hickman. An auxiliary tank filled with diesel is attached to truck to run the cycle. At night, marshals are out monitoring the track to keep animals off, said Hickman. “We have done 90 supplier tests and 57 PIT in-house tests. We’ve also done environmental chamber fuel testing; for example, comparing the fuel consumption of the same refrigerated unit on the same test vehicles, but with two different refrigerated van boxes: one a classic design of aluminum and steel joints, insulated with sprayon urethane foam; and one a new design of highdensity polyurethane sandwich panels, without any joints; at an ambient temperature of +30°C, and with a refrigerated box interior temperature of -10°C,” said Hickman. A big part of the testing is on emissions. PIT owns a portable emission Continued on page 35 trucknews.com

12-07-26 9:50 AM

GREEN to GOLD

TRANSPORT CANADA PROGRAM IDENTIFIES WAYS TO GREENIFY TRUCKING

he Canadian Trucking Alliance says it’s encouraged by Transport Canada’s move to fund the next phase of the ecoTechnology for Vehicles Program – a five-year, $38-million program that will proactively test advanced vehicle technologies to develop safety and environmental regulations, as well as industry codes and standards. The plan builds upon a successful predecessor program with the same name that was focused on testing environmental technologies for passenger cars. The new program, however, will expand testing activities to include heavy-duty trucks and a broader range of technologies. “In these challenging economic times, CTA is appreciative of Transport Canada dedicating limited resources to research in our sector which could result in the identification of opportunities or challenges associated with green technology,” said CTA senior vice-president Stephen Laskowski. “This research will no doubt identify ways to green our sector without introducing unnecessary costs, as well as, hopefully, identifying challenging technology that is not worth pursuing.” For a list of the heavy truck projects slated for inclusion under the ecoTechnology program, see the list included below: ➤ Studying the feasibility of replacing truck rearview mirrors with on-board cameras to improve aerodynamic efficiency. eTV will test the reliability/ durability of the camera equipment, study human factors consideration, and investigate user acceptance. Results will help develop vehicle safety regulations and support the implementation of future environmental regulations. ➤ Conducting scale-model aerodynamic wind-tunnel testing to measure the drag reduction capabilities of aerodynamic devices (e.g. cab trucknews.com

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under-body treatments, gap reduction methods, long combination vehicles) equipped on long-haul truck-trailer combinations. Results will help develop North American emission regulations, and help industry integrate new innovations into the Canadian market. ➤ Studying the potential for boat tails (aerodynamic fins affixed at the end of tractor-trailers) to affect other road users due to the spraying of snow, ice, mud and other debris. Scale-model wind-tunnel testing and track testing will be performed. Results will help develop safety regulations and non-regulatory codes and standards. ➤ Studying the safety benefits of side skirts (an aerodynamic sheet of material that fills the gap from the bottom of the truck trailer to the ground and in between front and the rear axle of the trailer) versus side guards (metal bars in the same area) to withstand pedestrian impacts at standard temperatures (20°C) and cold temperatures (-25°C). Results will help develop safety standards, and non-regulatory codes and standards. ➤ Testing the performance of hybridelectric trucks across a variety of operating conditions, including cold weather. Results will be gathered on emissions performance and fuel consumption. This work will support the development of future environmental regulations, the development of non-regulatory codes and standards, Government of Canada energy efficiency programs, and the development of global technical regulations. ➤ Testing the safety and environmental performance of compressed natural gas (CNG) and liquefied natural gas (LNG) vehicles to assist with provincial weights and dimensions regulations, emissions regulations, industry codes and standards and to support the work of the Technical Advisory Committee that is implementing the recommendations of the Natural Gas Use in Canadian Transportation Sector Deployment Roadmap.

➤ Conducting cross-comparison testing of various alternative fuel vehicles (such as compressed natural gas, propane, gasoline, diesel, and electric) in the laboratory to assess performance, fuel consumption and emissions, (e.g. greenhouse gas, black carbon, etc.) This work will support the development of future environmental regulations and Government of Canada energy efficiency programs. FE

Stiffer pavements could reduce vehicle fuel consumption by 3%: study

recently released MIT study shows that using stiffer pavements on US roads could reduce vehicle fuel consumption by as much as 3%. Officials say the resulting savings could add up to 273 million barrels of crude oil per year ($15.6 billion worth based on today’s oil prices) and an annual decrease in CO2 emissions of 46.5 million metric tonnes. The study is the first to use mathematical modelling rather than roadway experiments to look at the effect of pavement deflection on vehicle fuel consumption across the entire US road network, officials said in a release. The study found that deflection under the tires is similar to that of beach sand underfoot: With each step, the foot tamps down the sand from heel to toe, requiring the pedestrian to expend more energy than when walking on a hard surface. Stiffer pavements would decrease deflection and reduce the tire’s “footprint.” “This work is literally where the rubber meets the road,” says Professor Franz-Josef Ulm, the George Macomber Professor in MIT’s Department of Civil and Environmental Engineering. “We’ve got to find ways to improve the environmental footprint of our roadway infrastructure.”

July/August 2012 ❙ FLEET EXECUTIVE 21

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12-07-24 12:44 PM

ProfitabilityJuly12.indd 22

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COVER STORY: MERGERS & ACQUISITIONS

M The pace of mergers and acquisitions is expected to heat up. Read on to get our expert advice for both buyers and sellers

trucknews.com

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12-07-26 9:53 AM

COVER STORY: MERGERS & ACQUISITIONS

LET’S MAKE A DEAL A look at best practices for mergers and acquisitions By Julia Kuzeljevich

he pace of mergers and acquisitions in the Canadian trucking industry could become a significant trend in the near future, according to industry analysts. In a for-hire industry of more than 12,000 carriers competing for about $35 billion in annual revenues, and dealing with an average operating ratio of just six cents on the dollar even in good years, large carriers have made it clear they would like to consolidate the industry, while mediumsized and small carriers, have indicated interest in either growing by acquisition or selling. A recent survey of M&A trends south of the border found that 30% of fleets earning less than $25 million annually are looking to sell their businesses within the next 18 months. More than 50% are interested in purchasing a company. Doug Nix, vice-chairman of Corporate Finance Associates,

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and Doug Davis, independent director with Pro-Trans Ventures, provided their insights on this trend at the Driving for Profit seminar series, sponsored by our sister publication Truck News, Dalton Timmis Insurance and Daimler Truck Financial and organized by NAL Insurance. The session, moderated by Transportation Media editorial director Lou Smyrlis, went into detail about current trends and how carriers can best respond. Last issue, we examined the appetite for mergers and acquisitions. This issue, we look at best practices for both buyers and sellers.

Insights for Buyers “What we’re seeing is that there are more buyers than sellers. But there are people who are coming out of the doldrums, who are saying ‘I’m not going to be at this forever.’ I think trucknews.com

12-07-26 9:53 AM

COVER STORY: MERGERS & ACQUISITIONS

GreentoGol a number of people are moving to that point,” said Davis, emphasizing that demographics will play a role in future mergers and acquisitions prospects, with the older contingent of the baby boomer generation contemplating retirement or an adjustment in hours worked. It may make sense for some buyers to go out and look for companies that may not already be for sale. Many companies will be flattered by the interest, even if they are not interested in selling at that point. “Our philosophy is to start with a strategy of looking for businesses that look ‘like this.’ So our approach is to go proactive and look for these companies,” said Nix. “If we create our profile of the perfect acquisition, we can figure out which ones are going in the yes and no bins pretty quickly,” said Davis. Nix , meanwhile, complained that one of the “malaises” of Canadian trucking is that a number of people in the business are “bargain-focused” as opposed to paying a premium for a better, stronger business. Purchasing in a specialized market without enough knowledge of the market could spell trouble – unless you aim for proper knowledge transfer by offering the current specialists a retention bonus, for example. “People talk about acquisitions for specialized markets. But trying to find the kind of specialized markets that appeal to people, something they will actually pull the trigger on, is tricky,” said Nix. According to Nix, the specialized knowledge aspect may be just on the key parts of the business, and not necessarily on the entire business. “How we define specialty markets is by ‘buried entry.’ It can be specialized knowledge, permits, long-term contracts, equipment, anything that makes it difficult for someone else to come in off the street. You have to pick up the people who have that specialized knowledge and, in the end, it’s about transferring

that knowledge as a group,” said Davis. He said that when it comes to all Canadian businesses trying to get into US markets, “They go to the US and they just trade dollars. They don’t often realize the importance of local expertise. There are so many different nuances territory to territory, region to region. Before you go to look in the US, in your checklist, you have to have a local understanding of the marketplace.” During an acquisition or merger, “over manning” the process for awhile is probably not a bad thing, said Nix, but if you have too many people, it gets complicated. Both he and Davis noted that having a transaction lawyer, banker, and your operations people on the team at the outset is a good idea. Keeping your core business running in the background is another factor to consider. “Do you have the bandwidth to do the acquisition? If you don’t have the people, you will have a difficult time later,” said Nix. “Your extended team for the acquisition later becomes some of your middle management. Your existing business can end up being run sideways; it helps to give your management team heads up about the possible need for them to take on a little more,” said Davis.

Sometimes if there’s just one offer on the table it’s a leap of faith to say that’s the best offer.” tonnes in carbon offsets and currently he’d “Get planning right now if you intend get about $240.” to be a buyer or seller over the next few That might not seem like a lot of cash years. If you’re a buyer, then start to back considering the work and investment determine what you need to fix in your involved, but, if nothing else, it could give a own business,” said Davis. company bragging rights and maybe a marOften it’s a safety record, or general keting tool. On the other hand, the financial climate, that could use some attention. or marketing bottom line may not be the “The one thing about mergers is most important aspect of the program, to that it’s rare to have a merger of two some. The value of fuel saved outweighs the equals. Very early on, somebody’s on value of the credits and it always will, Arcand first base. And safety is a key business told the Sun, but the social value of contribrisk. Generally, poor safety means poor uting to a cleaner environment is priceless. culture,” he said. As for what a trucking company has to If you are selling to a family member, do to comply, Stedeford says COAC proor transferring the business from one vides the expertise and does all the work. generation to the next, be aware the “We basically come in and do all the inemotions will come into play, but stallation,” he says. “We do an awareness financial issues should be handled session, we put our modems in (the trucks), intelligently. we capture all the data and we send reports “If you are going to do a generational to the company to let them know where transfer, I implore you to get third party they need to focus, which operators need a financing where the kids have to pay you little bit of help in a certain area.” at the time of transfer,” said Nix. FE Equipment is installed by COAC to ac-

MERCANTILE MERGERS & ACQUISITIONS

Insights for Sellers

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

If you are set on selling your company, the right time to sell is when you’re ready to, as long as you have a good quality business. But it’s essential that you maximize your company’s value. “If you have a business that’s a bit of a dog, you probably need to get that fixed up,” said Nix. “Clean your offices, wash your fleet once in a while. Get your books and records in order, and get personal stuff out of the corporation. To the extent you can cut down on this stuff makes it easier for buyers to see what the business is. I’m a big proponent of the competitive bidding process, inviting well qualified buyers into a controlled process.

Contact (in confidence): Mark Borkowski, President at: (416) 368-8466 ext. 232 or mark@mercantilema.com Mercantile Mergers & Acquisitions Corporation 22

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curately measure f Stedeford says hardware, though. gram,” he says. “S with all of the opera es they can make th the amount of fuel COAC’s Web tion of their equi non-hydraulic lifti excavator, is $4,0 the setup itself. T change for a veh COAC can help th “We actually d says. “We come in gether, we sugge should put into the when to do it, we very much a win-w Truckers who f bon offsets attracti to surrender their themselves out of “If someone do carbon offsets wo you have to be in says. “So while th emissions) they ca it’s gone through agreed-upon met haven’t, they shou their customers t duced (their emiss It may end up b too long, anyway, Trade concept be something Steded pen (short of a cha ment, perhaps). It’s basically a c where the pollute rewarded for being cooperative alread bers across the pro

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July/August 2012 ❙ FLEET EXECUTIVE 25

12-07-26 9:53 AM

COVER STORY: MERGERS & ACQUISITIONS

THREE STEPS TO AVOID MERGER MELTDOWN By Mark Borkowski

he easiest time to change is when we’re in crisis mode. It’s human nature to resist change unless a decisive moment forces our hand. During a merger, transition can be overwhelming for employees and problematic for companies to manage. Leadership expert and internationally acclaimed business consultant Susan Steinbrecher puts it this way: “During a merger or an acquisition, there is usually a disproportionate amount of time and money spent on the financial due diligence and sadly, very limited resources are allocated to the ‘people due diligence.’ But numbers don’t make a merger work – people do.” Steinbrecher says that “people capital” can make a merger thrive – or take a dive – and maintains that there are three steps to effectively navigate through the storm.

Step One: Clash of the Cultures “Most companies think they can easily assimilate two completely different company cultures into one. This can be a recipe for disaster,” says Steinbrecher. When you take the time to explore the similarities and the distinctions of both company cultures, you can conceive a more effective communication strategy. Tip: Share best practices of both companies – not just the acquiring firm – and leave the corporate ego at the door.

Step Two: Communicate! “Bottom line: managers need to communicate more, show more empathy, have open forum conversations, allow employees to vent and, yes, even show their emotions at times,” maintains Steinbrecher. This generates a healthier 26 FLEET EXECUTIVE ❙ July/August 2012

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forum rather than an environment filled with disgruntled employees who may not be at their best under duress. They may even take it upon themselves to attempt to sabotage the business. “If your employees are working in a service role, would you want them to be stressed out and insecure – or worse, angry and upset? Wouldn’t it be better if they were on an even keel and, ultimately, more productive? At the end of the day, people want to be heard. They want their questions answered, and their fears identified and addressed. When a company leader cannot provide answers or refuses to communicate, it forces people to make up their own story. This has a spiral effect leading to a major impact on employees’ mental health.” Steinbrecher says it’s most important to address the emotional aspect of the merger before the business side. “Get their hearts before their minds,” she says. “What do you imagine your employees are thinking and feeling? They are scared and upset and may have lost their friends to downsizing or wonder if they’re next on the chopping block. If they’ve already lost a close friend due to the merger, they may feel like they have lost a family member: it can be traumatic.” Address the 800-lb. gorilla in the room, head-on. The more you engage them, the more you will disarm them – giving you the opportunity to engage their mind. Summon up the courage to answer the difficult questions – even if you don’t have definitive answers. This will engender the utmost respect for you, the leader. Tip 1: If you don’t have answers, don’t change the subject; simply say: “I don’t have that answer for you today, but my commitment to you is that as soon as I have it, I will get back to you. Here is what I can tell you…” trucknews.com

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COVER STORY: MERGERS & ACQUISITIONS

Tip 2: Explain what is happening and why – particularly important in any new decision that affects employees. Tip 3: Communicate in more personal settings of smaller groups or “roundtables” – this will impart a sense of encouragement and support.

Step Three: The Four Energy Quadrants If you are a leader involved in a merger or acquisition, it is imperative that you take particularly good care of yourself so that your energy reserves do not become depleted. Of equal importance is the health of your employees to ensure they are operating at their optimum capacity. Steinbrecher says the four “quadrants” of energy that must be addressed are: physical, mental, emotional and spiritual. 1) If you observe a physical deficit, you will notice fatigue. Pay close attention to proper diet, sleep and exercise.

M & A quick tips

There are pros and cons to be aware of if you are looking to merge with or acquire a company. By Julia Kuzeljevich When it comes to a “bolt-on” scenario, the advantage is you already understand the business, so it can be easier for owners and lenders to get their heads around it. The risk, however, could be that these companies are “usually run by two or three people that understand the risks and just a few major clients,” said Doug Davis, an independent director with Pro-Trans Ventures. “Who’s to say that those clients and executives don’t go somewhere else? Ownership of the customer is a risk.” Another risk involves proper value transfer, and knowing when to make a move. “If you have a fairly aggressive, progressive management team, or if you want to take your organization to the next level, mergers and acquisitions is a key component of that. To start any proactive acquisitions work, we start with helping clients figure out where they are trying to get to,” said Doug Nix, vicechairman of Corporate Finance Associates. “At the end of the day, all businesses are the same: it’s either grow or die before overhead creep diminishes your returns,” added Davis. But you should also look closely at your current business and your management team to figure out if you were twice the size, would management’s skills sets still apply? “You have to think about that in advance before you hit the road looking for acquisitions. The key thing is to understand the underlying business risks of acquisition, the underlying contracts, operations processes, and once you outline all the business risks you have to attach the right kind of folks,” he said. Having a transaction lawyer, banker, and your operations people on the team at the outset is a good idea.

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2) An emotional deficit pertains to negative thoughts, which can be tackled through proper communication (see Step Two). 3) A spiritual deficit shows up as lack of motivation and sense of purpose. By offering reassurance and encouragement, you uphold their resolve and enthusiasm. 4) When there is a mental energy deficit, employees become distracted, so involve them in decisions whenever possible and make sure they are clear on your expectations. Tip: “Try meditation,” says Steinbrecher. “It is the best remedy for a distracted mind.” FE Mark Borkowski is president of Toronto based Mercantile Mergers & Acquisitions Corp. Mercantile is a mid-market M&A brokerage firm. You can contact Mark at mark@mercantilema. com or www.mercantilemergersacquisitions.com. Keeping your core business running in the background is another factor to consider. “Do you have the bandwidth to do the acquisition? If you don’t have the people you will have a difficult time later,” said Nix. “Your extended team for the acquisition later becomes some of your middle management. Your existing business can end up being run sideways. It helps to give your management team heads up about the possible need for them to take on a little more (during the M & A process),” said Davis. For asset-based operations 3.75 x EBITDA (earnings before interest, taxes, depreciation, interest and amortization), applied to normalized earnings, is a common valuation, he said. But the market value of a business is ultimately what someone is willing to pay for it. “You can use all kinds of multiples. But it’s based on what the market can pay,” said Davis. If you are employing legacy staff post-acquisition, don’t assume that you can impose new conditions or less advantageous conditions on them. “They are human beings and if they are good, they have options,” he said. “If you use your same people principles you’re using to keep your key people, you’ll be just fine,” noted Davis. Avoiding the critical mistakes In the run up to an acquisition, Nix has observed that some buyers become so nervous, they try to build in a series of protections that no seller would ever accept. “So they start stacking the cards against themselves right away. I don’t think you should ever bet the farm on an acquisition. Take it in reasonable sized chunks,” he said. It’s also critical to apply a high level of planning around the execution at post-close. “It’s about ensuring that you get the juice out of the deal that you expected. It’s a balance of interests between buyer and seller. Somewhere in between, there will be an appropriate balance,” said Davis.

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12-07-26 9:53 AM

BORDERING ON HARMONY Canada and the US have plans to harmonize and streamline business at the border. But will this mean more regulation for motor carriers? By Julia Kuzeljevich

s a sector, the Canadian trucking industry is greatly affected by border trade and security policies. Canadian and American truck transportation markets are largely separate and protected, with respective governments inching slowly towards better streamlining day-to-day operations at the border. In fact, Canada and the US are undertaking several initiatives to harmonize border regulations. In �� late 2011, US President Obama and Canadian Prime Minister Harper announced the Perimeter and Economic Competitiveness Action Plan, a 28 FLEET EXECUTIVE ❙ July/August 2012

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move the Canadian Trucking Alliance (CTA) has championed. “Despite the odds, the Canada-US border agreement announced by the Prime Minister and the President just before Christmas was, in my opinion, an historic achievement that takes meaningful steps to bringing the Canada-US border into the 21st century. What is called the Perimeter and Economic Competitiveness Action Plan effectively balances security and trade imperatives while restoring a meaningful return on investment in the trusted trader programs and creating the opportunity for a more efficient and productive border,” said CTA CEO David Bradley. trucknews.com

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BORDER

Photo courtesy of: Westport Innovations Inc.

The CTA, which has consulted extensively with both the Beyond the Border Working Group and the Canada-US Regulatory Cooperation Council, said that of the measures announced, “Perhaps the greatest bang for our buck is the agreement to harmonize data requirements to restore carriers’ ability to move Canadian domestic shipments in-transit through the United States. This is something CTA has been pursuing for almost 10 years.” Both countries have also agreed to the mutual recognition of, and cooperation on, air cargo security. On May 31, Canada and the US announced that cargo shipped on passenger aircraft will now be screened only once for transportation security reasons, at the point of origin, and won’t need rescreening prior to upload on an aircraft in the other country. The aim is to reduce delays and economic costs caused by both countries screening the same cargo twice. The two countries are also developing joint emergency border traffic management strategies. The “Considerations for United States-Canada Border Traffic Disruption Management guide,” will “manage the flow of traffic near the border during a disruption,” said Canada’s Public Safety Minister Vic Toews. Public Safety Canada (PS) and US Department of Homeland Security (DHS) officials will be adapting the guide to specific points of entry and conducting cross-border regional exercises, reporting annually on the percentage of priority border crossings that are covered by a regional plan and validated through an exercise. A new consultation process on cross-border business is also in the works, that will see Immigration and Multiculturalism Minister Jason Kenney and US Department of Homeland Security (DHS) Secretary Janet Napolitano meet with stakeholders to focus on 27 areas, including agriculture, food, pharmaceutical, motor vehicles, marine transport, and the movement of dangerous goods. But as efforts to harmonize go forward, there’s still a lot to be ironed out in terms of how things will play out in the transportation sector, and to whose benefit. Canadian Trucking Alliance vice-president of Customs Jennifer Fox said that in a recent discussion with Minister Kenney, CTA raised the issues that carriers sometimes have getting certain trucks across the border, specifically restrictions on US drivers moving Canadian equipment. “Regulation is clear that this type of move is not permitted. We are hopeful that Minister Kenney will look at ways to reduce regulatory burdens to carriers on immigration and equipment restrictions,” she said. “There are many areas where the two countries could come to an agreement and reduce costs. Harmonization is not always required to get the same effect,” said Brian Bowen, a Customs expert with Bowen Enterprises who sits on the Beyond the Border meetings for the Private Motor Truck Council. He cited the dual bumper standard between Canada and the US. trucknews.com

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“It’s an area where manufacturers and industry could create a common standard versus building to two standards. I would also like to look at a process that would certify wood pallets as pest-free so that they would not be subject to delays at the border. Now we’re implementing reciprocity, and adding a layer of risk management,” he said. The logistics of Hours-of-Service will be easier to manage as modernization plans go forward under the Cargo Control and Sufferance Warehouse Modernization BCCC Sub-Committee, said Bowen. In March, the Canada Border Services Agency held its inaugural Cargo Control and Sufferance Warehouse Modernization Sub-Committee meeting. The objectives of the committee are to modernize current Cargo Control and Sufferance Warehouse Programs to achieve greater efficiencies for trade and the agency, better align with eManifest, modernize these processes, establish better/smarter controls of unreleased cargo, better support of the CBSA’s examination program and achieve simpler and more consistent national policy. “There are fewer and fewer of these warehouses in Canada. But not all enforcement people may be on board with the plans,” he said. In April, the CBSA issued Customs Notice 12-011, eliminating individual permits on steel and steel products, a move impacting importers and brokers and changing the procedures carriers have previously had in place – with this aspect of clearance auditing now being done after the truck has actually crossed the border. “It removes that layer of responsibility from the carrier,” said Bowen. Progress on border initiatives may be slowed by summer recess and an approaching election. Even trying to book a meeting constitutes “consultation,” noted Bowen. He added the concern that, with Beyond the Border, if one country wants to add a restriction, and they’ve agreed to standardize something, when they’ve jointly made a mistake, how likely are they to reverse it? Denis Prud’homme of Prudhomme International, former president of the Saskatchewan Trucking Association, sat on the Red Tape Reduction Commission that convened between January and March 2011 to gather information about red tape irritants affecting business productivity. “I think the biggest priority is the centralization of information, the single window for information, and use of electronic services. We heard that it’s tougher to do business in Canada than it is in the US. The cost and burden of regulation to business is huge in terms of some of our requirements. I think some of the red tape will be reduced and it should be. Most of the things we worked on were processes to develop new regulations or streamline the current ones,” said Prud’homme of his experience. “The biggest change that could happen for road carriers is inter-provincial harmonization. I led the Western Canadian July/August 2012 ❙ FLEET EXECUTIVE 29

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BORDER

harmonization group when I was head of the STA. There needs to be a lot more work done nationally and internationally. We’re in a global marketplace and we’re fighting over our turf in the different provinces. Of course, you’ll have the geographical differences that impact on certain regulations, but we need to get our stuff together in Canada. Internationally, the impact on Canadian manufacturers getting rid of some of the red tape and making it easier to do business in Canada would also have a huge impact on road and rail. I think that governments have to move at the speed of business because it does impact our standard of living at some point,” he said. Another thing that could help speed movements is a single trusted trader program. In a May 17 address to the US House of Representatives on “Customs Trade Modernization, Facilitation, and Enforcement,” Customs and Border Protection’s (CBP) Acting Commissioner David Aguilar said that CBP is studying the possibility of merging the Customs-Trade Partnership Against Terrorism (C-TPAT) and the Importer Self-Assessment into a single trusted trader program, in order to increase turnout.

“THERE ARE MANY AREAS WHERE THE TWO COUNTRIES COULD COME TO AN AGREEMENT AND REDUCE COSTS. HARMONIZATION IS NOT ALWAYS REQUIRED TO GET THE SAME EFFECT.” – Brian Bowen, Customs expert, Bowen Enterprises “CTA interest lies in the harmonization of C-TPAT with Canada’s PIP program. The Alliance applauds the Perimeter Action Plan’s mutual recognition of the two main ‘trusted trader’ risk assessment programs: the US Customs-Trade Partnership Against Terrorism (C-TPAT) and the Canada Border Services Agency’s Partners In Protection (PIP). CTA had been urging greater flexibility in how each program determines carrier and shipper access to FAST lanes into Canada. Currently, companies must apply to both programs separately, despite the fact that the information required is identical,” said CTA’s Bradley. Canada and the US have also agreed to examine ways to allow FAST cards to meet requirements of other security programs, involving CBSA, CBP and other government agencies, eliminating the need for both FAST and TWIC cards. A pilot slated for launch at the Port of Montreal will introduce an “inspect once, accept twice” concept, where freight arriving at the North American border will only be inspected by one Customs agency, but will be accepted by both countries. And a pre-clearance pilot will be implemented at a land border (likely the Peace Bridge) by September. 30 FLEET EXECUTIVE ❙ July/August 2012

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“We’ll have to make sure this doesn’t mean trucks will be stopped twice (leaving Canada and entering the US), but we look forward to working with governments and local port officials on this initiative to ensure optimum efficiencies are achieved,” said Bradley. At press time, Ontario’s Ministry of Transportation had just passed a regulatory amendment, effective July 1, to allow longer wheelbase tractors for single, tandem and tridem semi-trailer configurations. Under the change, the maximum allowable tractor wheelbase will increase from 6.2 m (244 in.) to 7.2 m (282 in.) for vehicles classed as SPIF1 (Safe, Productive and Infrastructure Friendly) Designated Tractor-Trailer Combinations. To accommodate for the longer tractors, MOT will use a similar formula to other jurisdictions, which reduces trailer wheelbase as tractor wheelbase increases, allowing the configuration to negotiate turns the same as any other vehicle. Currently, all other Canadian provinces allow a longer wheelbase tractor, although all but one (Nova Scotia) only do so by special permit. (There is no maximum tractor wheelbase requirement in the US). While this change has been welcomed, when US Customs and Border Protection announced in May it would be going ahead with a requirement for mandatory reporting of residue in tanker trailers entering the US, CBP said that soft enforcement on the reporting of residue in tanker trailers would begin on Sept. 29, followed by full enforcement on Dec. 28. CTA called it an action that “doesn’t make sense in the context of the border agreement.” “The agency has yet to explain to the industry what either hard or soft enforcement will mean, or how the trading community is expected to comply,” said CTA. The rule, originally published on July 17, 2009, will require all empty tanker trucks, ISO 20-foot tanks, rail tanks and large bulk carriers to provide a manifest and file a Customs entry for all cargo residues entering the US. Prior to this change, cargo residue was treated as part of the Instrument of International Traffic, exempting it from manifest and entry requirements. Under the ruling, residue left in a tank truck after unloading will have to be measured and valued. “CBP’s response has been to warn carriers that simply reporting a zero or near zero value could raise a red flag with CBP officers and may lead to increased inspections at the border,” said the CTA, which noted that questions about the ownership of the residue are an important liability consideration that CBP has left unanswered, except to say that where there is no clear owner or importer of record, the residual cargo can be deemed abandoned by the consignee, thus making the carrier by default the owner. If the burden of compliance rests with carriers, it could also impact negatively on a trucker’s ability to use the border FAST lanes, making the whole concept of smooth border crossings out of reach. FE trucknews.com

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12-07-26 9:47 AM

TIRE STUDY

Tire pressure systems deliver fuel savings, extend tire life: US research By John G. Smith

two-year US research program shows that systems which monitor or maintain tire pressures can deliver better fuel economy and longer tread life, and, in some cases, pay for themselves in as little

as a year. “We saw an increase of 1.4% in fuel economy, which is a big deal,” says Chris Flanigan of the Federal Motor Carrier Safety Administration’s Office of Analysis, Research and Technology, which was responsible for the Tire Pressure Monitoring Field Operational Test Results. “These systems can provide a real quick turnaround on fuel savings alone.” Official results of the Federal Motor Carrier Safety Administration’s work will not be released for a few months, but an audience at the recent annual general meeting of the Technology and Maintenance Council was given a sneak peak. The report will certainly offer a valuable testimonial for companies that provide automatic tire inflation systems and tire pressure monitoring systems, which are currently mounted on a mere 5% of the equipment rolling down US highways. There is little secret that tires are rarely inflated to the proper pressures. An earlier FMCSA study showed that only 28% of tires are inflated to proper pressures, and 34% are within 5 psi of the right levels. One in every 14 tires was underinflated by at least 20 psi. But systems like those tested in the latest study can help to spot these issues or even top up the air in the tires. The research itself involved two test fleets: Sheetz, a Pennsylvania tanker operation that runs on wide-base single tires, and GFS (Gordon Food Service), a Michigan fleet that had traditionally struggled with curb-related tire damage. The tested equipment included the Meritor Tire Inflation System by PSI, the wheel-mounted Tire-SafeGuard Monitoring 32 FLEET EXECUTIVE ❙ July/August 2012

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System, and the Integrated Vehicle Tire Monitoring System which is mounted on a valve stem and bolted to the wheel. The tire inflation systems were able to maintain preset pressures in trailer tires, and offer warning lights that could be viewed in the driver’s mirrors. And the tire monitoring systems delivered their data to monitors in each cab. Researchers tracked everything from mileage to fuel consumption, system status, visual tire inspections, tire pressure, tread depth, tire failures, in-service failures, tire replacements and system maintenance. The systems themselves were also exposed to a test track to see how they would perform in extreme situations. When one tire failed, for example, the automatic tire inflation system would not pull air from the other tires. The Sheetz test fleet covered 3.9 million miles, consumed 632,000 US gallons of fuel, and identified 160 worn tires and 38 tire incidents. At GFS, the test fleet covered 3.4 million miles, burning 520,000 US gallons of diesel. About 278 worn tires had to be replaced. The steer and tanker tires used in the Sheetz fleet lasted as long as they ever did, but the life of the drive tires was extended by about 30/32 inch per million miles. The control group lost about 154.5/32 of tire depth per million miles, compared to the test fleet where tires were consumed at a rate of 125/32 per million miles. Related results from the GFS fleet were not available because the equipment did not come back to the maintenance facility as often as expected. When asked if the monitors could deliver an added safety benefit, Flanigan admitted that accidents linked to catastrophic tire failures are “relatively few and far between.” But the equipment can help to reduce the calls for roadside tire repairs, which can be dangerous when completed next to a live lane of traffic, he said. FE trucknews.com

12-07-26 9:57 AM

UP TO THE TEST?

There were a lot of naysayers when Western Star launched its new 4700 during a downturn in the construction industry last year. Geared Up editor James Menzies recently took the 4700 for a spin on a makeshift construction site to see if Western Star’s gamble can pay off.

“T

By James Menzies

he best way to sell a Western Star, quite candidly, is to give people the opportunity to drive them,” according to Michael Jackson, general manager of Western Star Trucks, and that’s what the company has been doing this year with customer and dealer demonstration events, which put on display the full breadth of the Western Star product line. The newest addition to the family is, of course, the 4700, which was introduced last spring but didn’t go into production until December. The 4700 is a “Baby 8,” meaning it’s designed for lighter Class 8 applications, or for work that’s too rugged for Classes 6-7 vocational trucks. The company has just announced the availability of a tractor version of the new model. Initially launched to serve six core vocational segments (dump, mixer, crane, roll-off, snow plow, and sewer vac), Jackson said dealers are finding the truck to be more versatile than first thought. They’re now expanding the applications the truck can be put into and the tractor version takes it into a whole new realm. trucknews.com

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“This will further expand our dealers’ capabilities to attract people that want to pull trailers with fifth wheels,” Jackson said. The 4700 tractor is targeted towards bulk haul, local delivery and construction applications. It will be available in both set-forward and set-back axle configurations with a day cab. The tractor is available with the Cummins ISC and ISL engines or the more powerful Detroit DD13, with power ratings from 260-470 hp. Despite its Baby 8 moniker, the 4700 boasts a full-sized, expansive cab, which is also highly functional. This is a pure work truck, and was designed with serviceability in mind. To access the wiring system, for example, all you have to do is remove a few screws and then the entire dash panel folds forward to provide unfettered access to all the wires. The 4700’s exterior appearance is pure Western Star, with a distinctive grille and bold stance. While it’s unmistakably a Star, the 4700 has its own unique DNA and is easy to identify from other models within the family. It does not, by any stretch, appear to be a pared down version of an existing Western Star model. July/August 2012 ❙ FLEET EXECUTIVE 33

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I drove a 4700 oilfield service truck and another 4700 mounted with a crane on a makeshift construction site set up at the Las Vegas Motor Speedway earlier this year. I took the service truck on a course designed to showcase its manoeuvrability and ease of backing. The truck’s sloped hood provided excellent forward visibility and the truck’s steering was ultra-responsive. Coupled with an Allison transmission, the service truck was both easy and comfortable to drive. I took the crane-mounted 4700 out on the road where it was so nimble and responsive that in some respects it drove like an oversized pick-up truck. It did not have to be manhandled through the corners like you’d expect from a Class 8 vocational truck. With the launch of the 4700, Western Star is feeling pretty good about itself. Jackson admitted launching a new model in 2011, amid so much economic uncertainty – particularly in the construction segment – was “daunting.” “There were a lot of naysayers,” he admitted. However, the gamble appears to be paying off, with orders for the new model being incremental to Western Star’s business. “They haven’t taken anything away” from sales of existing models, Jackson said. Western Star continues to enjoy a loyal following here in Canada, partly because of its Canadian heritage and also because so many Canadian customers put their trucks to work in the harshest of conditions, where only a premium, custom-built truck can survive. Here in Canada, Western Star’s market share sits at a healthy 7%, while it’s only 1-1.5% in the US. The company has an ambitious plan to improve its North American market share, but it’s challenging for a brand that sells mostly to customers with less than three trucks. “Every time we make some progress, it seems the large fleets make an order and that dilutes our progress because that’s not where we play,” Jackson explained. Indeed, Western Star sells 64% of its trucks to customers with less than three units, while its sister company Freightliner sells the majority of its trucks to customers operating more than 100 units. 34 FLEET EXECUTIVE ❙ July/August 2012

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Still, Jackson said there’s plenty of pent-up demand out there in the construction and municipal markets – vocations where Western Star is traditionally very strong. He noted there are 435,000 trucks within the construction and municipal segments that are nearing 15 years of age and will soon need replacing. This presents a welcomed opportunity for Western Star’s newest offering. Jackson said about half of the 4700’s orders to date have come from the construction services segment, while utility and P&D follow in that order. The company is already strong in the forestry, mining, specialty heavy-haul, petroleum and vehicle transporter markets. It sees its chief areas of growth coming from the general freight, government, Haz-Mat, agricultural and construction segments. Going forward, Jackson said Western Star plans to better promote the benefits of being part of the Daimler organization. “I think this has been a missed opportunity over the past couple of years for Western Star,” Jackson admitted. “Being part of Daimler gives us an advantage I don’t think a lot of other people have. You’re going to hear us talk more in the future about our connection with Daimler.”

For example, being part of the Daimler organization means Western Star has access to proven, existing technologies without having to spend a fortune on research and development. It can also adopt Daimler programs such as the recently announced Elite Support dealer service network, which sets standards and benchmarks for dealer service excellence. “Our dealers get to take advantage of all those things that the bigger Freightliner and Daimler can invest in,” Jackson said. “Our dealers are pretty happy right now.” FE

James Menzies is equipment editor for Fleet Executive. He possesses a CDL and has covered the Canadian trucking industry for 11 years with an emphasis on equipment-related issues.

trucknews.com

12-07-26 9:57 AM

Navistar to combine advanced EGR with SCR in 2013 By James Menzies

avistar is working with the US Environmental Protection Agency (EPA) and California Air Resources Board (CARB) to transition to a combination of advanced exhaust gas recirculation (A-EGR) and selective catalytic reduction (SCR). The announcement comes after Navistar was unable to achieve EPA compliance at 0.2 grams NOx using only advanced EGR. It is calling the new approach ICT+, for InCylinder Technology Plus. “Our distinctive solution will leverage the investment and advancement we’ve made in clean engine technology while providing immediate certainty for our customers, dealers, employees and investors,” said Daniel C. Ustian, Navistar chairman, president and CEO. “We have made tremendous progress with in-cylinder technology and with the introduction of ICT+ our goal is to offer the world’s cleanest and most fuel efficient diesel engine – benefiting both our customers and the environment for years to come.” The company says its new approach will provide a clear path to compliance with the impending GHG standards for 2014-2017 model year tractors. Navistar said it will continue building and shipping current model trucks in all vehicle classes while it develops its new ICT+ solution. “We’ve shared our new technology path with the EPA and California Air Resources Board, and both agencies are encouraged by our plans,” Ustian said. “We will continue to work with the agencies to ensure that our customers receive uninterrupted deliveries in all 50 states during this transition.”

GREEN to GOLD

Continued from page 20 measurement system (the Horiba 2000), which can measure greenhouse gases such as carbon dioxide, and pollutants such as nitrogen oxides, carbon monoxide, and THC (total hydrocarbons). Technology’s impact on greenhouse gas emissions has been that GHGs are increasing, said Hickman. “Hopefully, they will be going down under the new regulations,” he said. In terms of measuring ROI for technologies such as hybrid utility vehicles, “It’s over 300 months ROI at this point – that’s why there is not a lot of investment,” said Hickman. Test results are quickly distributed to members and PIT staff supports members with implementation, including providing practical implementation of energy efficiency plans and of driver training and performance monitoring. “We are affiliated with Transport Canada to deliver their

trucknews.com

GearedUpJuly12.indd 35

In a conference call to provide further information, Ustian said the base engine will remain the same as today’s MaxxForce. He said further advancements in Navistar’s in-cylinder technology focusing on fuel, air and controls, combined with urea-based exhaust aftertreatment, will both provide improvements in fuel economy. Navistar president Troy Clarke said the company has trucks running in simulated environments right now using the new technology. “I can say from what we’ve seen, we’re pretty excited,” he said. Since the first ICT+ engines won’t be certified until early 2013, there remain questions about how the company will continue to build and supply engines until then. “The first 13-litre engine will go into production in early 2013. I know that leaves the question with many of you about how we manage the transition between today and then,” Clarke acknowledged. “Of course, we will utilize a combination of emissions credits we’ve accumulated through early achievement of NOx standards in years past and we will also use NCPs (non-conformance penalties) in some states to extend the credits for use in states that don’t accept them at this time.” Clarke also said that now that Navistar has unveiled an acceptable compliance strategy, the EPA and CARB are more willing to work with the company to find “solutions for circumstances that could disrupt production or sales during the transition period.” Finally, Clarke said, “Today’s announcement is not about going back. It’s not about backing up, it’s about going forward.” He vowed Navistar’s new ICT+ solution will provide the “cleanest” and “most efficient” engines going forward. Officials did not take any questions during the conference call. FE

Smart Driver training programs. ETV, the Environmental Technology Verification Program, provides third-party verification for the tests. “Our reports are used for (US EPA) Smart Way verification,” said Hickman. “PMTC and PIT have entered into an agreement where PMTC members have access to the reports, guides, and services. We’re looking at developing our own centre for transportation research to house more equipment.” A strategic alliance is in the works on electric vehicles with the CNTA, National Center for Advanced Transport. A Canada-France initiative, the CNTA has a recognized expertise in electric vehicles and power train, said Hickman. “Technology testing is essential – you don’t want to go in there blind. We want to make sure the industry is getting the best,” said Hickman. FE July/August 2012 ❙ FLEET EXECUTIVE 35

12-07-26 9:57 AM

DASHBOARD TransCore Canadian Spot Market Freight Index 2007-2012

2007 2008 2009 2010 2011 2012

Change Change Y-O-Y M-O-M

JAN

173

214

140

171

222

220

-1%

FEB

174

217

117

182

248

222

-10%

MAR

228

264

131

249

337

276

-18% 24%

APR

212

296

142

261

300

266

-11% -3%

MAY

280

316

164

283

307

301

-2%

JUN

288

307

185

294

315

JUL

219

264

156

238

245

AUG

235

219

160

240

270

SEP

206

203

180

234

263

OCT

238

186

168

211

251

NOV

227

143

157

215

252

DEC

214

139

168

225

217

13%

TransCore Canadian Spot Market Freight Index 2007-2012

TransCore’s Canadian Freight Index rallies in May with double-digit increase TransCore’s spot market Canadian freight index saw a substantial 13% month-over-month increase in May. The month also had the highest freight volume to date this year. Year-over-year volumes were off slightly from the peaks of early 2011, down 2% from May of last year and only 5% off the record set in 2008. Cross-border postings remained consistent at 73% of overall load postings. Intra-Canada postings made up 23% of the total load volumes. Equipment postings also experienced double-digit increases: 10% month-over-month and 15% year-over-year. While both equipment and loads postings increased, the May equipment-to-loads ratio dropped to the lowest levels in 2012. The top destinations for loads imported into Canada were: Ontario (54%), Western Canada (20%), Quebec (22%), and Atlantic Canada (3%). Western Canada had a slight decrease month-over-month, while Quebec had a 2% increase. Top regions for import equipment into Canada were: Ontario (51%), Western Canada (25%), Quebec (21%), and Atlantic Canada (3%). Equipment postings maintained similar levels from the previous month. Regions of origins for loads within Canada were: Western Canada (45%), Ontario (26%), Quebec (21%), and Atlantic Canada (7%). Western Canada had a slight decrease monthover-month. The top states of origin for loads destined to Canada in order 36 FLEET EXECUTIVE ❙ July/August 2012

DashboardJuly12.indd 36

of most loads were Ohio, Illinois, California, Pennsylvania and Texas. The top destinations for freight originating in Canada were New York, Texas, Pennsylvania, California and Washington.

CGFI rates decrease in April with TL rates experiencing greatest change Results published by the Canadian General Freight Index (CGFI) indicate that the cost of ground transportation for Canadian shippers decreased 2.3% in April when compared with March results. The Base Rate Index, which excludes the impact of accessorial charges assessed by carriers, decreased by 2.0% when compared to March. Average fuel surcharges assessed by carriers have seen an increase from 21.9% of base rates in March to 22.4% in April. “We are experiencing a downward trend in both base rates and accessorials, while fuel is seeing increases for the third consecutive month,” said Doug Payne, president and COO of Nulogx. “It appears that both the domestic and cross border truckload markets are seeing the most change as a result of these trends.”

International cargo loadings boost 2% increase in rail freight traffic in April Canadian rail freight traffic rose 2.0% this April from April 2011 to 27.2 million tonnes, according to Statistics Canada. The gain was solely due to increases in international cargo loadings, as domestic freight shipments declined. Total domestic freight loadings, composed of non-intermodal traffic (i.e., carried in bulk or loaded in box cars) and intermodal traffic (i.e., containers and trailers on flat cars), fell 0.7% to 23.8 million tonnes over the same 12-month period. Non-intermodal cargo loadings declined 1.6% to 21.3 million tonnes. The decrease was the result of reduced traffic in more than half of the commodity classifications carried by the railways. The commodity groups with the largest declines in tonnage were coal, iron ores and concentrates, and other cereal grains. In contrast, several commodity groups registered increases. Loadings of wheat increased the most, followed by fuel oils and crude petroleum, and other refined petroleum and coal products. Intermodal freight loadings grew 8.1% to 2.5 million tonnes. The increase occurred solely on the strength of containerized cargo shipments, as trailers loaded onto flat cars declined. Internationally, total rail traffic received from the US advanced 25.2% to 3.4 million tonnes. The increase was driven by both non-intermodal and intermodal traffic. Geographically, 60.2% of the freight traffic originating in Canada was in the Western Division of Canada, with the remainder loaded in the Eastern Division. For statistical purposes, cargo loadings from Thunder Bay, Ont., to the Pacific Coast are classified to the Western Division while loadings from Armstrong, Ont., to trucknews.com

12-07-26 9:50 AM

DASHBOARD

the Atlantic Coast are classified to the Eastern Division.

US for-hire truck tonnage falls 0.7% in May US for-hire truck tonnage decreased 0.7% in May after falling 1.1% in April, according to the American Trucking Associations. Compared with May 2011, the seasonally-adjusted index was 4.1% higher, the largest year-over-year increase since February. Year-to-date, compared with the same period last year, tonnage was up 3.8%. The notseasonally-adjusted index in May was up 6.5% above the previous month. “Two straight months of contractions is disappointing,” said ATA chief economist Bob Costello. “The drops in tonnage are reflective of the broader economy, which has slowed. The good news is that the decrease in fuel prices will help support retail sales going forward, which is a big part of truck tonnage. However, Costello said he’s concerned about businesses sitting on cash instead of hiring more workers or spending it on capital – both of which would give the economy and tonnage a shot in the arm – as they are worried about Europe and the so-called “US fiscal cliff” at the end of the year. He also reiterated last month’s comment: “Annualized tonnage growth should be in the 3% to 3.9% range this year.”

RBC PMI inches higher as new order growth strengthens June saw a further robust improvement in Canadian manufacturing business conditions, according to the RBC Canadian Manufacturing Purchasing Managers Index. The headline RBC PMI – a composite indicator designed to provide a singlefigure snapshot of the health of the manufacturing sector – indicated a further strong improvement in Canadian manufacturing business conditions in June. At 54.8, up fractionally from 54.7 in May, the RBC PMI recorded the strongest improvement since September. trucknews.com

DashboardJuly12.indd 37

Moreover, the average PMI reading for the second quarter as a whole was 54.3, up from 51.6 in the first three months of 2012. The RBC PMI is a monthly survey, conducted in association with Markit, a global financial information services company, and the Purchasing Management Association of Canada (PMAC). It offers a comprehensive and early indicator of trends in the Canadian manufacturing sector. The RBC PMI found that both output and new orders rose strongly over the month, with firms generally citing greater client demand. Notably, the rates of growth strengthened to six- and ninemonth highs, respectively. Manufacturing employment increased for the fifth successive month in June, while the rate of input price inflation slowed sharply to its weakest pace since data collection began in October 2010. “The strong performance in the manufacturing sector so far this year has been led by medium-sized companies... with more recent improvements also noted for smaller companies,” said Craig Wright, senior vice-president and chief economist at RBC. “Conditions across the sector are favourable, and we expect that continued gains in employment and an uptick in exports will help contribute to further economic expansion in 2012.” In addition to the headline RBC PMI, the survey also tracks changes in output, new orders, employment, inventories, prices and supplier delivery times. Canadian manufacturers received a larger volume of new orders in June, with greater client demand often cited. Approximately 37% of survey respondents reported an increase in new work intakes since May, while 18% recorded a decline. Overall, the rate of new order growth was strong and the fastest since last September. New export orders also increased for the fourth consecutive month, with incoming new work from the US particularly mentioned by panellists. Reflective of the increase in new

orders, firms raised production during June. Output has increased in each month since data collection began in October 2010, with the latest rise the strongest since last December. Backlogs of work, meanwhile, fell during the latest survey period, and stocks of finished goods were depleted at the sharpest rate in the 21-month series history. The quantity of inputs bought by manufacturers increased strongly in June. Input inventories also rose, albeit marginally. Anecdotal evidence attributed the increase in purchases to larger output requirements. Concurrently, suppliers’ delivery times lengthened further, with a number of monitored companies citing transportation problems. The strong performance of the Canadian manufacturing sector in June was led by medium-sized companies. Moreover, the latest improvement in business conditions faced by mediumsized manufacturers was the strongest since April 2011. Overall, medium-sized companies have led the manufacturing expansion in each month of 2012 so far. Small firms with less than 49 staff also recorded a strong improvement in manufacturing business conditions in June. Although the latest improvement was to a lesser extent than in May, the rate of growth remained above the series average for the third month running. The strong performance of small manufacturing companies in recent months contrasted with only modest growth between October and March (including a slight deterioration in January). Large manufacturing firms that employ more than 200 employees were the worst performing company-size group in June. Although the PMI rose to a six-month high and signalled a solid improvement of operating conditions faced by large manufacturers, the index remained below its series average. Notably, the weak performance of large manufacturing firms contrasted with strong growth in the second half of 2011. FE July/August 2012 ❙ FLEET EXECUTIVE 37

12-07-26 9:50 AM

Annual supply chain budget

INSIDE THE NUMBERS

$501,000 to $1 million

$1 million to $5 million

10.7%

That’s how much of total sales that returned merchandise can account for, stressing the importance of a logistics plan to process return.

18.5% $5 million to $10 million

$100,000 to $500,000

9.6%

24.7%

Less than $100,000

More than $20 million

15.4% 14.3%

6.7%

Importance of performance criteria to shippers On-time performance

LTL TL Courier Rail Ocean Air

$10 million to $20 million

Quality of equipment Information Competitive Customer & services technology pricing service

Leadership in problem solving

Ability to Sustainable provide value- transportation added services practices

4.76

4.25

4.00

4.67

4.68

4.36

3.51

4.04

4.84

4.45

4.09

4.71

4.64

4.38

3.80

4.17

4.87

4.32

4.55

4.73

4.67

4.37

3.77

4.13

4.49

4.31

4.19

4.68

4.49

4.22

3.69

4.07

4.59

4.40

4.25

4.75

4.61

4.39

3.95

4.16

4.90

4.46

4.54

4.63

4.70

4.49

3.97

4.16

Shipper satisfaction ratings by mode On-time performance

LTL TL Courier Rail Ocean Air

20.24

Quality of equipment Information Competitive Customer & services technology pricing service

17.54

15.60

19.58

19.66

Leadership in Ability to Sustainable problem provide value- transportation Combined solving added services practices scores

17.21

13.70

16.05

139.58

21.33

19.10

15.97

20.03

20.08

17.85

14.93

17.00

146.28

20.64

17.92

18.60

18.94

18.19

15.99

13.56

15.87

139.71

18.67

17.70

16.55

19.07

18.19

15.98

13.40

15.56

135.11

19.07

18.06

16.81

19.36

18.65

16.61

14.34

15.89

138.79

20.84

18.70

18.01

18.65

19.04

17.37

15.19

15.98

143.78

WHAT DO SHIPPERS REALLY VALUE IN THEIR TRANSPORTATION PROVIDERS? Price remains a considerable concern for shippers purchasing trucking transportation services. Just how important competitive pricing remains for trucking is evident in our annual research, which asks close to 2,000 shippers across Canada to rate the importance of eight Key Performance Indicators when it comes to selecting one carrier over another. The chart shows the value shippers place on each of the eight KPIs on a scale of 1 to 5 and provides a comparison for all modes. On-time performance still remains the top priority when it comes to selecting both LTL and TL carriers. However, competitive pricing is the second highest

consideration when shippers select a TL and LTL carrier, ahead of both customer service and quality of equipment and operations. Even when it comes to selecting a courier, competitive pricing is the second highest consideration, again ahead of customer service. This has been true for a couple of years now. Our research also delves into the value shippers place on sustainable practices when it comes to selecting their carriers. It’s interesting to note that sustainable practices were once again ranked ahead of the ability to provide value-added services and information technology when it came to selecting both LTL and TL carriers. It’s also important to note that shippers give their truckload carriers the highest satisfaction score of any mode.

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