Golden opportunity

Even as we were putting the finishing touches to this year’s Top 100 report, TransForce Income Fund was still hard at work, buying up yet another small Quebec carrier to add to its impressive list of swallowees. It’s the first for-hire trucking operation in Canadian history to top the 10,000-vehicle mark, settling in this year at 10,535. That’s a big jump from last year’s survey in which it also ranked first with an 8,100 total, thanks in large part to its acquisition in 2003 of Calgary’s Canadian Freightways.

Interestingly, that 8,100 figure from last year is less than the outfit that took top spot in our first Top 100 survey way back in 1989. Hard to believe-especially if you subscribe to the notion that we’ve seen more and more concentration of trucking capacity-but the Federal Industries Transport Group of Winnipeg counted 8,266 trucks, tractors, and trailers all that time ago. Interestingly, one of Federal’s fleets was Kingsway (4,856 vehicles in 1989, good for fourth spot all on its own), which has long been part of the TransForce group. The acquisitive Montreal outfit led by Alain Bedard has also taken on parts of both CP Trucks and TNT Canada from that 1989 list, which were second and third respectively, and of course the one TransForce started with, Cabano Transport, which ranked seventh.

Folks often say that most of those old names have disappeared, but that’s clearly not true. Pictures of consistency, there are many fleets from the upper levels of that original list that remain alive-and independent-today. Fleets like Trimac (11th in 1989), Day & Ross (13th), SLH Transport (15th), Transport Robert (17th), and Paul’s Hauling (19th) are among many that have soldiered on.
At the bottom of that 1989 list sat Penner International (now 41st) and in 95th position was Mullen Trucking, now a strong and very healthy ninth. Another one that’s risen dramatically, Challenger Motor Freight, held 78th spot 16 years ago with 542 vehicles but was obviously poised to grow, and now occupies position number six on this year’s starting grid.

The issues fleet managers grappled with have changed, of course. In 1989, they included learning to live with deregulation, obviously no small task, and new hours-of-service rules that exempted farmers, loggers, and fishermen to everyone else’s dismay. But the big concern was the new Goods and Service Tax, which, then-Finance Minister Mike Wilson promised, was supposed to be revenue-neutral. Right.

So what’s on the industry’s mind now?

This time last year the key issue was the price of fuel, with insurance costs and border delays following in hot pursuit. The latter two are clearly at the top of the heap right now, along with the nasty mess created by new American hours-of-service regulations. The three together are potential carrier-killers, at least for those linehaul fleets working cross-border lanes.

Take Paul Wood, for example. Wood is the former owner and president of T-Line Transportation in Kingston, Ont., a general-freight hauler with some 140 power units in our 2003 survey, including 80 owner-operators. He packed it in last year. Wood arranged for Highland Transport to take over both his customers and his drivers and then sold the hardware himself. Nowadays he runs a driver agency, Connexxions Plus.

“I just got to the point where I said it’s not worth it. There was no money in it any more,” Wood told us. Despite a good safety record and clean audits, and with his deductibles already at $50,000, his substantial U.S. exposure meant he was facing a $400,000 year-over-year premium hike.

For Wood, as with others, the trouble really began with the events of Sept. 11, 2001. With his drivers stuck at the border for as long as 48 hours following that catastrophe, he lost $600,000 in the next six weeks. In his mind the die was cast because things never really improved. Wood’s drivers were still suffering outrageous border delays last year and he couldn’t pay them enough to make it worth their time. So he just plain quit.

It’s a frighteningly common story, though most international carriers are still plodding on and trying to make it work. Some complain of losing excellent veteran drivers who simply can’t stomach the border hassles and the 20-per-cent productivity loss that new HOS rules have foisted on them. Others have shrunk the fleet.

But there are also good signs, with many fleet owners thinking we’ve reached some sort of turning point. With their backs against the wall, they’re relieved that shippers are realizing the plight of truckers and seem ready to play ball in a new way.

Jim Hicks, for example, says he’s had success in getting shippers to pay an extra “border security fee” which goes straight to the drivers. The president of Travelers Transportation Services in Brampton, Ont., adds that a lot of his customers have made a real effort to understand just what’s happening on the road and at the border in particular by attending seminars and the like.

“Carriers will have to make sure they invoice customers for what they actually do,” says Eric Gignac, CEO of Groupe Guilbault in Ste-Foy, Que. “We have to put emphasis on ‘accessory costs’ like waiting times, trailers being held at customers’ docks, warehousing, etc. For the first time since I’ve been in trucking, carriers are in the driver’s seat. The economy is good and demand for transport is high. We have a golden opportunity.

“With new hours-of-service rules, new food-inspections rules, etc., our productivity is affected. So we have to invoice. We now have the best reasons to go see the shipper and explain the situation. Increases will also help us pay our drivers.

“We do invoice every cost and we have no problem,” Gignac continues. “When you explain things well and demonstrate that shippers will have something in return, everything goes well.”

Happily, that is becoming an even more common story than the Paul Wood experience. It will be awfully interesting to write this story in a year’s time. Then again, trucking has never been dull, and that’s not likely to change.