Ontario Trucking Association:
Trucking and the Southern Ontario
Gateway
Introducing OTA
• Founded 1926 OTA Member Companies By Size
• 1,000+ member companies # of Trucks in Fleet, Percentage
– 50,000 + trucks
– 75,000 employees 301 to 500 > 500
101 to 300 (2.9%) (3.6%)
• Only trucking association in (8.7%)
10 or Less
(25.4%)
Ontario that represents all 51 to 100
segments of the industry – by (12.4%)
size, region, commodity
• Small carriers dominate the
membership 11 to 50
• Board of Directors of 80+ (47.0 %)
carriers
Ontario Trucking Industry
Moving the Economy
• 90% of consumer products, foodstuffs
• Trucks move 74% (by value) of US trade
• At 7.5 million trucktrips, the top 4 ON-US border
crossings (Windsor (Ambassador Bridge), Sarnia
(Blue Water), Fort Erie (Peace), and Niagara
(QLB)) account for @ 56% of all transborder trips
• #1 transport GDP contributor
Size & Structure
• $20 billion in annual revenue
• Low concentration
Total Employment
• More than 200,000 direct jobs;
• 150,000 truck drivers; 25,000 o/o’s
The Fleet
• 150,000 heavy vehicles; 37% of national total
• Heavy vehicles travel about 8 billion km/yr
Safety
• # of trucks increased by 43% since 1990, but
fatalities involving large trucks decreased by 21%.
• # of fatalities per 100,000 large trucks declined
45% (1990-2003)
Tough-Diverse Business
• Derived demand industry – as goes economy so goes trucking
• Provide a “perishable” service – no shelf life (added pressure to act
now)
• Is highly competitive
• Is very fragmented – size, region, service, commodity
• Different levels of sophistication, customer mix
• Free market economically, regulated safety
• Customers don’t always value service
Constant Tug of War
Within companies and between companies in terms
of competition, pricing strategies, growth plans
What is a Trucking Company?
As many definitions as there are companies
Trucking
Brokering
Warehousing
Logistics
Intermodal
Flexibility has been the key to service and the key to
success – whatever the customer wants they get
Intermodalism
It has its role, but government’s need to understand what it
is – and what it is not.
It is …
something that trucking companies and their partners do
every day
a useful solution for certain types of movements –
particularly long distance or non-time sensitive
But it is not…
a new idea
a magic-bullet solution to congestion or a replacement
for infrastructure investment
likely to increase its current market share
The Information Age
JIT – Computerized inventory control
Point and click world
We don’t have “mass” anything anymore, not mass
marketing, mass media, and not mass manufacturing
people expect specialized on-demand service
So why is trucking the mode of
choice?- Service, Service, Service
Door to door, flexible, time-sensitive
Best able to meet the demands of an on-demand world
Issues/Challenges (Part 1)
Economic Conditions
Fuel Prices
Canadian Dollar
Driver Shortage
Fuel Costs
• #2 operating cost, 10%-30% of total
• Fuel Surcharges – Fact of Life:
– @30% of rates
– % rate vs distance-based, base price,
head/back haul, empty miles, etc.
– Rate vs Surcharge: Amounts to same
thing, carriers need decent ROI
• Legislated Fuel Efficiency Reductions:
– ULSD: 1% less energy content
– 2 to 3 cents per litre more to produce
– 2007 engines = 3-5% less fuel efficient
• Challenge
– Unlike fuel price increases, no triggers Diesel Rack Price - Monthly Averages
in contracts to recover $ spent from Cents per Litre (Cdn) - Excluding Taxes
lower fuel efficiency
• Fuel Efficiency Measures: 80.0
75.0
70.0
– Activation of speed limiters 65.0
60.0
– Weight & length allowances: Wide- 55.0
50.0
base single tires, auxiliary power units, 45.0
40.0
aerodynamics (e.g., boat tails). 35.0
30.0
25.0
20.0
Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06
Appreciation of Canadian Dollar
– Impact on pricing followed by impact on exports
(manufacturing)
– Shippers look to reduce trans costs
– Northbound becomes head-haul
Canadian Dollar vs US Dollar
0.9
0.875
0.85
0.825
0.8
0.775
0.75
0.725
0.7
0.675
0.65
Driver Shortage
• The shortage:
– Injection of 37,000 new drivers needed each
year (2003-08) just to keep pace with
forecast economic demand, natural attrition
• Demographics not on our side
– For 1st time in 2005, # of drivers over 55
exceeded # under 30
• Compensation vs Lifestyle
– Drivers work more hours to make same as
average worker
– Don’t get paid for all time spent
• Respect
– Rodney Dangerfields
• Curse or a blessing?
Issues/Challenges (Part 2)
Public Policy
Safety
Environment
Weights and Dimensions
Borders
Infrastructure
Safety Measures
Carrier Safety & Compliance
Process Underway/Decisions
Complete CVOR Modernization
Needed)
Complete New Facility Audit Protocol Need to Revisit Previous
Decisions/Work
Revisit Safety Ratings for Out of Province Carriers Commence Review
The Driver
Mandatory Activation of Speed Limiters
Improve Class A Driver Licence Test
Improve Driver CVOR/Profile
Improve Driver Alertness, Reduce Fatigue
Pass New Federal Hours of Service Regulations
Develop Policy on Electronic Onboard Recorders
Develop Fatigue Management Strategies
The Vehicle
Introduce New Pre-Trip Inspection Standard
Adopt National PMVI Standard
Review Performance Measurements at TIS
The Shipper/Load
Interpretations for New Cargo Securement Standard
Shipper Responsibility
Trucking in the Forefront of
Improving the Environment…..
North American regulatory changes culminating in 2010
emission standards herald era of the smog-free truck:
2007 engines: 90% reduction in PM
2010 engines: Virtual elimination of NOx
OTA & other sector stakeholders embrace its
responsibility
Fully endorse new standards to eliminate smog
Dedicated to reducing fuel consumption (GHG)
Member of EPA’s Smartways
Work proactively with federal & provincial government
14 Point EnviroTruck plan presented to MTO, MOE
Feature of 2007 OTA pre-budget submission
……But There is a Cost
New, cleaner units are more expensive
2007 standards have $7,500-$12,000 per unit
environmental surcharge on purchase price
2010 potentially even more
More expensive to maintain
Technology increases truck weight, reduces payload
Progress on fuel efficiency set back 10 years as a
result of new engines:
Require more expensive, lower energy content ultra-low
sulphur diesel
New engines less fuel efficient (3%-5%)
Summary Detail of OTA “Environmental Truck” Plan
Annual Reduction Total Annual Reduction
Per Truck1 (Ontario)
Jurisdiction NOx PM GHG
Ministry/ NOx PM GHG (kg, (kg, (tonnes,
Immediate Impact Measures to: Dept (kg) (kg) (tonne) Million) Million) Million)
Activation of speed limiters on all trucks at no more than 105 km/hr Prov -MTO 195.0 4.0 10.0 33.2 0.7 1.7
Accelerate Penetration of Smog Free Trucks into Fleet2 : 817.0 34.0 - 17.2 1.0 -
• Accelerate Capital Cost Allowance for 2007-10 model year trucks Fed/Prov-Fin
• Tax advantage for Ultra Low Sulphur Diesel Fuel Fed/Prov-Fin
Prov-MTO
• 180 kg (400 lb) weight allowance for 2007-10 particulate traps
Encourage Auxiliary Heat/Cooling Systems for Anti-Idling: 134.0 2.0 19.0 22.8 0.3 3.2
• Reinstate NRCAN rebates & increase rebate from 19% to 50% Fed-NRCAN
• 181 kg (400 lb) weight allowance for auxiliary power units Prov- MTO
Allow wide base single tires at same weights as conventional duals Prov-MTO 28.0 0.6 4.0 4.7 0.1 0.7
Flexible dimensions for non-payload aerodynamic improvements Prov-MTO 42.0 0.9 5.0 7.1 0.2 0.8
Total Reductions 1216.0 41.5 38.0 85.0 2.3 6.4
Equivalent # of Trucks Removed from Air Quality Perspective 43,000 68,000 27,000
Measures for Further Discussion/Study
Expand ELDT Network Prov-MTO Notes
1 The calculations used to create the emission savings were
Develop Viable Alternative Fuels for Commercial Trucks: Prov-MOA generated from USEPA emission factors for Class 8 trucks; US
• Develop precise definition of biodiesel & blend amount required EPA Smartway and/or NRCAN data. PM/NOx emissions reflect
• Conduct pilot to address operational concerns for 2007-10 trucks/biodiesel emission factors for Class 8, pre-October2002 trucks.
• Introduce/enforce strict biodiesel quality, manufacturing & testing standards
2 Based on sales of 35,000 Class 8 2010 model year trucks.
All modes should meet regulated emission reductions comparable to trucks Fed-EC/TC
Weights & Dimensions= Productivity
Single biggest factor affecting the
productivity of trucking.
Constant struggle improve vehicle
safety, environmental performance,
infrastructure integrity, fleet
productivity and jurisdictional
compatibility.
For example…LCVs
Study after study has shown that they are safer, more
environmentally friendly, reduce pavement wear, decrease
congestion.
New NRCAN Study – just the latest
“Turnpike doubles, as they are currently operated in Canada, are
about five times safer than the overall truck population traveling
Ontario’s multi-lane highways”
“Turnpike doubles offer fuel savings of about 30%” = reduction per
year of 100 million litres of fuel and 265 ktonnes of GHG
estimated reduction of over 500 million km of truck travel/year
“Turnpike doubles are 25-30% more efficient” … “Studies in PQ,Sask,
AB have identified $72 million in annual savings”
An Efficient Border
Delays threaten North American
– Efficiency/predictability/reliability of supply chain
– Competitiveness & direct investment
NAFTA Still world’s largest trading block
– 1/3 of world’s total GDP -- 25% of global trade
– For how long? (emerging economies, e.g., China)
Border needs to be:
– MORE efficient & MORE secure than on the day
before 9/11
Is border more efficient?
– New border security measures costing Canadian
trucking industry $290 million/year
– Some carriers exiting the market
– Drivers don’t want the hassle, delays
– Exacerbates capacity crunch
– Border crossing fees, security surcharges, delay
charges
Is border more secure?
– We hope so
– No shortage of measures …
An Efficient & Secure Border
Border Security Measures What Needs to be Done
More or Less In Place … Sort Of Border security programs
Explosives Act Lists of “known” Canadian need to be bilateral
drivers/carriers
Focus on risk assessment
Bioterrorism Act Registration, prior notice,
not check everything,
detentions
everyone, all the time
FAST Implemented, growing
pains – Build upon FAST platform
US VISIT Entry component now ACE directionally way to go
operational, exit testing. Better planning/testing
Trade Act Advance cargo information
Realistic timeframes
In Process, Looming Infrastructure investment
Patriot Act HAZMAT credentials: Aug – Review EA process
10, 2006.
Political/Bureaucratic
TWIC Another ID card! Ports first,
Mechanisms
then all facilities
– Prosperity & Security
ACE Electronic manifest.
Partnership?
Phase in at major crossings
WHTI Passport or other document – Competitiveness Council?
C-TPAT Stringent carrier criteria &
on-site validations
Closing the Infrastructure Gap
► Ontario/Canada needs a dedicated
highway/border infrastructure fund
Only G-8 country without NHS
US hwy trust fund=C$300 billion, 6 yrs
Europe & China re-building Silk Road
Ontario+Feds raise over $6 billion/year in
fuel taxes and vehicle registration fees; at
most $1.5 million reinvested
► Get over idea that there is a magic bullet
solution that will allow us to do without
highway investment – we can and must keep
building/expanding highways
► Make better use of existing infrastructure
Incentives to shippers to move off-peak --
Weights and dimension reform
Summary
Trucking industry is successful because it is highly
responsive to customer needs -- we change to fit their
needs rather than expecting them to change to meet
ours
Challenges are divers – infrastructure is important but
impacts are long term and its only one issue affecting
our ability to service the economy, regulatory barriers
are as significant as congestion and are more easily
fixed
SOGC’s Role
There is a need for all freight modes to work
together to find ways to better serve our
collective customers – SOGC can provide a
forum for this dialogue – but the customers voice
needs to be heard
Infrastructure issues should only be the start –
southern Ontario is not the Vancouver gateway-
we have more complex issues that need
addressing – regulatory issues need to be part
of the discussion, they are as important and
more immediate than infrastructure.
Need to narrow the focus more clearly on freight issues
– GTTA will deal with movement of people, SOGC
should be the voice of those who move goods.
We are all in this together we should be supporting each
others productivity gains – not oppose them out of
historical positions or self interest – we all benefit from a
bigger economic pie.
Finally, SOGC must deliver to governments realistic,
effective, and concrete proposals for action that will help
us all better serve Ontario’s economy– we cannot be just
another “talk shop” – SOGC cannot focus on
transportation provider’s needs, SOGC’s job should be
to provide advice to government on how we can all
provide better service levels to the shippers who are the
ones who actually create prosperity.