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Are you ready to adjust and thrive in a carbon-constrained future economy?

As we begin to get the first glimmers of hope for the resurgence of the North American economy, there are two things we can be certain about: One, the new economy will be significantly different from what we’ve been used to in the past; more government intervention is a certainty, not only in the Obama-led US but even here under a Conservative government. And two, green practices will begin to figure more and more prominently in the new economy.
Trucking both benefited and contributed tremendously to the previous economic expansion. The numbers speak for themselves: The amount of freight carried by for-hire carriers from 1990 to 2003 rose 75%. Trucking was a huge contributor to the ability of manufacturers to trim their inventories by 15% from 1992 to 2005 as they employed JIT delivery strategies. The Canadian tractor-trailer fleet grew by a third since the turn of the century as a result.
Is trucking poised to once again play such a definitive role in driving supply chain efficiency in the new economy sure to rise from the ashes of the currently ruined one? The answer to that we believe depends on trucking’s ability to adjust to and thrive in a carbon-constrained business climate. Learning to understand and profit from government cap and trade programs, answering shipper demands for more sustainable transportation practices and embracing green practices to reduce operational costs will be key ingredients to future success.
Yet at the same time, it’s impossible to ignore the continuing pressure on trucking company profit statements. Investments in environmental projects and programs have to contend with across-the-board cuts in company budgets. This can be a very confusing time for companies trying to reduce their expenses enough to survive the worst economic downturn since the Great Depression while at the same time trying to keep an eye on the future.
It’s with this in mind that we prepared our third annual Green to Gold supplement on transportation practices. In this special report, coming out with your next issue of Motortruck Fleet Executive, you will read about government cap and trade initiatives and their likely impact on transportation; how to effectively evaluate fuel saving technologies; and the financial impact green transportation pioneers are reporting. In addition, we have more information available online at
As we’ve always maintained in producing this annual supplement, if you take the time to do it right, you can turn green into gold.

Lou Smyrlis

Lou Smyrlis

With more than 25 years of experience reporting on transportation issues, Lou is one of the more recognizable personalities in the industry. An award-winning writer well known for his insightful writing and meticulous market analysis, he is a leading authority on industry trends and statistics.
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13 Comments » for Are you ready to adjust and thrive in a carbon-constrained future economy?
  1. RoberT D. Scheper says:

    Green to Gold is actually Green to Red.
    In 1992 engines went from mechanical to electrical, dropping fuel consumption by 15-25%. In my opinion it was one of the industry’s greatest accomplishments. Then the “green movement” was jammed down the throat of the engine manufacturers in 2001. Since then fuel savings fell dramatically year after year! However, through small technology improvements SOME (repeat SOME!!!) manufacturers have been able to bring it back at least somewhat to pre-2001 levels. Even still, diesel fuel now has to be processed MORE than gas where before it was LESS. The result is we are MORE dependant on oil companies and global supply than ever before. Whenever government gets their mucky hands into industries the industries LOOSE! Cap and trade will be another grand financial fiasco as government departments broker “credits” at their politically motivated discretion. If you own a trucking company roll up your sleeves, big brother is coming for another pint!
    As an accountant I advise clients (when they are considering upgrading) to consider fuel costs FIRST! Ignore taxes, ignore trucking company advice, ignore the media, ignore everything but the computer readout of the truck in question. If its new they MUST be informed they may have less money at the end of the year than they do now. The $15,000 to rebuild an engine is paid for in six months (at $2500). Who can survive loosing 1/2 – 1 1/2 miles per gallon AND make a truck payment as well?
    The green movement kills operators and the industry. What’s good for the environment and the industry is fuel SAVINGS not additional consumption and government regulation.

  2. Gord Karpf says:

    The industry should fight any carbon tax, or cap and trade system. The industry can not afford to pay any more taxes. The carbon tax in BC has been a complete disaster, in one of the worst economic times in recent memory. At a time when people are out of work and losing jobs, the government is raking in record amounts of revenue for this left leaning tax.

  3. John Doble says:

    There is a big difference between a carbon tax and a cap and trade system. The former simply puts a tax on fuel right at the pump to go into government coffers. The latter offers incentives to companies who take initiatives to reduce emmissions. The two key points with cap and trade are, where will the baseline be set and what methodology will be used to measure the emmissions. Cap and trade itself is not necessarily a bad thing for the industry.

  4. John Doble says:

    To elaborate, the green movement does not necessarily have to be a cost on operators. Here is a link to a post on the Green Supply Chain Network on a company which has helped 3PL and private fleets reduce fuel consumption and GHG’s.
    In a cap and trade system, a baseline year is set. All GHG savings, or CO2 credits would be calculated using a standard scale (likely the World Resources Institute scale). Those credits would then be tradeable to other companies exceeding their baseline.

  5. Robert D. Scheper says:

    Let me use two trucking illustrations as examples of my point (and then my point):
    There are two types of fuel surcharges that are provided owner operators: first those LOCKED to outside indexes (ie. North American Fuel Index) which provide a surcharge for fuel consumption based on actual averaged costs, AND the second is management determined fuel surcharges. In too many situations trucking company owners (who didn’t make as much money as they hoped for the month) give 6 cents per mile surcharge instead of 10 CPM. This second type is controlled by management not the market. It is a TOKEN of costs entirely controlled by management! The control is NOT for the benefit of the operator but for the administrators.
    The lunch bag let down campaign successfully lobbied the government to increase the deductibility from 50% to 80% in March 2007. However, the tax credit has MANY formulas applied to it before the bottom line is achieved (ie. 2009 $11.63 per day). Consider that the $51 used to be $45 which used to be $33. This NON income tax act GUILDLINE is increased by “management” (aka government) not: inflation, industry averages etc.. Since the 50-80% increase will finally be achieved in 2012, what do you think the chances are that CRA will increase the $51 before 2012? My answer 0.000000000000001%. Conclusion, it is STILL management controlled! Not for the benefit of those with the costs but for the administrators (Revenue Canada).
    Flash ahead to the Cap n’ trade. You stated “The two key points with cap and trade are, where will the baseline be set and what methodology will be used to measure the emmissions.”
    Both the “setting” and “methodology” is managed and administered by government administrations who will change and manipulate the numbers by political will and/or lobbying (not by anything that remotely relates to market or scientific truth). It is a simple beurocratic system of control and market manipulation. Other than the publicity generated to support the system, the setting and methodology has minimal or nothing to do with GHG (at best it will be a TOKEN setting subject to many various “changes or tweaking”).
    The “global warming fever” is not based on science but on politics (see UK court rulings and their subsequent restrictions on the public viewings of Al Gore’s “inconvenient truth”. Also research the MANY, MANY other scientific non partisan de-bunkings). It (global warming propaganda) is a means to an end (control). Cap’n trade is a method of government market manipulation originating from a liberal political philosophical agenda (as well as other industries agendas). In 20-40 years historians will laugh at the “bunk” society swallowed hook line and sinker. There is a strong movement around the world today that is mounting a truly SCIENTIFIC defense against the gross mis-representations such as X Vice President Al Gore’s.

  6. John Doble says:

    You bring up some interesting and good points. I do not have the expertise in taxation that you do, however, I can appreciate your position that anything dictated by government (i.e. cap and trade baselines and methodology)has a good chance of being biased in their political favour.
    Where you lose me is in the global warming debate. I think that what we can say is the the evidence is not yet conclusive either way. In the U.K. court rulings, the film was not banned altogether in schools, but simply advised to present a more balanced argument. This is education policy. In fact, Mr. Justice Burton who made the ruling said that he had no complaint in the central thesis that climate change was happening and was being driven by emmissions by humans. However, he went on to say that nine statements in the film were not supported by mainstream scientific consensus. The link from BBC news is here
    For every argument prsented against global warming, there is one for. (See the recent article from Cambridge University on melting in the Arctic.)
    Personally, I didn’t like The Inconvenient Truth. I think the film was heavily biased and added fuel to sceptics arguments. It also seems to be the only source to come up when any of these debates start, ignoring all the other legitimate scientific evidence, which is not “global warming propganda’.

  7. Robert D. Scheper says:

    I agree our globe experiencing climate change (lots of scientific evidence on that) but not “global warming”. Everyone talks about the north pole melting but refuses to talk about the south pole freezing. Climate change has been occuring on and off for many centuries, but to assert that it has to do with man made carbon emitions is a joke. How about the FACTS of sun flares (or shortage of them) which is a MUCH better scientific explanation. Global warming propaganda is about controling national and international markets… that’s where the money is, plane and simple.

  8. Derek says:

    As you are all probably well aware, the SCR system, as an add-on to older equipment, is estimated to have an initial cost structure of $8-$13,000(US), notwithstanding the continual purchase requirements of DEF urea. The California government is initiating a 1 billion dollar fund to provide loans to carriers based in California for the switch over.
    Proponents of SCR are claiming a fuel savings maximum of $4,000 per annum (best case scenario), without ANY provisional testing being performed to arrive at this magnanimous estimate. Even with this estimate, there has been no conclusive costing structure to the DEF urea to offset the best case scenario fuel savings of the SCR. Many truckers with equipment outfitted with SCR are reporting failure of sensor readings; gradually shutting down the engine when in fact there is still plenty of DEF in the reservoir.
    Broad estimates(based on the scanty data provided), indicate that with fuel savings offset by DEF costs, maximum savings per annum would be approximately $2,000. With the initial purchase cost of $8-$13,000, breaking even (ROI), would not occur until AFTER 4-6.5 years. This is unacceptable, to the fleet owner and owner/op alike. As well, the SCR unit & DEF reservoir(full) add an extra 500 lbs. to the tractor.
    Pertaining to NaviStar’s current lawsuit against the EPA, I feel they were quite right following this lead as there seems to be more than meets the eye with the EPA & OEM’s respective relationships. It is quite evident Engineering at the Manufacturer’s level have not done their homework. CAT attempted at the start by increasing fuel pressure at the injector area with disastrous results, and have wisely removed themselves from this current fiasco.
    There are a couple of other applications currently on the market; one that has already passed California’s carbon emissions requirements and is a fraction of the cost of SCR with ROI at less than 6 months in fuel savings alone.
    It should be apparent how money plays a much more important role to the OEMs, EPA & Government; instead of practical and common sense solutions for the industry. I look forward to the inevitable squirming the EPA & the OEMs will be doing while their respective pants lay bunched around their feet when this other application has passed all tests by the California government.
    Then again, with the results of the other application I speak of; there is always the chance of it being “buried”. BTW; the other application is called “Intercharger.”

  9. Robert D. Scheper says:

    Everyone has something to sell!
    Wonder what the commission rates are?
    At any rate, I am a proponant of Hydrogen cells not anything else available (SCR, DEF, CIA, FBI etc.). The system is seriously underdeveloped and underfunded but in theory much more cost effective, efficient and logical. It probably will not take off in America due to politics but I beleive the science is very strong. The only downsize is that research needs 10 more years before full production… (maybe… not sure). Just think of the benefits: migher power, clearner burn in the cylinder, no need for spinoff industries cleaning up emissions, unlimited, cheep and renewable resources. I may be slightly prejudice about the science but at the very least its a very underdeveloped opportunity. I don’t sell it but I have clients using it, and the evidence is hard to refute.
    In my humble opinion the North American diesel industry responses can be summed up by Bob and Doug “koo looo koo-koo koo looo koo-kooooo…”

  10. Derek says:

    As to Robert’s comment “Everyone has something to sell! Wonder what the commission rates are?”. Hydrogen, in theory IS more cost effective, efficient & logical. I agree.
    However, we are currently dealing with a mindset & scenario predicated on fossil fuel usage. After decades of establishment, I sincerely doubt the players in business & Government will drop diesel & gas like a hot potato and wholeheartedly embrace hydrogen technology WITHOUT ensuring they have at least the same revenue they are currently making from fossil fuels. As a number cruncher, Robert, keep in mind what is the motivating factor(money), not the supposed altruistic intents without sound feasibility.
    For all the drum beating of Green & Alternative, We are dealing with the here and now. I interact with scores of owner/ops & fleets, obtaining a far more comprehensive view of the real world practitioner costs, than say, a survey of PR representatives from various trucking firms. The SCR is here to stay for now, however inefficient and abysmally lacking in cost efficiency it is.
    I have admired & agreed with your previous posts, as they have shown an astute awareness that is not typically displayed in this industry. Your flippant comment on your last post has indicated, however, you have not even performed even the most casual investigation into the aforementioned application. There are currently some major players in the U.S. that have researched and have applied the application after reading about it.
    What’s your excuse?

  11. Robert says:

    A thousand appollogies for my koo-loo-koo koo remark. Usually I think through what I say and pass it by my wife (who would have caught my shallow emotions), however this time I wrote off the cuff.
    I don’t beleive in conspiracy theories… which makes it difficult fighting them :).

  12. richard says:

    so tell me …. how much much would it cost me for 000the perfect heavy haul truck ??? i travel all over canada & usa …. and how dependable will it be… in the middle of nowhere , do think i can get a problem fixed with the new system SCR … in NWT OR SOME OTHER PLACE … a dependable truck , means that i have a contract that i can deliver on time. I loaded the same time as 3 other trucks… 1 st to arrive … one new truck … a volvo .. still in the shop as we speak … DEPENDABLE…

  13. Robert D. Scheper says:

    Lou. Have you been keeping up with “Climategate”? I think your readers would be interested in your views… or at least I would!

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