This is really an open letter to Ontario Minister of Economic Development Al Palladini.
You have in the past repeatedly told the industry that regulation would return if fuel surcharges were not agreed to and paid. Well neither has happened.
As Transport minister, you were certainly quick to enact draconian laws in response to wheels coming off trucks. So why the delay here? If you desire a safety problem far worse than anything you could have ever envisioned during your tenure as Transportation Minister, then just allow this situation to continue. When it comes down to a choice between feeding your family or maintaining equipment (although these go hand-in-hand), if there is only money for one or the other, which do you think will win out?
This scheme, as I understand it, worked out in October, would see every cent of the fuel surcharges passed straight through to the owner-operator. This is not happening in most cases. This will never happen in a number of other cases.
The reasons are many, but one big one is the fact that some companies have an owner-operator pick the freight up in one city and bring it back to their warehouse facility. At that point, it is unloaded from his truck and cross-docked to a highway trailer along with a number of other shipments brought in by other local owner-operators. Once these shipments are consolidated onto the highway trailer, a line haul owner-operator hooks onto it and takes it to the destination city or hub, at which point the whole process begins again in reverse.
How do you pass the fuel surcharge along to all of these owner-operators? Some companies are simply not about to reveal their rates to the owner-operators (this certainly wouldn’t be hard to figure out if you knew what percentage was being paid in fuel surcharges) because that would make it public knowledge. What does that do to competition? You are better off with a tariff rate with a cap on how much you can discount that tariff.
I have written to you before and received no response. I did talk to one of your assistants on the phone after calling your office and being extremely persistent. In that conversation, I expressed to him that fuel prices were only the straw that broke the camels back, and are by no means the only problem.
For example, non-asset load brokers are a major part of this problem as well. They have sales people out quoting rates that are below the cost of operating a truck and trailer. Worse yet, transport companies are then taking these loads, after the load pimp has taken his $100 (or more in some cases). These alleged businesses are among the leaders in collecting fuel charges and not passing them along whenever and whereever possible.
Now I’m not sure what the fuel cost has gone up to on your fax, computer and phone, but I’ve yet to put any gas or diesel fuel in any of these devices I own. The principle upon which this alleged industry works is to find the most parasitic transport company (read cheapest) and play them off against the rest in order to move the freight as cheaply as possible, and keep as much as they can in their pockets. In some other circles this might be called something other than business. As I stated before, this is a group (non-asset load brokers) that is totally unregulated, unchecked and is riddled with people who have not adhered to the rules laid out for them. The Ministry of Transportaion, charged with overseeing these businesses as well as those which actually have equipment, has its hands tied in a number of ways with regard to enforcement of these load brokers.
If you take a typical scenario for an owner-operator and break down his costs at present, it works out as follows: (See cost-per-mile above.).
All of these figures are hypothetical and each individual situation will vary, but I think they are a good indication. I am basing these numbers on averages; the average being 10,000 miles per month and six miles per gallon. You can do better, but we need some kind of average to work with.
Mr. Palladini, would you like to buy one of my trucks?
Now, I have not really been one to think that the government is the place to look for relief, but the government could level the playing field with re-regulation.
The experiment in supply and demand controlling the market is a booming success, if you are a shipper or load broker.
If you are the one making the investment in the equipment, buying the fuel, supplying your skills as the driver and making the personal sacrifices, as well as having your family endure the hardships involved with you being gone, it is a dismal failure.
Far too many carriers have been allowed into the marketplace. I would suggest many do not belong.
Chief among those who don’t belong are those making large profits with next to no investment or exposure to the risks associated with this business.
I felt that a number of these people doing business at cut rates would have fallen by the wayside as the costs increased.
To that end, I parked my trucks at the end of September. Much to my amazement, as we enter the month of December, nothing has changed.
Based on the people I’ve talked to, I would say that the only thing keeping all hell from breaking loose right now is that Christmas is only a few weeks away.
Enjoy now, because I suspect that all hell is exactly what will break loose in the New Year, and Mr. Pallidini, no one will be accepting promises or platitudes at that point.
Please be kind enough to pass a copy of this Email along to Brock Smith and any other member of the “Working Group” who would care to read it. n
Ken Nevils, E-mail
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