BARRIE, Ont. - The high cost of fuel is taking its toll on owner/operators, causing many to look at careers outside trucking. However, a shortage of programs to assist them with the transition has lef...
BARRIE, Ont. – The high cost of fuel is taking its toll on owner/operators, causing many to look at careers outside trucking. However, a shortage of programs to assist them with the transition has left some truckers feeling trapped.
Alternative career opportunities are slim, says the wife of one Ontario-based owner/operator, who in the past regularly hauled general freight to Quebec. Tobi and Kevin Johnson are now struggling to maintain their small trucking business, but if that fails there seems to be few opportunities available for a 43-year-old truck driver. Tobi says that employed workers in other industries might be laid off, but they have access to federally-funded unemployment insurance – and the associated government services, such as retraining programs and job placement – that are designed to get workers back into the job market.
“Well, put that mindset to our owner/operators,” says the mother of four. “They too have limited ‘talents’ pertaining only to their job.”
Tobi says working conditions are not favourable for today’s owner/operators, who must cope with an erratic workday, often without scheduled breaks or meals. While regulations are in place dictating the number of hours truck drivers can work in a day, Tobi says they are often ignored in order to meet delivery schedules and pay the mortgage.
“Well let me say that (those HoS) regulations are put on the back burner,” she says.
Tobi points out that an unskilled worker, like those who work in a factory, may get a pink slip informing them about an upcoming layoff, while owner/operators are “lucky to get a 24-hour courtesy call.”
When that happens, she says owner/operators often find themselves potentially defaulting on their truck payments, losing an expensive rig to creditors. Johnson suggests the future looks bleak for those who are driven out of business due to high fuel costs, and O/Os should be prepared to face a tough reality.
“We are scared,” she says. Her husband has been in the
trucking business for 22 years, and before that her father-in-law was in the same business, but was unskilled for any other job beyond driving. The elder Johnson died recently, and at his funeral, Tobi was surprised to talk to many others from the same industry with a similar problem. Those friends of the family had experienced the same fate: suffering from an economic downturn, with high fuel prices and now facing an uncertain future with no other skills to fall back on.
“It’s a tough lifestyle,” says the owner/operator’s wife, who attributes the present challenges to the many expenses associated with the business – especially the fuel bill, which can’t be delayed.
“The cost of fuel is killing owner/operators,” she laments.
Owner/operators don’t necessarily benefit from a fuel surcharge either, she points out. That’s an add-on levied by the carrier that sometimes only benefits the company the O/O is driving for.
While the Johnsons say that they have a great relationship with their company’s creditor, there is no leeway about deferral of loans. Last year, Tobi worked full-time just to make the truck payments. “It’s such a big expense.”
Her husband is only 43, but with one skill: truck driving, and no alternative prospects. The family has obvious concerns. “For us, it’s just devastating,” she says.
Joanne Ritchie, executive director of the Owner-Operators’ Business Association of Canada (OBAC), say she has never given much thought to the issue of retraining O/Os.
“It’s usually the other way around, trying to get funding for training for those who want to get into the business, not for those seeking retraining because they’ve left,” says Ritchie.
Ritchie indicates that education and training are under the jurisdiction of provincial governments, although many of their programs receive federal funding through Labour Market Agreements, funded by HRSDC (now Service Canada). Ritchie speculates that the sticking point is possibly not lack of funding for truck drivers, but rather lack of retraining for owner/operators, due to their status as self-employed business people rather than company drivers or employees.
As for financial hardships during these tough economic times, Ritchie says she’s heard many stories about owner/ops going under, but doesn’t personally know any whose businesses have actually failed. She has, however, talked to many O/Os who have considered packing it in.
“I also know owner/operators who have parked their trucks, temporarily, and taken jobs as company drivers. There may still be a truck payment to make, but if the truck is sitting still, there are no other operating costs,” she says.
On the flip side, Ritchie also knows many owner/ops who are actually “doing quite well,” especially with shippers willing to pay appropriate fuel surcharges.
“The key is, of course, that these owner/ops are already running efficient businesses, know their costs to the penny, and aren’t moving freight that doesn’t pay,”she says. “They are usually those who also have a solid customer base, or work for a carrier who has, and are able to show their customers the numbers that justify increased rates and higher fuel surcharges. But ‘doing quite well’ is relative; no one is rolling in dough. Costs are up and profits are down, but at least the good ones are still able to cover their costs.”
As for what Ritchie refers to as the “reprehensible practice of carriers collecting a fuel surcharge from their customers, and not passing it on,” the OBAC executive director, acknowledges that it happens.
“Or sometimes the carrier doesn’t collect a fuel surcharge, which means they can undercut the fair market rate because they can still get the owner/operators to take the hit. Even in today’s market, there are carriers out there telling their owner/ops that the customers won’t pay a fuel surcharge. I find this hard to believe. Even a year or so ago when fuel was half the price it is today, surveys indicated that the vast majority of shippers were paying fuel surcharges,” adds Ritchie.
“If the carrier can afford to haul the freight today without a fuel surcharge, are we to infer that their profits were skyrocketing when fuel and other costs were much lower? I don’t think so.”
Ritchie corrects one bit of misinformation about surcharges, that “there is some kind of law that requires a carrier to pass on fuel surcharges they collect,” which she says is simply not the case.
“The only protection small business truckers have from this and other unscrupulous business practices, is their own business smarts. No one is forcing them to haul the freight. Again, it all comes down to knowing their costs, and refusing to haul freight that doesn’t pay what they need. That said, they need to make sure their costs are realistic. No one is going to pay more to compensate them for inefficiencies, like poor fuel economy.”
Ritchie says she also hears from carriers who claim they’re losing loads to rate-cutting competitors, so it’s not just owner/ops who are struggling. However, she says carriers who are slashing rates get away with it because they’re able to find someone willing to get behind the wheel and move the freight.
“As long as we continue to keep a big pool of cheap labour out there, we’re keeping the bad apples in business.”
Ritchie recently discussed trucking bankruptcies with government officials who indicated Industry Canada insolvency stats aren’t as high in trucking as suspected. “I pointed out that not everyone who goes out of business declares bankruptcy, so this probably isn’t a true picture of who is leaving the industry,” she says.
Linda Gauthier, executive director of the Canadian Trucking Human Resources Council, indicates that funds for training can be found in any province through community programs that offer skills development, employment opportunities, and other services.
“Most of the funds that are available may be targeted to help employers train their employees, but I believe there is poten
tially some small business funding available through the economic development offices in the provinces,” says Gauthier. “A lot depends on the type of retraining that is required, and which province you are in. Each province is deciding on how to help the workforce remain skilled and efficient.”
Service Canada does offer employment programs across the country, but as Johnson attests, “the skills development program provides a negotiated amount of financial support for skills training to Employment Insurance-eligible individuals,” according to the federal government’s Web site on this topic. However Service Canada does offer other employment programs to the general population.