The industry needs a survival plan for difficult times

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Ontario’s economic development minister, Al Palladini, has been working with the National Truckers’ Association and the Ontario Trucking Association to develop an action plan to begin to address some of the longstanding economic concerns of the province’s trucking industry. In announcing the plan, Mr. Palladini said: “Now, I want to say something clearly. The government is prepared to regulate if the industry won’t regulate themselves when it comes to fuel surcharges. This includes the fuel surcharges that shippers pay to carriers and carriers to owner/operators.”

The message: The ball is now in the industry’s court – that of carriers, owner-operators and especially the shippers.

There are no easy solutions to the current situation confronting the industry. The prospects of even higher diesel fuel prices are very real. Clearly, the governments must be a part of the solution. Trucking is a highly regulated, highly taxed industry. Palladini has made some important commitments. As an economic minister he is well-placed to work with us. The federal government, too, has a role to play. This will take time. The fuel tax issue is not going to go away.

But we also need to get on with finding our own solutions. We have learned to be as self-reliant as possible. Surviving this ordeal will take co-operation amongst everyone – carriers, owner-operators, company drivers, suppliers and the shippers. (Let’s also not forget the banks and lending institutions that we are calling upon to cut some slack to the owner-operator during this difficult period).

Some may dispute this, but it is generally acknowledged that those carriers that belong to trade associations tend to be the more responsible, more enlightened and better-managed fleets. As they are also at the mercy of the market’s vagaries, these carriers are well aware that many independent small businesses are presently under severe stress.

Most would also agree that independent operators are the backbone of the trucking industry. Indeed, that is how many of them started. Most of the carriers I come in contact with are passing along collected freight surcharges to their owner/operators. (That is, to the extent that they are successful in getting them from their shippers). Others, again to the greatest extent possible, are making other arrangements with their owner/operators, including rate increases, offering bulk fuel prices, etc. In addition, many individual member companies provide group buying programs, financing and business advice/assistance and training in order to attract and retain good owner/operators. If qualified, safe owner/operators feel they are getting a raw deal from their carriers, they should explore the opportunities with other carriers. I know my members would welcome applications.

Not all business relationships will be happy ones, but I believe the vast majority of carriers are being as fair as they can be.

You are also not likely to get any argument from carriers that rates are increasingly insufficient to offset the continued upward pressure on industry cost structures. You also won’t get much argument that:

1. All carriers should be seeking fuel surcharges from all shippers. Current market conditions clearly justify assertive action by carriers to be fairly compensated for all the services they provide.

2. All motor carriers should seek rate increases. (The Freight Carriers Association of Canada recommends a rate increase of 5.5 per cent). Truck rates have been stagnant since the 1980s.

3. Shippers should pay for ancillary service and wait times. Carriers should refuse to pay shipper fines and no-compliance fees.

4. All collected fuel surcharges should be passed on to owner/operators, in proportion to the owner/operators within the fleet. The exception to this rule would be where the carrier and owner/operator have agreed to other remedies.

There is also much room for discussion – guidelines for owner-operator contracts, codes of best practices, protecting the owner/ operators’ independent status, etc.

Finally, and with all due respect, owner/operators need to be part of the solution. Most do an excellent job of running their business. However, there are those who need some help with the business side of trucking. Those owner/operators need to structure their affairs as a business to take advantage of lower corporate income tax rates, GST credits, etc. They should become informed about fuel and equipment purchases. And, they need to pursue all opportunities to maximize the efficiency and productivity of their operations. Finally, every owner/operator should have a written contract with his or her carrier.

I remain bullish on our industry, though there will be choppy days ahead. But the freight still has to move, and nobody does it better than the trucking industry. n

– David Bradley is chief executive officer of the Canadian Trucking Alliance and president of the Ontario Trucking Association.

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