Years from now, when the hair-raising sound of truck air horns blasting Parliament Hill and the sight of owner/operators massing in parking lots to shout their frustrations are distant memories, this winter of discontent will likely be considered a turning point in the history of our fast-growing but troubled industry.

Whether it will be viewed as the wake-up call that finally drove us to address the issues necessary to help our owner/operators thrive, or mark the start of their demise, will depend largely on how well we — as well as our shipper customers and governments — come to understand what has driven the usually passive men and women behind the wheel to such desperate ends. And what we decide to do about it.

Let’s start with the issue that sparked the owner/operator protests which consumed much of eastern Canada from St. John’s, Nfld., to Parliament Hill in Ottawa: diesel prices that have risen from 40 cents a litre last year to as much as 79 cents a litre in some parts of the country. Three things can bring relief: a market correction that significantly reduces the price of diesel; government action to reduce the tax burden on fuel; and shippers agreeing to fuel surcharges that carriers pass on to their owner/operators. Yet the likelihood of any of these measures becoming reality fast enough to provide the immediate relief sought by owner/operators is dubious at best.

Owner/operators were quick to point an accusing finger at oil companies for the highest diesel prices since the Gulf War in 1991. Yet the economic reality is that prices are not set by the oil companies but by traders at North America’s stock exchanges acting on their perception of international supply and demand dynamics that are beyond the knowledge of most members of the public and probably beyond the control of government.

At the moment, about two million more barrels of crude oil a day are being consumed globally than are being produced and the effect of that supply shortage on prices is showing up daily at the pump. Analysts say that every dollar change in the barrel price of crude suggests an adjustment of one cent (Cdn) per litre at the pump. The value of crude at the New York Mercantile Exchange has jumped from a low of $10.72 per barrel (all figures in U.S. dollars, unless otherwise noted) on December 1998, when there was glut of oil on the market, to a peak of $34.37 on March 8th of this year.

The recent decision by OPEC to add 1.45 million barrels a day in new production of crude falls far short of the 2.5-million barrel increase the U.S. and other western countries had been seeking in their efforts to rein in spiraling fuel prices. Even if OPEC had agreed to increase oil production by the recommended 2.5 million barrels a day, the U.S. Energy Department had expected oil prices to drop to $25.50 a barrel — a far cry from the price of crude at the end of 1998. A day after OPEC’s announcement about increased oil production, prices on the New York Mercantile Exchange had dropped just 78 cents per barrel to close at $27.

And there’s another factor that will keep crude prices high — the shortage of gasoline reserves. There is such a shortage that most of the announced OPEC increase in crude production could be absorbed by the need to generate gasoline.

Even if OPEC’s increase in production does result in lower fuel prices, it’s not going to happen quickly.

“I read a lot of articles that were predicting we would be back to normal pricing levels by February but I didn’t believe it because I knew there were still supply problems,” says Mark Derks of T-Chek, a company which tracks fuel pricing in North America. “It will take time for prices to go down as it took time for them to go up. I believe it will take at least 60 days before we get relief at the pump. That takes you into June.”

Adding to truckers’ confusion over the real cause of price hikes is the fact that diesel prices are determined differently in eastern Canada than they are in western Canada. In eastern Canada, the proximity of major U.S. centres has a major impact on pricing. Fuel suppliers charge the price they could receive for their product if it was being sold in the U.S. When prices peak, as they did earlier this year following an unexpected cold snap that raised the value of heating oil, the main indicator for diesel pricing, there’s no incentive to cut Canadians a deal.

“The oil companies are saying ‘it’s a world commodity, and this is what we’re gonna charge.’ There is no reason to favor domestic consumers with lower prices,” says Ron Rosnak, senior petroleum advisor for EnPro International Inc., another company that keeps track of fuel pricing.

It’s a different story out west where there are no major U.S. centres nearby to affect pricing (Seattle, which impacts Vancouver prices, is the exception.) Here oil companies do base their pricing on the value of crude. That’s why diesel prices in the west are expected to remain high.

Such dry supply and demand realities hardly make fodder for protests. It’s hard to point fingers when there are so many variables at work. However, that doesn’t erase the reality that owner/operators must face no matter which corner of the country they live in:

“You’re not going to get back to what prices were in 1998,” warns Rosnak “But keep in mind that the prices then were some of the lowest in ten years. What is very drastic is that you’ve gone from a situation where prices were the lowest in 10 years to the highest in 10 years in a matter of 12 months.”

It’s no surprise then that owner/operators have turned to the federal and provincial governments for help.

“We met with some people from the fuel industry and they educated us about how fuel prices are determined, and the more we learn the more we realize it’s a pretty complicated thing. It’s definitely not as easy as going to the government and saying put a cap on it,” acknowledges Jonn Faustino, interim president of the National Truckers Association, a new voice for Ontario owner/ operators that sprung to life during the protests. “But I have to stress that governments have a responsibility to ensure there is an environment that allows people to make a living. Whenever there is a crisis — whether it’s the government’s fault or not — they have to rectify it…If they can’t control the fuel prices, let’s face it, governments make a huge chunk of money every time I put diesel in my truck, so they can look at suspending the fuel tax even if it’s for a temporary basis.”

Ottawa tacks on a four cent per litre excise tax and its seven per cent GST to the price of diesel fuel while the provinces add anywhere from nine cents per litre in Alberta to 16.2 cents in Quebec. However, there have been no significant fuel tax increases in five years. Prime Minister Jean Chretien was quick to dismiss demands by truckers protesting on Parliament Hill to counter the price hikes by cutting taxes on diesel fuel, but Ottawa’s stance has softened since then. At press time, Finance Minister Paul Martin was inviting the provincial governments to meet with him to discuss lowering excise taxes on fuel. However, Martin cautioned that Ottawa would not consider lowering its taxes unless the provinces agreed to similar cuts. Considering the track record of getting the provinces and the federal government to agree on anything, government aid is also unlikely to provide the quick solution owner/operators are looking for.

Ditto for getting help from shippers. In many cases carriers are finding shippers are refusing to pay the full cost of the fuel increases and some are refusing fuel surcharges outright.

Forced to accept the apathy of shippers, stonewalled by slow-to-react governments and confused by the complicated economic variables conspiring to keep diesel prices high, the frustration level of owner/operators can only continue to mount. What next? Probably more protests. One week after organizing a demonstration on Parliament Hill, representatives of the Greater Ottawa Truckers Association were openly talking of staging another demonstration.

“Oh, I don’t think that it’s g
oing to be too long. We might not be so nice this time,” says Dwayne Mosley, a negotiator for the association. “We’re talking a different type of demonstration. The farmers want to join us with their tractors and cultivators.”

Even the National Truckers Association, which has shunned actions that inconvenience the public, is uncertain it can keep a leash on its members.

“The association right now is in talks with different groups. We’re trying our best to find solutions. Meanwhile a lot of truckers are starving. They can’t make ends meet anymore,” says Faustino. “They’re coming to us and saying what have you got? We say we’ve got another meeting. I have heard people say enough with meetings, let’s do something.”

It’s important to remember that high fuel prices are not the only problem owner/operators face. Their rates have been stagnant for years, their ability to generate income by keeping the wheels rolling is hampered by ridiculously long waiting times to load and unload at some shippers’ yards, and truck costs have escalated thanks to the low value of our dollar compared to the American greenback. The high fuel prices were simply the straw that broke the camel’s back. The resulting fear of losing their trucks and livelihood has led people better known for their staunch individualism to band together for support. So far they have looked inward for that collective strength, the formation of the National Truckers Association and other groups in Newfoundland, Nova Scotia and New Brunswick being evidence of that. But can these fledgling organizations overcome their organizational inexperience quickly enough to be effective? Already the leadership of the new group representing owner/operators and independent contractors in Atlantic Canada has missed a key meeting with Nova Scotia government officials. And the protesters at Parliament Hill were openly disappointed that few members of the National Truckers Association appeared even though they expected the support of more than 1,000 truckers.

If these associations fail to deliver, owner/operators will have to look elsewhere. What next? Several big-name unions are chomping at the bit to organize the trucking industry and owner/operators are probably more receptive to collective action now than they’ve been in years. The Canadian AutoWorkers (CAW) union pledged $10,000 to help get the National Truckers Association going. Faustino is quick to point out the donation was unsolicited and came with no strings attached but the CAW is also putting together a $150,000 nation-wide campaign to show union support for all truckers in the fight against high fuel costs.

“I think this fuel crisis has been a wake-up call, and now lots of owner/operators are coming around to the idea of organizing,” says CAW national rep Dave Tilley. “Our organization is actively out there in the trucking companies, talking to owner/operators and company drivers. And we have had some successes.”

The CAW currently represents about 5,000 drivers in Canada. The union recently organized 200 drivers at Ryder Logistics and ratified an agreement with the company that included a pay increase. Another powerful union, the United Steelworkers of America, is trying to organize independent drivers at the CP Rail Intermodal yard in Vaughan, just north of Toronto. The union has already organized a number of independent truckers in Quebec and the provincial government there has announced plans to create a permanent roundtable on the trucking industry that will include representatives from unions. The Teamsters were behind the owner/operator strikes that crippled the Port of Vancouver last summer and led to a switch from operators being paid trip rates to hourly wages.

Of course, the industry need not sit idly by and watch owner/operators’ desperation grow. Indeed, it hasn’t. Quebec Trucking Association vice-president Claude Pigeon has tentatively endorsed the notion of a professional association of owner/operators in the hopes it will address issues that can improve the lot of owner/operators, such as training needs and group purchasing power. The Atlantic Provinces Trucking Association has been helping the fledgling owner/operator and independent trucker groups in the Maritimes set up meetings with key government officials, and the Ontario Trucking Association has played the same role with the National Truckers Association. But there may be a limit to how far these relationships can go. For example, the National Truckers Association wants a base rate for owner/ operators.

“We say the industry is deregulated but the government has regulated everything from how many hours you can drive in a day to how many times you have to stop, so why not regulate a minimum base rate?” asks interim-president Faustino. “And if the rate was the same across Ontario, or even better across the country, I don’t think that would be detrimental because when carriers bid on work they would all be working from the same base.”

That logic doesn’t cut it with Ralph Boyd, head of the Atlantic Provinces Trucking Association.

“There are companies out there that are abusing their people, I’m not going to deny that. But most reputable companies with a desire to be here in the future have already been dealing with the aspect of contracting services to owner/operators and have worked through coming up with structured agreements with terms and conditions,” Boyd says. “I don’t know if you can come up with one standard contract that would cover everybody.”

Bob Dolyniuk, general manager of the Manitoba Trucking Association, questions how carriers could find the extra money to better pay owner/operators under a master agreement.

“If we’re going to look at regulated rates for owner/operators maybe we should be looking for regulated rates for carriers. You’ve got the carriers between a rock and a hard place…Where do carriers go to get higher rates?”

Of course, regulated rates for carriers would return us to the regulated trucking industry that existed prior to 1988, something the federal and provincial governments are unlikely to consider.

Obviously, some soul searching needs to be done. But carriers aren’t the only ones that should be doing it. When looking at the economic hardships facing owner/ operators, the hardest question to ask is how much of it is of their own doing?

“This fuel issue is a symptom of a bigger problem and that is that owner/operators are getting into business with substantial overhead and substantial monthly commitments and in many cases they lack a thorough understanding of the business side of trucking, the cost structure of trucking, and the compensation needed to sustain long-term viability,” Al Smythe, the new general manager of the Alberta Trucking Association says. “As long as they’re willing to haul freight at non compensatory rates — and they don’t do that intentionally, it’s just that they don’t understand what they need in return –then this problem is going to continue to exist.”