Executive View: John Erik Albrechtsen, Paul’s Hauling
October 12, 2010
WINNIPEG, Man. -- John Erik Albrechtsen, manager of operations with Paul's Hauling began working in the family business when he was about 12 years of age.His career has taken him from the shop floor through the University of Manitoba where he...
John Erik Albrechtsen of Paul's Hauling remains bullish about the trucking industry but has some concerns.
WINNIPEG, Man. — John Erik Albrechtsen, manager of operations with Paul’s Hauling began working in the family business when he was about 12 years of age. His career has taken him from the shop floor through the University of Manitoba where he earned a business degree and even included a stint as a commercial airline pilot. Today, he manages the operational side of Paul’s Hauling, a 250-truck fleet that hauls bulk commodities such as jet fuel around Western Canada. Always one to speak his mind, Albrechtsen visited recently in Winnipeg with Truck News executive editor James Menzies. Following is a candid conversation about driver pay, costly new engine technologies and the future prospects of the trucking industry. * TN: How do you spend most of your time at Paul’s Hauling? Albrechtsen: My real role is to leverage business processes with operational technology to make us more efficient, that’s essentially what I do. I bring equipment, regulations and technology together to support our operational groups and then I work with a team of senior managers to drive all that through our organization.
TN: What role does technology play in all that? Albrechtsen: I went to a conference in the early 80s with a guy who was the Dean of the Sloan Business School of MIT and he said ‘Anybody can move your goods from Point A to Point B, but the guy who moves the goods and can provide the information is going to be the winner.’ As we come through the 2000s, that’s the case. The guys who have the technology and can reduce the workload for the driver, and deliver information to the customer in real-time, that’s what customers are looking for. Back in the 80s, that was pretty visionary. Today, that’s what everybody is expecting. Shipping customers want visibility of where their carriers are and what they’re doing. That drives the challenge. On the other side, you have an overcapacity in the marketplace and a shortage of capacity for good drivers. How do you bring drivers into the market and how can you make their job easier and more effective while meeting regulatory and customer requirements?
TN: You’re an early adopter of driver-friendly technologies such as automated transmissions like the Eaton UltraShift Plus, why is that? Albrechtsen: We used to have 18-speed manual transmissions. Now, to move the load down the road the driver doesn’t have to focus on progressive shifting or how to shift, he can focus on the external environment around him. It makes it easier for us to bring less experienced drivers in, but it also allows us to operate equipment efficiently and effectively. The drivers love them.
TN: Do automated transmissions help with driver recruitment? And is the driver shortage back already? Albrechtsen: We’re a bit more insulated from that because a lot of our loads are local and quality of life is always important to a driver. Our part of the business allows for a better quality of life than some of the over-the-road guys. But because the commodities we haul are mostly hazardous materials, it puts more onus on the driver – it’s not for everybody. From that perspective, we haven’t seen that issue yet but it’s coming back, you can see it happening in the States already. During the downturn, there was an overcapacity, rates went down and now it makes it difficult to increase wages for drivers but that is going to have to come back. The shortage is going to happen. In the downturn, a lot of guys left the industry and as the economy starts to rebound, guys who were getting ready to retire are going to retire and the regulatory environment is going to make it more difficult to bring new entrants into the business. What we are seeing is our average age of driver is staying consistent with the industry and increasing. Getting new entrants into the industry is a challenge not only for Paul’s Hauling, but for anybody across the industry and the shipping community is going to have to understand that.
TN: There seems to be a sense in the industry that driver pay methods must change and hourly pay may be worth examining. How does Paul’s Hauling pay its drivers? Albrechtsen: We pay them hourly to a standard. It’s a complicated system. Our business is not just over-the-road, it’s a mix of loading and unloading and product handling. On short hauls, there’s a lot of product handling involved so we have to make sure to equate that. The key things that make us successful with our drivers are: we have an established hourly rate system that is fair and equitable to everyone. We say a task should take a certain amount of time to accomplish. If a loading point is not ready to go and it’s not your responsibility, you need to be compensated for that. Over and above that, when our guys go over 60 hours – because you can do that within the (HoS) cycle – we pay overtime. One of the issues with our industry has always been: ‘It’s in the rate.’ This is why hours-of-service is such a big issue. If everybody paid hourly rates and overtime, it’d be self-policing. They try to take a safety standard and make it a social standard. In essence, for anybody who pays strictly hourly, there’s a whole bunch of inefficiency in there. Anybody who pays strictly by the kilometre is not being fair. We believe we have a system that does both. Some guys will do a little better because they’re a little bit more efficient. It’s fair. And if they face extra time or delays, they get reimbursed for all that time so they’re getting paid fairly for the work that they’re doing.
TN: Are drivers pleased with that arrangement? Is driver turnover still an issue? Albrechtsen: Our turnover is low. Our big challenge is that we have quite a bit of seasonal business, so staffing up for the seasons is a challenge but within our normal core of operations, it’s low.
TN: Paul’s Hauling runs mainly Mack and International trucks. How closely have you followed the debate surrounding EPA2010 engine technologies? As a customer, has the war of words been a disappointment or is it just good, healthy competition? Albrechtsen: I haven’t paid too much attention to it. Our job is to get loads from A to B and our biggest issue is to make sure we have reliability and durability and to this point, we’re not sure. We do know that anything to do with emissions on any engines we have experience with is costly – really costly. Just look at the dollars spent on EGR coolers, EGR valves, diesel particulate filters – all the failures are the bolt-on components. Any engine is reasonably reliable but as soon as you get into all the emissions components that go around them, they’re not. That’s a frustration for drivers because drivers can’t get their tasks done. All they’re looking for is a truck that will get them from A to B and let them do their job. SCR vs EGR or whatever else – I don’t really care. I just want one that does it. Today, if you ask me which one is going to do it…I couldn’t pick a horse today. From our experiences, so far none of them are any good. The shipper wants us to pick up his load, deliver his load and do it timely, safely and efficiently and that’s what our drivers want to do. They don’t want to be stuck on the side of the road; they don’t want tow bills. That’s why you buy new equipment. But today, the cost of emissions equipment is extremely high and the reliability is moderate to low across the board, it doesn’t matter what vendor you’re talking about.
TN: How are you managing the additional costs of EPA2010 emissions? Did you pre-buy trucks? Are you extending life-cycles? Albrechtsen: We are extending life-cycles. The old trucks work well and the new trucks don’t and that’s primarily because of emissions. It’s not an environmental issue – it’s a reliability and cost issue. We had one in the other day, an EGR cooler went so you get coola
nt in the oil and then it’s a $17,000 repair. It was warranted but it cost $17,000 to fix. And those aren’t isolated instances, it’s not only us, it’s everybody. Our maintenance facilities do a lot of outside work, so we get a lot of exposure to what other carriers do because we see a lot of those outside trucks. We don’t have to buy Brand X to know how reliable Brand X is, because we’ll see it. The cost of new trucks is huge. The only thing that’s not huge is the price of used trucks. You want to buy some? I have a helluva deal for you. Except for the creature comforts and the amenities, from the driver’s perspective it’s the older trucks that perform better than the newer trucks. The operational cost models today don’t support new trucks very well. Not only are they expensive to buy, they’re expensive to maintain and the reliability is poor which pushes up against a whole lot of cost factors that the shipping rate structures don’t support.
TN: On the regulatory front, what are your main concerns? You are an early adopter of technology so I would think you’re a big proponent of things like EOBRs? Albrechtsen: Yes and no. I’m not a big fan of big brother looking over my shoulder, but it has a place in that it can allow good information to come through on how things are being operated and where inefficiencies are and where you can take corrective actions. Aggressive driving behaviour is something we focus very strongly on. EOBRs can provide important data components that have value to you but if those data components are not interpreted properly, it can be extremely detrimental because it can skew one way or another and all sense of reality gets lost.
TN: Looking at the big picture in terms of the regulatory environment, rates, capacity, etc., are you optimistic about the trucking industry’s future? Albrechtsen: That’s an interesting question. I am cautiously optimistic. I think the economy has a long way to go even though there are some sectors that are pretty vibrant right now. For our particular company, we managed to carve out some areas in the downturn where we managed to do reasonably well. I think that the general public and the shipping community need to understand the relevance and importance of transportation and that has to gain a more prominent position in the logistics chain. I don’t think it’s getting the respect it needs. Traditionally, what has separated North America from other economies is our ability to move goods from A to B and support that infrastructure and I don’t think the public recognizes the need to effectively fund infrastructure.
TN: So you feel that the general public and shippers must gain a better understanding of the role trucking plays before things improve? Albrechtsen: In the late 50s and early 60s, transportation was a regulated utility, no different than water and heat. Deregulation has gotten us away from that. So they try to come up with things like CSA 2010 and all those other things. The perception the public has is that you get stuck behind a truck and it gets on your nerves but in the bigger picture, it’s the most effective means of getting things from A to B and the public needs to recognize that. Am I optimistic? Yes. When was the last time an airplane pulled up to your doorstep or a train pulled up to your doorstep? It doesn’t happen that way. (Trucking) is going to come back but it’s going to take a lot of reflection from key people in key places.
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