TORONTO — Returning to his old stomping grounds of Toronto, Chris Patterson laid it all on the line for nearly 300 fleet executives and industry suppliers at this morning’s opening VIP breakfast of Truck World 2006.

The Rexdale, Ont.-born and raised president of Freightliner LLC in Portland, Oregon told his audience that the North American trucking industry is experiencing perhaps one of the most interesting points in its storied history. Despite some hardships in the last 10 years – some naturally cyclical, some entirely industry-created – trucking is stronger than it’s ever been, said Patterson, who has worked for truck manufacturers in Canada and the U.S. for 27 years, the first 14 years with Canadian Kenworth. He was named Freightliner of Canada president in 1992 before moving to company headquarters in Portland in 1996 as vice president sales. Following a four-year stint with Volvo Trucks North America, he returned to Freightliner in 2002 and was named president in April 2005. He’s the only the second Canadian to hold the top job at an American OEM, the first being Al Pelletier, who headed Mack Trucks for several years in the 1970s.

Freightliner chief Chris Patterson says the ’07
transition will be a lot smoother than ’02

“Years ago we watched these young kids that barely needed to shave make millions with these dot-com’s and enterprise software [ventures], and we thought ‘what the hell are we still doing in this business?'” he says. “But 10 years later a lot of those guys are now doing our dry-cleaning and serving us pizza and we’re still here. So there’s lots of things trucking’s got going for it.”

It didn’t come easy, however. Patterson says it took a long time for the industry, including both manufacturers and carriers, to properly understand post-deregulation issues like capacity. “Deregulation had a profound effect on both Canada and the U.S. I don’t think as an industry we handled it particularly well, and it cost us a lot of money,” he told the crowd at Truck World, owned and operated by Today’s Trucking’s parent company Newcom Business Media.

SINS OF THE PAST

Patterson wasn’t shy about pointing out past mistakes by OEMs during the “dark days” either, including his own company, which in the mid-to-late ’90s swallowed market share by flooding the market with equipment, and – along with relaxed standards from leasing and financing arms -invited “truckers that shouldn’t ever have been truckers” into an industry with extremely tight margins.

“Excess capacity was the bugaboo of the industry,” he explains. “There were far too many trucks, far too many people in the business. Many of whom didn’t know what they were doing.”

Today, truckers and suppliers have clearly learned from their mistakes. “We now earn market share, we don’t buy it,” says Patterson, who himself used to drive a Loblaws truck around urban Toronto before attending the University of Western Ontario where he earned an MBA.

How then, Patterson asks rhetorically, do we keep the industry healthy? As many fleet owners listening to him in the room have been doing for years, Patterson insists that carriers have no choice but to keep passing rising costs of fuel and equipment through to their customers.

However, there is a ceiling for how far rates can be pushed, he says. So it’s up to carriers to find competitive advantages in other cost-reduction practices. “If you are over-spec’ing your vehicle or if one of your retention [strategies] is to let drivers run faster, you are going to be in tough,” says Patterson, who adds that customers shouldn’t be surprised if they start seeing non-fuel-efficient models and 600-hp-plus engine offerings fade away in the near future.

SECURING PILOTS

Although it’s been said many times, another escalating challenge for carriers, says Patterson, is shoring up professional drivers-more so in the U.S. than in Canada. He says the “myth” that drivers can easily be lured with fancy equipment and lots of chrome has been debunked.

Patterson rolled around Toronto in a Loblaws truck before
embarking on a career with North America’s largest truckmaker

While decent equipment, as well as higher wages and better benefits are part of the solution, Patterson says the industry will continue to have a shortage of qualified manpower until it improves its treatment of drivers and owner-ops. “Frankly, with some of the practices I’ve observed over the years, not just from [carriers], but from shippers too, I’m not sure you could give good drivers Mercedes’ and they’d want to go down the road.

“To keep drivers in the industry and get more drivers, you simply have to do more than just pay better,” he says.

ALL-CONSUMING DISCUSSION

That’s how Patterson described the 2007 EPA-mandated emission regulations nine months before they take affect. With over three million real-world miles tested on Detroit Diesel and Mercedes engines in this current “fine-tuning period” – a piece of the puzzle denied to OEMs leading up to the ’02 standards – Patterson is sure that the ’07 EGR engines won’t have any significant problems attached when they hit the market.

“This time around, we, and I’d like to think the other engine manufacturers too, are well ahead of the curve,” he says. “We’re actually at the same level [with the Detroit Diesel Series 60] of fuel consumption with the new engines that we are with the 2004 standard. That was not an outcome we could have possibly predicted when we launched this program.”

However, there are still some outstanding wildcard issues concerning the engines, admits Patterson, namely the newly-added diesel particulate filter (DPF) and ultra low sulfur diesel (ULSD) required to run in the new engines.

With the DPFs, truckers will have to deal with a still somewhat murky “regeneration” process, which injects a squirt of fuel into the exhaust stream, igniting and burning soot collected in the DPF. Also, while the fuel economy of engines themselves are said to be at par with current models, the 15-ppm ULSD required will carry an energy degradation penalty of about 3-5 percent. There are also some lingering concerns about ULSD’s wide-scale availability in North America.

For carriers looking to sidestep ’07 equipment by grabbing whatever is on dealer lots today, Patterson did warn against massive pre-buying. “There isn’t a lot of [manufacturing] capacity out there as there was in previous cycles,” he says. “Be careful about making a short-term decision of deferring purchase cycles for a year or two because it may not be so easy to get trucks when you really need them in 2008 and 2009.”

WORLD TRUCK?

Not exactly, says Patterson. However, on the subject of vertical and virtual integration – spec’ing consolidation within OEMs and among suppliers – Patterson stressed the growing trend in North America is not an opportunistic grab on the part of manufacturers, but a “natural evolution.”

With increased safety regulation forced upon the industry, it simply isn’t practical, or perhaps within compliance, to allow customers to spec brakes or other safety-sensitive components from wherever they choose, he says.

“As a general rule of thumb, I welcome change, and find it invigorating,” Patterson says. “For our business and for your business, the key to success is to get in front of change rather than get run over by it.”