Trucking Challenges Lead to Opportunity, says Navistar’s Allen

BANFF, AB. —  “Yes, we’ve had our challenges,” began Navistar COO Jack Allen in a presentation to Alberta Motor Transport Association (ATA) members. He was speaking of Navistar, of course, but Allen didn’t spend much time outlining the company’s recovery plan.

This talk was about the trucking industry as whole, a changing business and regulatory environment, and the responsibility that everyone in the industry has to ensure goods are delivered at a reasonable cost.

“In talking to everyone here today, I know that everybody in this industry has gone through a challenge at one time or another,” he said.

In what he called “his first coming out party,” Allen kicked off the AMTA’s Annual General Meeting with a presentation titled Five Questions in a Changing Truck Market and How Our Industry Must Respond.

Change and challenges, yes, but Allen stressed that change only means opportunity.

He talked fuel prices: “The instability and unrest in the Middle East to the ripple effect of the European financial meltdown, it seems like every global crisis there is results in the price of diesel fuel in North America being volatile and on a wild ride. From a customer perspective, it’s very difficult to manage a fleet when one of the most significant operating costs can vary so greatly.”

But, he said, he’s betting on a coming stability, pointing to increasing domestic options, notably the Keystone XL pipeline and North America’s domestic natural gas supply.

He talked hardware issues and the cost of natural gas trucks, too. “We all have a lot of work to do here and so do some others,” he admitted. Collectively, the industry is working on it.” But there are still hurdles — significant hurdles that must be overcome before the fuel can be a viable trucking fuel. “This is especially true for long-haul applications. With the price of the tanks and other equipment, it’s just too significant right now. But if industry volumes increase, more suppliers get to market, we can expect these prices to fall. And then this equipment will have faster payback.”

He talked regulations. “The past decade has brought on several regulations and from a customer standpoint, that’s been driver regulations — CSA 2010, hours-of-service. For us as manufacturers, we’ve seen several emission cycles and even braking regulations and several new engineering requirements. This compliance has come with quite a price.”

Expect more regulations, he said bluntly. “It’s not if, it’s when. And the customers, unfortunately, are going to pay the price. Manufacturers and suppliers will need to engineer new technology and as an industry we must be conscious of the cost that this can have on all of us. So we need to work together with the regulators in a collaborative way so they fully understand the financial impact of the decisions they make on our industry.”

He talked driver availability: “As I get out to meet customers, I’m really surprised that with the unemployment rate that we have today, the pool of ready, able and willing drivers continues to dwindle. There are a few reasons why this is, certainly new regulations like CSA mean that drivers who were once welcome as truck drivers have to be turned away. Driver safety records and health records are reducing the pool of drivers. There’s also a social issue here; driving a truck doesn’t have the same appeal to the younger generation today than it did in previous generations. The thought of being on the road for extended periods of time away from friends and away from family is really an issue.”

He sees drivers having an increasing influence on trucking. “Fleets are going to have to address the fundamental deterants to driving trucks, including quality of life. But that could come at a price. As manufacturers, it is our responsibility to build products that are more driver centric, easier to drive, safer, and with shorter training periods so drivers can become more efficient and more productive.”

He sees the length of haul changing, too. “What’s driving that? Well, there are a number of factors. One of the big ones is the growth of rail and the growth of intermodal. In many cases, it is simply more affordable to move freight by rail than by truck.” He pointed to the expansion of the Panama Canal that will change freight patterns throughout North America “as new ports are open on the east coast as larger container ships and more freight is going to arrive at ports where the goods are closer to their final destination.”

But in the end, Allen said that he is “incredibly optimistic about the future. Trucks aren’t going away and this economy — from Canada, the U.S., Mexico and even the emerging markets — the economy thrives on trucks.

“What strikes me most about this business is that the world economy rides on our vehicles. Commerce cannot happen and will not happen without trucks. This is a tremendous responsibility that we all bear.”

That responsibility has been embraced by the industry for over a century, he said.

“And when the industry changed, well, so did all of us, and all of us have contributed significantly. And by doing so, have helped raise the standard of living in this entire world.”

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