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TFW changes reinforce truck driving as low skill? – That’s wrong!

Regardless of whether yours is a carrier that participates in the Temporary Foreign Worker Program (TFWP), or whether you agree with the program or not, recently introduced changes should be of concern to the entire Canadian trucking industry. In the grand scheme of things, a relatively small number of carriers participate in the TFWP. But, for those that do, they will say that it is the last remaining way for them to get idled trucks moving for a period of time when all efforts to recruit Canadians have been exhausted.

Truck driving is not a low skill level job.

Truck driving is not a low skill level job.

The TFWP was already expensive and cumbersome before the recent changes. Now it is even it even more costly and restrictive to the point where some carriers will be forced to abandon the program altogether. This could have significant implications for those carriers and their customers.

But, the more universal problem underscored by the recent changes to the TFWP – and why everyone in the industry should be concerned — is that they reinforce the notion that truck driving, as an occupation, has about the same standing as a burger flipper in the government’s eyes. For years, CTA has — given the level of skill, training, planning, administration and legal compliance required to do the job — objected to the classification of truck drivers as unskilled under the National Occupational Classification (NOC), which is the underpinning for government policy on which occupations are eligible for training funds, immigration, and programs like the TFWP.

In 2009, a research report conducted by Hiscott Consulting for the last review of the NOC by the federal department now called Employment and Social Development Canada (ESDC), recommended occupation 7411(Truck Drivers) be re-classified from Skill Level C (low skilled) to Skill Level B. For reasons that were never fully explained, that recommendation was not adopted.

The implications of this misclassification of truck drivers are significant. The trucking industry, hauls 90% of all consumer products and foodstuffs and almost 60% by value of Canada’s trade with the United States. It is facing a chronic shortage of drivers which the Conference Board of Canada forecasts will reach as high as 33,000 (mostly of long-haul tractor-trailer drivers) by 2020.

The industry has been put in an untenable situation. Labelling the occupation is low skill creates huge barriers and disincentives to people who might otherwise consider driving in Canada for a living. On the one hand the federal government is telling employers in the trucking sector they should be hiring Canadians first to fill driver vacancies (which everyone agrees with). But, on the other hand, by classifying the occupation as low skill, Canadians who might consider becoming truck drivers are excluded (through key programs like the Canada Jobs Grant) from funding for the training they will need to become employable. Low skilled occupations are also at the bottom of the priority list when it comes to immigration. Other than in a few provinces with receptive Provincial Nominee Programs (where the TFWP can be a stepping stone to permanent residence status and a path to citizenship), qualified, experienced truck drivers who would love to work in Canada and become Canadians have no chance of doing so.

The recent changes to the TFWP serve to exacerbate the situation. In one sense ESDC seems to acknowledge the problems that are inherent in the current classification system for certain occupations by introducing the concept of high/low wage occupations as opposed to low/high skilled workers. The determination of whether an occupation is low or high wage is conducted by comparing the median hourly wage for all occupations in a province to the median hourly wage for that occupation in the province. The result of this is that in all but two provinces (British Columbia and Alberta) the occupation of truck driver is deemed to be low wage. (Quebec is exempt from all the changes to the TFWP).

This is not about whether truck drivers should be paid more. The CTA Blue Ribbon Task Force has already acknowledged that industry compensation packages need to be as competitive — or better — than that available in other occupations and sectors in order to attract and retain drivers. Part of the problem is that most tractor-trailer drivers at least are paid by the mile. In addition, all types of truck drivers are lumped together in the NOC. As usual trucking does not fit into the typical 9-to-5 office/factory world that most government analysis and data is based on. Trucking complicates things. CTA has proposed that tractor-trailer drivers should have their own classification distinct from drivers of other vehicles.

While the tractor-trailer/straight truck comparison may not apply in all cases for the most part tractor-trailer drivers tend to earn higher wages, are far less likely to be paid by the hour, work longer hours, drive longer distances, require a different class of license, etc., than most straight truck drivers. There are certainly straight truck drivers in specialized sectors who would earn wages as high as or even higher than some tractor-trailer drivers. Nonetheless, separating the two is a superior methodology to the one currently in use.

Last year, CTA asked the Minister of ESDC, Jason Kenney, if he would consider moving up the timetable and accelerating a review of the NOC for truck drivers. (CTA and the provincial associations are also seeking mandatory entry level training to a national occupational standard currently being developed by Trucking HR Canada with assistance from ESDC). With the recently announced changes to the TFWP, a review of the NOC to ensure the occupation of truck driver, or the various types of truck drivers are properly classified, is even more critical today than it has ever been.

Source: David Bradley, Ontario Trucking Association, November 28, 2014

Researcher discusses self driving truck

Trucks engineered with various levels of self-driving capabilities are expected to pull onto North American roads over the next decade; and autonomous could be seen in the real world not to long after 2025, according to Frost & Sullivan.

Mercedez-Benz Future Truck 2025

Mercedez-Benz Future Truck 2025

As reported by Fleet Owner, F&S’s global director Sandeep Kar offered a “forward-looking perspective on how this brave new world of trucking may play out down the road.”

He contends such technologies will work in concert to cut fuel consumption, reduce emissions and ensure better highway safety. “Trucks that will host these technologies in 2020 and beyond will be more fuel-efficient compared to trucks today and will feature even higher levels of distributed electronics,” he told Fleet Owner.

“Automated vehicle technologies can enhance fuel efficiency by communicating with disparate vehicle systems and sub-systems in trucks featuring electronic interfaces. Moreover, OEMs will design and use these technologies to catalyze highest fuel efficiency so as to influence the purchase decision of truck buyers.”

Kar noted that wireless platooning is “a form of autonomous driving that has shown meaningful fuel cost savings with very little incremental increase to a truck’s price. That can be leveraged by long-haul fleets to derive significant cost savings. This is one of the autonomous driving technologies/concepts that if applied properly can deliver interesting fuel economy gains.”

According to Kar, self-driving trucks will improve the performance of individual truck drivers “particularly if drivers can extract the promised benefits of this technology effectively and efficiently– which includes higher fuel efficiency, higher safety, less driver fatigue, etc.

“Nowadays,” he pointed out, “more and more fleets are incentivizing drivers for safe driving, and this technology can help drivers with safe driving, regulation compliance and fatigue reduction.”

While Kar conceded that “the jury is still out” on the technology’s potential to improve highway safety, he said that “our initial research indicates that highway safety may actually increase overall since most accidents can be attributed to human error.

“However, this will be a long-term phenomenon,” he continued, “since it will take at least a decade or more from 2025 onwards to have a sizeable population of such vehicles on the road to make a meaningful impact on highway safety.”

Kar also advised that self-driving technology “would also enable drivers and vehicles to communicate more effectively with shippers, receivers, fleet hub, and service and maintenance infrastructure. That would improve overall mobile-resource productivity.

Alberta big oil to feel the price squeeze

Source: Tim Webb, The Guardian, Friday 29 October 2010

Alberta Tar Sands: Source: Tim Webb, The Guardian, Friday 29 October 2010

Canada’s biggest energy producers now face the same prospects of shrinking budgets and declining profit as their smaller rivals as prices drop for what’s already the world’s cheapest oil.

If crude prices continue sinking following OPEC’s decision not to cut global oil supplies, Canada’s producers big and small will have to tighten their belts to prepare for declining profits.
“This is a pretty big shock,” said Justin Bouchard, an analyst at Desjardins Securities Inc. in Calgary.

Western Canada Select, the Canadian benchmark, has lost more than a third of its value since June, in step with declines for West Texas Intermediate and the international gauge Brent.

Lower Spending
Large Canadian energy producers will probably trim capital spending with WTI below US$70 a barrel, which reduces cash flow about 30%, Matthew Kolodzie, a Toronto-based credit analyst at RBC Dominion Securities Inc., said in a note Thursday.

There are factors working in the Canadian producers’ favour.
To offset low prices, as well as the high cost of mining and steaming bitumen from northern Alberta, Suncor, Cenovus Energy Inc. and some competitors own refineries and use trains to move their products to coastal markets, where they get better prices.

‘Not a Holiday’
Stocks tied to oil-sands growth are falling less than Canadian producers focused on delivering output growth from shale, as well as those carrying high levels of debt, said Jennifer Stevenson, who helps oversee CUS$5.5 billion at Dynamic Funds in Calgary. That’s because investors consider oil-sands developers based on long-term prices for decades-long projects, she said.

Source: Jeremy van Loon and Rebecca Penty, Bloomberg News | November 28, 2014 12:36 PM ET

Ontario carriers are optimistic

Ontario carriers continue to be optimistic regarding freight volumes and rates.
The Ontario Trucking Association’s members’ opinions on fourth quarter reports on the North American freight environment remain confident even though the second quarter had exceptional highs. The Ontario Trucking Association added that there is a continued level of enthusiasm, post the recession uncertainty that lingered for years over the industry is in the rear view mirror for the majority of carriers.

content_photo_canadian_truckload
This is how Ontario fleet executives differentiated the market conditions in the fourth quarter review.

Intra-Ontario said freight volumes have improved by 47% of respondents in the past three months which is up from 6% from the second quarter review.
Carriers reported a decrease in volumes of 3% in Ontario, which is an all time low. Intra-provincially carriers who said volumes increased, were down 6% from the last survey yet it was still the second best response since 2011.
Looking ahead, 29% of carriers anticipate improved volumes in the next six months compared to the 3% in the last survey.

Rates in Ontario are expected to increases by 45% of respondents, making the highest level recorded, a 14% increase over the previous survey. Thirteen percent of carriers expect to see softer rates north into Canada, yet 33% anticipate increases.

Expectations are largely unchanged for 45% of respondents, although 27% have experienced capacity increases of the last quarter. Looking ahead, 84% of carriers don’t expect changes and 42% expect further tightening. Still, 82% state customer contracts are not lengthening in spite of warnings in the shortfall of drivers and documented shipper concerns on truck service convenience.
On that note, 59% of carriers plan to add drivers; though based on recent trends, the majority are by replacement demand, not expansion.

Carrier costs are affecting capacity levels leading many carriers to increase wages for drivers, adding to the largest cost. In the forth quarters 2014 survey 78% reveal driver pay is increasing around 10%.

Overall, the top concerns are; driver shortage with capacity and rates being the second highest concern. The lowest number was the economy which is nearly half from 2013’s survey.

Natural gas truck market growing slowly

The choice to use natural gas alternatively to diesel fuel in the heavy-truck segment is expected to grow, but at a slower rate than first anticipated.
According to reports from ACT Research and NG Reality Check these are their findings;

At first reported by ACT they projected faster growth for natural gas trucks, however with lower diesel pricing it has had an impact.
This doesn’t mean natural gas has not grown; it will continue to grow but at a slower pace in the next few years. Truck and transit bus was 3% in 2013 but should reach 4% in 2014.

ACT is projecting natural gas vehicles will represent 23% of Class 8 truck and bus vehicles sold by 2025. This is a large quantity that will be shared by those aware and accepting of tomorrow’s truck transportation needs with a plan to get there.
With the emissions and greenhouse gas needs and regulations in place in the coming years, Ken Vieth, ACT Research’s senior partner and GM believes achieving those needs, natural gas penetration could be much higher since natural gas is equally available, cleaner and cheaper (cost per mile) fuel than diesel.

Freight transportation services index rose to all-time.

The index has increased 4.2% to 121.5 for September compared to last year at the same time.
This is the highest level since 2000 when records began.

The freight TSI (Transportation Services Index) of 0.3 percent increase from August to September, Department of Transportations said in its monthly report.

Freight for truck, water, pipeline and air has increased, but rail is unchanged, The Department of Transportation’s Bureau of Transportation Statistics (BTS) said.

Year to date, freight shipments are up 2.1% in comparison to the same period last year.
The report stated that several other indicators of related parts of the economy often impacting transportation increased. Specifically, industrial production grew 1% after several months of slow or negative growth.
Shipments and inventories by manufacturers’ have both increased. Inventories have increased 22 of 23 months reaching a historic high.