ELDs, cost controls top carrier and shipper agenda
Posted: October 14, 2016 by John G. Smith
TORONTO, ON – Telematics are increasingly being used to control costs, but shippers and carriers who spoke at the recent Surface Transportation Summit are recognizing that more challenges are on the horizon – especially when it comes to pending mandates for Electronic Logging Devices (ELDs).
Fleets that install the equipment ahead of the mandate will have a competitive advantage, insisted Trevor Kurtz, general manager of Brian Kurtz Trucking. What, he wondered out loud, will happen to the fleets that rush to order their technology at the last minute? “He who’s there and is ready to go will win.”
His fleet is already using ELDs. So is GX Transportation. Michelle Arseneau, managing partner with the latter carrier, admits that drivers were not keen on the idea when the electronic logs were introduced in 2013. But since then they’ve come to prefer electronics to paper logbooks. Proof of that is heard whenever someone has to use a truck without the device. “It’s a nightmare for them. They don’t know where their pencil is, and they don’t know what they’re going to do,” Arseneau said.
Ken Rosenau, Rosenau Transport’s director of operations, looks forward to the way the devices will level the playing field, and help bring an end to fleets that promise to travel more than 1,100 kilometers per day.
Shippers see advantages, too. Martin Pede, director – logistics and supply chain at Glencore Canada, sees ELDs as a tool to remove one more unwanted variable from business tenders. With the right data it’s possible to address existing bottlenecks in the supply chain, too. The commodity producer itself has already responded to such data by opening one site around the clock, and extended loading hours at others.
Still, there will be challenges to overcome. Rosenau said that drivers have threatened to walk away from the industry when the mandates come. Some aging fleet owners might as well, he added.
It is not the only way that tracked hours are causing challenges, with shippers like Target increasingly applying fines for late loads.
Arseneau argued that shipper fines like these are not reasonable.
“The appointment times that are out there, they just don’t add up,” she said. “You can’t predict traffic on the fly and you can’t predict when another shipper or receiver is going to tie you up.” Where one customer pays $50 for holding up a truck, that hardly offsets the $1,000 fine for being late at the next loading dock.
The unwavering focus on time could even expose companies to legal risks, suggested Valerie McSween, MacTrans Logistics vice president – eastern region. She referred to a jury that awarded a $23.7-million verdict because of the pressure applied by a freight broker before the truck driver was in a collision. “Is that really worth the 100% on-time performance?”
PepsiCo Foods Canada, for its part, will often pay such penalties rather than passing them on to carriers. Sure, companies need to be accountable for on-time deliveries, but it has to be done in a “responsible” way, said Heidi Syer, division freight manager. “We have invested very heavily in technology, supply chain solutions. We’re looking for ways to be more proactive.”
And more cost-effective. Carriers and shippers alike recognized that cost controls still remain on the top of everyone’s agenda. Rosenau referred to clients in Alberta’s famed Oil Patch that have been looking for rate cuts of 20 to 30%. “Most of us in this room don’t have 20% to begin with,” he said. Instead, the fleet is looking at options like reducing fuel surcharges.
PepsiCo managers, meanwhile, are expected to find $1 billion in productivity gains every year. That translates into about 4% of the operating costs. And it’s why so much time is spent analyzing related data. “Most of the low-hanging fruit is already gone,” said Syer. “We do invest very heavily in technology and supply chain systems in order to pull out those costs in the system.” A massive Enterprise Transportation Management System examines all of the company’s transportation moves across the globe, looking for ways to optimize the network. Maybe loads can be traded, or bypass a distribution center and go straight to a customer. That’s where the wins are found.
Valerie McSween, MacTrans Logistics vice president – eastern division, suggested there’s more room for outsourcing. About 30% of the trucks on North American highways are deadheading, and 40% are only partially loaded, she said.
GX Transportation found its own savings when it used telematics to track idling time, and offered drivers a pay increase if they could meet related targets. The goal was met in the first month.
Customers are looking for more data, too. “In order to be able to survive, you have to bring that to the table,” Arseneau said.
Still, technology is not solving every challenge on the horizon. “The reality is, drivers are exiting the industry and young people are not coming into the industry. We’re not getting any new blood,” Arseneau added. Some of them may even bristle at the increasing role of telematics and carefully tracked hours. “They’re being told when they can stop for a pee break.” That’s not what it was like in the movies.