DAILY NEWS Dec 17, 2012 12:14 PM - 0 comments

LEADERS: Day & Ross's Doug Harrison on fuel surcharges, capacity and obstacles to future demand

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2012-12-17

 Q. Rising fuel costs are becoming a concern for both carriers and shippers. What are you doing at Day & Ross to improve fuel efficiency?

Harrison: Fuel is a major cost to any transportation services provider and the fluctuations we are seeing continue to be broad. We are spending time with our drivers in the area of training to reduce consumptions, increasing the use of LCV’s, greater use of technology based routing and scheduling optimizers and examining new truck technology and other methods.

 Q. The Shipper Pulse Survey conducted by CITA this year showed that a large percentage of shippers, although they are paying for them, are not happy with the current system of fuel surcharges. Many believe that it’s not just a method for carriers to pass along an uncontrollable cost but a backdoor way to raise rates without touching the base rate. Are those concerns valid? Is there a better way than the current system?

Harrison: Unfortunately with the volatility in fuel pricing I am not sure of a more efficient method to adjust rates due to fuel price increases or decreases. Given that this is such a major cost component where the carrier has little ability to control pricing a fuel surcharge is likely the most visible method for adjusting rate levels in an open transparent manner.

Q. It has been difficult to get a handle on the true strength of freight activity over the past year. What is your view on the current state of the business?

Harrison: The global and Canadian economy continues to be quite tenuous in its recovery. We continue to see growth in our volumes. The transportation and to a lesser degree the logistics provider sector has certainly been challenged over the last several years, for the most part the conditions in the industry have improved but the reality is success  will come to those providers who invest in their businesses, continue to focus on service, are able to attract and retain talent, who stay close to their customers  and challenge themselves to be leaders in the sector will be the companies that are successful in the new economy.

Q. The LTL sector more than any other suffered from over capacity during the recession. What is your sense of the situation currently? Has supply aligned itself with market demand?

Harrison: Capacity overall continues to tighten in both the LTL and TL segment, through the downturn there were a number of bankruptcies and closures and certainly fleets were downsized. As we look forward Day & Ross is well positioned to invest in its business and its people. The shortage of drivers and human capital will continue to be a challenge. This is an area we have a number of teams focused on. With an industry that will continue to consolidate and our growth plans we realize one of the key resources we will need is people. Through our strategy we have several teams working on how to make Day & Ross an employer of choice for both owner operators and our employees. We know that to be successful growing our company we will need great talent and will need to invest in our people.

Q. If we are headed towards a new cycle of growth, what do you see as the main obstacles to keeping up with the demand for freight services?

Harrison: I believe we will see low growth in the North American economy for several years, that said our plan is to continue to grow our business at an accelerated pace by offering a full range of quality transportation and logistics services, as well as making the right capital investments. We are well capitalized and have the financial capability to invest in our current and new businesses but I think the real obstacle will be attracting talent. That is why we are investing in being a great place to work, we are looking at new ways of attracting and retaining drivers, warehouse employees and owner operators. To provide great service you need great employees, we have them and our proud of our team and will invest even more in the development of our people over the next several years.



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