Canadian Shipper


Regulation, risk the topics of Canada Logistics Conference opener

NIAGARA FALLS, Ont.–CITT’s Canada Logistics Conference 2015 is taking place this Monday and Tuesday in Niagara Falls, Ontario. The conference launched today with a regulatory primer featuring Ian MacKay, a lawyer with over 30 years of experience in federal transportation law, and David Bradley, the president and CEO of the Canadian Trucking Alliance and the Ontario Trucking Association.

MacKay illustrated the theoretical path of a widget travelling from Shenzhen China to Niagara Falls and listed the various risks that would have to be managed in the transit: rates, poor service, potential loss and damage of goods, liability for accident or theft, delay, financial liability for third party losses, regulatory penalties for non-compliance, and even criminal responsibility.

He then cited the example of the liability chain in the Lac-Mégantic crude train derailment, where class action suits named all the supply chain stakeholders and where there still remains potential regulatory enforcement action against the loader.

The trustee in the case stepped in to create a compensation fund, and managed to convince most of defendants to contribute to it.

The derailment’s impact on the supply chain was stricter regulation with regard to the transportation of dangerous goods, mandatory insurance requirements for Canadian railways, tougher railcar standards, and tougher operations rules on railways.

The shipper-funded compensation fund presently only addresses crude transport but there is the potential for it to extend to other situations, MacKay said.

As a take-away message shippers should certainly ask themselves what is their worst case scenario? Are they protected? Are their third parties protected, MacKay asked.

In the marine mode, effective May 2016 shippers, freight forwarders, vessel operators, and terminal operators will need policies and procedures for the weighing of containers, as estimates will then no longer be acceptable.

And in aviation, new air cargo security rules are coming into place that enable supply chain stakeholders to become known consignors, certified agents, and registered  and certified agents, with the advantage that you’ll be able to screen your own goods but it’s a complex system where everyone in the chain has to participate, MacKay noted.

The lesson to draw in this increasingly regulated environment is to source from capacity rich routings, and support infrastructure investment in ports, rail, road, terminals, ships, trucks, and in driver recruitment and training, he said.

According to David Bradley, while the trucking industry has been economically deregulated since the 1980s, virtually every other aspect of the industry is regulated in some fashion. And while regulation certainly has a role to play, the issue is, is the actual regulation good or not?

Potential game changers for the trucking sector include truck driver hours of service regulations, and electronic logging devices. By the end of this year, the U.S. Department of Transportation will introduce an ELD mandate for the U.S.. But as Bradley noted there are 120, 000 Canadian trucks also crossing the border each year. When the U.S. mandate comes into force in 2017, or as late as 2018 these Canadian trucks will also have to be equipped with ELDs.

“From an enforcement policy it’s important we have a Canadian approach though the technology should be the same both sides of border,” Bradley said.

Rules governing intra-provincial regulations will be needed as well as cross-border rules.

“For those who have moved to ELDs already they have not seen a reduction in productivity. Where you will see it is where people are cheating and where their business model is based on that, but also on those runs that are at the margin,” Bradley said.

ELDs will require better planning on the part of the carrier  and the shipper both.

“We will have to sit down as carriers and shippers and figure it out. It is going to be a significant change in our business,” he added.

On the topic of the environment, “We will hear our politicians say that climate change is the fight of our lives. Fuel efficiency aims to reduce GHG and the trucking industry leads if not North America then the world in its efforts at fuel efficiency. But the Canadian government has said we’re only going to do what the Americans do, no more, no less,” Bradley noted.

Smog free trucks come at a cost-now a 25-30% increase in equipment due to currency change.

“We can’t afford the same kind of mistake with GHG as we did with clean air (policies),” Bradley said.

New EPA rules built around a 80,000 lb tandem tandem trailer, for example, if adopted in Canada, don’t address some of the more common, “productive configurations” that exist here, and that don’t exist in the U.S., said Bradley.

Canada has also got to overcome harmonization issues between the federal and provincial levels of government, and between the provinces themselves, he said.

Immigration, a federal department, holds up the process of bringing new potential drivers to the country. The classification of occupations is also federal while driver training is provincial.

“It took 15 years to get the ‘new’ federal hours of service regulations in,” Bradley said.

There has also been no real growth in driver wages since deregulation, and this is a major contributor to the imminent driver shortage, and where the shortage is most acute is in long haul trucking.

“Those are some real challenges we’re going to have to deal with. The marketplace is going to have to sort those out. The major underlying issue is the ‘demographic tsunami’. The average age of a truck driver today is over 46 years, aging more rapidly than any other part of the labour force, and only about 8.8 % of current drivers are under 30 years of age. If we were ever to get the economies kick in, it would exacerbate things. Most of it will be dealt with in the marketplace. But one of the things impeding our ability to attract younger drivers is it’s not deemed to be a skilled occupation. How do we address that? We think there has to be mandatory entry level training,” Bradley said.

The reality of it is you can walk in off the street and take both practical and written test and next day you’re in theory licensed to drive a tanker down the highway. If you don’t require any sort of training it’s difficult to argue it’s a skilled occupation, Bradley noted.

“The other source of drivers we need to be able to look at is through immigration. The industry is pushing for regulation, but smart regulation. We need to have perfection in safety-we need to take responsibility for the carbon footprint that we create. But no no one holds a candle to the trucking industry in terms of its commitment to safety and the environment,” he said.

Julia Kuzeljevich

Julia Kuzeljevich

Julia Kuzeljevich is Editor of Canadian Shipper. She has been writing about transportation and logistics issues since 1999.
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