Carriers and Insurers Unite to Tackle Cargo Theft

Published in Western Canada Highway News, Summer 2014:
The theft of a truck in Mexico last December grabbed worldwide attention because of something the truck was carrying: radioactive waste that terrorists could use to make a “dirty bomb.”
Eventually, after much public fretting and some sharp police work, the truck and its dangerous contents were located. Six people (one of them showing signs of radiation sickness) were arrested. The situation was brought back to “normal” within days of the heist.
That story was exceptional for its drama and potentials, but theft of truck cargo of all kinds is not so exceptional. In fact, it’s a common and growing concern across North America.
Closer to home, for example, there was the September 2013 theft of a trailer containing an estimated $100,000 worth of frozen beef from a truck yard in the Niagara region. Eleven months earlier, $10,000 worth of meat was stolen from a lot elsewhere in southern Ontario.
In Regina last November 30, a truck containing 1,500 cases of liquor was stolen. It was found empty and abandoned, all of its approximately $500,000 in intoxicating freight gone. The Saskatchewan Liquor and Gaming Authority, the booze’s intended recipient, said the carrier would have to cover the loss.
Cargo crime, which includes theft, fraud and hijacking, is a huge problem. “We had one insurer say it was a $5-billion problem in Canada,” Jennifer Fox – Vice President, Trade and Security, of the Canadian Trucking Alliance (CTA) – told CBC News shortly after the Hamilton beef incident. “I actually think that’s an understatement of how prevalent the problem is.”
In March 2014, CTA and the Insurance Bureau of Canada (IBC) expanded their Cargo Theft Reporting pilot program from Ontario and Quebec to include all parts of Canada. Carriers across the country can now report cargo crime via an online form. The numbers will be crunched and information will be shared with a national network of law enforcement partners, including border agencies.
“This expanded and improved reporting process will help prevent crimes and lead to faster recovery of stolen goods and prosecution of cargo theft criminals,” IBC’s Garry Robertson says.

STOLEN OVERNIGHT

Mike Gerber of Monarch Insurance Brokers in Edmonton says cargo thefts often “seem to follow a common pattern in that they involve loads that aren’t secure – I mean, not in an enclosed trailer and locked. [Drivers or staff] just leave the loads overnight, and they come there in the morning and the load’s gone. If the trailer isn’t in an enclosed area, [thieves] will take the entire thing. They’ll drive away with it, and the cargo won’t be seen again.
“Lots of times they don’t know what they’re stealing, but with the economy being the way it is in Alberta they figure there’s a good chance that whatever is in the trailer is worth some money. They’ll just take their loot, whatever happens to be in there, and try and make do.”
The rising incidence of theft “has put pressure on the cost of cargo insurance,” Evan Di Bella, Claims Director at Northbridge Insurance, says from Toronto. “The insurance industry has had to pay out more in cargo claims in recent years, and that cost gets reflected in rates.”
There are safety measures that any trucking company can and should take to reduce the risk of cargo theft. For example, every firm should have a “loss prevention committee” whose members are empowered to “think like a thief” and look for cracks in business practices that might present opportunities for a thief – and then, of course, act to address those deficiencies.
That tip gets a thumbs-up from Cheryl Talbott, Senior Account Executive at McLean & Shaw Insurance in Edmonton, who says “awareness is certainly key to prevention.”
Another tip is to assign high-value loads to more experienced employees only. As well, see that drivers make frequent call-ins so that the load’s whereabouts are always known, and/or use technology such as RFID tags to track the load’s progress.
Once high-value cargo reaches its destination, you should avoid storing high-value cargo on-site for longer than necessary. Weekend storage is especially risky, as the Journal of Commerce recently reported that about 70 to 75 percent of cargo thefts occur during that time.
Also, adds Northbridge’s Di Bella, “make sure that loads are delivered before the destination is closed for the day.” Coming in late can mean the trailer is left unattended an insecure location. It’s crucial to have a secured facility for overnight and weekend storage.
SGI Canada’s Barry Peabody says there’s a “risk triad” related to cargo crime, and the human factor is the most important part of the dynamic.
“You’ve got three scenarios,” he says from Regina. “You’ve got the employee, you’ve got the commodity, and you’ve got the locations – in other words, where they’re going to be stopping. It’s a four-day journey, but they’re going to be stopping here, here and here.
“So, if you have a new employee stopping in a high-risk location with target commodities, your chances of trouble are greater than if you address any one of those three points in the triad. If you assign your best, most trusted employee who’s been with you for 10 years, the dynamic changes because the commodity is going to be looked after by someone you’ve got more trust in, and location selection might be different.
“We have to look at all of those factors, but there’s no question that the human being is the key part of that triad.”
When a load is stolen, a carrier mercifully can expect the claims process to be simple: Declare what was stolen, where, when and its approximate value. Monarch’s Gerber says claims tend to be “processed very well, and sooner than later you have a cheque cut for the cargo that was stolen – if you have the right insurance company.”
McLean & Shaw’s Talbott notes that making a claim won’t necessarily affect your premiums. “It may or not,” she says. “It depends on the claim itself – the nature of the claim, the cost of the claim.”
Whether or not an insurance claim is filed, she adds, “it’s important that trucking firms report thefts to law enforcement authorities.”

INDUSTRY PARTNERS

A few years ago, CTA and partners in law enforcement and insurance commissioned a study on cargo crime. The study’s report said cargo crime can have “staggering” impacts on individual carriage companies, and it raised concerns about an increased use of violence and involvement of organized crime.
“Probably the most glaring revelation from the study was that there were actually no statistics on cargo crime and that sort of thing in Canada,” CTA’s Fox notes from Toronto. “So it became obvious that what we need to do is advocate for law enforcement to record in a uniform and consistent manner what is happening out there with respect to commercial cargo-related crimes.”
But before the CTA and its partners could advocate for those types of changes, they needed empirical evidence to demonstrate necessity. It was, as Fox says, “a bit of a chicken-and-egg situation”: Hard data was needed to argue the case that hard data should be collected.
“That is what led to CTA and IBC agreeing to partner together and develop a mechanism where cargo crime can be reported to CTA and IBC – which positions us to collect some data that can be uniform and consistent,” she explains.
“Also, it provides us a way to push that information that we capture out to law enforcement in the hopes that we can aid in the recovery of stolen freight and the like. And it also provides a mechanism for carriers to report incidences of cargo theft without having to go through their insurer, because one thing that came out of the report is that sometimes there is a reluctance in the trucking industry to report cargo crime to insurers for fear of rising premiums.”
The reporting form can be accessed online at www.ibc.ca. Fox sees the data collection and building relationships with police across Canada as wins for CTA and IBC.
“The fact that law enforcement is engaged and interested and active in this project nationwide is the first indication that it’s been a success throughout Ontario and Quebec,” she states. “Obviously if it wasn’t successful in those two provinces, there wouldn’t be interest in getting onboard in the rest of Canada.”
She says seeing more stolen cargo recovered will be the “most obvious” metric of success. “If we’re able to recover stolen freight, if we’re able to apprehend criminals and get increased charges laid, and we can somehow link those to the data that’s been collected, then I think that those would be the measurable statistics.
“I wouldn’t want to put too much weight on the numbers at this point in time, because we’re just not there yet. But there have been recoveries as a result of this program, and that’s why we want to go forward with it and continue to pursue it.”

Alex, Ice Road Trucker

Published in Western Canada Highway News, Fall 2010:

Alex Debogorski is known to millions as a star of the History Channel’s Ice Road Truckers. That makes him probably the Northwest Territories’ most famous resident, and perhaps Canada’s best-known trucker.
But he contends the reality show’s title gives people the wrong impression of him.
“I don’t consider myself a trucker, but I drive trucks,” says the personable father of 11 and grandfather of seven. He pauses, and then concedes with a chuckle: “I’m not sure what that means.”
To understand how this truck-driving non-trucker came to be famous as a trucker, it helps to rewind the Debogorski story to the early 1970s, when teenaged Alex was trying to earn a living in his native Alberta.
Quite a raconteur, he’s happy to tell the story.
“I started out in 1972,” he says from Alaska, where Ice Road Truckers’ fourth season is being produced. “I didn’t plan on driving trucks. I went to university for a year – the University of Alberta – got married when I was 18 years old and had 16 jobs that first year. I was trying to get a job, get set up.
“We had a baby and I got offered a job in Grand Cache hauling coal. I was driving a truck and getting paid about three times as much as the other 15 jobs that I had.”
At that west-central Alberta locale, Debogorsksi drove a GM dump truck to transport coal to a power plant five days a week. It wasn’t long, he relates, before “we had these big diesel off-road trucks that were hauling coal down the mountain, and I wanted to drive those.
“That was dangerous work. We were coming down the mountain with a 30-yard box on a body job with a 350 Cummins in it. You know, in the winter time with two mountains, there was ice and chinooks would come through. It would get slippery and the trucks would run away, you’d run out of brakes and we had cliffs on all sides.
“And then from there,” he continues matter-of-factly, “I almost got killed.” A workplace accident sent him to a hospital, where he met someone who told him about an opportunity in the mining sector. He went looking for gold in central BC, but that was a bust. (“I lost my pants there” is Debogorski’s colourful way of putting it.) He and his wife and child returned to Alberta, and eventually a family friend found him a job in Yellowknife with Robinson Trucking.
“That was in August 1976,” he recalls. “I got there the 10th of August and I’ve been there ever since. Started with Robinson, and I drove a taxi, and I worked in a bar. I worked four jobs for a couple of years. I just about killed myself. Then I started my own business, and then I got it down to just driving a taxi and running my own (excavating) business. And then finally I quit driving cabs and just stuck with the dirt business and we survived. We didn’t get wealthy but we did alright. When I turned 40 I realized I had retired at around 28 but didn’t know it at the time.”
By “retired” he means isn’t a slave to his job; he can leave it at any time. “Just in knowing that you can pick your coat off the hook and leave, that makes the job 10 times better. That’s what retirement is – knowing that you can always do something different.” He says it’s a position everyone should try to be in.

No place like home
“A trucker, to me, is a guy who goes up and down the highway 12 months a year,” Debogorski says. “I’ve been fortunate and I spend most of my time around home.”
But, as he’s saying those words, he’s in Alaska for another season’s taping of Ice Road Truckers. “I’ve been here since the beginning of February,” he says, a few days before St. Patrick’s Day. “I guess I’m more of a trucker now, because I haven’t seen my family for a couple of months.”
Debogorski says driving isn’t something he would want to do year-round, “but I enjoy doing it for two or three months every year. Then I go do something different. This is part of retirement – doing different things. Otherwise, I get easily bored. Sometimes, driving is good. Sometimes, it can get monotonous after awhile. And especially on the jobs we do, if it gets too monotonous, if you take your eye off the ball, it’s an easy way to wreck stuff and get killed.”
The Alaska experience, taping season four of Ice Road Truckers, has been quite an eye-opener for him, in more than one way. Debogorski marvels at Prudhoe Bay’s “phenomenal industrial complex” and the region’s impressive scenery.
“On the clear days, the colours of the sky change. I could not believe how, on every trip, the colour is different. There are an infinite number of shades of pastel for the sky. It just blows me away.
“On the last trip, we had a herd of about 2,000 caribou on both sides of the road,” he remarks. “Then there were a whole bunch of sheep on both sides of the road, and we had to watch out for them. Some of the guys have seen musk ox under the pipeline. And, of course, closer to Fairbanks, you gotta watch out for the darn moose.
“And how many people have seen 40 eagles at once? Unless you’ve seen so many eagles at once, you don’t realize how different they are from one another. There’s tall ones and short ones, fat ones and skinny ones, ones with short beaks and ones with long beaks. They look comical because they all look different.
“Most people would have to pay lots of money to see what we see just driving down the road here.”

Famous in 50 states
By the time you read this, Ice Road Truckers’ fourth season will have premiered on the History Channel. The documentary-style series has changed Alex Debogorski’s life.
“I always thought I was famous, but now everybody else found out,” he quips. “Somebody told me that was actually a quote from some important guy, but I didn’t know that. I thought I invented that myself.
“It’s changed my life in quite a few ways. Like, last year, I spent quite a few weeks in the southern 48 (United States). I got my son to help me, and we got an agent, and we got these PR people this year we’re gonna try. Maybe we can make something out of this notoriety. Maybe we can make the world or some people’s lives better in some way, from an idealistic standpoint. Maybe we can make money off of it.”
The money’s important as Debogorski, well into 50s, ponders the conventional kind of retirement. But he says it isn’t all about the moolah.
“I don’t mind shaking hands and kissing babies, or shaking babies and kissing hands, talking to kids or visiting people in the hospital, or signing autographs,” he says. ‘If I can make somebody’s day by signing an autograph, that’s a pretty big deal.
“A lot of people say, ‘Oh that’s all baloney.’ Well, if I can improve somebody’s day by signing my name or having a picture taken with them, what the heck. It sounds stupid, but you’re making a difference in the world if you can improve somebody’s mood for a while.”
A sometime truck driver in the Northwest Territories becoming a star of a three-million-viewer U.S. cable show “might seem surreal for others,” he admits, but for some reason it doesn’t feel so odd to him.
“I mean, my life has been so twisty and turny,” he remarks. “For a guy that’s not very well travelled and not very well educated, I’ve lived a lot of life. For me, I’m not really overly surprised. The show’s just another twist, just another job, another opportunity to make a difference in the world, and maybe another opportunity to make a dollar. I know that my life is short. I think this show is a great thing.”

Customs Brokers Help Importers and Carriers

Published in Western Canada Highway News, Summer 2009:
Photos of his son and daughter decorate the window sill of Chad Pasosky’s second-floor office in south Winnipeg. Seated at a large U-shaped desk, he manages a team of nearly 40 who are doing their part in getting U.S. products to stores and factories in Canada.
Not one member of Pasosky’s team operates a tractor-trailer, but he plays an important role in the transport industry. He helps trucking companies and their clients get goods across the border.
Pasosky is a customs broker. He and other employees of Jensen Customs Brokers Canada, of which he is regional manager, do the administrative work necessary to get import shipments cleared at the border. They act as intermediaries between importers and the Canada Border Services Agency (CBSA).
He says customs brokers’ work has, if anything, become more important in recent years as border operations have been transformed by changes in technology, trade rules, security concerns and other factors.
“If an importer invests in compliance, by joining various programs offered by the CBSA it will benefit from lower examination rates, not to mention lowered costs and increased savings. The CBSA wants to focus their efforts on high-risk or unknown shipments. With CBSA’s increased scrutiny of compliance, more emphasis is placed on an importer’s books and records to verify compliance away from the border.”
Evolving regulations mean customs brokers, who stay on top of these changes, are vital partners to importers and the transport companies those importers use. And Pasosky, a 21-year veteran in the customs broker industry, expects more changes to come. “You’ve always got to be on top of your game to meet future requirements,” he says, “because they’re endless.”

Partners in importing
A customs broker’s work is mainly about “managing information and managing relationships,” Carol West, president of the Canadian Society of Customs Brokers (CSCB), says from Ottawa.
The information management part is easy to see: Customs brokers take data from their clients and format it for use by government officials, then send it to those officials to get imports cleared at the border.
“They save government a ton of money, because they’ve taken on a lot of the data entry function from the government in terms of preparing the information that allows goods to be released and accounted for in this country,” says West.
Relationship management includes, of course, brokers’ relationships with importers. But that’s not all.
“They also have relationships with warehouse operators,” says West. “They have relationships with thousands of carriers who bring goods into this country, and that sort of thing.”
Tens of thousands of importers rely on customs brokers every year to help get their shipments cleared at the border. For each of these shipments, important data must be made available to government officials.
Putting that data, which may include the shipment’s point of origin and eventual destination, into the proper format for border clearance is the main job of customs brokers. They make the importer’s task easier – nay, possible. Without that “paperwork” (much of which is electronic) being done, the goods won’t be allowed passage.
But there’s more to the customs broker’s role than the completing documents and filing them with the CBSA. As the CSCB states at its website, “customs brokers are now helping importers leverage that information into a strategic advantage, turning information into critical business intelligence. They are offering a growing range of specialized services to help importers develop new product lines, explore new markets, evaluate the impact of global change, and cut costs.

Finding a partner
Back to that whole thing about customs brokers, as West put it, “managing relationships.” As in any type of relationship, choosing the right friend or partner is of utmost important. The CSCB’s website (www.cscb.ca) offers some pointers.
Generally, says West, “I’d suggest that if an importer has an idea of what they want to do, then they should meet with a couple of brokers, using some pretty standard questions in terms of what a broker provides. They’ll find a fit, I think, pretty easily.”
One question the website suggests the importer ask a customs broker is “Does your firm have a specific area of expertise?”
A few other questions at the website: “Do you have experience with and current knowledge of the goods that will be imported by my business? Can you provide me with some references from clients who import the same or similar items? What do you require from me to begin development of my database records?”
Then there’s this one, which Jensen’s Pasosky says is quite important: “How will we work together to develop a compliance plan to clarify our responsibilities and minimize our exposure to administrative monetary penalties?”
The administrative monetary penalty system, commonly referred to as AMPS, is the CBSA’s schedule of fines for non-compliance with customs rules. Penalties increase with each infraction, and infractions stay on an importer’s record for a few years. Penalties can apply to importers and carriers alike.
Office locations, reporting practices and alliances with foreign – especially U.S. – customs brokers are a few other things an importer might want to know about when choosing a customs broker.
Then there’s the matter of fees, which can be a bit tricky. “It’s not so much whether fees vary,” West says. “It’s whether the service being provided is the same. So, I always encourage importers to be very straightforward about their expectations, and I encourage brokers to be very clear about what their service is.
“For me it’s more about communication in terms of service levels and service options than it is about having a standardized fee.”
Not surprisingly, she puts in a plug for the CSCB. “I believe it’s very important that the broker belong to our organization. There are very few that don’t. It’s important that they belong to the CSCB, because you’re guaranteed that (the broker is) benefiting from the advocacy work we do and from the information we provide our members.”
From a carrier’s perspective, a customs broker’s availability is important, according to Bison Transport’s Trevor Batenchuk.
“The trucking industry is a 24-7 business,” says Batenchuk, supervisor of customs and customer service at Bison in Winnipeg, “so having the flexibility that the broker is open 24-7 allows us to sometimes deal with issues in the middle of the evening or at 6 o’clock on a Sunday.
“But, that being said, sometimes the customs broker needs to get more information from the shipper and the shipper is only open 9-to-5 Monday to Friday. It’s a little complex, but having the extra hours helps the drivers get across the border more easily.”
“The carrier is a key partner in ensuring that goods get across the border without trouble,” says Reynold Martens, executive vice-president of GHY International in Winnipeg. “We work very closely with the carriers. Carriers are very important to us.”
Problems for carriers at the border should be rare since documentation is filed well in advance of any border crossing, he adds, but carriers can count on GHY to do its best should the need arise for “last-minute intervention.”

Making it easier
If someone has the letters LCB (for Licensed Customs Broker) or CCS (Certified Customs Specialist) after his or her name, it’s a safe bet that you can rely on that person to have the knowledge and wherewithal to deliver quality service. But there are a few things importers and carriers can do make it all easier.
Tops on customs broker Bob Hobson’s list of tips: “Make sure you have documentation, and make sure you send details to the customs broker.
“We’ve gotten bills of lading here where the client says ‘Hey, I’m crossing at Emerson,’ and they don’t give us the date and time they’re crossing, they don’t give us the weight of the shipment or the number of pieces,” Hobson, president of Service Plus International, says in Winnipeg. Such details are crucial if you want a shipment to reach its destination at the appointed time.
West and Pasosky add that importers and carriers can help themselves a lot by getting more and more with the electronic information scene. Pasosky says about 95 per cent of documentation to the CBSA is released electronically. Clients can help that process along by submitting their data to the broker in electronic form rather than, say, a faxed document of numbers that then have to be keyed in.
A good reason to be thoughtful toward one’s customs broker is that the customs broker can really save the day for an importer or a carrier.
One quick example: Pasosky relates how JCBC got the CBSA to reclassify the imports of an Alberta company that had used a different broker. The reclassification resulted in hundreds of thousands of dollars in tariffs being refunded to the importer.
At Service Plus, Hobson has a broker-comes-through anecdote of his own.
“Last week,” he says, “I had a customer who phoned and said ‘Listen, all I have is a bill of lading here. No invoices. I’m hoping that you have invoices.’
“I was always made to understand that trucking companies are not supposed to move shipments without invoices when they’re moving goods across the border. They’ve got to have some sort of documentation.
“So, what I was able to do is get a copy of the invoice and fax it to (the importer’s) dispatch people. I’m not sure how they got it to the trucking company, but we were able to get them an invoice.”
Similarly, Martens says GHY was recently “called after hours by a carrier in the U.S. who was approaching the Canadian border hauling perishable goods without sufficient documentation.
“Our staff made a direct emergency intervention with the U.S. producer to obtain the necessary information, and arranged for the documentation to be processed and sent to the border crossing in time for CBSA to approve clearance, thus avoiding a lengthy delay that could have been costly for all the parties involved.”

Borrow, Lease, Rent or ...?

Published in Western Canada Highway News, Spring 2009:
Even in the best of economic times, new equipment can be quite an onerous purchase for a trucking company. A new heavy-duty truck can cost more than $140,000, and that ain’t chicken feed.
And 2008 was not the best of times. First, truckers saw a big jump in operating expenses as fuel costs went sky high in spring with the pump price for diesel above $1.40 per litre in June across western Canada and above $1.50 in Whitehorse. Then, in September, came the big market crash that prompted financial institutions to tighten their purse strings.
“I guess it’s hard for everybody to get credit,” says Glenn Cranwill at the Connexion Truck Centre in Winnipeg. “Various finance companies have raised what’s called their beacon score.” Loans are less expensive than a year ago, he adds, but fewer would-be borrowers qualify.
The hoops through which one must jump can be a serious headache, particularly for owner-operators. “Truckers are very time-conscious,” says Cranwill. “Time is money for them. If they have to take a lot of time off the road, that’s a problem for them.”
“Capital has dried up all over, but we’ve seen an increase in business,” Money In Motion’s Kurtis Chisholm observes from his office in Sudbury, Ontario. “For us there are obstacles, but we’re still able to do deals.
“We’re finding we’re able to get it done for owner-operators. As long as they’re still getting contracts, we’re able to get credit for them. With the larger fleets, there doesn’t seem to be a credit problem at all. We’ve found trucking companies in the mid-range in size have been hit the hardest.”
Money In Motion has its headquarters in Sudbury and four other operating offices, including one in Winnipeg. Its website says it provides a range of “custom tailored financing” to transportation, construction and other industries.
Financing options for that new equipment or expensive upgrades include loans, leasing and factoring.

Get some credit

Loans and credit lines are probably the first things that come to mind when the topic of financing comes up. Banks and credit unions are the traditional places to look for these services.
"There is a belief in the marketplace that banks are no longer providing credit,” remarks Allen Barabas, an executive at RBC Royal Bank. “That is not true. In fact, RBC is very much open forbusiness, and we have capital available for trucking firms.
“The process and qualifications required to obtain funding have not changed at RBC,” he adds. “We have always assessed the credit-worthiness of any company prior to providing funding to an entity. It is important to note that the costs of funds have changed for all credit suppliers. It has become more expensive for banks to lend, and as such, loans may be priced higher against prime than in the past.
“That said, given today’s low-interest-rate environment, many firms are finding that their borrowing costs may not have increased much if at all and in some cases may have actually decreased.”
Barabas says commercial account managers at RBC branches across Canada provide “individualized financial solutions” and the bank’s team includes specialists in the transportation sector.
Trucking firms will find many financing options available at banks, he says from Toronto. “For example, RBC offers a retrofit program to help trucking firms that are considering reducing their carbon footprint by upgrading their trucking fleet or warehouse facilities. These solutions can be conducted in a form of term loans,leasing or commercial mortgages.”

Use those assets

Barabas recommends companies look into asset-based lending to tackle the challenge of paying for equipment expenditures. One option under the category of asset-based lending is factoring, a.k.a. accounts receivable financing.
Many transportation companies use factoring to meet cashflow demands or seize growth opportunities at a time when there aren’t the financial resources to make it happen, Jennie Bugg says from J D Factors’ national headquarters in Mississauga.
Essentially, factoring is the sale of accounts receivable to another company in exchange for a line of credit. The creditor takes a percentage of the receivables and the trucking company (in this case) gets quick access to money for operating and capital expenses instead of having to wait for customers to pay up.
Bugg says J D Factors has both big and small factoring clients in the transport industry – from $10,000 a month in invoicing to $4 million a month. The companies typically get 95% of accounts receivable right away, then another 3% once J D collects, but it varies according to circumstances.
Besides giving your company quick access to cash, factoring also “relieves you of the considerable time, energy and effort and expense required to follow up with customers to ensure timely payment,” Liquid Capital Corporation’s website declares. Instead of you or your employees pursuing clients for payment, the factoring company does that for you.
Brian Birnbaum, Liquid Capital’s Chief Operating Officer, offers a hypothetical example to illustrate this case for factoring. A firm with $600,000 a year in receivables might pay a 4% factoring fee (the percentage varies according to a number of particulars). That’s just $24,000 a year – a lot less than the salary of a full-time employee - to have someone chase down receivables.
“So they get the money they need and they also get the whole accounts receivable administration that they would otherwise have to pay staff to do,” Birnbaum says from Toronto.
Liquid Capital has an office in Saskatoon, as well as principals in Edmonton, Calgary and several other Alberta centres, and most other provinces.

Lease or rent it

Leasing instead of buying can carry significant tax advantages,especially since the Canada Revenue Agency changed its rules in 2001 following a Supreme Court ruling (Income Tax Technical News Bulletin 21, June 14, 2001).
On the other hand, leasing can be more expensive than buying, depending on a number of variables. NationaLease has “Lease vs. Buy Worksheet” on its website (NationaLease.com) that managers may find useful in addition to consulting a qualified professional to help evaluate all the available options for financing.
Among the touted advantages of leasing are the preservation of credit lines and the conservation of working capital. Also, a “full-service” truck or trailer lease can lighten a company’s burdens through maintenance and roadside assistance services that are part of the lease agreement.
Leasing can be the best option for a transport company eyeing equipment acquisitions to grow or remain competitive, says Classic Capital Inc. Winnipeg representative Errol Tapper.
“With all the changes in the credit markets and the withdrawal of some of the financial companies that had previously offered accessible financing, it has become more difficult to obtain the credit if there are any tarnishes in the credit history of the applicant,” he notes. “Where before, some minor infractions in the credit history may have been overlooked, this now has become a reason for a credit-granting institution to say no.
“It is imperative that, when seeking the financing, any applicant has all the information readily available to present. That includes financial statements and tax returns, as it takes more effort today to satisfy the credit investigation process.”
A Canadian company, Classic Capital specializes in financing for customers and equipment dealers in transportation, construction and other sectors. It offers services related to leasing and financing, to help companies get the equipment they need on flexible terms that meet their budgets.
If leasing or purchasing doesn’t work for your business, you might want to rent. Or you could go yet another route: rent-to-own. It requires no money down and gives you the option of purchasing eventually. “It’s right between a purchase and a lease,” Harry Dornn says from Maxim Truck & Trailer’s head office in Winnipeg.
Under its rent-to-own program, Maxim allows customers to build equity in their rental equipment and apply up to half of their rental charges toward a down payment for purchasing.
Maxim, which has 15 branches, has also introduced a two-year lease product for those who aren’t comfortable with a typical lease of five years or more. Think of it as an option between rent-to-own and standard leasing.
In short, there are many financing options out there, and no shortage of people ready to assist transport companies in the equipment acquisition process.
Money In Motion’s Chisholm says, in his experience, he can nearly always find a way to overcome the obstacles.
“Sometimes it’s just a matter of digging a little deeper (to find a way to get financing). We need to see how an operation is working so we can find information that could help them get financing.”
He’s optimistic for Money In Motion’s trucking clients despite last year’s “perfect storm” of economic calamities, saying “I would tell people to just turn off their radios and televisions and go to work.”

Be Fuel Smart - Here's How

Published in Western Canada Highway News, Fall 2008:
Adam Smith’s invisible hand of the market reached out and slapped truckers in the face this spring as escalating world market prices for crude oil drove up the price of fuel at the pumps.

For truckers in Western Canada, it meant mid-May diesel prices well above $1.25 per litre, and above $1.40 in Whitehorse. Truckers were paying $1.32 in Winnipeg, $1.30 in Saskatoon and $1.27 in Edmonton. A year earlier, the retail price range in those Prairie cities was 92 to 98 cents, according to M.J. Ervin & Associates.

Add concerns over the environmental impact of carbon and nitrogen oxide emissions, and the reality that our planet has only a finite supply of petroleum, and operators and fleet owners alike have compelling reasons to improve fuel economy.

Luckily, experts have some easily implemented ideas on how you might achieve that objective by changing what you put in the tank, the equipment you use, and what drivers do when they’re on the road.

New fuel additives have been put on the market in recent years with their makers and marketers saying they improve fuel economy. Among those products is the NEUTRO line of additives from PEXT International, which claims NEUTRO products are a “green” way to add as much as 10 per cent to your diesel mileage.

“With America using 375 million gallons of gas a day, the introduction of NEUTRO could not be more timely,” the Deer Park, Wash.-headquartered company declared in a news release this spring. PEXT claims its diesel additive will boost fuel efficiency, improve engine health and reduce emissions.

Similarly, Connecticut-based Stanadyne Corporation and Saskatchewan-based DSG Canada claim their diesel additives reduce fuel consumption for substantial gains in miles per gallon.

Such claims are met with skepticism in some quarters. “We don’t believe in it, that’s for sure,” Imperial Oil senior account executive Jim Noel says from Vancouver. “We’ve looked at all different types of additives over the years and we haven’t found anything that significantly improves fuel economy.”

Stanadyne’s website says the company’s Performance Formula diesel additive has been proven in tests and is approved by Ford, Navistar, General Motors and other leading vehicle manufacturers. Similarly, PEXT International and DSG Canada say their products’ safety and quality have been established through testing and numerous testimonials from satisfied users.

DSG’s additive for heavy-duty diesel trucks sells for about $35 per two-litre bottle. How much you put in varies depending on the product, says DSG president Percy Hoff in Saskatoon. The most common treatment rate is one ounce per 18 gallons (about 82 litres) of fuel.

When considering an additive, “check the label to see what verified claims the manufacturer makes,” Hoff advises. “You should be asking a lot of questions before you go ahead and dump things into your fuel – it could be a costly mistake, or just a waste of money.” He adds that there are a handful of good fuel additives on the market, including the DSG brands.

Biodiesel has been touted and hyped as a way for the transport industry to “go green.” Blends of petroleum diesel with fuel made from vegetable oils certainly do produce less air pollution than conventional diesel, but they don’t improve fuel economy. What’s more, if the motivation for using biofuels is environmental, one might wish to consider the environmental and social costs that go with producing it. Those costs include the energy that goes into producing it and the cropland that’s used for growing fuel instead of food.

Still, whether you think biodiesel is a good idea may be a moot point by the time you read this. Bill C-33, the Renewable Fuels Act, passed in the House of Commons in late May and was headed for approval in the Senate. If passed, it would require diesel sold in Canada to have an average renewable fuel content of two per cent by 2012.

Engine makers are trying to help you reduce fuel consumption with more efficient systems. International Truck and Engine, for example, says it has designed a truck that is seven per cent more fuel-efficient than their nearest competitor.

“The ProStar is the most aerodynamic and fuel-efficient Class 8 truck on the road,” Roy Wiley says from International headquarters in Illinois, adding that wind tunnel tests conducted in Canada confirmed ProStar’s superiority.

International says the high fuel efficiency, which is mainly thanks to the truck’s aerodynamic design, means well over $5,000 in savings on diesel in a 190,000-kilometre year. That ain’t chicken feed.

“Clear and decisive fuel-economy leadership is great news for our customers,” declares Daniel Ustian, president and CEO of Navistar (International’s parent company). “The ability to save thousands of dollars in fuel with one truck over the course of a year is extremely significant, especially with the financial pressures placed on truck and fleet owners.”

Idling costs fuel, so it’s fortunate that engine makers have developed idle reduction systems. Kenworth’s patented Clean Power no-idle system was put in T660 trucks a while back, and this spring’s Mid-America Trucking Show in Louisville the company announced that Clean Power will become a factory-installed option for W900s and T800s as well. Kenworth states that Clean Power can boost fuel economy by as much as eight per cent in trucks with high idling times. That can mean saving thousands of dollars per truck every year. Clean Power adds $8,000 to $10,000 to a truck’s purchase price.

You might want to consider an engine performance module – or a “fuel-economy enhancing module,” as Hoff prefers to call it - like the ones made by DSG Canada. The Saskatchewan firm makes them for Cummins ISX and some Caterpillar engines, and prices them at $1,800 to $2,300. “With a 10 per cent fuel economy gain,” adds Hoff, “you pay for that in no time.” Hoff assures us DSG’s modules don’t interfere with manufacturers’ engine control modules.

Digital technology can also come in handy for improving fuel economy. Innovative companies like Langley, B.C.-based 4Refuel Canada have software to help you track fuel costs and increase fleet productivity. Its core program, Fuel Management Online, allows clients to access daily fuel-spending reports. A step up from that is an attachment that collects data from a truck’s engine on idling time, excessive acceleration, excessive speed and other things that jack up diesel consumption.

The 4Refuel approach recognizes that on-the-road practices have a big impact on whether your fleet is getting the best bang for the fuel buck. “A truck driven using poor driving habits can use up to 35 per cent more fuel than a truck driven using fuel-efficient driving techniques,” states a 4Refuel fact sheet. Companies have seen dramatic fuel savings after implementing “smart driver” programs.

Maintaining reasonable speeds and not accelerating too quickly are two simple tactics for conserving fuel on the road. According to Natural Resources Canada, reducing your cruising speed from 100 klicks to 90 can result in 10 per cent better fuel economy. An increase from 100 to 110 can worsen fuel economy by a similar magnitude.

Another simple measure is to reduce idling. It’s stating the obvious to say that the worst gas mileage a vehicle can get is zero distance per litre, so prolonged idling is obviously a waste of fuel. A commercial truck driver can save thousands of dollars on fuel annually just by eliminating unnecessary idling, according to Natural Resources Canada. As well, letting an engine idle for too long can cause damage that shortens engine life and harms fuel economy.

Low tire pressure also adversely affects fuel economy. Tires under-inflated by 15 per cent can reduce fuel economy by one per cent or more. Proper inflation also improves braking performance and tire life, by the way.

Make sure your fleet goes out on the road with proper lubrication. Follow the manufacturer’s recommendations for optimal fuel economy. According to International Truck and Engine, using a 10W-30 instead of a 5W-30 can reduce fuel economy by two per cent. An extra two per cent in diesel expenses adds up to a lot of money for a busy fleet.

Lastly, drivers can improve the distance they get from every tankful by removing unnecessary weight. By that we don’t mean dieting and exercising to lose body fat (though it might not be a bad idea). Losing as little as 100 pounds (45 kilograms) from what a rig is carrying can mean a significantly smaller diesel bill for an 800-km haul.

The federal government has a program called SmartDriver for Highway Trucking. Free information on that and fuel-smart practices generally can be obtained online at fleetsmart.nrcan.gc.ca.

New Generation Engines

Published in Western Canada Highway News, Spring 2008:
Engine manufacturers had to green up in 2007 as new U.S. Environmental Protection Agency emission standards came into effect. They rose to the challenge with innovative solutions in exhaust gas circulation and particulate filtering.

In December 2000, the EPA declared new emission standards for 2007 and later heavy-duty highway engines. The new limit for particulate matter (PM) emissions was set at 0.01 grams per brake horsepower per hour, one-tenth the standard that was in force in 1998 (which was about one-sixth the standard enforced in the late 1980s). Emission standards for nitrogen oxides (NOx) and non-methane hydrocarbons were similarly tightened. The PM standards were to take immediate effect in 2007 while the NOx and NMHC standards were to be phased in over three years.

The health effects of exposure to high levels of particulate matter can include decreased lung function and chronic bronchitis. Nitrogen oxides – compounds of nitrogen and oxygen, in varying complexity – are of concern due to their link to respiratory problems, acid rain, global warming and other troublesome issues. The EPA’s website says hydrocarbon emissions, resulting mainly from incomplete combustion and the evaporation of fuel, are “a serious air pollutant in cities across the United States.”

Cummins Inc. responded with confidence that it could comply with the new benchmarks and yet still deliver the quality its customers had come to expect. The company was “on schedule to deliver as promised, just as we did in 2002 (when new standards also came into effect),” Cummins vice-president Ed Pence said at the 2006 Diesel Techology Conference in Washington, D.C. “Given the breadth of our engine design capabilities, we consider emissions technology a competitive advantage for Cummins and we welcome the new EPA regulations."

For the big engine makers, the approach to meeting the new emission standards was essentially twofold: recirculating exhaust gas to cut emissions of NOx and NMHC, and filtering particulate matter so that less of it gets belched out. In Cummins’ case, it meant combining the newest version of the company’s cooled exhaust gas recirculation (EGR) system – already proven when Cummins met the 2002 regulations – with a particulate filter designed and produced by Cummins division Emission Solutions.

“We have delivered on our promise to have certified compliant engines that perform and deliver on the things that are most important in the trucking industry, which are performance, fuel economy and reliability,” Cummins spokesperson Louis Wenzler said this year. “And as we step back and listen to customers and fleet owners that we talk to on a regular basis, our interpretation would be as they grade our scorecard that (they believe) Cummins has delivered on its promise. The product is working.”

Wenzler said Cummins was pleased to see that the engines “worked as designed” right from the start, though “minor adjustments in the software” were made after the first units hit the market. He emphasized the word minor. “Have we made design changes that drive hardware changes and assembly changes? The answer to that is ‘No.’ The fundamental product as released is stable, is remaining with no changes. Have we made minor software changes? Yeah.”

Caterpillar Inc. responded to the emission-reduction challenge with refinements to its trademarked ACERT technology. To the basics of ACERT – air management, precision combustion, etc. – the company added clean gas induction (CGI) to reduce NOx levels, as well as a top-notch diesel particulate filter. CGI is an ACERT process that cools filtered non-combustible gas and and then blends it with more incoming cool, clean air before returning it to the combustion chamber. A company brochure emphasizes that these engines differ from competitors’ products in that they put clean air into the combustion chamber – “not the recycled exhaust gas of cooled-EGR technology.”

A news release from Caterpillar last fall said the new engines “provide the value, performance and fuel economy customers expect.” Lorne Lagimodiere, truck engine account manager for Toromont Cat in Winnipeg, concurred with that assessment early this year. He added that the 2007 engines provide better response, power and fuel economy. And the trucks running on those engines invariably have clean smokestacks as testament to how well PM pollution has been cut.

Truck sales volumes shot up in 2006 “because truckers knew that that the ’07 engines would cost anywhere from $8,000 to $13,000 more,” said International Truck and Engine’s Roy Wiley. “There was a big pre-buy in 2006. For the medium-duty engines the price difference was a lot less – more like $4,000 to $6,000. But for the big-bore engines - well, those engines are quite expensive.”

The Pro-Star Class 8 truck was at the centre of International’s response to the 2007 standards. The MaxxForce 11 and MaxxForce 13 engines in those trucks included proven cooled-EGR systems and advanced aftertreatment systems. A company vice-president pledged in 2006 that the new engines would deliver outstanding performance and reliability along with improved air quality.

"The new engines are being received well in the marketplace," Wiley said months after the launch. He added that the engine systems were subjected to “your normal tweaks that you sometimes have to do, but nothing out of the ordinary.”

Mack Trucks also used a combination of cooled-EGR technology and a diesel particulate filter to cut emissions from its MP engine series down to 2007 standards. Early reviews from customers were rather positive. The GM of a Pennsylvania industry supplier, for instance, said in late 2006 that his company tested the new Macks and “had absolutely no issues. I would not hesitate to buy more of these trucks.”

“We’re very happy with the product,” Murray Marshall, general manager of Mack Sales and Service in Winnipeg, said early this year. “Our customers are very happy as well.”

His shop has sold well over 100 of the new engines, so they’ve got a good idea of how well the engineering panned out. And it was all aces, he said, with the engines being “great right out of the box. … The guys did a great job engineering these parts into the engine. … It went off really well.

Feedback from customers was extremely positive, Marshall said. “The most common comment that we received back was how quiet and powerful these new engines were.”

Volvo Trucks North America president Peter Karlsten said in 2006 that its new D11, 13 and D16 engines “will make our air cleaner and help our customers be more productive and efficient.” The new engines were to use high-efficiency cooled EGR and a diesel particulate filter to tackle the emission challenges.

So, now that the new products are out and in use, what’s the prognosis? “Other than the expense, they were very well received,” Winnipeg Beaver Truck Centre fleet manager John Oades said. Extra cost and weight were issues, he added, and Volvo made very minor tweaks to enhance their products after after they hit the market.

Detroit Diesel’s heavy-duty Series 60, perhaps the most popular on-highway diesel engine in North America, came equipped in 2007 with an aftertreatment system for removing PM from the exhaust, and a top-drawer EGR system to meet the NOx emission targets. The company took other measures as well to improve the performance and cleanliness of the engine.

Detroit Diesel spokesperson Dave Siler said the company’s ’07-compliant engines – which also included the revamped MBE 4000 – got a “lukewarm” reception on the market at first, largely due to typical caution toward new products. In the end, however, the engines were embraced as the sort of top-quality products truckers have come to expect from the Michigan-based company.

Detroit Diesel has seen “better-than-expected particulate regeneration” in the new engines, he added.

The next challenge for heavy-duty engine manufacturers is to meet even more stringent NOx emission limits by 2010. Cummins announced last September it will rise to the challenge with engines that include the company’s own “next-generation cooled EGR,” without adversely affecting fuel economy, power and torque. It has already met 2010 NOx standards with the engines for certain Dodge pickup trucks.