Tank fleets benefit from tight capacity
Apr 1, 2005 12:00 PM
LIKE SO many individuals who grew up in the tank truck industry, Thaddeus (Ted) Gorski Jr began learning the business at a very early age. The lessons started around the dinner table with discussions between Ted Gorski Sr and his mother Lottie, who founded Gorski Bulk Transport Inc in 1957 in Windsor, Ontario, Canada.
As Ted Jr grew older, he started working along with his brothers Bernard, Joseph, and Martin at the terminal after school and during vacations, learning the business from the bottom up. “I think my earliest experience would have been washing tractors and trailers on weekends,” Ted says. “We washed the interior and exterior of the tank trailers — with a mop and a hose. The industry sure has changed a lot since then.”
Ted has seen many of the changes up close, especially those regarding international movements of bulk cargoes. He joined Gorski Bulk Transport full time in 1981 and was named president in 1987. Throughout his tenure, the carrier has served both Canadian and US customers.
With the company headquarters just miles from the most active border crossing point between the United States and Canada, Ted saw first hand the impact of heightened security in the wake of the terrorist attacks in the United States on September 11, 2001.
Even before he became a fulltime employee at Gorski Bulk Transport, Ted was involved with National Tank Truck Carriers Inc. He began attending NTTC meetings in the mid-1970s. After rising through the ranks of the association, Ted served as NTTC chairman during the past year.
Ted shared his Canadian perspective on the tank truck industry during a recent interview with Bulk Transporter. He discussed the outlook for the industry, the regulatory outlook, and the ongoing security concerns related to cross-border operations.
BT: Would you still want to work in this industry if you were coming in today?
Gorski: Definitely. This is a terrific industry. Certainly there are challenges, but I can't think of any industry that involves you with a broader scope or wider range of people, businesses, and industries than this one.
BT: How would you describe the state of the tank truck industry?
Gorski: The condition of the tank truck industry is a lot more upbeat right now than it was in previous years. There still are challenges, but the industry has benefited from improving US and North American economies. The new hours-of-service regulations, Bioterrorism Act, homeland security, and other issues that were uncertainties have taken effect. They are today's realities, and people have implemented plans to deal with the changes.
BT: Are carriers better off financially today?
Gorski: I believe carriers are better off financially. However, there are still a number of concerns. High energy costs are probably the biggest concern, followed by insurance premiums. An area that is becoming both an industry concern and financial concern is the ongoing shortage of drivers.
BT: What does the future hold for the family-owned tank truck carrier?
Gorski: This is still a great industry for the family-owned carrier. I firmly believe that the backbone of both the US and Canadian economies is the family business. These are entrepreneurs who create new ideas and initiatives to overcome the problems we are facing.
The 50-truck fleet can survive if the owners are prepared to work in their niche and specialize. As a 50-truck fleet, you can't afford to be everything to everyone. You just can't do that.
On the positive side, there has been an overall change in the industry away from the very large tank fleets. There are fewer true nationwide carriers. We definitely have a lot more regional operators.
BT: How are freight volumes this year?
Gorski: We've seen some moderation in freight levels with regard to international traffic. The tremendous appreciation in the value of the Canadian dollar in the past year relative to the US dollar has impacted international trade levels.
We're also seeing some segments of the market in the United States where it looks like volumes are easing a bit. Whether it's just a seasonal change, we probably won't know for another quarter or two. We're seeing it on both the chemical and food sides of the business.
I don't want to sound alarmist, though. The economy definitely isn't shrinking. It's just growing at a slower rate than it did last year. Transportation activity remains at relatively high levels.
BT: What's happening in the shipper community today?
Gorski: We're seeing a change in attitude toward carriers. Shippers are aware now that the ongoing driver shortage is a serious matter as demand for transportation service remains high. Fleet overcapacity has been reduced, and the remaining capacity is tempered by the ongoing driver shortage.
Communication has improved between carriers and shippers. Although higher rates are necessary, they alone won't solve the problems. Because of the new hours-of-service regulations, shippers and carriers need to work together to identify areas of lost productivity and delays — anything that will eat into the driver's work time needs to be addressed. That cooperation has been a very positive experience for me.
BT: What's in store for the tank truck industry this year?
Gorski: The new Canadian hours-of-service rules are scheduled to be released this summer. We anticipate that the proposal will be gazetted (published in Canada's version of the Congressional Record) by the Canadian Parliament before the summer break. We won't have the exact form of the rules until then. Preliminary announcements are that the driver's daily off-duty time will increase from eight hours to 10 hours. The daily on-duty time will be reduced by two hours, and the maximum daily driving time will be lowered by three hours.
We're hoping they bring us more into line with the United States. If we're faced with significant differences from the US rules, such as in the sleeper berth requirements, it will only complicate international transportation.
In the United States, the Bush Administration has proposed legislation that would make the current US hours of service a statute. This would remove the court challenge that was initiated last year. Our industry has spent a lot of time and money adjusting to the new hours of service. Going back to the old rules would have a tremendous impact on carriers and the shipping industry.
We've learned how to operate within the new rules. Are the hours of service rules perfect? No. Some aspects of the new rules have made it more difficult for drivers to make a living, but wage increases have offset some of that. I believe drivers are getting more rest now. The split sleeper berth part of the regulation provides flexibility that allows carriers and drivers to maintain a measure of control in how they operate to meet the shipper's requirements.
Overall there is more of a realization of how precious the driver's time is, but we also need action to support the drivers. We need more infrastructure additions, such as rest stops. We need to do more to eliminate delays at border crossings and toll plazas.
We have more trucks on the road today than at any time in the past, and the frequency of accidents is going down. That tells me that our industry is doing many things the right way.
BT: Should the federal government mandate fatigue monitors and on-board driver log technologies as part of the hours-of-service enforcement?
Gorski: These technologies impact driver privacy, and we must respect that privacy. Our responsibility as carriers is to ensure that we don't place drivers in circumstances where they become fatigued, where they are not in full control of the vehicle. Training, safety programs, and common sense are the best technologies to use.
BT: What sort of impact do you anticipate from the fingerprint-based background check requirement for drivers who haul hazardous materials?
Gorski: The latest statistics I've heard is that the fingerprint-based driver background checks that are required for a commercial driver license with a hazmat endorsement may remove from our industry up to 400,000 drivers out of 2.7 million total CDL drivers in the United States, which is a major concern.
BT: What are your thoughts on the way the fingerprint-based driver background checks are being implemented?
Gorski: The good thing is that carrier and shipper input has been sought as part of the rulemaking process. The federal agencies have reached out to industry to determine what works and what doesn't. When we have brought up valid concerns, changes have been made or the process has been delayed to clarify issues.
BT: Will the background checks achieve their stated objectives?
Gorski: I don't know how to quantify that. Moving to higher levels of security always creates discomfort. However, certain elements of the tank truck industry could be a terrorist target. Some very volatile products are moved in tank trucks.
The carriers are being responsible in following their security plans and hazardous materials training. We're working together with shippers and the government and developing new levels of communication. We will lose drivers as a result of the background check requirement. This will create additional capacity problems and higher costs that will have to be passed along.
BT: How are Canadian drivers affected by the background check requirement?
Gorski: The current understanding is that the FAST (Free and Secure Trade) card will be accepted as equivalent to the FBI background checks on US drivers who have a hazmat endorsement on their commercial driver licenses. The FAST card has criminal background check and fingerprint requirements. Some Canadian drivers will choose not to get FAST cards.
BT: If US truck drivers can be stopped at the Canadian border because of a criminal record — no matter how minor or how old — why are Canadians upset about the US requirement for fingerprints and background checks?
Gorski: Two parts to that. First there are people concerned about privacy. Personal privacy is part of the Canadian charter. Second the agreement in place between Canada and the United States lets the FAST card be the equivalent to a CDL hazmat check on a US driver.
The FAST card is for international trucking, and a large percentage of Canadian drivers haul international freight. Approximately 81% of the $380 billion in trade that Canada does with the United States moves by truck. The driver rejected for a FAST card due to a criminal background check doesn't have the same ability to earn a living within Canada as an international driver. In many cases, we are dealing with old records and a new process that does not have the flexibility to distinguish between a current record or something that occurred decades earlier.
BT: Should both countries do away with the criminal background check requirements?
Gorski: No. I don't see that as a practical alternative at this stage. With the heightened homeland security concerns, this is part of the new reality and the new economy.
BT: Who will pay the cost of the background checks?
Gorski: Ultimately, the consumer pays for the background checks and all of the other new security measures.
BT: When it comes to increased hazardous materials security, how much is enough?
Gorski: We need a level of security that we can afford. However, the tank truck industry can't absorb these extra costs on its own. The costs will have to be passed on to the end user.
BT: Will we see fewer carriers wanting to take on the high-hazard cargoes?
Gorski: You will definitely see more specialization in the future. Some carriers will probably exit the tank truck market, but other carriers will expand and thrive in the hazardous cargo market.
How much security is enough, though? If every delivery requires trailer tracking, satellite communications, geofencing, electronic seals, motion detectors, and highly secure terminals, there will be a much higher cost of doing business.
BT: How does the industry ensure that security-related technology requirements are reasonable?
Gorski: The industry ensures that reasonable levels are adopted by working through groups such as National Tank Truck Carriers. The association serves as the collective voice of the members and can bring a measure of practical business sense to the rulemaking processes.
The tank truck industry certainly has increased its overall security awareness, and technology has played a role. I firmly believe that the tank truck industry is less of a target for terrorism today because of that.
BT: Is remote monitoring, and that sort of thing, practical for the tank truck industry?
Gorski: In theory, remote seals or some kind of electronic tamper-proof seals are great ideas. If a customer needs this level of security and is willing to pay for all of the associated costs, he should have it. That goes for the United States or Canada.
BT: How beneficial would it be to have government offsets or tax incentives for security technology investments and such?
Gorski: I'm not a great supporter of government incentives. I am a believer in a free-market driver economy. If there is a need for something, the public should be willing to pay for it. If they aren't willing to pay a fair price, then they should not need (or expect) that service.
Government grants and incentives just create additional levels or bureaucracy, and we will all have to pay for this. Any industry supported by government tax incentives is not operating as efficiently as it should.
BT: What's the latest on driver availability?
Gorski: Driver availability is an ongoing concern. There are fewer qualified drivers today. With the new security checks and the border crossing restrictions, it seems like we're looking for saints rather than professional truck drivers.
BT: What will it take to attract people to the industry in the future?
Gorski: Pay rates must continue to increase — going up perhaps 10% to 20% over the next five years or so. Truck driving must be seen as a viable alternative to other jobs and careers. We've substantially increased our driver pay at Gorski Bulk Transport to attract the caliber of driver we want and retain the quality people we employ.
One thing we need to improve in the tank truck industry is driver image. We have to make sure that we send out a positive message about the tank truck industry. We must portray the right image — that the tank truck industry has a highly professional attitude and is a great place to build a career. We need to show prospective drivers that our drivers often are closely involved in the product-handling operations of the shipper and consignee.
I've been told that the US trucking industry needed to add 32,000 CDL drivers a year to sustain existing levels of transportation, and the industry was more than 200,000 drivers short a year ago. That was before the hazmat background check. Relatively speaking, Canada is in a very similar situation. Canada needs to add 5,000 to 6,000 drivers a year, and the industry is down about 30,000 drivers.
BT: What sort of driver pay increases have you seen in Canada?
Gorski: Canadian carriers operating in the United States follow the US hours-of-service. So their drivers have the same HOS limitations as US-based drivers. The result is that Canadian driver pay rates have kept pace with US levels.
BT: Where are new drivers coming from?
Gorski: We don't get as many from the traditional sources, such as farms and rural communities. Immigrants are an important source of new drivers. Some of the immigrants already have years of experience in transportation before they come to Canada. Our experience is that new drivers stay with us once they get into the business.
An additional problem that we have to face is an aging workforce. The average age of drivers is increasing, which will compound the existing driver shortage.
BT: We've heard a lot about the FAST cards and FAST lanes at border crossings for international shipments moving into the United States, but they don't seem so fast in reality.
Gorski: Initially, there were problems that had to be overcome with FAST lanes. With the heightened levels of security, the entire business of international transportation has had to change. We've had the new Food and Drug Administration requirements on protecting against bioterrorism. We've also got the Homeland Security and prenotification requirements.
New dedicated FAST lanes are in place at several border- crossing points. However, one delay doesn't take long to snowball into a significant delay that can create a slow down that lasts several hours.
The FAST cards and the CTPAT (Customs-Trade Partnership against Terrorism), program are designed to separate low-risk cross-border transactions from higher risk shipments. I support those programs. If we can separate the lower risk shipments from the overall mix, we save time and we make the border crossing more efficient. I don't think we'll ever go back to the way things were prior to September 11, 2001.
BT: Looking back over the past 13 years or so, what has NAFTA meant to the tank truck industry?
Gorski: It brought a lot of changes to the industry, and the results are really mixed. Some of our shippers have prospered under NAFTA and, even before that, under the Canada-US free trade agreement that predated NAFTA. Some shippers, however, have actually lost market share in the free market environment.
There are some true North American freight movements today, where cargo passes through all three countries. We're also seeing Central American shipments to the United States and Canada. That activity is growing.
BT: What do cabotage laws mean today for North American transportation?
Gorski: Cabotage is a non-issue for Canadian carriers that can set up a US-based division. The same goes for US fleets with domestic operations in Canada. However, the laws still are in place in both countries, and they are enforced against carriers that don't comply. Cabotage is still an issue for each country, but some reform would be useful to help address the current driver shortage.
BT: What other tank truck-related issues are there in Canada right now?
Gorski: Two of the more pressing issues are the new clear language regulations that are coming out — B620, B621, and B622 that address cargo tanks. They are the US equivalent of 49 CFR on tank design and will cover the 400 series cargo tanks.
Also, Ontario has made some changes in vehicle sizes and dimensions to conform to the RTAC specification. Trailers with lift axles will be grandfathered for 15 years. Gross vehicle weights will be severely restricted on new trailers built with lift axles after 2006. Carriers are going to have to switch to self-steering axles. In Canada, there are still a considerable number of multi-axle trailers with lift axles in use.
BT: Why is Ontario essentially banning multi-axle trailers with lift axles?
Gorski: The conventional wisdom is that this change will protect and preserve our infrastructure and roads.
BT: In light of some federal studies on vehicle stability and rollover, how much of an issue is this for the tank truck industry at this time?
Gorski: In all the years that I've been in this industry, rollovers have occurred. The frequency fluctuates at different times. Equipment design and training all help to keep these events to a minimum.
BT: What will it take to bring more Canadian carriers into NTTC?
Gorski: More exposure to the value that NTTC provides. We're always looking for more members. NTTC is a great organization. It's a strong, credible voice of the tank truck industry. A number of Canadian tank truck carriers operate internationally into the United States. NTTC helps to keep Canadian tank fleets up to date on US issues and requirements. It also gives us a forum through which we can network and share ideas with other carriers.
NTTC has always held some of its summer board meetings in Canada. This provides a greater opportunity for Canadian carriers to participate in association activities.
NTTC also is a great meeting place for family and publicly-owned carriers from throughout North America. As I said previously, the family-owned businesses are the backbone of the economy.
BT: NTTC has a big change coming at the end of 2005 when Cliff Harvison, who served as president for much of his 40 years, is retiring. What's the latest on all of that?
Gorski: Cliff is retiring as of December 31, 2005. He will stay on in a consulting capacity for five years. We're very pleased that he will continue to be a part of the association in a consulting capacity. I expect we'll continue to see Cliff at annual meetings or board meetings.
Cliff made a tremendous contribution to our industry. He's probably one of the most respected and influential industry representatives on Capitol Hill. He's done a tremendous job of identifying the important issues for our industry to focus on. He's able to take our concerns and voice them in an effective way to government officials and politicians. He conveys our industry message in very clear terms.
It was announced at the annual meeting last year that John Conley is the president-designate. John is very capable and will be the association's next president upon Cliff's retirement. We recently recruited Tom Lynch to fill the vice-president's position. He was Cliff's assistant from 1990-1995. He worked at Philip Services Corp before returning to school for a degree in law. Most recently, he was the legislative director for Rep Nick Rahall, (D-WV) on Capitol Hill in Washington.
Tom brings with him a wide range of industry knowledge that complements his previous time with NTTC. I am looking forward to having Tom back at NTTC.
NTTC has a great staff. In my capacity as chairman, I'm really impressed with how much the staff accomplishes and how well they work with the carriers. They are extremely knowledgeable and have been very supportive of me. I can see why NTTC is so highly regarded in Washington.
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