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Brace for rougher 2019: Mark Seymour
By James Menzies
BRAMPTON, ONTARIO
“Fasten your seatbelts in 2019, we’re going to be in for maybe a little bit of a rough ride.”
That was the sobering warning from Mark Seymour Nov. 14, who was participating in a panel dis- cussion at the Truckload Carriers Association’s Bridging Border Bar- riers seminar. The president of Kriska Transportation said he has noticed capacity utilization slide slightly for four consecutive months, and thinks supply and demand are coming into alignment. This after a year in which rates have vastly improved, lifting operating margins with them, as shippers have struggled to secure capacity.
“I think 2018, for all of us, has been one to enjoy,” he said. “Frankly, I think that the lift in operating mar- gin is more related to price than it is to how smart we are. Price can cover a lot of sins. We should always prepare ourselves for price to cor- rect itself, because it likely will. I’m not here to sprinkle pessimism on the room, but I think the market is slowly finding itself to correction.”
Trevor Fridfinnson, chief operat- ing officer of Bison Transport, took a more upbeat view.
“We hold the view that strong ser- vice providers with a strong value proposition are going to have good prospects,” he said.
One of the storm clouds hang- ing over the horizon is rising insur- ance costs, and the exodus of some trucking insurance providers from the marketplace.
“It’s not a function of insurance companies getting greedy,” Seymour said. “It has everything to do with acci- dent frequency sneaking up, costs of claims going through the roof, and insurance in our vertical has been priced way too low for way too long.”
Stephen Laskowski, head of the Canadian Trucking Alliance (CTA) and Ontario Trucking Association (OTA), said carriers should also
brace for change next year on the political front. He said a federal elec- tion in Canada will impact labor pol- icies, and that when looking at the cross-border trucking environment, “tariffs are here to stay.”
One of the best ways fleets can prepare for the inevitable correc- tion, Seymour explained, is to stay close to your customers and avoid the temptation to add capacity to chase freight.
“It’s more important to own the customer than it is the truck,” he said. “The quest to fill trucks really becomes a seduction to us all. I think it’s more important to own the cus- tomers. It’s cheaper to hire a truck than to own one.”
In addition to offering their per- spectives on the year ahead, the panel covered a range of topics including the driver shortage, Driver Inc., the viability of hourly pay, and driver training standards.
The driver shortage
The shortage of qualified drivers is a real issue, especially in the over-the- road longhaul segment, Fridfinnson noted. Seymour agreed, adding it’s easier to fill positions where drivers are home every night with a predict- able work schedule and compensa- tion. It’s an issue he doesn’t see an easy solution to.
“I don’t know of any other way goods are going to get from origin to destination by truck without some- body being gone for nights on end,” he said.
Fridfinnson insisted the issue is solvable, but added “if the incum- bents in the industry don’t up our game in terms of how we approach this problem, someone else is going to fix it for us.”
Bison’s approach is to welcome in inexperienced drivers and invest heavily in their training. This year it will put 250 drivers through a “finish- ing program” in which it will spend up to 13 weeks training each of them at a cost of about $10,000 or more per driver.
(L-R): Trevor Fridfinnson, Bison Transport, Stephen Laskowski, OTA, and Mark Seymour, Kriska Transportation, discuss industry trends at a Bridging Border Barriers conference hosted by the Truckload Carriers Association.
“Not that long ago we were insis- tent upon and able to demand that anyone join us have two years of ver- ifiable experience, and we could take our pick,” Fridfinnson said.
He acknowledged both compen- sation and lifestyle must improve to attract new blood. “The abil- ity for individuals in these roles to feel they have a fair shot at making a good living and doing work they find redeeming,” he said. Fridfinn- son said the trucking industry must look beyond its own circle to find solutions.
Uber, for instance, has three mil- lion drivers, “not because driving a cab is an aspirational role that every- body is going to gravitate towards. They’ve done things fundamentally to empower the individual.”
Seymour agreed that trucking could learn from Uber, which gives drivers choice on when and where they work, and even who they pick up.
“There is no dispatcher telling him to go pick up some smelly individ- ual who has a habit of puking in the back of your car. You have a choice,” Seymour said.
Is hourly pay a solution?
One attendee asked how the fleets represented on the panel feel about hourly pay, and whether that could make the occupation more attrac- tive. Seymour said a hybrid system
is ideal, but technology is required to make it happen.
“I think there needs to be a hybrid approach so algorithms in the background can flip from one to the other,” he explained, adding some drivers may take advantage of a straight hourly pay model, neg- atively impacting productivity. He would like to see a technology that recognizes when drivers are delayed for reasons outside of their control, and then changes them to hourly pay until the circumstances change.
Bison has experimented with hourly pay and had about 300 driv- ers getting paid in that manner. It’s now switching some of them to a hybrid model.
“We have been actively switching some of those onto a more hybrid scenario to recognize the fact that if motivations are not in alignment, bad things happen,” Fridfinnson said. “If I’m motivated to sit, I will find ways to sit. The straight hourly scenario unfortunately invites that, and I think we’ve seen that.”
Driver Inc.
And on the subject of driver pay, the controversial issue of the Driver Inc. payment model reared its head. It’s a practice whereby fleets instruct drivers operating company equip- ment to incorporate in order to lessen the tax burden on both the
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