This week I had the opportunity to participate in a Logistics Management webinar that featured Adrian Gonzalez, Director, Logistics Viewpoints, as one of the 4 speakers. Adrian spoke on the topic of Social Media in Supply Chain and Logistics. This is what he had to say.

Social Media are tools for communicating and collaborating. Citing data from an October 2011 Adelante survey, Adrian commented that a large block of respondents (e.g. over 40%) agreed with the statement that Social Media will transform supply chains (for the better) in ways that we cannot envision today. Young professionals, the key early adopter segment, are using them today primarily for Business to Consumer branding and marketing. In his view, we are at an infection point where the emphasis will shift to Business to Business external and internal communication and collaboration, at all levels within organizations.

The world of smartphones, tablets and social media are coalescing and from this integration, new features and applications are taking shape. E mail communication, at least for your professionals, is being superseded by texting and social media communication. Adrian argued that “public” social media tools will become integrated with “enterprise” social media tools leading to faster connectivity and enhanced business integration.

Don’t be afraid of them and don’t ignore them since we will all be using them sooner rather than later. He related the current infatuation with social media to our interest in the internet in the 90’s. Smartphone usage, E mail communication and internet access have become second nature in the intervening years. He also suggested that we should look beyond Facebook, LinkedIn and Twitter. He highlighted You Tube, Instagram, Pinterest and Foursquare as other media to investigate. New social media tools are constantly emerging.

He cautioned against focusing on the buzzwords (e.g. LinkedIn). Adrian suggested focusing on what needs to be done and then employing the social media tools that are the best fit for each organization. Over the past few years, we are witnessing the rise in popularity of Skype for business, web meetings, blogging, RSS feeds and other mechanisms that foster teamwork and instant communication. As was the case with the internet in the 90’s, it is helpful for less experienced users to seek out mentors from the younger professionals on the team. They are often the most knowledgeable and sophisticated users.

Some companies in our industry (e.g. BlueGraceLogistics) are taking a leadership role in this area. Rather than restricting their employees from using the internet or social media during working hours, they are encouraging their personnel to use these tools to enhance their engagement with customers and suppliers.

In addition to the personal side of Facebook, special interest groups (e.g. truck drivers) are forming to share information. Similarly on LinkedIn, the service is being used for far more than recruiting. Specific groups are being formed to discuss Best Practices in Freight Management and a host of other topics. LinkedIn is also becoming a force in target marketing and advertising.

Twitter gives users instant access to a broad array of ideas and opinions from thought leaders (and followers) throughout the transportation industry. It also provides those people who have something to say with a platform to build a following. Twitter has immediacy and the ability to spark instant feedback on almost any topic or news story.

There is no doubt that Social Media will have the same level of impact as has the internet over the past two decades. For those individuals still sitting on the fence, it is certainly time to at least get engaged so as to understand how they can be used to provide a competitive advantage for your business.

I have been writing a blog on a variety of freight transportation issues for the past 5 years. None has generated as much feedback as my two postings on the subject of driving a truck and driver shortages. While my blogs can be read in multiple locations, the two recent ones on this topic have received over 2500 hits and 60 comments on the Truck News site alone, many from drivers.

I have read all of the comments and they encouraged me to reach out to some folks in the field to do a “deeper dive” into the “driver shortage” issue. As a result, I contacted three truck drivers and sent them a list of questions. David Robson was the one who helped me write the article on a “Driver’s Perspective on the Current State of Trucking.” The other two (e.g. Stephen Large, Desiree Wood) are prominent truckers who took the time to share their feedback on the blog. Here are their thoughts.

One of the recurring themes that I kept hearing is that despite the common perception that we have a “driver shortage” in North America, this is not an accurate description of the current situation. So my first question to the three drivers was to obtain their thoughts on this question. Do we or do we not have a driver shortage? Here is what they said.

Dave stated, “I feel we have a driver retention problem that is created by a lack of extensive driver orientation and training from the hiring trucking companies. This leaves the newly hired drivers to learn the company and driver policies on their own. In their frustration they find it easier to quit and move on. I am sure that the compensation was acceptable when they agreed to work for the company.

Problem number two I feel is driver dispatch compatibility. Many dispatchers are not people oriented and therefore drivers cannot work with their dispatch and again find it easier to quit and move on.”

Stephen noted that “I am one of the people who does not believe there is a shortage of truck drivers! More than half of the people I know who have a class 1 license DO NOT DRIVE A TRUCK for a living. And they WON'T! I CAN find a good driver to drive for me (even with my 20-30 year old trucks), but I have to pay $35-$40/hr. And it has to be local work, or they are not interested. There are too many ridiculous rules and regulations in the industry and shippers/receivers treat drivers poorly almost without fail! . . . If the drivers have to go where they are to be loaded or unloaded by some dork on a forklift or a smart Alek crane operator who WILL NOT take ANY instruction on where to put the load on the trailer or which way to put it so the axle weights work out, then most experienced drivers would prefer not to get involved!”

“I do believe that the pressure is being felt by carriers who are committed to keep wages low and therefore more pressure is needed to expose the true nature of driver turnover. The solution is common sense, pay a living wage, do not treat drivers like second class citizens and expect them to act as professionals who bear the brunt of enormous conflicting regulations” commented Desiree.

“The ‘qualified driver shortage’ as it has been re-branded since 2008 sends a message to veteran drivers that the industry intends to eliminate experience . . . in favor of . . . lower paid, less experienced student truck drivers and CSA will assist the industry to accomplish this task.

The industry of student truck drivers provides an economic benefit by way of commission structures to recruit new candidates into trucking who are unfamiliar with the volume of unpaid labor they will be expected to perform and by the time they figure it out they have created a low wage workforce for carriers. The bonus is that they arrive with a clean CSA slate.

As long as training and pay are not addressed there will always be a so-called ‘driver shortage’ because it makes sense to keep labor costs down. The ‘Qualified’ driver shortage should be defined more accurately. If a carrier requires two or more years of experience, the industry should focus attention on training carriers who are supposed to be producing qualified candidates.”

The next set of questions had to do with driver compensation. A recent report from the Canadian Trucking Alliance Blue Ribbon Panel set out the following objectives for driver pay.

“Truck drivers should have an improved ability to predict what their weekly pay is going to be.”
“Truck Drivers should be paid for all work that they do and earn enough to cover all reasonable out-of-pocket expenses incurred while on the road for extended periods.”
“Truck drivers should have an improved ability to predict what their weekly pay is going to be.”

I then asked our three drivers for their thoughts on the issue of driver pay, specifically the issue of hourly pay and compensating drivers for non-driving time (e.g. waiting time). Here is what they had to say.

“Relatively speaking yes, (drivers should be able to predict what their weekly pay is going to be) within 10-15% variance,” stated David. “The revenue will never be consistent as public demand and economic trends will determine the amount of freight to be moved. The better diversified a company is with their freight accounts, the better it will be able to provide consistent revenue. Unfortunately freight charges do not cover waiting times, lay-overs or unforeseen interruptions. Any compensation that is given beyond what has been calculated in the freight cost is straight off the profit margin. With enough bad customers, a company could be at a 0% profit margin trying to compensate their drivers. It is sad but real.

I think that (hourly pay) is excellent. If we could raise freight rates by 20% then perhaps more companies would incorporate an hourly rate without fear of losing their shirts. Black boxes or satellites would need to be installed in every truck to monitor working hours and non- working hours.

I feel that compensation may have to be given using the law of averages flat rate method in this lovely unpredictable world of trucking. Let’s say the company’s hourly rate is $20 per hour. Each . . . (type of non-driving) . . . compensation would require documenting or monitoring for driver legitimacy of time.

Pre- trip inspections = ½ hr. x 20= $10.00.

Border Crossing is an average of 1 hour = $20.00.

Unload/load time is based on 2 hour average x 20= $40.00.

Waiting time in excess of 2 hours can be paid at the minimum wage rate of the trucking companies region. For example, if it takes 5 hours to load, it would be (2x20) + (3x 10.50) = $ 51.50. Driving times could be paid hourly at a rate of .40 cents per trip . . . (assuming) . . . 50 miles per hour average trip speed= $20.00/hr. This would compensate for lost wages due to traffic jams, geographic hurdles and city driving.

This type of payment schedule I feel is predictable enough to calculate freight rates and compensate the driver. We have to have a pay structure predictable within 5% of the freight rate, I feel, in order to be competitive and sustain our drivers’ need for compensation.”

Stephen expressed the view is that “Hourly pay is the ONLY way to attract/keep good drivers! (My idea of a good driver is one who can drive any combination from a body job to a 8 axle B-train anywhere, in any weather, hauling any product for several years without . . . causing damage to the truck, trailer, freight, road, and especially other vehicles.).

Everything that the driver does under the direction of the employer should be paid for! Pre-trips and all necessary paperwork required by the company or by law should be done while the driver is getting paid . . . it is not for the driver, it is for the company! Waiting for dispatch, waiting for a customer to load or unload or prepare paperwork, waiting for customs or brokers or roadside inspections . . . it is all to do with the job, not for the driver! Unless the driver is eating, using the washroom or shower, or sleeping, if not at home, or another place of HIS choice, then he should be getting paid. The driver should start getting paid, by the hour, when he has been instructed to be at work.”

Desiree observed, “I think the hourly pay approach would bust the industry because they have been able to operate without accountability for the low wages and unpaid labor for so long. A salary without hidden fees and strings attached which are often used as a tool to make drivers disqualify themselves for receiving their pay would be a better solution. Hourly pay from a driver perspective would be great but impractical; a happy medium would be a guaranteed salary with carrier and driver requirements that are transparent.

I believe the industry will align with shippers to fight any pay increases to drivers so this will be a very long battle to raise awareness of just how bad it is. Whether the conclusion is hourly or salary, particular job duties should be compensated include pre-trip inspections, shipping/receiving wait times, counting freight on the dock, strapping/tarping, border crossing time, driving time. “

In next week’s blog, our three drivers will discuss the issues of recruiting, training and student drivers. To be continued . . .

In last week’s blog, my panel of three expert drivers spoke out on the topic of driver shortages and compensation. In this week’s blog, we will explore the topics of recruiting, training and student drivers.

Let’s talk about recruiting. What are your thoughts?

“Just last week I read a recruiting ad that claimed that team drivers could make $100,000”, commented Desiree Wood. ‘Could’ is the operative word I suppose but in reality the context of the ad was to mislead. The ad was for a lease program which depicted 2 people at a carrier known for extremely low pay to drivers but their recruiting ads tell a different story. The ad does not say what costs will be paid back to the carrier from the gross “could make” amount, if the lease payment is based on both people . . . (driving) . . . or other hidden charges. This is a carrier that should be training candidates to become qualified drivers but instead they are selling trucks to people who know very little about what the trucking industry is really all about.

Drivers are bombarded with less than accurate information and this lack of respect is a contributor to industry burnout among qualified candidates hoping to make truck driving a career. There are many qualified men and women in the trucking industry already that remain at poor paying carriers until they burn out simply because they cannot trust carriers to deliver the pay or benefits they advertise. . .

It is stressful to be away from family support, work long unpaid hours in extreme weather conditions and have to share difficult living situations while having to adjust to odd sleep schedules. When candidates are recruited into truck driving, frequently they are unaware of all of these factors, nor (are they aware) . . . that they will be expected to drive 11 hours per day on top of the unpaid labor they have performed. Truth in Logistics would help define qualified candidates but this common sense approach takes aim at the inner commission structures in the recruiting and student trucker industry.

Turnover benefits certain people in the trucking industry. Unethical lease programs in training, targeting recruitment at folks who are not ‘qualified’ truck driving candidates, running team freight with two poorly experienced and compensated drivers; these are profit strategies at some carriers”.

What are your thoughts on driver training?

“I thought there were standardized licensing criteria through the driving schools,” stated David Robson. “These are the minimal requirements. When the driver gets a job with a company then it is up to the company to make sure he is qualified to drive and work their equipment. Not one company I have worked for has every given me a pre-hire evaluation for Hours of Service, pre-trip or load securement. These should be evaluated as much as the pre-hire “road test” evaluation. I’ve had a few companies not even give me a road test. They just threw me the keys and said there is the truck, have fun. . . Personally I would like to give every new applicant a pre-hire test for hours of service, pre-trip, and load security. If he passes the road test and seems like a candidate, then depending on his test evaluations, I know where this driver needs training to get up to compliance.”

Stephen Large observed that “standardized training is a good idea but who would decide what standards to use and each company does different types of work, so training at one place needs to be different than at another carrier. For example, Bison Freight Lines hauls van loads of dry product which is loaded by a forklift and does not move and you sweep out the dust from the trailer after you unload. . . TransX pulls reefers and hauls frozen meat and fresh produce which takes a set of skills to make sure that the temperature controlled loads are properly looked after. . . All the drivers have to drive similarly, but now look at Mullen or Richards or Triton. They have some trailers that would use the same skills as the others, but they also have multi-axle trailers and other specialized equipment and haul oversize and overweight loads which require a COMPLETELY different set of skills. . .

As for mandatory recertification, I do not see a lot of benefit, other than perhaps hours of service or some of the newer technology should maybe be refreshed periodically. I have been through a couple of courses where the instructor had so little hands on experience, that the course was pretty much useless to anyone with 20 years of experience! . . . There is no sense enforcing something that does not prove anything! This industry is already bogged down with enforcement of a bunch of stuff that does nothing to improve safety or quality or any other problems that are common to trucking in North America”!

In the last blog, we spoke about paying drivers for pre-tip inspections. What constitutes a proper pre-trip inspection?

“A proper pre-trip should take 15 -30 minutes, depending on the equipment,” stated David. Stephen observed that “a properly done pre-trip inspection should take an hour or more! On a 5 axle truck and trailer, there are 18 tires to check tread depth and air pressure, 18 wheels, with at least 100 wheel fasteners, 6 oil filled hubs, at least 30 lights, 4 mirrors, 4 windows, 2 wipers and washers, a horn or two, a muffler or two, two or more doors, a fan with belts and a radiator with coolant, an engine with a compressor, turbocharger, power steering pump, etc., a transmission, a driveshaft with at least 5 u-joints, half a dozen air bags and some springs, 10 brake pots, 10 brake drums, 10 s-cams, 10 slack adjusters, 20 brake shoes, a 5th wheel and a king pin! Now you have a few hundred lines and hoses to check! Of course nobody checks all this stuff, but on the trip inspection sheet, this is what the driver is expected to look at before driving the truck each day”!

Would proper pre-trip inspections help improve CSA scores?

David commented that “it would reduce the scores immensely as air brake systems and lights are highest on the violation scores. My experience with other drivers shows me that very few know how to check brake light operation or air brake systems. I have detected many proportioning and tractor protection valve leaks during a proper pre-trip as well as line connector leaks. If you are shown a proper routine, you can cover everything on the schedule one inspection in 15-30 minutes. I just find that very few drivers are shown a proper way to do a pre-trip inspection”.

Stephen expressed a different view. “In my opinion, even if all this stuff was inspected faithfully, the scores would not improve immensely . . . . The roadside officers, who do the random inspections, are trained to find something wrong with nearly every truck! For example; there is an older, experienced officer in my area who has an extreme hate on for older trucks....he thinks that anything over about 10 years old should be cut up and put in the scrap yard. This winter, he stopped me for talking on the cellphone and gave me a $172.00 fine. While he had me stopped, he did a full inspection on my 32 year old Kenworth and 32 year old 16 wheel lowboy trailer. After making several trips around and under my truck and trailer without finding anything wrong, other than no front brakes, which were not and still are not required on that truck, he decided to give me a ticket for (Articles of cargo not secured). . . .

A couple of months later, the same officer gets me again, and again, spends quite a while checking out my truck and trailer only to find nothing wrong with it, so after all is said and done, when he has me prove that the air-powered wipers work, the windshield washer fluid tank goes dry just as I pushed the button to show that it works. I had more washer fluid with me (it was springtime in Alberta and the roads were sloppy), but I was only allowed to refill the tank after receiving a violation notice for (WW system not functioning as specified). The way the laws are set up and the way the officers word the violations, there is always something they will write you up for, so the NSC scores do not really reflect how safe or unsafe a company is. The log book and all the rules that go with it are the same. . . there is always something that they can write you up for, even if you have done everything legal, there are too many contradicting rules”!

Let’s talk about student drivers.

“Pay for a student truck driver is extremely low but because this is not clarified in the recruitment process, it becomes a major contributor to turnover in the first few months of entering the industry. While one may expect low wages for entry level work, truck driving requires a great deal of personal commitment and sacrifice due to the nature of the work”, commented Desiree.

“Another recent pay scale change that was sent to me outlined how 6 month student truck drivers, who have been expected to drive as a team, would be receiving a pay increase of .02 cpm with much fanfare in the memo. This is a carrier that has very low pay in the industry and cut wages in 2008 by .03 cpm. While the memo is written with a level of excitement that drivers will be receiving a pay increase, the wages still do not restore 2008 levels. Experienced drivers at this carrier are only restored .01 cpm and the memo goes on to say that $700/per week gross is guaranteed with a stipulation that the driver must be available to work each day, Monday thru Sunday of that week, and must check in with their fleet manager each day to verify.

This is a carrier that has several thousand trucks and has a phone system that drivers find incredibly difficult to have any live person answer their calls during normal business hours, and pretty much forget about it after hours.

(A driver can make) . . . $700 per week gross, all things being perfect for a job that requires 11 hours of driving per day. . . (This includes) . . . the 2012 pay increase that this carrier feels drivers should be jumping for joy to receive. That wage calculates out at $9.09 per hour but in a seven day work week a driver could not legally drive 77 hours. It also does not account for waiting times at shippers, inspections, drop/hook of trailers, searching for trailers, cleaning trailers etc. . . .

Misleading pay increases, bonus ploys, recruiting ads, added regulations, unpaid wait times, they are all contributors to industry burnout and turnover. Would this recipe not eliminate ‘qualified’ persons from an industry and leave room for more ‘unqualified’?
The current state of truck driving requires candidates to live on such meager wages that they may not be able to afford much more than food, a cell phone bill and send a few bucks home in the first 6 months in the industry”.

The last word goes to Stephen Large.

“To improve the industry, the pay needs to be better and the quality of life needs to be better! That will get better drivers to drive (and keep driving). Better drivers will have fewer accidents and other problems. That will improve the image that truck drivers have. Then more people will be interested in driving for a living. The newer drivers will have someone to look up to and to learn from. The equipment will last longer and look better and cost less to maintain and be worth more when it is time to replace it”.

Over the past several decades, “Offshoring” has become a very popular supply chain strategy. The low costs of production in many Asian countries combined with enhanced ocean shipping and improved North American intermodal services have made this sourcing option very attractive to many manufacturers and retailers. The Offshoring movement accelerated as companies in a variety of industries followed their competitors abroad and moved manufacturing jobs to other countries. The Great Recession was a further tipping point in the reduction of North American manufacturing jobs. Recent economic data suggest that manufacturing is slumping in the United States and Canada and it is being pulled down by drops in new orders and shipments.

The Asia outsourcing curve may be about to reach an inflection point. Labour costs in China have been doubling every three years. Changes in currency levels and energy prices have also altered the equation. If one factors in labour costs, freight costs and the Total Cost of Ownership in bringing goods from China to North America, as compared to manufacturing them here, the TCO’s are expected to converge in 2015 according to Harry Moser, Initiative Founder at the Reshoring Initiative (http://www.reshorenow.org/), a non-profit organization based in Chicago, Illinois.

Mr. Moser argues that about sixty percent of cost studies are flawed. They do not reflect the full set of variables and the full range of costs involved in offshoring.

The Reshoring Institute offers a free software tool (TCO Estimator) and a manual to perform detailed calculations and allow users to make informed decisions. The cost model includes 29 cost factors. Using a set of pull down menus, freight costs from 17 countries, duty costs and various risk elements, the TCO tool allows companies to make accurate comparisons. Mr. Moser indicated that the model is based on moving goods from China to Chicago and the calculations use in $U.S. Upon questioning, he indicated that Canadian companies should be able to use the model and make the appropriate adjustments for moving freight to a major Canadian city (e.g. Toronto, Montreal).

Results from a recent survey indicate that 61% of larger companies are considering bringing manufacturing back to the United States. He listed a number of major corporations that are Reshoring at least some of their manufacturing back to the USA. They include Caterpillar, General Electric, Ford, NCR and Master Lock.

Each company that manufactures some of its goods off shore has a range of strategic options that are available. They include:

1. Shift some Offshoring back to North America
2. Maintain a domestic sourcing option
3. Shift some Offshoring to “Nearshoring” (e.g. Mexico, Central America, South America)
4. Move some Offshoring in incremental steps to North America
5. Shut down Offshore Operation (as a last priority)

In Canada, the "Take Back Manufacturing" initiative was started by the Society of Manufacturing Engineers (SME) in Toronto but is now supported by many other management associations, technical societies and trade organizations in Ontario. Nigel Southway, Chair of the SME, has been leading the charge in Canada. Like Harry, Nigel spent a great deal of his business career either in the manufacturing industry as a technical operating manager or as a practitioner of productivity and continuous improvement. He has been an "architect" of change for many major manufacturing companies and is the author of a text book on productivity improvement.

The Canadian initiative takes a broader perspective on Reshoring than its American counterpart. It looks beyond the costing methodology at government programs, education and training. It takes the view that we need a balanced economy in Canada that has strong resource industries, strong service industries and strong manufacturing. In a recent interview, Mr. Southway highlighted that Reshoring is particularly important in Ontario since this is the province that has suffered the largest loss of manufacturing jobs.

Certainly the Canadian Government has been very focused on supporting the development of the Western Canada oil and gas industries. Mr. Southway argues that government policies and incentives that support local manufacturing, coupled with education programs and apprenticeship training programs to help people perform trades jobs in the manufacturing sector would take the Reshoring movement to a whole new level and contribute to increased prosperity and higher employment levels.