Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 2 - Evidence - November 28, 2007
OTTAWA, Wednesday, November 28, 2007
The Standing Senate Committee on Transport and Communications met this day at 6:15 p.m. to examine and report upon current and potential future containerized freight traffic handled at, and major inbound and outbound markets served by, Canada's Pacific Gateway container ports, east coast container ports and central container ports and current and appropriate future policies relating thereto.
Senator Lise Bacon (Chair) in the chair.
[English]
The Chair: Tonight we have with us from the Canadian Trucking Alliance Mr. Graham Cooper, Senior Vice- President, Mr. Ron Lennox, Vice-President Trade and Security, and Ms. Elly Meister, Vice-President Public Affairs.
Graham Cooper, Senior Vice-President, Canadian Trucking Alliance: Thank you, Madam Chair, and good evening, senators.
I would like to tell you a little bit about the Canadian Trucking Alliance. For those of you who may not be familiar with us, we are known as CTA. We are a federation of Canada's seven provincial and regional trucking associations, collectively representing over 4,500 motor carriers coast to coast. Our headquarters are in Ottawa, and provincial association offices are located in Vancouver, Calgary, Regina, Winnipeg, Toronto, Montreal and Moncton. CTA is the voice of the Canadian trucking industry on policy, legislative and regulatory issues at both the national and international levels.
Tonight we will touch on two issues, one rather briefly and one in a little more depth. First, let me just make reference to the question of regulation of port authority operations. I believe this committee met with the representatives of the British Columbia Trucking Association in Vancouver in March of 2007.
In July of 2007, CTA and the British Columbia Trucking Association jointly submitted comments to Transport Canada on a proposed amendment to the port authority regulations. In that submission we commented on a number of practical matters with respect to trucking operations at the Port of Vancouver.
These, in our view, made regulatory intervention by the federal government unnecessarily largely because drayage operations, the local transport operations, at the port had stabilized during the two-year life of the memorandum of agreement, which the proposed regulation would ostensibly replace.
However, further critical concern expressed in our submission — that is, our written submission in July — was that by putting in place a regulation governing the economic relationship between motor carriers and truck owner- operators, the government would be setting an undesirable precedent for other sectors of the transportation industry and for other geographic regions. Moreover, in our submission we cautioned Transport Canada that this type of economic regulation was inconsistent with the statement of national transportation policies set out in the Canada Transportation Act, specifically section 5(a):
. . . competition and market forces, both within and among the various modes of transportation, are the prime agents in providing viable and effective transportation services.
Notwithstanding our intervention, the regulation was put in place. As it includes a two-year quasi-sunset provision, our hope is that this will lead to a thorough analysis of trucking operations within the port and the recognition that further regulatory intervention by the federal government is both unadvisable and unnecessary.
Madam Chair, to our written submission I have attached a copy of our letter, in the event that you have not seen it. For your records, it is there, and obviously expands in more depth on what I have just mentioned.
The second main area we wanted to discuss with you tonight is the question of port and intermodal security. Of course, for the trucking industry, security in its various forms and incarnations these days is a prime concern. The impact of Canadian port security measures on trucking companies has thus far been relatively unobtrusive. In CTA's view, Canada has taken a more risk-based approach to dealing with port security than our neighbours to the south, at least insofar as truck drivers are concerned.
The Canadian approach — to identify where risk is greatest and to focus on those areas — seems preferable in our view to a blanket approach that captures everyone, regardless of their perceived threat to transportation security.
From CTA's perspective, the key concern on the transportation security front is how to maintain this focus on risk management in the face of a seemingly never-ending series of new security requirements and programs affecting all modes of transportation, particularly relating to the carriage of Canada-U.S. trade.
We worry about duplication and overlap in programs. We, like the exporters whose goods we carry, are unsettled by the fact that the cost of moving goods continues to be driven up by security measures that are rolled out and evaluated often in isolation from one another. The big picture — an appropriate balance between security and trade efficiency — seems unfortunately to have been lost.
However, we are not naive. The trucking industry, perhaps more than most, understands very well that the North American trade picture has changed since 9/11, and that we have a critical role to play in reducing threats to national security. Frankly, the industry has stepped up to the plate by participating in a broad range of Canadian and U.S. security programs covering both carriers and drivers. We will expand more on that during the question and answer period.
When one stands back and surveys the landscape, it becomes apparent that six years after 9/11, Canada and the United States have created an array of programs that do not always dovetail with one another, and the situation appears to be getting worse. The reality of the situation today is that the trucking industry faces a range of mode- specific, facility-specific, and even commodity-specific requirements coming at us from departments and agencies on both sides of the border.
In our view, this situation is not sustainable. We cannot go on forever layering one new program on top of another, further driving up the cost of transportation and harming Canadian competitiveness. We acknowledge that there is of course no silver bullet to address these problems, but government agencies on both sides of the border must remember that the appropriate balance between efficient trade flow and enhanced security can be achieved only if risks are properly assessed.
In our view, the focus on risk management is absolutely fundamental, an observation recently made by the Auditor General in her report on the Canada Border Services Agency. A proper assessment of risk creates a win-win scenario for the trucking industry and government; for us in ensuring that inspections and programs are targeted to where they really are needed, and for government in ensuring that scarce resources are applied where they will do most good.
The Chair: Thank you very much for your presentation. What federal policy or regulation — whether customs, taxation, or operational — do you think has a negative impact on efficiency? I read what you just told us about the capacity and the competitiveness of the Canadian transport system.
Mr. Cooper: Senator, our concern is what these various programs do in terms of the cost to specific carriers, the impact it would have on drivers and operators within the industry, and indeed, whether these costs are sustainable over time. We have seen some attrition. We have seen some withdrawals from the industry over the past several years. We hear anecdotal reports about the effect of these programs on transportation operators.
You may be aware, I expect you are, of some quantitative studies that have been done in terms of the cost of these security measures to the industry. Let me stress again, as I mentioned in my opening remarks, we understand the need. We are at the point, if I can be so bold as to suggest, that we wonder when governments are going to sit back and say, "Whoa. When is enough enough? Are we doing the things that we should be doing?''
You will remember, no doubt, the Ridge-Manley action plan, the smart border accord of December 2001, which very neatly, I believe, drew the distinction between the efficiency of trade flow and the need for an enhanced security environment. The accord recognized that those two are essential but that they can exist in harmony.
That is the view that we have taken, and I believe many of the regulators and many of the transportation industry participants have taken over the past six years or so. The concern at this point in time, senator, is that things may be just getting a little bit away from us. We are losing track of that risk-management approach that was so integral to the acceptance I believe in December 2001 that you needed to focus on risk.
I must say that for the past several years Mr. Lennox has been working in this area, not specifically container security but in transportation security almost full time.
Ron Lennox, Vice-President, Trade and Security, Canadian Trucking Alliance: Senator, I would like to add a couple of specific examples from the written remarks that we submitted to the committee today. You asked your question about efficiency. From where I sit, I just wonder if we are not just tripping over ourselves at times. The first example that is provided in our written submission is about security credentials for truck drivers that have to access a port.
In Canada, if a truck driver requires access to a R2 restricted area within a port, which for us would be a cruise ship terminal, he or she would have to have a Transport Canada security. The driver is required to obtain the transportation security clearance, even if he or she already has a FAST card, a free and secure trade card, which is issued by the same government. In this situation, the driver is checked twice. Now, frankly, there will not be a lot of guys in this situation. The number of truck drivers that go into cruise ship terminals would be fairly limited in terms of the overall population, but it is an example of the sort of thing that we see out there.
Another example is something that we are working on right with Transport Canada and has to do with air cargo security. The requirements obviously spill out throughout the supply chain, so carriers that are moving freight that is destined for an aircraft will eventually be required to comply with requirements for air cargo security. The thing that I hear from carriers is that they have gone through the CBSA partners and protection program. They have gone through the Customs Trade Partnership Against Terrorism, the C-TPAT program, and wonder what more they have to do. They feel that their job is to protect all the freight that is in their system, not just stuff that might go on an aircraft. What we are told at this stage is that air freight is a little bit different. Again, as Mr. Cooper had suggested, we just wonder when enough is enough.
The Chair: Does it affect the competitiveness of the industry?
Mr. Lennox: Do you mean with regard to other modes of transportation?
The Chair: The situation you just described, does it affect the competitiveness?
Mr. Lennox: I am not so sure that it would affect the competitiveness, senator. It certainly drives up the cost.
Another example from our submission has to do with identity cards. You access a Canadian port and you may have a free and secure trade card. Certainly, if you are crossing into the United States and you are hauling hazardous materials or hauling for a fast importer down there, you are going to need a FAST card. However, if you also operate at a port in the U.S. you will have to pay now for a card issued under a U.S. program called the Transportation Worker Identification Credentials. I am not sure that it affects our competitiveness with regard to other modes of transportation, because all modes of transportation are facing new requirements on the security side, but certainly, it is driving up our costs.
Mr. Cooper: If I can add one thought to that, I think the competitiveness question is international or binational at least. There could be a risk at some point in relation to the cost of doing business across the border. Obviously the export economy that we are dealing in has trucks carrying about two thirds of our trade by value with the U.S. and a large proportion of that trade is intra-company, so that we would have a manufacturing subsidiary of a larger U.S. operation. Those plants were set up over the years for good reason. Labour costs were different. The tax structure was different and obviously the Canada-U.S. dollar exchange rate was different from what it is today.
The concern we have had for the past several years is what will be the long-term sustainability of that manufacturing base in Canada that is operating in a just-in-time environment across the border. Certainly Mr. Lennox referred to the FAST program. I am sure you are familiar with FAST and C-TPAT and those kinds of things, and the principle objective of that, of course, is to get safe, secure, known trade across the border expeditiously. However, too often we see backups, limited infrastructure in some situations, where we wonder — and we are not the only ones clearly — how sustainable is it to have a manufacturing sub-base of a larger manufacturing base in the United States, particularly in the auto parts industry, for example.
The Chair: One witness told this committee that he thought there was too much trucking in North America for distances better suited to rail. How do you react to this statement?
Mr. Cooper: It is not the first time we have heard that, senator, as I am sure you can imagine. All modes of transportation, certainly the two biggest modes of land freight transportation, truck and rail, have their place. The reality is that only about 10 per cent of freight is fungible. In other words, it could be as easily carried by rail as by truck. Trucking can provide a service element that rail has struggled with over the years. There are, as you know, some intermodal agreements in place, although of late the rail industry appears to be giving those perhaps less emphasis than in the past.
The arguments are not new to us. Frankly, the debate between whether there are too many trucks and not enough rail is not terribly productive.
At the end of the day, the shipper, the customer of the transportation system, makes the choice. We have a role to play; rail has a role to play and those roles are really quite different in most cases.
The Chair: We have been informed that Canada's trucking industry is experiencing a shortage of drivers. The Canadian Trucking Human Resources Council has proposed a project to provide information to help the government develop policies and programs that will help the industry. What kind of policies should have priority to help the industry?
Mr. Cooper: First let me qualify the term "driver shortage.'' We are not necessarily talking about a shortage of people who can drive a truck. There are many people out there with commercial licenses. The issue is whether they are qualified.
Trucking these days is very complex compared with what it was perhaps 20-30 years ago. The drivers have to be computer literate and know a fair bit about cross-border regulations because for a so-called unregulated industry, we are probably the most regulated in terms of safety regulations.
I think where governments collectively can help is look at why it is difficult for the industry to attract and retain truck drivers. The regulatory climate is complex. The panoply of rules with which they are required to comply sometimes frustrates drivers who drive across the country — and indeed across the border. Over the past number of years, we have made statements about the need for consistency and harmonization of the regulatory regime in Canada affecting trucking to make truck drivers' lives less complicated.
Certainly, the work that CTHRC has done — and I have participated in some of that work — is extremely valuable. We have always talked about a driver shortage. It was only relatively recently that we were able to put some dimension to that issue.
I believe the number is 37,000 drivers every year for the next 10 to 15 years. We need to pay attention to our aging workforce. However, the industry is not looking to the government to solve its problem, not entirely. It is the sort of thing where there is room for partnerships, as I have mentioned. We know that one of the problems in the industry is turnover. There are companies out there, some well-known names that do an excellent job of limiting turnover, while other companies do not do such a good job.
I am not trying to make excuses for the industry, because it is a large, diverse and extremely competitive industry. Margins are razor thin, and it does take a while for a company to become sufficiently well established to pay its drivers and put the necessary effort into training them. As you may know, the trucking industry has a large number of family- owned businesses.
The competitive environment is fierce; brutal some would call it at times. It sometimes makes motor carriers focus on things other than how to best retain and attract qualified drivers. Everybody wants to do it, no question, but not everybody has the resources to do it properly.
Senator Oliver: Thank you for your interesting presentation, and welcome to the committee tonight. You outlined in your remarks some of the regulatory difficulties you are having, both in Canada and the United States, and there is often overlap and other problems.
Our main study is, of course, containerized freight traffic. We are interested in containers and the trucking of containers. On page 3 of your presentation you state:
The obvious place to start, it would seem to us, would be a single security program that carriers can apply for and a single security card for drivers. Participation would be required where risk warrants, not right across the board.
That is about the drivers and the trucks, but we then have to get to the containers. What I would like to know is what procedures would ensure the security of containerized freight transported by truck in Canada and when it crosses the border into the United States.
The last witness we had in this committee talked to us about a black box. That is, hermetically sealing the container and being able to monitor that container through satellite for light, heat, and anything else so that when it went over the border officials would know just what was there and whether anything had moved or changed.
Have you looked at a black-box system to assist you in your trucking of containers?
Mr. Lennox: We have not looked at that specifically. There are all sorts of technologies out there. Sometimes I wonder if we are looking at the art of the possible. You can track anything, anywhere, anytime, if you want to. It gets back to the risk. How necessary is it to track every single container moving through Canada every minute of every day?
Certainly what the trucking industry has embraced right now through the security programs is the use of high- security seals, certainly for moving containers across the border. Anyone moving freight under C-TPAT or into Canada under FAST is using ISO high-security seals.
However, in answer to your question of whether we have looked at these other technologies; no. We are aware that things are being looked at, but we have not been directly involved in those discussions.
Senator Oliver: I am a strong believer in information technology as a way of adding value and adding to productivity. There is available information technology that is inexpensive and can save costs.
Mr. Lennox: If you want to talk about containers transhipped from a Canadian port through to the U.S., there is a fair bit of information technology that goes into something like that. If you start, for example, where the container originates, Canada Border Services Agency requires that there be 24-hour pre-lading information on that container before it has even left the foreign port. They make the risk assessment. It comes to the Canadian port. They may or may not do additional checks when it gets to Canada. Before that container is sent to the United States, an electronic manifest has to be prepared, sent ahead to U.S. Customs and Border Protection so they know exactly what is on that container, who is carrying it, the driver, the carrier, so they can do their risk assessment. There is a fair bit of technology, even though it may not be what you talked about earlier.
Senator Oliver: Are you able to recommend anything else we should be looking at in terms of technology to help speed up and reduce costs and make the system more efficient and effective?
Mr. Lennox: Even though our industry has sometimes been a bit resistant to change and new technologies, I have always been a big believer in the use of electronic manifests and automated targeting systems. The Canada Border Services Agency is currently working on something called the automated commercial environment. You are probably familiar with it; the acronym is ACI. It would be the Canadian equivalent of what the U.S. is doing in terms of electronic manifest for cargo coming into Canada. If you want to pursue something, I would say be supportive of the Canada Border Services Agency project. We have encouraged them to try to build a system that is compatible with and as similar as possible to the U.S. That to us is fundamentally important.
Mr. Cooper: You raise an interesting question with black boxes. I am assuming by black boxes you mean some sort of tracking device.
Without meaning to sound too cynical, over the past six years the security industry has been a growth industry. We have been approached by countless organizations, consultants, engineering firms — you name it — as to who has the best mousetrap.
The concern we have about those approaches is when you forget the risk assessment we talked about before — the need to manage risk — and you somehow have a tracking system for every truck you can imagine that could conceivably present a problem. We go back to Oklahoma City. That was not a gasoline tanker, that was a U-Haul van, as I recall, or a small van full of home-made explosives.
Where do you draw the line? Let us assume for the moment that you could draw it. Mr. Lennox mentioned the art of the possible. If you could put a tracking device on every single truck on every road in North America, at least on the interstates and the main highways in Canada, you would have a giant, what would look presumably like an air traffic control centre. What do you do with it? What do you do if, assuming that it is even possible for all those trucks to file route plans, a driver on his way to Alabama decides to stop off and see his mom in Michigan? The thought of what might happen if somebody deviates from a plan one can only imagine.
That said, however, your point is well taken, that there is a role for technology in modern transportation operations, be it trucking or any other. I certainly would invite, honourable senators to see a modern trucking operation where satellite tracking is used, where GPS is used, where the speed of the truck and fuel efficiency performance can be monitored. It is really worth seeing. If there are any members of the committee who would like to take advantage of that offer, we can certainly arrange a visit with motor carrier operations relatively close by.
Senator Dawson: You use the expression "fungible.'' You talk about fungibility between trucks and trains; please explain concerning short-term, inland and coastal shipping.
Mr. Cooper: Do you mean short sea shipping?
Senator Dawson: Yes.
Mr. Cooper: I must confess, senator, I am certainly not an expert in that area. It has been talked about. In some parts of the country it has been recognized as a possible solution. The question is whether the volumes can ever reach the point where they make any difference. Would we be able to have enough of those types of vessels carrying enough freight to really impact one way or the other?
If you would like to find out more about that subject, I could provide you further information.
Mr. Lennox: When I think of the Montreal-Toronto corridor, again, as Mr. Cooper had said, would there be enough to make a difference? Most of that freight is moving on trucks because it has to be there tomorrow. Could short sea shipping be competitive in that market? Perhaps it cannot. Maybe they are looking at other markets. Like Mr. Cooper, I am not an expert in that area.
Senator Dawson: One of the reasons I am asking is that all trucking in Canada falls under provincial jurisdiction. It has federal applications at ports and airports, but provincial authorities govern it. I am thinking of the North Shore of Quebec, from Sept-Îles to Montreal where there is now some displacement or fungible transfer from the trucking industry to the tugs carrying woodchips and minerals, down to Trois-Rivières and Montreal, et cetera.
A problem is one falls under provincial jurisdiction and the other under federal jurisdiction, and some of these companies are trying to get the best advice from both governments. They do not seem to have that type of cooperation that you people would need.
There was a trucking item this week with Premier McGuinty and Premier Charest. We will not address the many issues they spoke about during their meeting. However, the premiers addressed the issue of compatibility of their information on trucking, because some truckers are allowed to do some things in one province and are not allowed to do them in the other province and that means they have to get two types of permits.
Again, it comes down to the fact that it would be nice to have north shore trading. Both governments in Canada seem to agree on east-west trading. What do you recommend that we recommend as far as that is concerned, the jurisdictional issue and the fungible issue between shipping and trucking?
Mr. Cooper: As you know, the federal government has constitutional authority over extra-provincial transportation, which would be transportation between provinces and across the international border.
The delegation of the administration took place a number of years ago. Frankly, it is something that Transport Canada struggles with, that we struggle with as a national federation, to try to get harmonization and compatibility between those various federal regulations. I made mention of that earlier when we were talking about the driver issue.
In this particular case, I believe you are talking about a barge operation between Sept-Îles and Quebec City, which from the standpoint of the trucking industry operator would be a provincial operation, but when it gets on the St. Lawrence Seaway, it comes under federal jurisdiction. Is that the point you are making?
Senator Dawson: Yes.
Mr. Cooper: It is an interesting point, senator and I would like to look into it and get back to you. One of our associations is based in Montreal, as I mentioned at the outset. They do a lot of work with the Transports Québec and other organizations in the province of Quebec, and certainly, woodchip transportation is a big part of the transportation picture in that province.
"Fungibility'' is probably more of an old petroleum industry term than anything else.
Senator Oliver: He likes the word a lot.
Senator Dawson: I learned something today.
Mr. Cooper: I like the word. I do not get to use it very much any more.
I am not sure whether a barge-type of operation falls under the strict definition of short sea shipping. However, those barges would carry the type of commodities that the railways would carry, and the railways excel in that type of shipping and we do not.
The trucking industry specializes and excels in relatively high value, lightweight materials — television sets and razor blades et cetera. When you are talking about transportation of grain and iron ore and all of those kinds of minerals, you would find that the majority of those items are transported by rail.
When you are talking about the bulk transportation of wood chips between two points in a province, if it makes sense for a barge to carry it, that is something worth looking into. I certainly will explore that in further depth, senator, and get back to you on that question.
Senator Dawson: Yesterday a witness suggested that maybe we should be using containers more often for grain because we would have more specialized grain going directly to the buyer and there would be less manipulation. Again, sometimes a container can go from a truck to train to a ship.
That intermodality is something we will have to recommend. At some point, we will have to say that concerning some of the provincial jurisdiction and some of the port and train responsibilities, the cooperation is not strong enough. We will have to comment that where there could be better intermodality, it is not happening. We talked about interprovincial cooperation and it seems to me that it is certainly one of the priorities.
On another subject, you talked about export companies. How would you compare your relationship with containers and the people who receive containers on the export side versus the import side, when you are exporting car pieces or grain? How different is it when importing containers concerning security and risk management?
Mr. Cooper: Are you talking primarily about marine containers?
Senator Dawson: I am referring to export containers versus import containers.
Mr. Lennox: I am not sure that I can give you a very good answer to that, senator. We would pick up containers either at a bulk facility or at an individual shipper and move them to a port terminal. We would be required to comply with whatever security requirements are there. Typically, they would be applied against the driver to ensure that they he or she has the right to be there. The same would go, as far as I can tell, on movements out of the port. Our drivers require usually identification cards to access port property. Forgive me, but I cannot think of a specific difference in terms of how we would handle that movement.
Senator Dawson: There would not be any difference as far as how they are treated whether they are sending out a container or going to get one.
Mr. Lennox: No, I am not aware of any difference.
Mr. Cooper: One interesting point is the difference between a hypothetical container ship leaving Hong Kong and coming to Seattle, and another leaving Hong Kong and coming to Vancouver. We discussed the difference in the transhipping by road from Vancouver to Los Angeles. This is what started us thinking about whether we are doing a good job in terms of risk management and risk assessment when it comes to marine transportation and marine container transport in particular. The container ships — and you may know the numbers better than I do — hold thousands of containers.
As we mentioned in our written brief, those containers are subject to pre-lading requirements in some cases in both Canada and the U.S. In some cases, no load orders can be issued to the originating country whereby a container, which has not passed muster for one reason or another, would not be allowed to come to the shores of either Canada or the U.S. Once they arrive at the port, they are subject to some further inspection in some cases, if something might have been flagged on the pre-arrival system. I think VACIS is the process that is used.
Mr. Lennox: They have employed VACIS machines at Canadian ports. These systems can examine the inside of the container. They still do some manual examination as well: they use dogs, and they actually look at containers that are of particular interest; but yes, they use VACIS.
Mr. Cooper: Would it be a safe assumption that when you have a container ship with its many thousands of containers which have been subject to pre-arrival, pre-lading notification, it is not likely that too many of those thousands of containers will be physically inspected.
What is interesting is when they are off-loaded from the ship and on-loaded to a container chassis for furtherance into the United States, they are subject to yet a further pre-notification process. They may not be physically inspected at the border, but as I understand the situation, that container, once it is in the land transportation system, is treated as a good and is subject to the pre-arrival notification process to enter into the United States. Am I accurate in that?
Mr. Lennox: Yes, that is correct. There is some joint targeting that goes on as well for these containers moving through Canada into the U.S. and vice versa. The idea there, and it makes perfect sense to me, is we do not want both governments examining the same container. It does not make a lot of sense.
Even though when I spoke earlier, I mentioned that once the container arrives in Canada, another manifest has to be prepared to move that container into the United States, under these joint targeting arrangements, hopefully — I do not have any specific evidence — those containers are not being examined twice. It would not make a lot of sense if Canada and the U.S. are both looking at same container.
Mr. Cooper: What is interesting is whether there is a physical examination of that hypothetical container from Hong Kong. We know that once the same type of container ship arrives at the Port of Seattle and goes through the necessary screening, it is on its way to Michigan or New York or Arizona. We are not as heavily involved in container transportation as in certain other types of transportation across the border, but to the extent that we can be sure that the people that are doing this kind of work are focusing on risk, I think that is probably about as good as it gets at this stage in the game. Of course, the overall exposure is enormous when you consider the number of container ports and the number of containers in North America.
Senator Zimmer: Just yesterday, we had a witness that said security would always trump trade at the U.S. border. Given that fact, it is our job as a government and yours as an industry to find ways to best deal with these ever- increasing security measures.
I know you advocate having one security ID card — Mr. Lennox touched on that — instead of several different ones, which seems to make perfect sense. You also say that participation would be required where the risk warranted it and not across the board.
What is the problem with issuing one security card? It seems to me that this would make sense and eliminate complications. What are your thoughts on that alternative?
Mr. Lennox: In terms of issuing one card across the board, the basic problem we face is that immediately post-9/11, there was this Canada-U.S. shared border accord. Under that accord, which had many good items in it, came the FAST program, which required drivers to go through a criminal and immigration check in order to obtain the card. In addition, drivers were exposed to a check on any customs violations. A person can be denied a card or have his or her card revoked if he or she has brought in extra cigarettes or whatever the case may be. They are actually looking at customs. You now say to yourself, "This guy will go on to port property; why should not the FAST card suffice?'' Or "This guy cannot get a FAST card because he has committed some customs offence,'' for example, he has smuggled some cigarettes in the cab of his truck. How does that materially affect whether or not he will commit some sort of act such as a security breach at the Port of Vancouver?
All these cards were developed for specific purposes. Once you have them out there in the marketplace — and, right now we are probably approaching 100,000 FAST cards if you include Canada and the United States — undoing that becomes difficult. From customs' point of view, they believe that is fundamental. They do not want people going across the border in their FAST program that is meant to be an elite, low-risk program. These are the sorts of issues that we face in coming up with a single card. I am not quite sure exactly how we will ever get to that stage.
Maybe could I say a few words now about the approach of the U.S. I know I said some critical things about this transportation worker identity credential, but philosophically it makes a lot of sense. The idea is an individual who must have access to a transportation facility, whether it is a port, an airport or a rail hub, will have his or her security checked. They will then obtain a card issued by the United States Department of Homeland Security. That is one card that will grant them access throughout the transportation system.
To have that sort of system which would also allow an individual to cross the border into the United States would make a lot of sense. Given that we have already gone this far down the road with FAST for five years, it might be difficult to undo that. I wish we could, though.
Senator Zimmer: If all truck drivers were required to obtain the security ID card, what impact would it have on the current worker shortage in the trucking industry?
Mr. Lennox: It all depends on the criteria they establish to obtain the security card. If the government takes the attitude that everyone who has committed a criminal offence no matter how far back is a threat to national security, then you will have real problems. You will exacerbate that problem of driver shortage. If, on the other hand, they take a more holistic approach like they do with the transportation security clearance and say, "He may have done something, but is that individual truly a threat to national security,'' that is a much better approach. We could probably live with that approach as opposed to the former approach.
Senator Zimmer: The litmus test would be is it a hanging offence. I think that is the question.
Mr. Cooper: If you are talking about cross-border transportation, I mentioned in my remarks earlier about how difficult it is, in many cases, to retain drivers in the industry. Certainly, the complications of crossing the border have not helped. That said, however, a driver with a criminal record cannot get into the United States in most cases now anyway. We have that part of it licked.
As Mr. Lennox said earlier, when the so-called TWIC card concept was being discussed, we were in Washington that day talking with the transportation security administration people. They were ruminating about this TWIC card. The vision was that at some point every transportation worker in the United States would have a card. They were wondering how to ensure that the drivers did not have criminal records.
In some parts of the United States, for example, some of the trucking companies who are looking for drivers actually hire them from jails — on their way out, obviously. These are the same people who, in many cases, end up with long and positive driving careers; that is, 25, 30 or 40 years of accident-free driving and all those good stories that you hear about.
If you are talking about national security, as Mr. Lennox has mentioned, how do you marry those imperatives with the imperatives of just making sure that every transportation worker has a card? For example, in the United States, how do you ensure they are part of the TWIC program, starting with the ports? We do not know where the next one will be. I suppose to some extent it will depend on how well it works at the port. You can see, perhaps, the wisdom of having a TWIC to access a refinery installation, or a nuclear plant, or a dam, or those kinds of critical infrastructures, but is it necessary to have one to go into the Kellogg plant in Battle Creek? That is a different story, perhaps.
These are the difficult questions that governments and industry on both sides of the border and, indeed, internationally must be asking. Coming back to that acid test, are we coming back to the right kind of risk management or are we trying to cover everyone?
Senator Merchant: I live in Regina. You said that you had an office in Regina. Is that just good fortune for us or is there a reason that you have an office in Regina? I do not know anything about it. I would like to find out about it.
Mr. Cooper: The reason, senator, is that the provincial association offices typically are in the provincial capitals.
Senator Merchant: You have one in every province?
Senator Oliver: No, Halifax does not have such an office.
Mr. Cooper: That is correct. In my opening remarks, I believe I described them as provincial and regional associations. Every province has one, except for the Atlantic provinces, which has one based in Moncton to cover four provinces. The reason Moncton was chosen is because it is a bit of a transportation hub.
Senator Merchant: What federal policy changes does the Trucking and Made in Canada Clear Air Act and Action Plan call for and how will these policy changes help the trucking industry achieve greater efficiency and increase capacity for containerized freight transport?
Mr. Cooper: It may be somewhat difficult to address that question in the context strictly of container transport. However, let me make some general comments. As it turns out, my colleagues appeared last evening before the House of Commons Standing Committee on Finance and dealt with the successor to the made-in-Canada clean air act proposals that we made a couple of years ago.
There is a new concept called Enviro Truck. This is a Canadian concept modeled largely on the U.S. SmartWay Transport Partnership, which is under the auspices of the Environmental Protection Agency. In essence, the Enviro Truck concept helps to expand into the marketplace the use of the 2007 and later truck engines which are the ultra clean engines. We had an event across the river about a month ago. We tried to have it on Parliament Hill but trucks are no longer allowed on the Hill. We held the even at the Hull marina. Brian Jean, the Parliamentary Secretary to the Minister of Transport, held performed a while glove test on one of the trucks. He held his gloved hands over the exhaust pipe for 30 or 40 seconds and the gloves came away perfectly clean. These clean engines are quite remarkable in terms of their emission performance. Of course, that is coupled with the new ultra low sulphur diesel fuel. That is part of Enviro Truck, and that is part of the U.S. SmartWay Transport Partnership.
The other part of this program has to do with fuel efficiency. How can we use principally aerodynamics but not exclusively aerodynamics in both the manufacture of the power unit, the tractor and the trailer in terms of fairings, what are sometimes referred to as boat tails or whale tails, which are aerodynamic deflectors, trailer skirts which go along the bottom, as the name would suggest, all to cut down wind resistance? Much of this work has developed over the years in conjunction with academic institutions in Canada, the U.S. and internationally, and the fuel reduction efficiencies in this type of equipment are really quite remarkable.
We have discussed this with the government. Certainly there is some attraction to it from a government policy standpoint and from an industry operational standpoint. There are some efficiencies to be derived, but this equipment is not cheap. Looking at some precedents from three years ago perhaps, the government had an incentive program for what are called auxiliary power units which heat and cool truck cabs without having to have the engine running. There was a good healthy subsidy available for that, and the take-up was quite significant. Again, I apologize for not having the numbers off the top of my head, but we can get that for you.
We are essentially saying to the government that this Enviro Truck concept is the way of the future. We do not want those old trucks belching up black smoke on the highways. Part of the Enviro Truck concept is a different type of tire, a super single or a wide-based low rolling resistance tire. The tires have significant environmental benefits. We have said that if the government can partner with the trucking industry in some way, through tax credits, incentives and various other fiscal mechanisms that it has at its disposal, our belief is that it will help in the market penetration of this type of equipment. The trucking industry and road transportation in general is criticized for its environmental footprint. Our view, and the view of experts we have engaged to work with us on this in the U.S. government, the private sector and in academia, is that this is the most effective way for the industry to reduce its environmental footprint, both on pollution-causing emissions as well as greenhouse gas emissions.
Senator Johnson: Tell me about your Enviro Truck. How many do you have on the road?
Mr. Cooper: I cannot give you an exact number, but the number is small, for several reasons. One reason is that these vehicles are more expensive than their predecessor vehicles, quite considerably more expensive. They are more expensive for a couple of reasons, one of which is the engine technology and another reason is the new aerodynamic modelling of the vehicles, which obviously requires tooling and so forth. There is a cost issue involved.
Senator Johnson: How costly are they? Nothing is more important than the environment.
Mr. Lennox: We talk about the $8,000 to $10,000 range. I am sorry I cannot remember the number off the top of my head, but we get monthly statistics on class 8 truck sales. It would probably be in the low tens of thousands actually on the road right now. I would be happy to follow up and send you the latest data.
Senator Johnson: Where are they manufactured?
Mr. Cooper: It is a requirement now, through the EPA regulation that this is the standard. A range of manufacturers produces this product including Freightliner, Mack and International.
The other thing worth noting, senator, is that we talked about an incentive program that we are currently discussing with the government. One thing that we want to try to do through such an incentive program is not so much provide huge operating subsidies to the industry but rather to send a signal of partnership that the government is interested in helping out the trucking industry as it struggles through a difficult economic time. You are no doubt aware of how important exports are to our industry. Certainly, in Central Canada the manufacturing base and its difficulties over the past couple of years in particular with the export market are showing up. These trucks do not last forever; they put on a lot of miles and kilometres.
Senator Johnson: How does it compare in the United States or Europe where these vehicles are used? Are they all converting into this kind of vehicle?
Mr. Cooper: I think the situation in Europe is different. I will not comment further on that. We can provide you with information on that situation. What we are talking about here in terms of the EPA regulations with respect to both the engines and the fuel quality is a North American standard. You will not see, for example, a new truck only being able to be sold in the United States, and an old new truck, a new truck with an old engine, would not be sold in Canada if it were not sold in the U.S.
We think we have a solution that works. It is proven. Certainly in terms of air quality, the emissions test I referred to earlier, that is proven. The aerodynamic performance and the fuel efficiency performance are proven.
Senator Johnson: You say that if your Canadian fleet of 294,000 trucks were to adopt a package of energy efficiency technologies, it would save 4.1 billion litres of fuel and reduce emissions by 11.5 million tonnes of GHG per year. Those are huge numbers. You could also take 64,000 class 8 trucks off the road or 2.6 million cars. How fast can you get that done?
Mr. Cooper: That is the $64,000 question. One thing we are attempting to do in discussions with several branches of government, including the Transport Canada, Finance Canada, Natural Resources Canada and so forth, is to try to find a way that we avoid another pre-buy. This happened in 2006 as in 2007. The vehicles which became more expensive came into the marketplace. There was a pre-buy, so now we have a bunch of relatively recent but older technology vehicles on the road. We want to ensure that there is sufficient incentive for the industry, notwithstanding the difficult time it is working through, to start considering some of these devices. We want the industry to consider a new truck or add-on equipment for aerodynamics and retrofit and so forth, so that it does not delay those decisions and we end up not taking advantage of the numbers you are talking about.
Senator Johnson: As we could have this discussion for hours, I will move on.
Mr. Cooper: It is an interesting topic.
Senator Johnson: Do you have any electric trucks?
Mr. Cooper: There are some hybrid trucks.
Mr. Lennox: Some of the courier companies are experimenting with hybrid trucks.
Senator Johnson: The electric car will be on the road in the next five years.
I am fascinated by your manpower issues, not only just the number of drivers you need but also where you find them. What kind of testing and qualifications do they need, and are they environmentally conscious?
Mr. Cooper: The problem with this, senator, is what I referred to earlier as a skills shortage as opposed to a driver shortage. It is relatively simple to get a commercial driver's licence. In fact, I believe there was a feature on Global Television several nights ago that dealt with just that issue. I did not see it myself, but I had heard about it.
The problem is that it is quite expensive for a candidate driver to get the kind of training to make him or herself attractive to a potential employer. I would not want to think that, for example, someone having just taken a test would be put behind the wheel of a tractor-trailer going down the highway and under those kinds of complex operating conditions. One of the issues is, if a trucking company wants to hire people, how do they get people who are qualified to take a million-dollar piece of equipment and cargo and go for three or four days?
It is something that is being looked at very closely. Different mechanisms are being looked at and part of it is through the immigration route. Some provinces have nominee programs. There are different kinds of organizations mentioned earlier, such as the Canadian Trucking Human Resources Council, which is working to help the industry deal with turnover and attracting new drivers. It is a very tough situation.
Senator Johnson: Are the wages competitive?
Mr. Cooper: The wages the drivers are paid are, shall we say, relatively low as a general rule when you consider the kinds of work that has to be done to earn those wages. It is a tough lifestyle; it is certainly not for everyone.
Senator Johnson: The Quebec industry person told us that it was almost impossible to earn a living while respecting regulations. Is the level of competition in the trucking industry destructive to the players, which then in turn affects your manpower and the people you hire to drive?
Mr. Cooper: Was it a driver that made that statement?
Senator Johnson: It was a Quebec industry trucking representative who appeared before the committee.
Mr. Cooper: Someone who would run a trucking company. One of the big issues we have in our industry is what is called "churn,'' which is the movement of drivers from one company to another company. When they are — if you will pardon the pun — in the driver's seat, it is relatively easy for them to do so. Freight volumes are lower than they were 18 to 24 months ago, so there is not the kind of tight capacity that there was then. It is more difficult for drivers perhaps to move, but certainly a good driver, someone with a good reputation, good experience and a relatively accident-free record, typically will not have any difficulty moving.
One thing that we are working on right now in conjunction with the Canadian Trucking Human Resources Council is trying to quantify the cost of turnover. Trucking companies, in this country in particular, are predominantly small businesses. Ninety per cent of trucking companies in Canada have less than five trucks. Sometimes, it is very difficult for people who are running those kinds of small businesses, often family businesses where they are worried about how to replace a tire that just blew, to look at the cost of turnover. It is a challenge for the industry, senator, and certainly, it is something with which many people wrestle.
Senator Phalen: In your submission, you say that post-9/11 security had created an array of program in Canada and the United States, and that these programs do not always dovetail with one another. Are these programs actually costing truckers in terms of time and money?
Mr. Lennox: These programs can be expensive. Again, when it comes to the primary security programs that cross- border carriers are engaged in, and I am talking about C-TPAT in the United States and Partners in Protection in Canada, I have carriers tell me they have spent hundreds of thousands of dollars to become C-TPAT certified. They are talking about fencing, terminal areas, remote cameras, and badge systems for their employees, the high security seals I have talked about; they are not free. Yes, it can be very expensive.
Now in terms of whether or not things dovetail, currently they do not. Again, if we take an example of the two primary security programs, C-TPAT in the United States and Partners in Protection here in Canada, carriers have to apply for and be approved by both programs. To the credit of the Canada Border Services Agency, they have just now begun a process of consulting with industry on how to bring those two programs together, and our point of view is you should be able to belong to one or the other but you should not have to belong to both. If you are certified by Partners in Protection in Canada, it should be recognized in the U.S. and vice versa, and hopefully we will get to that point.
Senator Phalen: I think you have just answered my second question. In your brief, you mentioned a number of programs like the Canada Partners in Protection and the Customs Trade Partnership Against Terrorism. Could you explain from the trucker's point of view what these programs require?
Mr. Lennox: Those two programs are relatively similar. The C-TPAT program is a U.S. program and, it is safe to say, more rigorous than Canada's requirements under Partners in Protection. It requires that a motor carrier submit detailed information on their operations, trade chain partners and people that they employ. That information is fed into Department of Homeland Security, and they can be granted conditional status within the C-TPAT program. That gives them access to these FAST lanes to get into the United States, providing their driver and the goods themselves meet the criteria.
Once that is done, then a carrier can actually be visited by an officer from the Department of Homeland Security up here in Canada. Every day that department has officers in Canada visiting trucking companies going through a validation process. It is fairly open and not subject to strict, hard and fast rules, but the sorts of things that can be required of carriers through validation are things like, as I mentioned earlier, fences, security cameras and that sort of thing. It can turn out to be fairly expensive for the carriers.
There is a carrot too. If you want to haul, for example, General Motors freight, you have to be in this program; and so if that is your primary client, you will go to the expense and make the investment to be part of C-TPAT.
Again, the process for Partners in Protection here in Canada, which is a precondition of the expedited process into Canada, is not quite as rigorous, but nevertheless you do have to submit information to Canadian Border Services Agency. It is reviewed. They do have case officers. I am not sure to what extent they are going out and visiting carriers. They are currently working on bringing that up to the C-TPAT standard.
The Chair: Thank you very much for your presentation and the answers to our questions. We do appreciate your attendance today. Feel free to furnish us with more information. As you mentioned, the clerk will distribute that information to the members of the committee.
Mr. Cooper: We will, Madam Chair. It was a pleasure being here.
The committee adjourned.