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Prepare for different operating differences if your private fleet is expanding into the U.S.

The prospect of serving the U.S. marketplace is exciting for any company. Our largest trading partner includes more than 300 million consumers and accounts for 25% of the globe’s economic output. Trade across the Ambassador Bridge between Windsor, Ontario and Detroit, Michigan will on its own match the trade between the U.S. and Japan.

But the opportunities come at a price.

When Statistics Canada studied cross-border trucking costs, it found that the U.S.-bound shipments cost 18 to 31% more than equivalent domestic trade. “Higher fixed costs per shipment are consistent with border delays and compliance cost,” concluded the authors of Trucking Across the Border, released in 2012. Steeper linehaul costs were linked to the struggle with finding backhauls, in part because point-to-point movements within the U.S. are restricted by cabotage rules.

They are not the only operational differences to consider.

“First and foremost is the Hours of Service and also the weight,” says Edward Cherubini, national fleet manager for Livingston Vehicle Transportation Services. “At the end of the day you can haul more [per truck in Canada].”

Canadian regulations allow drivers to work 13 hours after taking eight hours off, while the U.S. regulations limit drivers to 11 hours of work after 10 hours off duty. The U.S. duty cycles of 60 hours in seven days or 70 hours in eight days are also less productive than the 70 hours in seven days and 120 hours in 14 days allowed here. While maximum weights can vary depending on province or state, a tractor semi-trailer generally allowed a Gross Vehicle Weight of more than 40,000 kg in Canada will be capped at about 36,000 kg (80,000 pounds) on U.S. interstates.

The unique rules don’t end there. Cross-border drivers are subject to drug testing requirements, and depending on their past may require criminal waivers before traveling to the U.S. Insurance requirements might vary, too, particularly if the freight will travel through areas that are known for hefty court settlements against fleets. Drivers can even be placed out of service if they cannot read and speak English well enough to converse with the general public, understand highway signs and signals, respond to official inquiries, or make entries on reports and records. When asked, “Where did you start your trip today,” they better be able to answer.

There is also a unique approach to safety ratings to consider.

U.S. regulators and insurers alike keep a close eye on Compliance, Safety, Accountability (CSA) ratings, which track such things as unsafe driving, compliance with Hours of Service, driver fitness, the use of controlled substances and alcohol, vehicle maintenance, and compliance with hazardous materials rules, on top of providing a crash indicator based on the frequency and severity of high-risk crashes. “They have to monitor their CSA score,” Cherubini says of the fleets. Given the wide-reaching nature of the reports, it will be equally important to ensure that drivers report all fines, collisions and inspections in a timely manner so fleet can address rising totals, he adds.

Back in fleet offices, the files on each cross-border driver must be more comprehensive than the documents for those who operate in Canada alone. In terms of drug and alcohol testing, there will need to be a certificate of violations, and a copy of the medical examiner’s report, Cherubini says. The application for employment will also need to be more detailed, exploring experience, the type of equipment that has been operated, the existing class of licence, and training, he adds. On top of this, the file has to include documented inquiries to anyone who has employed the driver in the last three years; inquiries to state agencies covering the same three-year period; annual inquiries to state agencies from the moment the driver is hired; an annual review of the driving record; an annual certification of violations; a copy of the driver’s road test or equivalent; and a medical examiner’s certificate.

An estimated 45 different agencies now gather data about trucks that cross the border, whether it involves the U.S. Immigration and Naturalization Service’s need for details about a driver, or the U.S. Department of Agriculture’s focus on goods in the reefer.

While private carriers do not require an MC Number, those that offer for-hire services will. And fleets which hope to expedite border crossings will want Free and Secure Trade (FAST) cards to identify low-risk drivers.

There are other options to expedite business activities, such as registering with the International Fuel Tax Agreement (IFTA), which requires fleets only to file a single quarterly return with a base jurisdiction. This could lead to a refund for a fleet that tends to buy highly taxed fuel but travels most of its distance in states with lower taxes.

They are not the only tax implications to consider.

Linda Spina of MNP LLP, one of Canada’s largest accounting and consulting firms, suggests that businesses may even want to establish the U.S.-bound private fleets as a separate entity, particularly if it will collect some for-hire revenue through backhauls.

“If a Canadian [fleet] is considering doing business in the U.S., it would have to determine how it’s going to conduct its business in the U.S. so it does not pay U.S. income tax at graduated rates,” Spina says. The mileage in an individual state can determine tax exposure.

Some jurisdictions are also more aggressive than others. States like California, New Jersey, New York and Pennsylvania are particularly known for chasing after tax dollars, Spina says, referring to information that is gathered in documents known as a nexus questionnaire. “New Jersey will stop your truck. They have revenue agents at weigh stations,” she says. Those who have not filed a tax return will find vehicles impounded.

“You have to track the mileage of each truck in each state,” she says. “That’s critical to make sure that you are compliant and you’re not doing yourself a disservice with bad records.”

The reporting is not always complex. A fleet traveling in Florida, for example, can attach a federal tax return that claims treaty-related protections. But other states require tax forms of their own. Complex requirements to disclose a corporation’s worldwide revenue and taxes might be minimized by establishing the U.S.-bound fleet as a special-purpose corporation. “It’s much cleaner,” she says. Fleets without a permanent U.S. establishment like an office or warehouse would also be exempt from U.S. income tax.

Of course, steps to minimize cross-border differences continue. Canada recently adjusted allowable dimensions, giving fleets the right to use full-length aerodynamic boat tails on both sides of the 49th parallel. Recent announcements by the Canada-United States Regulatory Cooperation Council, meanwhile, refer to plans to harmonize codes and standards around natural gas as a vehicle fuel. Transport Canada and the National Highway Traffic Safety Administration (NHTSA) are looking for ways to use the same tests when establishing vehicle standards. But, even then, new barriers continue to emerge – such as the U.S. Department of Agriculture’s plans to increase animal, plant and health inspection fees.

There will always be some unique factors to consider when you’re border bound.

Current News

Retention for the Future of Trucking

As we look ahead, we recognize that retention is a critical component of the trucking sector’s business model and success in retaining a strong workforce. At a point where we have a skilled worker shortage, we cannot afford to lose our assets: our driving force who keep the economy moving and our businesses growing.

We have companies with varied turnover rates and those rates result in dollars lost. We have companies that have varied hiring practices, which inevitably result in varied retention rates.

The reports indicate that the skilled worker shortage will continue to increase as we move toward 2024. It’s time to reinforce our retention practices so we can reduce our turnover rates – resulting in strong retention practices.

It is a topic worth considering. We need to put the same level of effort into retention as we do into recruitment. Why is retention a challenge? What areas are we missing that create this barrier to stronger retention rates? Do we accept high turnover as the cost of doing business?

Let’s take a step back. The loss of one driver can have a potential cost implication of up to $5,000 (this may be low for some companies) to replace the professional driver. Lose 10 drivers and suddenly you are at a loss of approximately $50,000. In a sector where margins are tight, can we afford those types of losses without exploring why and how we can do better?

Understanding why we lose people in our sector can be challenging. Even the best exit survey strategies do not always yield the information we need to remove barriers and retain the individual or offer insight into what we can do differently; however, the survey is an essential tool that provides an opportunity to learn... it just needs to go beyond the surface. We need to go to the beginning at the point of hire.

The first thing I think about when looking at retention is trust. Is there trust being built at the recruitment stage – at a level that can be delivered beyond the promises made at the point of recruitment. Can we deliver the pay, home time, benefits, flexibility and everything else that we have promised?

Trust is a deal-breaker for many of us. If you promise professional development in the first year of an employee’s career and then do not offer it, you have broken trust. If you promise a raise after a three-month probation period and do not provide it, you have broken trust. If you promise a professional driver that they will be able to be home for special occasions and you do not get them home, you have broken trust.

Read more ...