Choosing a Trucking Company (Part 4)
One of the most interesting sections of my research to my second book was the charting of fuel taxes. Over 30% of the 260 pages were dedicated to fuel costs. The specific IFTA fuel costs needed to be explored in detail in order to expose high/low cost jurisdictions (I used June 30th 2012 rates/numbers). What was done was chart the cents per liter fuel taxes for every jurisdiction in North America (see figure 1).
The chart shows two colors: red and blue. Blue are United States jurisdictions and Red is Canadian. The first observation we can see is that Canadians are grossly over taxed. Canadian’s lowest (Alberta) is still higher than the United States Highest. I’m not exactly sure why we Canadians put up with this type of financial carnage… but we do. Taxes are just one issue that places Canadian trucking at a disadvantage over our US counterparts.
Another major disadvantage is our weather. This of course doesn’t change no matter who we elect into office. It must be said that commercial truck manufacturers do not build trucks for the Canadian winter! In all honesty I’m not sure who really can. Even steel becomes brittle at 40 below. Driving in Canada can sometimes be life threatening.
Canada deals with its cold the best it can, however, it becomes expensive. Not only is Canada over taxed from fuel taxes it must contend with winter fuel issues, specifically gelling. The extreme cold weather causes diesel fuel to gell. In order to minimize the risk of gelling diesel is “winterized” by thinning it down. The problem with thinning is the excessive loss of power. Most engines drop about a mile per gallon when the thinned fuel starts pumping.
When clients ask where is the best place to fuel (referring to price), I first comment on the extreme difference between fuel consumption rates. Price is not nearly as important as volume purchased. It is one of the areas some operators save more than anywhere else. I’m referring to parking the truck in heated locations. However, avoiding winter fuel is still similar to playing Russian roulette. It may not be lethal but it can be an expensive gamble.
Knowing your costs and consumption is critical to long term success as an operator. It’s one of the reasons when choosing a trucking company, operators must ask themselves (or the carrier) if they will be getting the same consumption rate at the new carrier verses their existing one. Consumption rate has many variables: weight, terrain, equipment, temperature and above all driving habits. Will any of these variables change? Fuel taxes may be a more fixed cost per mile (being calculated down to the cent before the truck even leaves the yard) but consumption may and will change nearly every trip.
Making Your Miles Count is the most thorough educational series available to Canadian operators. It is dedicated to operator’s success and the industries strength. As the author I’d like to thank Over the Road Magazine for its support of healthy Operators across Canada.
