Ralph Klein has gone and it is time to retire Ralph's World. Thanks to all of you who have supported this venture by contributing material and through your comments. It has been fun.

Should we get another blog underway? Let me know your thoughts by e-mailing me at johnnyslow@gmail.com.

John Slow
January 1, 2007

Sunday, April 17, 2005

Ralph's Oil or nothing industry plan fails (Transportation) 

John Clark14815 - 123 Ave.,Edmonton, AB T5L 2Y7
April 13, 2005.

Honorable Ralph Klein,
Room 307
Legislative Building,
Edmonton, AB T4K 2C6

Being involved in transportation I have seen a number of security walls come into place and looked at their resulting costs and Alberta’s self inflicted weakness.

Within one Canadian company, hiring and personnel lists were gone over individually by US Agents in their office in Canada. Did they properly check and record the reference? Did the people marked down for the place of reference actually work there? Did the original security check match the new US security check?

This process took 6 months, and got the company to first base - as a company they could now cross the border as they had been doing for 50 years or more.

Line ups and delays grew at the border because of US customs detailing. Meanwhile new driving rules on hours of work were brought into effect for the drivers and companies.

Under the old system if a driver waited 2 hours to get cleared at the border he could mark that down as time off as he usually slept in his sleeper.

Now, he has to include this time in his hours of work and the waits are longer, reaching to 4 to 6 hours easily. That means the driver can drive 4 or hours less for that day and, they are paid by the mile.

An express clearance "FAST" was invented. 75 dollars was paid US, for each of the 600 drivers. They had to apply in person for their fast card, fingerprint, photo etc. Now, providing all the shippers in his van were "FAST" approved he could get into the fast lane and go through with a unit wand, no delay.

It never happened; all drivers have upscale photo-bio ID.

Delay in unloading loads became a major cost item.

On other areas, they are asked to fence their yards, add 24 hour a day security camera and live a monitor to their warehouse and yard facility. Keylock entry. In some areas this is a million dollar upgrade. Costs must be recovered!

Bottom line is many drivers are now being paid more to cross the border and the price of transportation has gone up and up and up while many trucking companies have quit the business. Prices will continue to go up.

Alberta put a program on to help Alberta shippers set up the inland port scheme which worked well. They invented Alberta Intermodel Service and, when it was sold to the CP some 44 million dollars of start up costs were never recovered from CP. Writing off start up costs is the norm I am told. They did however pay for the property in Calgary and Edmonton and some of the limited rolling stock. This allowed CP a turnkey business without the regular overhead. With no start up costs, lower rates are possible.

At heart here, industry in Alberta moved away from Trucks into "Cheap" containers. The economy and markets were built on this false economy. Now, the rail roads have troubles getting the containers between point A and point B in time and, the delays are getting longer. It may take you 6 days to get a container into their yard to go and another 6 to get it out of their yard at the other end when it arrives. The rail prices have increased.

Where the dray part of the operation (P and D from the rail yards) was costed at 3 hours on initial contracts, it is necessary for the dray people to price on 6 and 10 hour durations. (50 to 70 per hour). The CN and CP are dumping their part in pickup and delivery making it the shipper and consignee problem. Prices again shoot up. Costs are downloaded.

Now, along with the delay and higher prices the shippers look for trucks.

When the container artificial operation tanked the rates out of Alberta, many trucking companies closed their doors many more just ignored Alberta leaving the low priced US freight sit instead, going to Saskatchewan, BC and MB for their loads into the US.

Market parameters for Alberta Companies shrunk and continue to shrink!

Add to this the higher prices of power paid by Albertans and you have the mix for recession in every part of the economy except the oil patch.

Ralph's oil or nothing policy is coming home to roost.

The recent closure of Sunland Biscuits in Edmonton is only the tip of the iceberg. Higher electrical costs were a contributor but the market place wanted to do away with trans-fats in their product. This means re printing the packages. They were beat in the market place by .60 a case!

The conservatives can subsidize oil and gas with railroads free gas and power lines but they could find no way to save the only bakery west of Ontario!

On the up side:
Canada's trade with China has increased 10 fold over the last couple of years. The prediction is it will expand by a scale of 20 in the next 5 years.

Alberta. B.C. and the Feds are working to enlarge the Prince Rupert deep sea port. This has been an on again off again project for the last 2 decades. This is the deepest port in North America! Really excellent potential!

Vancouver Port cannot handle the traffic presently and cannot be improved to any extent. Much of the facility is on the Fraser River which needs constant dredging. The Dees Slough under the river highway limits the draft (depth) of vessels coming out of the Fraser with loads. (Less load)

The cost difference between Vancouver and Prince Rupert is immense. Tug boats charge close to 20,000 dollars per hour for their service. To move a big ship up the Fraser to New West Minister is a 100,000 dollar bill into the dock and an additional charge coming out!

Prince Rupert can accept the ships straight into their dock with minimal or no help from tugs! In the plans is expansion to the extreme which. In my mind is be a good thing!

Every additional "security" the US puts in place drives up the cost of doing business with the US. By comparison doing business with China becomes cheaper and cheaper without doing anything!

Alberta, BC and the Feds have been on the Rail's case about moving product. Alberta can't even get its coal moved! Markets are falling away and the established markets cannot afford the higher transportation. Some products were sold a year ago on futures market, using US dollars as the base. Their costs remain in Canadian dollars.
Their business was established on artificial transportation costs.

These companies will only survive by increasing prices to cover the increased costs!

The railroads have no clear picture of how to increase service in or out of Prince Rupert. The demands on trucks will continue to grow at an unprecedented pace. New trucking-industry allegiances will be formed and maintained with industry. The shipper/carrier culture is changing.

China is putting pressure on Taiwan; the US will want to put pressure on China; what are the Canada's chances of coming on board with the US?
Nil I would say.

Transportation is my world; I try to make a living out of it. Times are changing so fast it is hard to position.

John Clark

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