Small carriers in Ontario’s trucking industry are facing big challenges.

Some of them were discussed Nov. 20 at the Truckload Carriers Association’s annual Bridging Border Barriers event in Mississauga, Ont. And it took less than a minute for the topic of driver misclassification to rear its head.

“We used to find we were a little insulated from it as a partial load carrier,” Mark Bylsma, president of Spring Creek Carriers said of competition against carriers that illegally classify company drivers as independent contractors to avoid paying certain source deductions and taxes. “Driver Inc. carriers are dabbling their toes in the partial load business; it’s not something we’re free of anymore.”

He even called out some of the carriers within the room for “giving freight to the Driver Inc. world” through their brokerages.

Julie Tanguay, president and CEO of EG Gray Transportation in Peterborough, Ont., said she has encountered it in rural areas as well.

Driver Inc. industry-wide

“The Driver Inc. issue is industry-wide. It doesn’t matter if you’re small, medium or large. Kawarthas or the Greater Toronto Area,” she said. “It’s becoming more prominent and harder to compete with. They’re everywhere, knocking on doors – especially in a freight recession – and they’re willing to go anywhere and do anything.”

James Steed, president of Steed Standard Transport, blamed the government for favoring an educational approach over actual enforcement. He noted there’s no need to create new legislation, just to enforce the rules already on the books.

Looking at the broader issues facing the industry, Bylsma said capacity has been slower than expected to leave the market. “Failures bring supply and demand back in line,” he noted. “We’re not seeing the failure rate that we should.”

He said freight volumes are out of whack, with strong volumes headed south but little to bring back north. Spring Creek is heavily reliant on the spot market, where Bylsma said northbound rates are 75-80 cents/mile below normal.

Tanguay added the recent requirement for federally regulated carriers to offer paid sick days to drivers has also eaten into profits. At EG Gray, she has been poring over the profit-and-loss (P&L) statements looking for ways to cut costs without eliminating jobs.

The fleet recently adopted a telematics platform she said has shone the light on some areas where improvements could be made. An example: Drivers were overpaying for diesel exhaust fluid they were purchasing while on the road in the U.S. rather than in bulk at home. Controlling that added $1,500 a month to the bottom line, which for a small carrier is meaningful, she said. She is also more closely monitoring fuel economy and where drivers are fueling their trucks.

Investing in technology

The fleet is also investing in new technology platforms to improve efficiency in the shop and during the driver hiring and onboarding process.

At Spring Creek Carriers it’s all hands on deck. The president himself has returned to his roots at times, doing dispatch for the first times in 20 years. “It’s nice to dip your toe back in that water once in a while,” Bylsma said. His company has also focused on the maintenance department for potential savings.

Tanguay said EG Gray now analyzes its KPIs daily rather than monthly so it can quickly make necessary changes. The fleet leaders said transparency with drivers is important when difficult decisions must be made.

They also said they will have to continue to focus on internal improvements and cost reductions they can control, while market conditions run their course. They remain uncertain about how the new Trump administration will affect the freight market.

“There’ll be a new government south of the border in January,” Bylsma said. “What does that look like? Are rules and regulations for drivers going to be stricter at the border? There are a lot more questions than answers.”

Asked how the carriers are managing relationships with drivers in a down market when pay increases aren’t feasible, Tanguay said it’s about communication. She said she normally works Saturdays and keeps her door open and is willing to have “honest discussions” with drivers who come to see her.

“Most of our cross-border drivers see the trucks parked at the truck stops and are very thankful we keep them rolling,” she said.

Bylsma favored paying bonuses over permanent pay increases during the post-Covid boom, which has served the company well since the tide turned. But Steed said his company has returned to a more traditional annual pay increase rather than two or three per year that were the industry norm post-Covid. The focus now is on getting drivers to take better advantage of mutually beneficial incentives such as those that reward good fuel economy.

“Only 35% of our drivers are making the full [fuel economy incentive],” he said. “Let’s bring the others up to speed and that’s going to put money in their pockets. We are focusing on education.”