Thank you very much, Mr. Chair and members of the committee. It's our pleasure to be here today. I commend you for the topic. This is something we've wanted to be able to address parliamentarians on for some time.
First I'll give you a little background on the Canadian Trucking Alliance. We're a federation of the provincial trucking associations in Canada, representing over 4,500 trucking companies from across the country, in all regions, all sizes, and all commodity specializations. We, like the industry, are basically an organization of small family-owned establishments. Almost 40% of our members have fewer than 10 trucks.
Certainly technology is a driving force in our industry. We're in the midst of a cultural change. Our industry is now about 20 years into deregulation. If you look at any industrial textbooks, we're now reaching the point where we're becoming a much more sophisticated business. We're still very entrepreneurial, but technology is helping to drive that cultural change or to facilitate the change that is already under way.
Our members hold some pretty strong core values. One is that competition should be based on service and price, recognizing that price includes the true cost of compliance by everyone. We have been told by governments ever since economic deregulation that they were going to regulate on the safety front and that they were going to be sure to enforce the safety rules. We now have technologies that enable governments to do that more than ever before, and we urge governments to adopt those practices so that we're all competing on a level playing field.
Second, in terms of the environment, and specifically with regard to reducing greenhouse gas emissions, the economic goals of our sector are aligned with society's goals more than they have ever been in our industry's history. Technology exists today to help make the industry safer, to help level the playing field, to make the air we breathe cleaner, and to reduce the risk of climate change. The goal has to be to take these technologies that already exist today and accelerate their penetration into the marketplace. We believe this can be accomplished through a combination of regulation and investment incentives.
There are barriers we need to overcome. Sometimes we need regulation to make it clear what the technologies are, what they are supposed to do—this is an industry that has been sold snake oil in the past—and that the technology will do what it says it will do. Sometimes we need to get everybody on board. Therefore, regulation is unavoidable.
In our industry there are a couple of examples right now of emerging technologies that we would like to see the Government of Canada pursue on the regulatory front. For one thing, we believe electronic on-board recorders should be universally mandated. The public would call these black boxes. They are used to monitor driver compliance with the hours-of-service regulations, which are arguably the most important safety regulations the Government of Canada has with respect to trucking. We believe that all trucks for which the driver is currently required to have a paper logbook should, in this day and age, be required to have an electronic on-board recorder.
Similarly, we now have something called electronic stability control, which helps to prevent rollovers of trucks. It basically takes the decisions away from the driver, or at least accelerates the decision-making for the driver. The United States will be moving to mandate this technology. We have supported this technology for years. It's cheap insurance.
There are other barriers. We are an industry that crosses borders, and not just the Canada-U.S. border. You will see in the documents we have provided to you that we look to opportunities for harmonization with the U.S., although “compatibility” is probably a better word; harmonization for the sake of harmonization is not always a good thing. As well, the provinces basically have responsibility for, or have been delegated, the administration of extraprovincial regulations. That can also make it difficult in terms of trying to come up with national standards.
However, we also need to stimulate investment in this country. Canadian business on the whole is undercapitalized compared to the United States.
In particular, trucking is a very undercapitalized business. Not only with respect to other industries outside of transportation, but even compared to the railways, for example, we're very undercapitalized. There are three or four trucking companies that are publicly traded; the rest are dependent upon debt financing, and that, of course, has become more difficult in recent years.
Also, for certain things it's virtually impossible to get financing. For example, if you want to do retrofits of environmental devices on truck trailers, which can certainly have a significant impact in terms of improving GHG reduction, it's virtually impossible to get financing for that retrofit. If you buy a new trailer or a new tractor, you can get financing for that, but if you want a retrofit, you can't.
In some areas we believe there's a role to be played by government in helping to stimulate this investment. We are in the age of the smog-free truck in Canada now. By law, as of 2007, all new tractors and engines produced in North America have basically zero smog emissions. They've eliminated NOx and particulate matter emissions.
The problem is that the fleet is aging, the capital is not there, and the industry is not growing particularly. The question I think you have ask yourselves is this: do we want to wait for 30 years for that to have an impact and eventually replace the fleet, or is there something that can be done now to accelerate that penetration? I look to Quebec as an example, where the new smog-free trucks have a 60% straight-line depreciation rate, which is really helpful.
We're soon to be in the age of regulation of GHGs from heavy truck engines. There is a regulation being developed right now by Environment Canada. I won't get into all of the details, but it's different from the smog regulation in that it doesn't say, “This shall be the GHG-compliant truck”, and that's something that we think should be part of the regulation so that people know what to buy.
Again, there should be credits, accelerated capital cost allowances, for those GHG-compliant trucks. Just about every other industry gets super-acceleration for investment in environmentally friendly technology.
The other thing is that the regulation only covers new tractors. It doesn't cover trailers, nor does it cover existing equipment, so again, in terms of its relative impact, it will take a long time before we start to see the GHG benefit, whereas there are things now, some of them actually manufactured in Canada, and there's at least the prospect for a fledgling industry to develop. When the Canadian Transportation Equipment Association comes before you, I think they'll be able to talk to you about that a bit more. In any case, we need to create a market here.
We think that the regulation for a GHG truck should be accompanied by a program of voluntary measures to stimulate a retrofit of the aerodynamic devices: the wide-base single tires and the trailer side skirts and those sorts of things that have a proven impact in terms of reducing GHG.
LNG tractors and engines are also showing great potential, particularly for those trucks that operate on regular routes where you can have a distribution system set up at either end; however, the reality of it—and this has been borne out by an industry-government paper on the subject—is that those trucks cost twice as much as conventional trucks, so again, if you want to get into that business, there is no way that you're going to be able to make anything other than the most modest of penetration without introducing the kinds of measures that we see in other industries.
Again, Quebec is taking the lead here. They're providing 80% straight-line CCA rates for investment in LNG tractors. That's something we're going to have to think about if we want to grow this segment. Again, there's a Canadian technology there. It works, and there's no doubt it reduces greenhouse gas emissions, but if we want to get it into the marketplace, we're going to have to make the price more attractive. Monsieur Robert will be able to speak to that in much more detail than I can.
We've provided you with a one-pager that we hope tells you our whole story, and those were my comments in a nutshell.
We'll be happy to answer any questions you might have, but I think Mr. Robert has some comments.
