TP14813 E
EXECUTIVE SUMMARY
This study assesses the competitiveness impacts of electronically limiting the speed of heavy trucks in Canada. This assessment is provided for two scenarios. The first scenario is with the policy implemented only by Ontario and Quebec. The second scenario is with the policy implemented throughout Canada.
Use of speed-limiters
Speed-limiters are in widespread use throughout North America's trucking industry. Surveys in the U.S. indicate that 60% of heavy truck fleets are already speed-limited. As larger fleets are more likely to be speed-limited, the percentage of trucks that are speed-limited is estimated at 77%. Similar surveys have not been conducted in Canada, but available information indicates a similar level of usage. Nearly all large fleets use speed-limiters while most small fleets (typically less than 10 - 20 units) and a large majority of owner-operators do not use limiters or use them with high speed settings. The main reason cited for not using speed-limiters is a desire to allow the driver to retain the flexibility to change speed to suit traffic conditions.
Speed-limiter settings typically range from 100 to 112 kilometres per hour (kph), with this project measuring an average speed of 105 kph for Canadian speed-limited fleets. Results of surveys conducted in the United States (U.S.) show a slightly higher average setting. The proposals by the Ontario Trucking Association (OTA)/ Canadian Trucking Alliance (CTA) and the American Trucking Association (ATA) to mandate speed-limiters at 105 kilometres per hour (kph) and 68 miles of hour (MPH), or 109.5 kph, respectively largely reflect the current practice of larger fleets.
North American speed limits for heavy vehicles vary from 80 kph to 120 kph depending upon the jurisdiction. In total, 23 states and 4 provinces currently have posted legal truck speeds above the proposed 105 kph mandated speed-limiter setting. Trucks that operate into and through speed-limited jurisdictions would be speed-limited at 105 kph when operating in these higher speed jurisdictions unless they choose to change the speed-limiter setting prior to entering and after leaving these jurisdictions. To change the setting takes about 5 to 10 minutes and can be completed by the operator provided they have the necessary tools which can cost in the range of $1,000 to $2,000.
The safety argument for speed-limiters is that slowing down heavy vehicles improves road safety by reducing the number of collisions and mitigating the severity of collisions that do occur. In certain traffic situations, reducing truck speed can also reduce speed variability which has been shown to improve road safety. Surveys on the use of speed-limiters in North America show that fleet managers, especially larger fleet managers, are of this view.
The argument against speed-limiters is that safety can be compromised in situations where increased speed differentials between trucks and other vehicles occur, such as when passing slow moving vehicles or in merging traffic situations. Owner-operators and smaller fleet managers tend to support this viewpoint. In this context, speed differentials can be up to 15 kph where legal speed limits are 120 kph (120 kph vs. 105 kph) and greater if actual vehicle speeds, which are normally higher than posted speed limits, are considered.
Scenario 1: Ontario and Quebec mandate speed-limiters at 105 kph
Implications for Atlantic Canada
Should Quebec and Ontario mandate speed-limiters, it is estimated that about 30% of Atlantic Canada's heavy truck fleet would need to set their speed-limiters accordingly due to the interaction of the Atlantic trucking industry with Quebec and Ontario. Larger fleets are already operating at the mandated speed of 105 kph or less as part of their current fleet management practices and hence would not need to make any changes. However, owner-operators felt their safety would be adversely impacted as a result of increased truck-car interactions associated with the lower truck speed, especially when travelling in the higher speed limit jurisdictions. They also noted that in some cases their productivity could be adversely affected as they could no longer complete some deliveries they currently service within their daily Hours of Service regulations. With lower speeds they would need an overnight stop near their destination then completing the delivery the next day which could result in them losing a day's pay by the time they pick up their next load. They indicated these safety and productivity considerations would lead them to avoid Quebec and Ontario. However, due to the significant role that Ontario and Quebec play in truck traffic patterns for Atlantic Canada such actions could prove difficult as they would be ignoring a large portion of their market. This impact would be mitigated to the extent they invest the resources necessary to adjust the speed-limiter setting as they enter and leave speed-limited jurisdictions.
Implications for Western Canada
Unlike Atlantic Canada, only a small portion of Western Canada's trucking industry interacts with Ontario and Quebec. This means the majority of fleet operations in Western Canada would not be affected if Ontario and Quebec were to adopt the speed-limiter policy. It is the consultant's best estimate that less than 10% of Western Canada's heavy truck population would be affected by Ontario and Quebec mandating speed-limiters. While most large fleets in Eastern Canada and Western Canada are already speed-limited at or below the proposed 105 kph maximum speed, a significant portion of smaller fleets in the West would need to adjust their speed settings to adjust to the 105 kph limit. Larger fleets in Western Canada are already speed-limited at 105 kph or less and hence already meet the Ontario and Quebec mandate. Many of these fleets operate between Eastern and Western Canada.
Available speed data for B.C. indicate that, for the most part, truck speeds in the province are already below the proposed 105 kph limit due to the constrains caused by the mountainous terrain. Implementing the proposed policy in B.C. would have little actual effect on truck speeds in the province.
Western Canada based owner-operators indicated that if Ontario and Quebec implemented the speed-limiter policy they would avoid operating in these jurisdictions as the slower speed for trips in Western Canada and the United States, where they do much of their travel, would put them at a higher safety risk due to increased car-truck interaction. Concern was specifically expressed about their ability to safely drive the two-lane highways in Alberta and Saskatchewan and the two-laned portions of the Trans-Canada Highway in Northern Ontario. They also noted that in some circumstances their productivity could be adversely affected on some runs where Hours of Service regulations would require an overnight stop before completing the delivery.
These safety and productivity concerns could be mitigated to the extent by which these operators invest in and use the tools that would allow the speed-limiter setting to be changed as they enter and leave speed-limited jurisdictions. It was not possible to estimate the number of owner-operators who stop operating in Ontario and Quebec as a result of a mandated speed-limiter setting in those provinces, nor the overall portion of truck traffic they represent.
Implications for Ontario/Quebec - U.S. Traffic
Canadian based companies hauling into the U.S. cannot compete with U.S. based fleets on runs within the U.S. This means mandated speed-limiters do not create any competitive issues between U.S. carriers and Canadian carriers when operating in the U.S.
Those U.S. based fleets that come into Quebec and Ontario will be required to operate these trucks with speed-limiters set at 105 kph while in either province. Larger U.S. based fleets interviewed were not concerned with this possible speed restriction as they are already operating at or below the proposed mandated speed limit. No competitiveness issues were identified with these fleets. It is noted that 47% of Canada –U.S. truck traffic (by value of goods transported) moves between Ontario and the neighbouring seven states that have truck speed limits of 65 mph or less. This means that at legal speed limits, this traffic would be unaffected by the proposal.
Owner-operators, on the other hand, were very much concerned with being speed-limited at 105 kph. Typically owner-operators drive on longer runs that expose them to states that have higher speed limits. Their primary opposition to mandated speed-limiters relates to safety concerns due mainly to increased car-truck interaction caused by limited passing ability and increased speed differentials. They also noted that in some cases their productivity could be adversely affected as they could no longer complete some deliveries they currently service within their daily Hours of Service regulations. This could cause them to overnight near their destination and completing the delivery the next day which could result in them losing a day's pay by the time they pick up their next load. The majority (80%) of the owner-operators interviewed indicated that to avoid being speed limited they would no longer haul into Quebec or Ontario. This may limit competition to the extent that these operators do avoid operating in these jurisdictions. Their concerns would be mitigated to the extent they decide to purchase and use the tools necessary to change speed-limiter settings as they enter and leave speed-limited jurisdictions.
Scenario 2: Speed-limiters mandated nationally at 105 kph
The triangular movement operated by most Atlantic Canada based fleets (to U.S., then to Ontario and then back to Atlantic Canada), and their owner-operators, would mean their vehicles would fall under the Quebec/Ontario requirement. There would be limited incremental impact to Atlantic Canada – U.S. traffic if the policy were to be mandated nationally beyond an Ontario-Quebec only mandate. Trade data indicate that only 1% of the total national value of U.S. imports arrives directly to Atlantic Canada and much of these imports enter from neighbouring states that have posted speeds of 65 mph, the proposed mandated speed limit.
A national mandate would have more affect on Western Canada than Atlantic Canada. An estimated 90% (or more) of Western Canada trucks would be, for the most part, unaffected by the Ontario/Quebec mandate. However, if the mandate were extended nationally, then all heavy trucks would be speed-limited at 105 kph. Many smaller fleets and owner-operators in Western Canada do not set upper speed limits or set them near 110 kph. However, company policy frequently calls for these vehicles to be operated in the range of 102 to 105 kph. The higher speed is allowed to provide additional speed when passing slow moving vehicles, especially on two-lane highways. In this context, both Alberta and Saskatchewan have quite extensive networks of two-lane highways.
Many states south of the Prairies have higher speed limits of 70 mph and 75 mph. All truck traffic moving between Canada and the U.S. would be speed-limited at 105 kph, raising the safety and productivity concerns previously noted by owner-operators and smaller fleets. U.S. based owner-operators noted that due to these concerns, they would be at a disadvantage to those operating entirely in the United States and therefore not speed-limited. As a result, they would stop operating into Canada. Again, this would be mitigated to the extent they are prepared to invest in and use the tools required to make changes as they enter and leave speed-limited jurisdictions.
Some of the smaller western based fleets noted they currently operate at 110 kph where it is legal to do so in Western Canada and the adjoining states. Fleet managers and owner-operators operating on these highways with runs that are currently at or near the Hours of Service limitations would be the most adversely affected as lower speeds would not allow them to make their delivery before the driver required a major rest break. Fleet managers indicated they would adjust their schedules accordingly to accommodate the changes or adjust the client's delivery schedule where mutually agreeable. Only a few of these fleet managers indicated this as a concern and indicated the impact was “manageable”. It is possible that this concern would keep some smaller fleets and owner-operators from operating into Canada as a means of avoiding this problem. Again, this could be mitigated to the extent they are prepared to invest in the resources required to change the speed-limiter setting as they drive into and out of speed-limited jurisdictions.
Truck traffic operating within B.C. would, by and large, not be affected by a national mandate as truck speeds on most highways in that province are already below 105 kph. As well, B.C. truck traffic to and from the U.S. mostly moves through the states of Washington, Oregon and California that have maximum truck speed limits of 55 mph (80 kph) and 60 mph (96 kph). Trucks should already be operating at speeds below the 105 kph mandated speed. Nevertheless, trucks operating to/from the U.S. mid-west would be operating in the higher posted speed states for a portion of their trips, raising the safety and productivity concerns noted earlier for this group.
Impact on trucking industry competitiveness
Overall, there could be some impact on trucking industry competitiveness within speed-limited jurisdictions provided sufficient numbers of operators were to avoid such jurisdictions. Such actions would, in effect, reduce competition in these jurisdictions by reducing the number of competitors. This would be mitigated to the extent that operators choose to invest in and use the tools required to changes the speed-limiter setting as they enter or leave speed-limited jurisdictions or ultimately decide to operate speed-limited.
ATA recommended mandated speed of 68 mph (110 kph)
The ATA has recommended a mandated speed-limiter setting of 110 kph (68 mph) rather than the limit of 105 kph (65 mph) recommended by the OTA/CTA. Both of these limits appear to be based on the common practices of larger fleets in each country. Adopting these limits is a reflection of what the industry, by and large, already does.
The interviews and analysis conducted as part of this project did not indicate any specific reasons why different limits could not be implemented. However, many of those interviewed indicated that in the interests of harmonization one limit should be adopted by both countries. This would mean there would only be one upper speed setting to work with throughout North America, allowing this setting to be set at the factory ("hard-wired") and therefore more tamper resistant, thereby easing enforcement difficulties and increasing compliance. It would also mean that operators would not have any reason to invest the time and money required to adjust limiter settings as they travel from one country to the other.
Driver recruitment and retention
Concern has been expressed that fleets operating into speed-limited jurisdictions could lose drivers to fleets not operating in such jurisdictions. This could affect the ability of these firms to move freight and hence potentially lose market share.
The owner-operators interviewed felt that such a shift of drivers could occur, reflecting the results of an OOIDA survey on the topic where 81% of drivers indicated they would prefer to work for fleets that are not speed-limited all other things being equal. However, this view was not shared by large fleet managers and most small fleet managers. They indicated it was the overall pay package that the driver considers including such factors as mileage rate paid, total miles driven each month, quality of equipment and fringe benefits. It was their opinion that being speed-limited would not unduly affect their ability to recruit and retain drivers.
A large scale, scientifically designed survey of drivers concerning their previous employment decisions and employment expectations would be required to quantify the extent to which speed-limiters can be an effective driver recruitment and retention tool. However, the qualitative information available indicates the ability to attract drivers via this means is quite limited.
Potential economic impact on the trucking sector
A costing analysis performed as part of this study shows that the increased fuel and vehicle operating costs of travelling at speeds above 105 kph outweigh the increased productivity benefits. As a result, the main economic impact on the trucking industry would be a net savings in fuel and other vehicle operating costs. In this context, fuel savings are estimated at approximately 228 million litres per annum for a nationally mandated speed limit of 105 kph. Depending upon the price of fuel, this would result in a cost saving in excess of $200 million per annum.
Fleets and owner-operators could have some runs adversely affected where these runs are currently at or near Hours of Service limits as they would have to overnight before making the delivery adding extra cost losing as much as one day's worth of productivity. However, only a few fleets interviewed indicated this as a concern. Those operators with such runs would need to adjust their operations accordingly. Fleets managers indicated they could do this without major implications as long as the speed setting was 105 kph. Mandated speeds lower than this would be more problematic. A detailed audit of several firms would be required to quantify these costs. Owner-operators felt that, where this occurred, it could essentially cost them a day's pay. However, such situations would appear to be limited.
Impact on shippers
The majority of freight being moved is already being transported by companies already speed-limited at 105 kph or less. There is obviously no impact on shippers using these companies to move their freight. This includes their just-in-time deliveries. Where the current fleet speed policy is above 105 kph companies interviewed indicated they would make any adjustments necessary so there would not be any negative impact on their clients. As well, the interviews conducted as part of this study indicate that mandated speed-limiters would not keep larger fleets from operating into such jurisdictions. While owner-operators indicated they would avoid such jurisdictions the numbers that actually do out of the total availability of trucks (especially if speed-limiter settings can be adjusted as trucks enter and leave speed-limited jurisdictions) should not affect competitiveness as far as shippers are concerned.
Overall, this indicates there would be minimal impact on shippers located within a speed-limited jurisdiction that ships with delivery timelines within legal speed limits. The proposed mandated speed-limiter setting of 105 kph would have limited or no impact on such timelines.
Impact on engine manufacturers and truck assemblers
Under the proposal, the same manufacturing and assembly procedures currently used would still apply so there would not be any impact on engine manufacturers and truck assemblers.