Ontario Trucking Industry
Expects Another Tough Year in 2008
Bellwether for economy says action needed on
dollar, competitiveness and borders
(TORONTO: November 15, 2007) -- Trucking is as good a
leading indicator of economic activity as there is. Trucks haul 90% of all
consumer products and foodstuffs and move about three-quarters of
Ontario’s trade with the United States. “If you got it, a truck
brought it” as the saying goes, is as true today as it ever it was.
“Whatever the state of the Ontario economy, or
sectors within that economy, it will be reflected in the business levels of the
trucking industry,” says David Bradley, president of the Ontario Trucking
Association which kicks off its 81st annual convention in Toronto
today. And, he says, “the impact of the appreciation in the value of the
Canadian dollar, combined with slowing US economic activity and the resultant
impact on Ontario’s manufacturing and export-based economy will continue
to exert a drag on freight volumes and create challenges for motor carriers in
2008.”
“There is an over-capacity of supply of trucking
service, certainly in the general freight sector, and until that situation is
resolved, either through improvement in the amount of freight being generated by
the economy, or through industry attrition and rationalization it will continue
to be tough sledding,” he said.
In order to deal with the capacity gap, Bradley
expects to carriers employ a number of strategies. He foresees further merger
and acquisition activity in the year ahead. Carriers will continue to hold off
investing in tractors and trailers and will try to reduce their fleet sizes to
reflect volumes in order to get utilization rates up. There will inevitably be
lay-offs and some business failures. “Some will take measures to address
the capacity situation voluntarily, others will be forced into it,” he
says. “Continuing to chase freight that doesn’t pay just to keep
trucks rolling, is not sustainable. Carriers can act quickly to address their
fleet size,” he says.
Bradley says shippers should not expect the current
soft rate environment to last. “Carriers are battening down the hatches on
costs, but the outlook for fuel prices suggests a tough winter is in store and
eventually equipment needs to be replaced. There has to be a margin to pay for
this. Moreover, the demographics of the driver population point to a worsening
of the driver shortage problem which will eventually have a significant impact
on capacity.” Those that either don’t have the kind of freight that
lends itself to building ongoing relationships with carriers or who choose to go
to the market for each shipment in hopes of driving rates down may find
themselves scrambling to get service.
However, Bradley cautions “when a turnaround
will occur and how strong and broad-based it will be depends not only on what
carriers do to address the capacity softness but what is done NOW by Canadian
governments and the central bank to bring the Canadian dollar back down to earth
and to ensure that Ontario businesses – including truckers – are
competitive.”
“Canada’s improving national debt
situation and that fact that our federal financial situation has gone from
deficits to surpluses, should provide us with a fiscal dividend; including
additional flexibility on interest rates. The Bank of Canada should act now to
lower interest rates to bring about a moderation in the value of the
dollar.”
But, he also sees a role for government.
“It’s time that the Government of Ontario addressed some key
long-standing issues like the taxation of business inputs by harmonizing the
provincial sales tax and the Multi-Jurisdictional Vehicle Tax with the federal
Goods and Services Tax.”
And, he says, ”the federal government and the
province have got to get on with the job of building a second crossing at
Windsor and find a way to talk to our major trading partner about restoring
sanity to the border.”
Bradley says there will always be a need for trucks
and the industry will remain the dominant mode of freight transportation, though
the players may change over time. However, he cautions “the current
problems in the trucking sector are indicative of larger problems in the Ontario
economy.”
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The Ontario Trucking Association (OTA) is a business
association representing motor carriers operating into, out of and within
Ontario. The trucking industry is one of Ontario’s largest employers.
Trucks haul 90% of all consumer products and foodstuffs produced and consumed in
the province and 80% of Ontario’s trade with the United States. Founded in
1926, the association’s membership comprises trucking companies of all
sizes, shipping all types of commodities, from all regions of North America. OTA
is a member of the Canadian Trucking Alliance
© 1995 -
2008, Ontario Trucking Association
555 Dixon Road, Toronto, Ontario
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Tel: (416) 249-7401 | Fax: (416) 245-6152
Email:
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