Trucking Alliance Tells
Commons Committee How Industry Being Hit by Economic
Conditions
(Ottawa, January 31, 2008) – In an appearance
today before the Commons Standing Committee on Industry, Science and Technology,
the Canadian Trucking Alliance (CTA) told MPs that the trucking industry is
being hit hard by current economic conditions in Canada and the US, by rising
fuel prices and by an array of costly, often overlapping security programs.
CTA Senior Vice President Graham Cooper told the
committee that, “trucking is a derived demand industry, so economic
conditions in domestic and international markets are reflected in the
industry’s freight volumes and financial performance. The high value of
the Canadian dollar combined with the general weakening of the US economy, the
resulting reduction in Canadian exports to the US, and the manufacturing
downturn (particularly in central Canada), are all having a profound impact on
the trucking industry in most parts of the country.”
It is in the cross-border market that the Canadian
trucking industry is being particularly hard hit and as Cooper told the
committee, “from November 2006 to November 2007, Canada’s total
exports to the US declined by 3.8 percent and imports by 1.9 percent. However,
these aggregate figures do not tell the whole story. Trucking specializes in the
carriage of relatively lower weight and higher value products when compared with
other freight modes. A comparison of export statistics for November 2006 and
November 2007 shows year-over-year decreases of 4.4 percent in industrial goods,
3.7 percent in machinery and equipment, 5.9 percent in automotive products and
9.9 percent in other consumer goods.”
Cooper also raised the need for the government to take
action to lessen the impact of the federal excise tax on diesel fuel: “The
excise tax on motor fuels was introduced in the mid-1980’s, ostensibly as
a deficit-fighting measure, but since that time it has clearly outlived its
stated purpose. Unlike the GST, the excise tax on commercial diesel fuel is not
a flow-through tax and therefore achieves little but to boost the
government’s general revenues; but in so doing, it heaps an additional
input cost on the trucking industry. We have long argued that this type of tax
is both unjustified and regressive; it should therefore be overhauled and
treated as a flow-through tax similar to the GST, or preferably abolished
altogether.”
The rising price of diesel fuel – up by 49
percent from 2004 to early 2008 – is yet another of the cost pressures
being felt by the industry. As Cooper explained to the committee, “while
motor carriers have been able to pass some of this increase on to their
customers through fuel surcharges, current business conditions in the industry
make this increasingly difficult to accomplish. Industry margins, traditionally
thin, are being squeezed even more as many carriers find it increasingly
difficult to fully offset the rising cost of diesel by way of fuel
surcharges.”
Finally, MPs were told how trucking security programs,
particularly at the Canada-US border, continue to result in duplication, overlap
and ever-increasing costs. “The big picture – an appropriate balance
between security and trade efficiency based on an assessment of risk –
seems to have been lost,” said Cooper. “The situation is not
sustainable. We can’t go on forever, layering one new program on top
of another, further driving up the cost of transportation and harming Canadian
competitiveness.”
Source: Canadian Trucking Alliance,
www.cantruck.com
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