TORONTO -- The appreciation in the
value of the loonie, combined with slowing U.S. economic activity and
the resultant impact on Ontario's manufacturing and export-based
economy will continue to drag down on freight volumes and create
challenges for motor carriers in 2008, says Ontario Trucking
Association President David Bradley.
A day before he kicks off his association's 81st annual convention in
Toronto, Bradley offered his trucking forecast for the coming new year.
Bradley stresses that the current problems in the trucking sector are indicative of larger problems in the Ontario economy.
He points out that until the over-capacity of trucks in the general
freight sector is resolved -- either through improvement freight
volumes or industry attrition and rationalization -- it will continue
to be "tough sledding" for most central Canadian carriers.
2008 will be a bumpy road for Ontario truckers, financially,
unless governments, shippers, and carriers act.
deal with the capacity gap, Bradley predicts an up-tick in merger and
acquisition activity in the year ahead. Even though another pre-buy
looms ahead of the 2010 emission regulations, carriers will continue to
hold off investing in tractors and trailers in an effort to reduce
their fleet and get utilization rates up, he adds.
Inevitably, some carriers will be forced to fold the tent. "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."
However, in case shippers were getting comfortable with slack capacity
and the soft rates that resulted, Bradley warns that shippers should
not expect the current 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," he explains. "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."
As for when a turnaround will occur and how strong it will be depends,
says Bradley, not only on what carriers do to address the capacity
softness but what is done right away by Canadian governments and the
central bank to bring the Canadian dollar back down to earth and to
ensure that Ontario businesses are competitive.
Meanwhile, 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. Courtesy of Today's Trucking