The Freight Slowdown is Hitting Canada, Too

Feb. 8, 2008
In testimony before the Canadian Governments Commons Standing Committee on Industry, Science and Technology, Graham Cooper pointed to current economic

In testimony before the Canadian Government’s Commons Standing Committee on Industry, Science and Technology, Graham Cooper pointed to current economic conditions on both sides of the border, exacerbated by rising fuel costs and meeting requirements of a number of security programs as seriously harming the country’s trucking industry. Cooper is senior vice president of the Canadian Trucking Alliance (CTA), a federation of seven provincial and regional trucking associations, representing more than 4,500 motor carriers.

Cooper drew attention to the cross-border market as a place where trucking is being particularly hard hit. While Canada’s total exports to the US declined for the 12-month period from November 2006 to November 2007 by 3.8% and imports by 1.9%, those gross figures did not give a correct view of carrier plight, said Coopers.

“Trucking specializes in the carriage of relatively lower weight and higher value products when compared with other freight modes,” he noted. “In fact, just five commodity groupings of manufactured or partially manufactured goods traditionally represent over three-quarters of total exports by truck to the US. A comparison of export statistics for November 2006 and November 2007 shows year-over-year decreases of 4.4% in industrial goods, 3.7% in machinery and equipment, 5.9% in automotive products and 9.9% in other consumer goods.

After the cost of labor, diesel fuel is the second largest component of Canadian trucker’s expenses. CTA notes that the average price per litre of fuel in Canada has risen by 49% over a 3-1/2 year period. “While motor carriers have been able to pass some of this increase on to their customers through fuel surcharges,” claimed Cooper, “current economic conditions in the industry make this increasingly difficult to accomplish. Competition is fierce, largely as a result of excess capacity—what has been referred to as too many trucks chasing too little freight. As a consequence, rates are at best stagnant and in many cases are discounted just to keep trucks on the road.” The CTA continued to advocate what it has for a number of years, having the government reduce the federal excise tax on motor fuels.

While noting that the Canadian trucking industry has been supportive of border security matters, particularly since the events of September 11, 2001, Cooper did say that some of the programs are driving up the costs of transportation and harming Canadian competitiveness. “Canada and the US have created an array of programs that don’t always dovetail with one another, and the situation seems to be getting worse,” he claimed. “The trucking industry today faces a range of mode-specific, facility-specific, and even commodity-specific requirements coming at us from departments and agencies on both sides of the border. The situation is not sustainable. We can’t go on forever, layering one new program on top of another.”