Canadian trucking feels economic pressures
Feb 5, 2008 12:16 PM
The Canadian trucking industry is being hit hard by current economic conditions in Canada and the United States that are driven by rising fuel prices and costly, overlapping security programs, according to information from the Canadian Trucking Alliance (CTA).
CTA said in a news release that Graham Cooper, a CTA vice-president, testified recently before a Parliament committee about the issues. Cooper told the Commons Standing Committee on Industry, Science, and Technology that "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."
He said that it is in the cross-border market that the Canadian trucking industry is being particularly affected, noting that from November 2006 to November 2007, Canadaís total exports to the US declined by 3.8 percent and imports by 1.9 percent. However, he pointed out that 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.
The rising price of diesel fuel (up in Canada by 49 percent from 2004 to early 2008) is another of the cost pressures being felt by the Canadian trucking industry. "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," Cooper testified. "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."
Cooper said that trucking security programs, especially 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 canít go on forever, layering one new program on top of another, further driving up the cost of transportation and harming Canadian competitiveness."
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