Trucking Chief Says ‘Bring on 2009’

(Canadian Trucking Alliance)

Shippers should consider locking in capacity now in anticipation of recovery

It may take the better part of 2009, at least, for the North American economy to stabilize and begin to recover. But according to the CEO of the Canadian Trucking Alliance, David Bradley, when it does, the demand for trucking services will likely outweigh the supply. At that point, truck rates, which have been hammered during the past 18 months, will be under upward pressure again.

“It’s been a tough year for everyone, motor carriers and shippers, and this has resulted in downward pressure on freight rates in 2008. But shippers would be advised to partner with carriers now to lock-in capacity for when things do inevitably start to come back, which we hope will be sometime in 2009,” he said. “Some shippers get it and are now entering into multiyear agreements with carriers.”

The major problem facing truckers over the past year, or more, has been one of over-capacity – too many trucks for the level of freight being generated by the economy. “Most carriers experienced softer freight demand in 2008, though some sectors of the industry and some regions of the country have, like the economy, been harder hit,” he said. “It doesn’t matter where you operate, all carriers faced a major challenge this year with sky-rocketing diesel fuel prices and a slowing economy. Obviously, the appreciation in the value of the Canadian dollar and slump in the U.S. economy continued to have a profound negative impact on the Central Canadian economies and therefore on the volume of freight, especially in southbound freight to the U.S. which had been the underpinning of industry growth for the past 20 years.” In many traffic lanes, both international and domestic, there were simply too many trucks chasing the freight.

However, according to Bradley, the trucking industry across North America has been shedding capacity. “Carriers have been reducing their fleet sizes, getting rid of trucks and not buying new ones. Many trucking companies have left the market; either because they decided they’d had enough, or they couldn’t get sufficient credit and/or they went bankrupt. Tighter credit has also made it more difficult for people to enter the marketplace. While there will continue to be tough sledding in 2009 – reflecting current global economic concerns and, as always, punctuated by a chronic long-term labour shortage – capacity of trucking services will be that much lower when things do turn the corner,” he said.

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