TORONTO, Ont. — Ontario truckers expressed their most optimistic outlook in years, when responding to the Ontario Trucking Association’s (OTA) first quarter business outlook survey.
Carriers indicated across-the-board, even unprecedented, favourable conditions, demonstrating that improving economic conditions are being reflected by sustained freight volume increases. There has even been some positive movement on rates, according to responding carriers.
While this time of year is normally slow, 42% of carriers said freight volumes within Ontario improved over the past few months, the highest number since 2011. At the same time, only 6% of carriers reported volume decreases.
Forty-eight percent reported improved volumes in southbound US lanes, about triple the number who’d expressed this view in the last several quarters and the highest level ever recorded for this sector since the survey was launched in 2008. This marks the first time since early 2011 that more than 35% of carriers indicated improved southbound volumes, the OTA reports.
Meanwhile, carriers also indicated northbound volumes are improving. Interprovincial volumes seem to be about the same.
Looking ahead, more carriers are expecting volumes to increase over the next six months, a break in the trend from the last few surveys in which carriers expressed concerns that improving freight volumes would not be sustained.
Fifty four per cent of carriers said they expect US volumes to keep growing, marking the highest level the OTA survey has ever recorded, by a whopping 14%.
At the same time, pessimism about projected volumes tied an all-time low of 7%, a level not seen since the first quarter of 2011.
Carriers also indicated rates are finally improving. Twenty-nine per cent of carriers said southbound US rates are increasing, triple the number who said so a year ago. While 18% reported declining rates, that marks an all-time low.
Within Ontario, 23% of fleets reported higher rates, a new high since Q3-2011. In Ontario, however, 28% reported rates are falling, indicating some pricing volatility within the province.
The number of carriers who reported stronger rates for interprovincial lanes (28%) is more than double that of last quarter, and four times more than this time last year, the OTA points out. A new all-time low of 8% said interprovincial rates are softening.
The OTA survey also found capacity is tightening. Twenty-seven per cent of carriers reported supply constraints, which is 10% higher than three out of four quarters from last year. Furthermore, 36% expect capacity to get squeezed further over the next six months, marking the highest response rates since 2010.
Just less than half of fleets plan to add tractors, trailers, drivers or owner/operators to keep up with demand.
Rising costs/exchange rate
Fuel costs are back on the rise, with 88% of carriers reporting higher diesel costs, up from 58% last quarter. Sixty-one per cent of those respondents said fuel costs climbed 10-15%, the highest reported spike since OTA began surveying members on costs in 2011.
Also, the number of carriers indicating fuel prices is their top business concern shot up from 18% to 29%. Other issues of concern are the driver shortage (29%) and capacity (42%). The number of carriers who cited the economy as their primary worry dove from 30% to 19%.
Some carriers acknowledged benefiting from the weak Canadian dollar, but most said they don’t want to see the dollar decrease in value much more. Only 15% of carriers said they’re comfortable with a Canadian dollar as low as 80 cents, while 30% said an 85-cent dollar is a good place for it to be and 42% said they’d prefer it trade at 90 cents.
The OTA concluded Ontario carriers are more optimistic than they’ve been since at least 2011. They seem buoyed by a strengthening US economy. In Ontario, carriers are reporting increasing volumes and indicated they believe in sustained freight growth overall and a stronger rate environment, at least in some lanes.