The last couple of years have not been kind to truckers. Just ask the bankers.

I got an earful this summer at a Muskoka golf outing where I teed it up with two senior banking insiders. When they learned I was a trucker, they did not hold back.

I heard all about how vested Canadian banks are in our industry. Their $54 billion in trucking business loans represent 3.4% of their total portfolio — more than double the oil and gas sector. 

Post-Covid19, the boom-bust market for trucks and other assets has left banks holding tens of millions of dollars worth of bad notes. Equifax Canada reports that asset-based loan defaults are the highest in the last 20 years.

Here’s what else I learned after five hours on the links with bankers who had lots to say about our industry. 

Pride life raft

We hadn’t finished the first hole before the Pride Group debacle came up. Pride and its various companies, which owe creditors about $1.6 billion Canadian and US$637 million, are by no means the only dominos falling, given the number of exits from the industry over the past 18 months.

While many truckers are a lost account or busted engine away from shutting down, the Pride situation is ironically helping some struggling carriers stay afloat. The pending return of 20,000 tractor-trailers to Pride’s creditors could wreak havoc on the used truck market.

The OEMs are primarily in the new truck business, not the used truck business, and want little to do with this influx of used equipment.

So, instead of pulling the plug on rudderless fleets they have thrown many life rafts to help them wait out the storm.

Under the hood

By the fifth hole (and third pop), our conversation turned to the complex corporate structures bankers encounter these days.

I saw it 10 years ago when selling MSM’s terminal in Bolton, Ont.

My preference post-sale was to hold paper on the buyer’s mortgage. But after five offers and five unsuccessful due diligences, I changed my tune. Seems the potential buyers had paper trails my accountants couldn’t follow.

Setting up a tangle of business entities makes it hard for the banks to unwind things when they go south. It also looks suspicious at a time when nefarious activities are at an all-time high. If you’re a bank, why take the risk?

Borrowing to buy

Last spring, I got a call from a friend excited to tell me that he had sold his fleet to a competitor. The only thing left was for the buyer to get bank financing.

I didn’t have the heart to tell my buddy that this wasn’t going to end nicely.

My new golf pals confirmed what we have been seeing at Left Lane for some time: Banks have zero appetite for acquisitions. The only companies getting bank financing are ones that do not need it. 

So be careful. Sharks are lurking everywhere, trying to take advantage of vulnerable carriers. Next time you get an unsolicited offer to sell, ask your suitor to prove they have the cash. They’re not getting financing from a traditional lender.

Still open for business 

After my grilling on the links, I couldn’t help but wonder: Is there any hope for truckers who want help from the banks?

I called my pal, Arun Rebello, TD’s national manager, transportation and logistics. He’s a rare breed who understands both trucking and banking. 

Arun is far more bullish about trucking than my golf partners. He understands the freight recession is an industry phenomenon and likens it to getting the flu.

As truckers prepare to come out on the other side, he encourages them to ask one question before approaching a bank: What are we, as a company, doing to give banks the confidence to invest? Be thorough, patient, and ready to show your work. The banks are still open for business. 

My gut tells me that even if you’re in bad shape, you have more leverage than you think. Forcing you to close your doors is their last resort. They don’t need any more used iron.

Tee it up and take your best shot.