MISSISSAUGA, Ont. — The challenges brought on by a low-value loonie was among the topics that came up several times during the Surface Transportation Summit here today.
David Zavitz, senior vice-president, sales and marketing with Canada Cartage, pointed out a $100,000 truck bought in 2010 costs 38% more today just due to currency fluctuations. In 2010, the loonie was worth more than the US greenback, so that same $100,000 truck would effectively have cost $97,000 loonies. Today, that truck, with a 75-cent Canadian dollar, costs $134,000. And that doesn’t include the 8% or so that OEMs have tacked onto the cost of a new truck over the past five years.
“The dollar today is creating some pretty significant sticker stock for asset-based carriers,” said Zavitz.
He said it’s particularly difficult for smaller fleets that may have to replace a large portion of their fleets in a single year, whereas most large fleets tend to replenish a smaller portion of their fleet every year. He also noted interest rates are higher today than they were in 2010.
Wes Armour, president and CEO of Armour Transportation Systems, said his company will continue to add new trucks, despite the weakness of the Canadian dollar.
“We upgrade our equipment every year,” he said. “I get upset over a 75-cent dollar.”
However, Armour said he still sees a benefit to buying newer, more efficient trucks.
“New trucks are giving us 8 mpg. Before that, we were lucky to get 6, 6.5 mpg. So there are some good things happening and as fuel prices increase, that benefit becomes bigger for us,” Armour said.
Mark Bylsma, president of Spring Creek Carriers, said the higher cost of new iron also means used trucks will fetch more on the secondary market.
“It’s important to have a modern fleet,” he said. “We are getting more on trade-ins than I thought we would’ve, so that offsets a little bit of the ratcheting up of overall cost of capital.”
James Menzies is editor of Truck News magazine. He has been covering the Canadian trucking industry for more than 15 years and holds a CDL. Reach him at firstname.lastname@example.org or follow him on Twitter at @JamesMenzies. All posts by James Menzies