So much has happened since I last wrote you, my faithful Hooked Up readers, that I barely know where to begin. Okay, let’s start with our very own Surface Transportation Summit, held Oct. 17 at the Mississauga Convention Centre. This event, hosted by us along with Canadian Shipper (formerly Canadian Transportation & Logistics) and Dan Goodwill & Associates, has grown exponentially over the past five years, and this year was attended by more than 320 shipper and carrier executives.
Kicking off the event was an economic outlook, headlined by Scotiabank chief economist Carlos Gomes. Carlos, as we’ve noted before, is one of the more optimistic of his ilk. He generally offers an upbeat report on our economy, and is as accurate as an economist can be. This year was no exception in terms of his optimism. Carlos reported there is slow growth, but growth nonetheless, in most of the global economies, including our own. Heck, even Europe showed positive growth in the second quarter of this year. Here at home, Carlos said the one situation that bears watching is household debt, which at 160% of annual household income is, indeed high. It’s even higher than the debt carried by our friends to the south. But while the situation is a concern, Carlos said it’s not as big a deal as some prognosticators will have you believe. You see, low interest rates mean our debt-related expenses, as a percentage of our disposable income, is actually less than it has been on average over the past while, less than the Americans’ coped with prior to the recession, and less than even our own from when the recession of the 90s (how soon we forget that one) occurred. As long as interest rates remain low, Carlos said, household debt will remain manageable and consumer spending will not be curtailed significantly.
Visiting from the US for an American perspective, was Charles Clowdis Jr. from IHS Global Insights. Charles was visiting us in the final days of the government shutdown and said he was “embarrassed” by the incompetence of his nation’s government (more on that later). Still, Charles said he was “cautiously optimistic” before the shutdown, and remained that way, as long as the government could get its stuff together reasonably quickly, which it ultimately did, and resume its governance. An interesting observation from Charles was that as much as 5% of the manufacturing that moved to China and Southeast Asia has returned, or is in the process of returning to North America, mostly to Mexico. That’s good news for Canadian and American truckers. We’ve heard lots about “near-shoring” and now, anecdotally, at least, it appears to be happening.
Next up was Doug Munro, head of Maritime-Ontario Freight Lines, to give a trucking-specific diagnosis of the economy. Doug said freight volumes are better than they’ve been in “many, many years,” so presumably pre-dating the Great Recession. Yet, he said there continues to be excess capacity in the market and that rates remain under heavy downward pressure. This was surprising to hear, considering our own research suggests about 15% of Canadian capacity was removed during the recession. Leave it to the trucker to be the most down on the economy. Doug said he’s not expecting good things in terms of rates until beyond 2014, and until after the fiscal stimulus lifeline the US government has thrown the economy is wound back in. Till then, Doug said, there could be a couple difficult years in store.
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