Continued Challenges, But Some Glimmers Of Hope In OTA Survey

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TORONTO, Ont. – Is the Ontario trucking industry beginning to stabilize? The Ontario Trucking Association’s (OTA) second quarter 2009 Business Pulse e-Survey shows continued tough times, but also glimmers of hope.

Seventy-four trucking companies took part in the survey, with 43% reporting they were “pessimistic” about overall industry prospects for the next three months.

But that’s down from 52% in the first quarter survey. Perhaps more importantly, the number of those saying they were “optimistic” about industry prospects rose from 17% last quarter to 27% in the second quarter.

Thirty per cent of respondents said they were “unsure” where the industry is headed.

“While we have a long way to go and more carriers remain pessimistic than optimistic, the narrowing of the gap between the two is perhaps an early signal that things may be stabilizing but it would be unwise to make that claim on the basis of one quarter’s results,” responded OTA president, David Bradley.

Discouragingly, 75% of respondents feel the Canadian economy has yet to bottom out and 81% say the same for Ontario’s provincial economy.

Also, 71% say they have yet to see any indication that Canada’s economic stimulus programs are working.

The survey suggested freight volumes are continuing to fall. Sixty-two per cent of respondents said freight volumes have dropped by more than 20% over the past year and 27% of respondents said they’ve suffered a 10-19% loss in freight.

Only 21% of fleets said they expect freight volumes to improve over the next six months, up slightly from the previous quarter’s survey.

Twenty-seven per cent of respondents feel freight volumes will deteriorate further over the next six months – but 42% felt that way last survey.

“Things remain ugly, an indication of continued economic weakness,” suggests Bradley.

“But, in this survey more carriers are expecting freight volumes to either stay the same or improve over the next six months than those who expect it to deteriorate, which is a hopeful sign. However, if the automotive industry fails or things get worse in the US, all bets are off.”

Fleets that responded said they’re trying to cope by managing cash wisely and reducing capacity.

However, Bradley said “it’s a game of catch-up right now since the rate of decline in freight volumes has outpaced the rate of decline in capacity in recent months.”

Thirty-eight per cent of fleets said they’ve witnessed capacity reductions in their segment of the market, down from 46% of respondents in the first quarter survey.

Forty-one per cent, surprisingly, said they’ve seen an increase in capacity in their segment, which Bradley attributed to the fact some carriers are moving into other segments in an attempt to recover freight volumes they’ve lost elsewhere.

“One thing is sure, when we come out of this mess, there will be less capacity in the trucking industry and those shippers that have tried to take advantage of the current situation may find themselves having a hard time finding anyone interested in hauling their freight,” Bradley warned.

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