Economic outlook

by David Bradley

The biggest question on most carriers’ minds as we head into 2012 is much like it has been in the last couple of years: What is the economy going to look like?

The answer also appears to be “more of the same.” The economists are telling us to expect slow, choppy growth combined with a lot of uncertainty. While Canada’s economy has up until now fared better than most of the rest of the G20 economies, we are not immune from the effects of the ongoing problems in the US economy and the European debt crisis. The risk seems to be more to the downside than the upside, but that too is something we have become used to.

Not surprisingly then, in terms of what carriers can expect for their businesses in 2012, from an economic perspective at least, I expect more of the same. In other words, not bad, but not great either. The ratio between freight volumes and trucking capacity appears to be more or less in balance and as long as things don’t go south in a hurry and carriers continue to take a more disciplined approach to capacity, the industry should be fine and well-positioned for improved growth which the forecasters are now putting off until 2013. (Economists are always eventually right).

While the economic outlook might be more of the same in 2012, not so for the regulatory environment that governs the industry. The list of major regulatory changes we are likely to see over the coming year is a long one.

First, what I call the Big Three.

Number One: The US DoT will publish its final changes to the US hours-of-service rules and no one is expecting them to become more flexible. The question for us is what will Canada do? At this point there appears to be little appetite at either the federal or provincial level to re-open this can of worms – there certainly appears to be no safety rationale for following the US – but one never knows.

Number Two: The US DoT will also publish its long-awaited final rule on EOBRs. A universal mandate is expected. Again, what will Canada (the federal government and the provinces) do?

Number Three: Both the US and Canada will finalize their new fuel economy/GHG reduction rules for heavy-duty tractors and engines. What will this really mean for product availability? How will differences in Canadian weights and dimensions standards be accounted for in the regulations? Will the Canadian government grant the industry’s wish for a program of complementary measures to accelerate investment in the new ‘GHG-compliant’ equipment and voluntary retrofits of the existing fleet?

But, that’s not all.

The reports from the two committees established by the US president and the Canadian prime minister in 2011 – the Beyond Borders Working Group and the Regulatory Cooperation Council – will reveal whether in fact there is an appetite, particularly in the United States, for a better balance between security and border/trade efficiency. Will Canada adopt a new dangerous goods security regime similar to the US program of mandatory security plans, training and management systems? Will the US introduce new food safety security regulations? How will Canada respond? The report of the Red Tape Reduction Committee will indicate whether the federal government is prepared to tackle the problems associated with the current lack of regulatory harmonization, at least in those areas where it has constitutional authority.

There are a host of other issues at the provincial level that the industry will be interested in. Will the rest of the provinces follow the lead of Quebec and Ontario by equalizing the allowable axle weights for wide-base single tires and conventional duals? Will a national accord be reached on extending B-train combination lengths to accommodate the maximum tractor wheelbase? Will the provinces and the federal government introduce regulatory/legislative amendments to nullify indemnification clauses in freight contracts that transfer the liability for shipper/3PL negligence to carriers? How will Ontario expand its LCV program?

Last but not least, carriers will continue to debate how to deal with the looming driver shortage (which many in some jurisdictions say has already arrived).

In combination, these issues pose potential challenges and opportunities for the industry and for the associations that represent the industry. Some have the potential to change the face of the industry itself. Make no mistake, 2012 promises to be a pivotal year for trucking in Canada.

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