MATTAWA, Ont. - Gyslain LeMelin is staring at a harsh economic reality.Fuel prices have taken such a dramatic jump in recent weeks that he actually loses money whenever he takes a load. And while his ...
DARKEST BEFORE THE DAWN: Truckers can take heart that high diesel prices should drop. (Photo by John G. Smith)
MATTAWA, Ont. – Gyslain LeMelin is staring at a harsh economic reality.
Fuel prices have taken such a dramatic jump in recent weeks that he actually loses money whenever he takes a load. And while his $2,700 truck payment is due on Feb. 25, he knows he won’t be able to make it.
“Not a hope in hell,” he says. “They won’t even get back to me. But they can’t afford to come and get all the trucks now, can they? Where they going to sell them?”
Any trucker east of the Manitoba-Ontario border was sent reeling in early February as the price of diesel took one of its biggest jumps in history. For the first time in recent memory, the price actually jumped over that of gasoline in some jurisdictions. Prices in Ontario alone jumped nearly 30 per cent between Jan. 1 and Feb. 8.
In Toronto, prices posted at the pump on Feb. 8 hit an average of 70.9 cents per litre, while truckers in Montreal saw posted prices of 79.9 cents, according to MJ Ervin and Associates, analysts who track the petroleum industry. The East Coast was hit hardest a week later, when signs in Moncton, N.B. hit 76.3 cents per litre and Halifax prices reached 78.6 cents.
LeMelin may have been able to draw on Laidlaw’s in-yard fuel tanks, but he was still paying 65 cents per litre after taxes. And with his Mack CH 600 hauling B-trains laden with more than 85,000 lb. of heavy board, he’s lucky to see 5 mpg. Traveling the hilly terrain of Northern Ontario, he’s more likely to see 3.5 mpg.
Any increase in fuel prices hits him particularly hard.
He can blame Mother Nature for the sharpest increase in prices. While the ever-rising price of Crude Oil was blamed for steady increases throughout 1999, it was a cold snap in the northeastern U.S. that sent diesel prices skyward in early February. Supplies were low, and the price of diesel in Eastern Canada was pushed skyward as the benchmarking commodity prices in New York Harbor did the same. Those traveling south of the border were offered little relief, and were paying as much as US $2.85 per U.S. gallon in states such as Massachusetts.
Refiners were left wringing their hands, claiming that the price increases were out of their control. Governments were quick to note that the increases weren’t linked to increases in fuel taxes.
Widespread calls for fuel surcharges to ease the price shock were met with mixed success. Some carriers and shippers did offer relief – even if it wasn’t enough to cover the entire increase in prices. But other major industries, such as Ontario’s automakers and the Maritimes’ pulp and paper industry, were generally slow to offer any help.
The situation fueled fires of protest throughout Eastern Canada. Quebec, which has hardly been the seat of contented truckers in the last year, saw logging trucks shut down, organized protests in the transportation minister’s riding, and wildcat blockades near Gatineau. In the Maritimes, hundreds of truckers blocked commercial traffic at the Nova Scotia-New Brunswick border, and the Truckers Association of Nova Scotia refused to haul road salt for its province. And in Ontario, more than 1,000 owner/operators began calling their Toronto-area carriers, refusing to take scheduled loads. Slow-moving convoys worked their way down corridors from Hwy. 401 to Hwy. 7.
“According to Laidlaw, they done everything they could with what our customers paid them,” LeMelin says. “And they did. But if you add up the cost of running the truck, payments and the fuel, I just broke even in January. Since then the fuel has gone up another six cents.
“I got my pay statement here, and I got $3,900 worth of fuel bought in 16 days for the period that ended on Jan. 10.” But he needed to spend only $1,900 for fuel during the same period in 1999.
LeMelin actually shut down his truck for the week of Feb. 14 because he couldn’t afford to drive it. And while he was preparing to go back to work on Feb. 21, he was unsure if his carrier’s promises to cut a two-cent profit off its in-yard fuel price and offers of a few more miles would help make ends meet.
His wife has taken a part-time job, but even that isn’t covering the difference.
Trucking associations were quick to lobby shippers to pay their share. The Ontario Trucking Association (OTA) and Canadian Trucking Alliance (CTA) went so far as to warn of shutdowns if shippers didn’t come to the table. The Atlantic Provinces Trucking Association (APTA) called for a 7.9 per cent increase for truckload carriers, and 3.4 per cent for their LTL counterparts, even though few got it.
“Any shipper out there to date, regardless of the industry that he’s involved in, if he’s really thinking about the future of his business and the ability to receive timely deliveries, he’s sitting down with his carrier,” said APTA president Ralph Boyd. “This is all happening in an environment where the governments are basically doing nothing. There’s been a lot of shuffling of paper and a lot of shuffling of feet, but nothing really active.”
The Canadian Industrial Transportation Association, while it wouldn’t participate in a CTA conference call on the issue, did suggest that its shipper members should negotiate short-term surcharges. But such deals should only be linked specifically to the higher price of fuel, added managing director Lisa MacGillivray. “It’s a contingency.”
The price increase is a “very real economic shock,” OTA president David Bradley told the first meeting of Ontario’s Gas Price Review Task Force. “People are losing their homes. They’re desperate,” he said, noting the government should look at tax relief if it’s serious about solving the problem.
The Greater Ottawa Truckers Association was going so far as to plan a protest on Parliament Hill for the morning of March 3, coinciding with the task force’s meeting in Ottawa.
The numbers can call attention to the issue on their own. The pre-tax price of diesel in Ontario has increased about 147 per cent since February 1999, while it jumped 20 per cent in 2000. When prices reached their peak, the increase since February 1999 was closer to 180 per cent, and marked a 30 per cent jump in the first few weeks of this year.
But there is hope for relief on the horizon. While the Oil Producing Exporting Countries (OPEC) have driven up the price of crude oil by limiting supplies, there appears to be a crack in the common front. Saudi Arabia has suggested it may be time to increase the flow, and will try to sell that position during a meeting in late March. Warmer weather will, eventually, return to the northeastern U.S., and shipments of crude oil from the Caribbean and Russia have set sail for New York Harbor. U.S. President Bill Clinton has indicated he might even dip into a federal reserve supply of fuel to deal with the emergency.
While the wholesale price of fuel had already begun to drop in late February, suppliers had yet to keep pace. And when Truck News was heading to press, the price of Crude broke through the US $30-per-barrel barrier, while the peak driving season was approaching.
The question of when relief will be seen at cardlocks remains unanswered.
In the meantime, LeMelin still has to wonder about a truck payment on the 25th. “I worked hard to get where I am right now,” he says of his life as an owner/operator. “But I’m going to let my truck go before I let my wife sit out on the street.” n