For the past 18 months or so I have been writing and speaking about what has become known as the trucking industry's "perfect storm" - that cauldron of ever-increasing costs of labour, fuel, insurance...
For the past 18 months or so I have been writing and speaking about what has become known as the trucking industry’s “perfect storm” – that cauldron of ever-increasing costs of labour, fuel, insurance, equipment and security that has combined with a capacity crunch, reflecting strong economic growth and a shortage of drivers, to create the best opportunity the trucking industry has had in years to begin to generate a decent return on investment, increase industry professionalism, make it a more attractive place to work, and to repair the industry’s image.
I would be the first to say that there is no such thing as the “typical” or “average” trucking company. Ours is a fragmented industry, segmented by different specialties, commodities, regions and sizes of carrier.
Nevertheless, and at the risk of generalizing, I am comfortable in saying that over the last 18 months the industry has done a better job, and had more success in charging and collecting long overdue rate increases, fuel surcharges and accessorial charges, certainly than at any time since deregulation way back in 1988.
Again, that is not to say that all carriers in all regions benefited equally. Or that all carriers took equal advantage of the opportunities presented to them. But, the industry was clearly emerging from the bloodbath of deregulation.
I have said that in many respects this is the natural progression of things. Ours is a relatively young industry. It really only started in the late 1980s.
We are now 16 or 17 years into deregulation, and like any 16- or 17-year-old, the industry is changing; becoming more confident, though still a little unsure of itself; and more experienced.
In the first half of 2005, it would appear that some shippers are testing the carriers’ resolve. Perhaps you are experiencing more difficulty in holding the gains made last year. This too is natural.
After behaving (both shippers and carriers) one way for so many years, it is hard sometimes to accept or believe that change is real or permanent.
However, I would argue that now is not the time to reverse course or to begin giving back some of the gains made.
Yes, the economy has softened in some sectors, in part reflecting the drag of the higher Canadian dollar values.
But, overall the economies in both Canada and the U.S. remain strong. Moreover, a little softening in economic activity won’t change the capacity situation much.
The driver shortage is only going to get worse for the foreseeable future. Trucking still has the oldest workforce in the country and is having more difficulty than many other industries in attracting young people. Even if there is some increased immigration of truck drivers into Canada, it won’t make a dent in the overall scheme of things.
At the same time, costs are continuing to escalate. Fuel prices are flirting with record highs again. Ultra low sulphur diesel fuel and the 2007 model year engines are just around the corner.
Drivers still want to be paid for all their time and wages will continue under upward pressure. We have yet to see any significant increase in insurance capacity.
New hours of service regulations will finally be introduced in Canada creating a fixed working window. The dollar is still 23 per cent above where it was not so long ago. Intermodalism is growing but will not displace trucks. Forecasts suggest the trucking industry will grow by about 2.5 per cent per year until at least 2020. Of course, for a service industry, where competition remains cut throat, sometimes the hardest thing in the world is to say “No.” But, sometimes it’s the only way. The market moves in slow and choppy ways. But, the opportunity for further gains remains.
– David Bradley is president of the Ontario Trucking Association and chief executive officer of the Canadian Trucking Alliance.