The Loonie’s wings have been clipped and it’s making new equipment purchases extremely painful. The Canadian dollar, as I write this, is worth about 77 cents compared to the US greenback, which is down 17% since this time last year.
This is a double-whammy for fleets. Not only does it add tens of thousands of dollars to the cost of a new truck, it has an effect on just about anything else you need to buy to support your business. Including fuel prices.
The Globe and Mailreports this morning that the exchange rate is what’s keeping Canadian fuel prices high even in a low oil price environment.
And in our August issue, owner/operator-columnist Mark Lee admits he has had to postpone the purchase of an APU because while he shopped around for the right one the falling value of the Loonie has added $4,000 to the price. Ouch!
I wrote about the effect the falling Canadian dollar had on the trucking industry just over a year ago, when it was at 89.09 cents, which was then its lowest level in four years. Then, Derek Varley, manager of fleet services with Mackie Moving Systems told me a five-cent drop in value for the Loonie adds about $6,750 to the cost of a $135,000 truck. He was trying to time his purchases to avoid the added costs and it looks like his crystal ball was working pretty well last spring when we chatted.
“There’s a lot of money to be saved with good planning,” Derek told me last spring. “It behooves fleet managers or owners, whoever is doing purchasing, to understand what may take place with the dollar and what is happening with the dollar and to work those projections to your advantage. I’m looking three months ahead. There are some strong projections that by mid-summer it could be back to an 85-cent dollar and that’s not going to be a fun time to be replacing equipment.”
I’m thinking many fleet owners and equipment buyers would welcome back that 85-cent Loonie about now. How are you coping with the lousy exchange rate? Is it changing your truck-buying plans? I’d like to hear from you as I plan to expand on this topic in an upcoming feature. Drop me a line at email@example.com.
James Menzies is editor of Truck News magazine. He has been covering the Canadian trucking industry for more than 15 years and holds a CDL. Reach him at firstname.lastname@example.org or follow him on Twitter at @JamesMenzies. All posts by James Menzies