Trucking industry’s ups and downs will continue in 2001
December 1, 2000
The trucking industry can be excused for asking "what's next?" as the last year of the 20th century, or the first year of the new millennium, comes to an end.The last year has been tumultuous: sky-roc...
The trucking industry can be excused for asking “what’s next?” as the last year of the 20th century, or the first year of the new millennium, comes to an end.
The last year has been tumultuous: sky-rocketing fuel prices; protests and blockades by independent operators; battles over U.S. taxes; plummeting new truck sales and questions over the direction of the Canadian economy. All played a role in casting uncertainty over the market, which by the way, still managed to produce more freight and more business for truckers.
By all accounts, prospects for the North American economy remain relatively strong, if albeit somewhat choppier than a year ago. That should be of solace to an industry that provides a derived demand service. But, the economic indicators are somewhat confusing these days.
Is a slowdown underway? Will the U.S. land softly? Are inventories building? Where is the price of fuel going? What impact will this have on inflation? How will this impact upon freight rates?
In any event, the immediate term will be challenging.
Fuel prices could escalate in the first part of 2001, as inventories of home heating oil and diesel, at their lowest levels in 20 years, falls into the grip of the cold weather season.
Essential during this period will be the application of fuel surcharges, combined with long overdue adjustments in freight rates.
Most would agree now is a good time to restructure rates, which have been static since the late 1980’s. Most carriers don’t have the room to absorb further cost increases, and the industry has sucked just about every drop of efficiency and productivity it can out of its operations.
It all depends on the will of carriers and shippers to cooperate.
As 2000 has shown, independent operators – the backbone of many trucking operations – must also get a fair deal. If they don’t, more O/O’s will turn over their rig’s keys to the dealers..
It must be recognized that O/Os are small businesses and they must manage their affairs like businessmen.
As things are shaping up, consolidation within the industry will continue. Mergers and acquisitions appear to be back on the front burner, after cooling off for a while.
In addition, a shortage of qualified labor will continue to be a major challenge for the trucking industry. Drivers are getting older, and the job market as a whole is getting very tight. Replacing drivers will take an investment in human capital like never seen before.
The industry will have to cope and internalize the costs of joining the International Registration Plan (IRP) set for April 1, 2001. Also in 2001, the industry should finally get the opportunity to avail itself of the harmonized Ontario-Quebec truck weights and dimensions, agreed to by the two governments after years of negotiation.
Enabling legislation is required in Ontario but is expected to pass before the legislature adjourns for Christmas.
It is also hoped that new federal hours of service regulations developed by the Canadian Council of Motor Transport Administrators will finally be adopted in 2001.
And finally, the industry will be watching to see how the new U.S. President and Congress view trade issues.
So, there are a lot of questions heading into 2001. However, one thing is clear. Trucking will remain the dominant mode of freight transportation. No other mode is able to match the trucking industry’s ability to provide efficient, safe, reliable and time sensitive service. n
– David Bradley is president of the Ontario Trucking Association and chief executive officer of the Canadian Trucking Alliance.
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