The ingredients for a fundamental change in the North American transportation market are coming together and Canadian carriers and owner/operators have much to gain.Officials at Transcore, whose load ...
The ingredients for a fundamental change in the North American transportation market are coming together and Canadian carriers and owner/operators have much to gain.
Officials at Transcore, whose load matching service manages about 300,000 positions per day in North America, say they’ve never seen a time with such a drastic imbalance in truck capacity. The general load to truck ratio, which in healthy times runs at about 1.5 to 2.25 loads for every truck in Transcore’s system, is currently up to four to one. If Transcore’s numbers represent a microcosm of what’s happening with loads moving by contract in the industry overall, it could be the start of something big.
Both the Canadian and American marketplaces have gone through a significant shrinkage of their carrier base over the past few years. In Canada, 25 per cent of the more than 8,000 small carriers that were around in the last decade did not make it into this one and neither did about 12 per cent of owner/operators.
The larger carriers, with some exceptions, have fared better through the onslaught of high diesel prices from a few years ago and the pressure of rising insurance and security costs. But the combined effect of a Canadian dollar that has risen twice as high and twice as fast than even the most bullish of forecasters had anticipated, and the flurry of unexpected economic shocks that declawed our “northern tiger” economy in the second quarter – shipments were down significantly every month of that period – left even the most profitable of carriers concerned about the future.
What a difference a quarter can make.
Buyers of transportation services have been saying for a while now that all that was needed to spark a capacity crunch was a sharp improvement in the U.S. economy. Of course, that’s exactly the kind of improvement the U.S. Department of Commerce announced just a few weeks ago. The third quarter results in the U.S. (7.2 per cent annualized GDP growth) marked the fastest pace of growth for the American economy since 1984 and sailed past the already optimistic forecasts for the quarter. Even though most forecasts call for a pullback in the fourth quarter, the full year growth for the U.S. economy is still expected to come in at a healthy four per cent.
That could prove the shot in the arm necessary to recharge our own economy and breathe life into the transborder hauls our carriers have come to rely upon (Canadian motor carriers control 69 per cent of transborder trade compared to U.S. carriers).
What happens with capacity is particularly important because, let’s face it, a capacity crunch is the only thing that will drive up rates, a major sore point for years now.
That will only happen, however, if carriers and owner/operators heed the lessons of the past.
More on that with next month’s column.
– Lou Smyrlis can be reached at 416-442-2922 or email@example.com