Better Days Ahead in 2004?

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TORONTO, Ont. – What’s in store for 2004? According to some, better times. For others, full on disaster. But no matter how you look at it there’s no question that things are going to get even more interesting than last year.

Truck News spoke to association heads and industry insiders across the country to get an idea of what the industry has to look forward to, or dread, as the case may be.

CTA optimistic

Nothing could have been more optimistic than Canadian Trucking Alliance CEO David Bradley’s speech to delegates at the Ontario Trucking Association annual convention in November.

“2004 has got to be better than 2003,” said Bradley, also president of the OTA. “Perhaps no industry is as reflective of the overall economy, than trucking. And 2003 was a tough, tough year for most carriers.”

The list of factors that visited hardship upon the industry over the last year seems endless – the war in Iraq helped push up the price of diesel fuel; insurance premiums continued to skyrocket; the Canadian dollar appreciated by 20 per cent almost overnight; the costs of all the new security initiatives began to hit home. On top of that we had the SARS crisis and the mad cow scare, followed by the big blackout.

“It’s rough enough in normal times in the trucking industry, but having all these things occur in the same year is extraordinary,” Bradley said.

But for carriers that made it through 2003, Bradley saw better times ahead.

“There is no doubt that the U.S. economy is picking up steam – all the signals point in that direction – and that will boost Canadian economic prospects too,” he said, adding this pick-up in economic growth “will further tighten capacity in the trucking industry, creating even better conditions for a meaningful and sustainable correction in freight rates.”

“With the kind of cost escalations the industry has had to endure over the past couple of years, carriers have become more selective already. Once the economy picks up, those shippers that work with their carriers to improve efficiency and productivity – and are prepared to pay a fair rate – will get the service,” Bradley said. However, he cautioned the timing and the breadth of rate adjustments will depend on the degree of market discipline the carriers adopt.

“The conditions are ripe (for rate increases),” he said. “But it’s up to the carriers to make it happen.”

According to Bradley: “2004 will also be a critical year on the regulatory agenda,” citing the introduction of new U.S. hours of service rules Jan. 4, 2004 and the ongoing battle over whether Canada will adopt a sleeper berth exception as part of its own hours of service reforms, as major concerns. He added the coming year will reveal the final form – and the costs – of a number of key U.S. security proposals, such as electronic prenotification of general freight and the driver licence protocols for hazardous materials.

Indeed, there will be plenty of new legislation coming down the pipe in 2004.

Aside from the “key security proposals” coming into force in the States (prenotification, FDA, hazmat, etc.) there’ll be plenty going on here at home.

The new hours of service regulations, with or without a sleeper berth exception, are expected to be published in Part Two of the Canada Gazette early in the year, said Brian Orrbine, chief of the Motor Carriers Road Safety Directorate of Transport Canada.

“Our target date for implementation is Sept. 2004,” Orrbine said. “And we also have an implementation date planned for the new Motor Carrier Safety Fitness regulations, which should come into force Jan.1, 2005.” (The safety fitness regulations will create a national standard for safety certification.)

British Columbia looking up

In B.C., where insurance premiums are determined by the provincially controlled Insurance Corp. of B.C. (ICBC), there is some much welcomed stability, which means carriers there will have one less worry to contend with in 2004.

“Insurance premiums are not expected to rise,” confirmed B.C. Trucking Association (BCTA) president, Paul Landry. “We’re not expecting to get hit as hard as before.”

There are more reasons to be optimistic in B.C.

“We see real improvements over the course of 2004 in order to facilitate trade,” said Landry. “There will be hundreds of millions of dollars in infrastructure investments.”

One of the most welcomed will be the addition of a FAST-only lane at the well-travelled Pacific Highway border crossing. That’s expected to be completed by June or July of 2004.

“Right now, it’s still hurry up and wait (for FAST carriers),” said Landry, noting the real benefits of being FAST-approved won’t be realized until the exclusive lane is opened.

There are also many other infrastructure improvements in store for 2004 – including the twinning of some well-travelled trade corridors.

Other good news for B.C. carriers includes the fact that the Port of Vancouver is expecting another strong year.

“I would anticipate a growth in container traffic,” predicted Landry. “The Port of Vancouver is doing quite well and they’re anticipating growth for 2004.”

But not all news is good news in B.C. heading into 2004. There are issues facing individual sectors – most notably the forestry sector.

“Right now, we’ve got the softwood lumber dispute which is an issue,” said Landry.

“The softwood lumber issue is a real concern and (the health of the forestry industry is threatened).”

Exacerbating that was the fact the IWA union recently went on strike, potentially bringing the coastal forest industry to a grinding halt.

“That’s certainly not going to help the situation,” observed Landry, just hours after the strike was officially launched.

Prairies worried

Serious concerns persist about the fate of many livestock haulers domiciled in the Prairies.

“That’s going to be an ongoing issue until either the border is re-opened or until there’s another plan of getting those animals processed,” said Kim Royal, executive director of the Alberta Motor Transport Association.

In Manitoba, where livestock hauling typically accounted for 100-120 loads of cattle per week prior to the ban, many cattle haulers have shifted to hauling other freight.

“A repercussion from that of course has been a downward pressure on rates,” said Bob Dolyniuk, general manager of the Manitoba Trucking Association.

A proposal put forth in the U.S., which would see live young Canadian cattle approved for export into the U.S. in early 2004, could bring relief. And there’s also talk of building a massive Western Canadian slaughterhouse, which would enable Canada to produce its own meat and send it to the U.S., reducing the need for live cattle exports.

An issue that’s been on the mind of many Albertans recently, and not just truckers, is the insurance reform that has been kicked around by the provincial government.

Most recently, the province imposed a rate freeze which insurers cannot break unless there’s a change in conditions.

Royal said it’s too soon to say whether this legislation will benefit commercial carriers.

“We’re not sure how that will affect commercial carriers in that, if you have 200 trucks, you’re bound to have some claims over the year,” he explained.

“So, does that mean conditions are no longer the same because you had one claim instead of no claims? We don’t know how it will be interpreted at this point.”

He said the ongoing issue of increasing insurance premiums will continue to be an issue.

A potentially troublesome issue in Manitoba is a fuel tax increase. The Manitoba government has been conducting a review the last two years, called Transport Vision 2020, to examine transport needs down the line. There have been suggestions from some quarters that the review will indicate a need for a fuel tax increase provincially, Dolyniuk said.

“We have the city of Winnipeg talking about a five cent per litre civic fuel tax which obviously would have a significant impact on our industry locally. So based on those sort of indications we are encouraging our members to increase their rates,” he said.

Among othe
r issues affecting the MTA membership are the anticipated reintroduction of a truck productivity improvement fund, which is based on a user-fee system to a certain extent, and spring road restriction policy changes put into place back in 2001 that have had an adverse effect on the industry and against which the MTA is still lobbying.

“We also expect a biofuels bill to be reintroduced either at the end of November or next spring which will allow for enabling legislation for biodiesel, which has an impact on us. How far the legislation would mandate the use of biodiesel is an unknown.

“And we’re looking for the government to legislate a third-party logistics liability bond. That’s an issue that we put before the government almost a year ago and was precipitated by the TCT Logistics bankruptcy. We’re looking at a minimum of CDN $250,000 to 500,000 bond,” Dolyniuk said.

In Saskatchewan, one of the provincial trucking association’s main concerns is the use of long combination vehicles (LCVs).

“We will continue to press our government to change current LCV regulations to level the playing field with both of our neighbouring provinces,” said Jim Friesen, general manager of the Saskatchewan Trucking Association (STA).

“At present both Alberta and Manitoba LCV carriers have a competitive advantage over Saskatchewan LCV carriers because of our outdated regulations.”

The STA also has concerns about the province’s Workers Compensation Board (WCB) and ever-rising premiums.

“We will continue to meet with WCB in effort to reduce our current premiums and to work closely with the Safety Council to reduce work place injuries,” Friesen said. “We must also work to get injured workers back to the job sooner than what our past and present experience is, we feel the system is being abused at great cost to all employers.”

Other issues of concern to the STA affect the entire industry as a whole: the ongoing driver shortage; the uncertainty regarding the new hours of service regulations and border issues.

For the most part, Friesen said, 2004 will pose many of the same challenges as 2003 did.

“We see 2004 as being similar to 2003 with many outstanding issues to be resolved and new challenges to be met,” he said.

“In general terms we are frequently meeting with several provincial government departments to discuss trucking industry concerns like vehicle weights, rural road infrastructures, vehicle insurance premiums, transportation partnership programs.”

Ontario in for a busy year

It stands to be a busy year for the Ontario trucking industry, said David Bradley, president of the Ontario Trucking Association.

“Ontario stands to feel the effects of things like cross border security initiatives because 65 per cent of Canada’s trade moves through here,” Bradley pointed out.

“Add to that a new government with a whole new approach to things, which the industry here will have to get used to.”

The planned for joint federal/provincial project for improvements of the crossing in Windsor is just one of the initiatives the provincial Liberals will have to weigh in on, Bradley said.

“The new government could just dump the project, although I think that would be unwise, given that the federal government has already committed $175 million to the project,” he said.

It will also be up to the Liberal government to take the lead in adopting and implementing the new national safety standards for trucks, including the pre-trip and periodic inspections, Bradley said.

“We’ve adopted the standards but no provinces have moved forward yet.”

And it will be up to industry leaders to come up with ways to improve productivity in the face of new hours of service regulations, set for implementation in Sept. 2004, Bradley added.

“We’ll have to find ways to gain productivity, perhaps through truck weights and dimensions. And there’s also the issue of taxation – should we tax business inputs in the trucking sector? Should we work to harmonize the GST and PST?”

As for the ongoing court battle over whether carriers should be held absolutely liable for wheel off incidents, even if measures were taken to prevent them, Bradley says there has been no decision on whether yet another appeal is in the works.

The Ontario Court of Appeal recently handed down a ruling upholding the controversial wheel-off law, in relation to a case involving a challenge to the absolute liability provisions of the law.

(The law imposes fines of up to $50,000 on trucking companies for wheel-off incidences – even if steps were taken to prevent the incident from occurring.)

Unless this decision is appealed to the Supreme Court of Canada (and there is no confirmation yet that it will be), Ontario law will continue to hold the owners and operators of commercial motor vehicles absolutely liable when wheels detach from their vehicles.

OTA lawyers are reviewing the entire report closely, Bradley said, but have not yet determined whether a Supreme Court appeal would be successful.

“It’s going to be a very busy year on the legislative and regulatory front,” Bradley affirmed.

Quebec expecting

more consolidation

Thanks to increased costs due to HOS, insurance, and border issues, etc., the Quebec trucking industry can look forward to further consolidation, said Marc Brouillettte, president of the Quebec Trucking Association.

“The reason is simply profitability – many companies haven’t been nearly as profitable as they should have been over the last few years. New technologies, for example, new tractors to meet emissions standards, are also costing a lot and revenues aren’t covering those costs. And there’s the problem of the driver shortage,” Brouillette said.

The end result will be that smaller, family-owned companies will not remain family-owned, he said. Quebec’s Transport Ministry desperately needs to adopt a policy on commercial traffic, Brouillette added.

“We need better highway infrastructure and we need an overall policy on commercial transport here.

“We’ve had three transport ministers and two different governments in three years. And we don’t even have an official transport minister right now. We need someone to step into the position of Transport Minister and take charge.”

East guarded

A recent announcement that Marine Atlantic has been designated as an essential service will have a huge impact on the industry, and that is a great way to start the New Year, said Ralph Boyd, president of the Atlantic Provinces Trucking Association.

“It’s a long time coming but it will be very nice to see that this particular service, that is extremely important to Newfoundlanders and Labradorians, will not be able to be shut down by labour disputes,” he said.

The 90-mile crossing has come to be considered part of the Trans-Canada Highway, which can’t be closed because of labour disputes. Crossing the waterways with Marine Atlantic should be thought of in the same way, said Boyd.

“It is minimal service at best right now and it does not have any fat that can be cut out of it, so it’s great that this particular service will not be reduced in any way because of labour disputes.”

Also of interest to Atlantic Canadian carriers is the $95 million investment announced recently in New Brunswick’s border crossings that serve 2.4 million Atlantic Canadians.

Approximately $20-$25 million will go to the Houlton-Woodstock border point in order to twin Route 95, as well as to contribute to the FAST-designated lane and enrollment centre, which are expected to open soon.

The balance of the money will be spent at the Calais-St. Stephen border crossing, where the highway from Fredericton, N.B. to the St. Stephen border will be twinned.

Also budgeted for is a third bridge, to be constructed in the area, and new Customs facilities.

There could also be further movement of sizes and weight harmonization.

As part of the trucking harmonization strategy that was originally announced by the Council of Atlantic Premiers in 2001, the four Atlantic provincial governments have been working to streamline programs, systems and regulations throughout the region.

“We were successful in harmonizing the weights and dimensions rules and they have been in place for over a year now. There is extensive work being done in the over dimensional area, and we are hopeful that in the not too distant future we will have a harmonized program for the movement of over dimensional loads as well,” Boyd said.

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