OTTAWA, Ont. — Rising fuel prices and inefficient security programs were some of the concerns raised by the Canadian Trucking Alliance when recently discussing the trucking industries economic condition with federal government representatives.
In an appearance before the Commons Standing Committee on Industry, Science and Technology, the CTA told MPs the trucking industry is being hit hard by current economic conditions in Canada and the U.S.
“The high value of the Canadian dollar combined with the general weakening of the U.S. economy, the resulting reduction in Canadian exports to the U.S., and the manufacturing downturn (particularly in central Canada), are all having a profound impact on the trucking industry in most parts of the country,” stated CTA senior vice-president Graham Cooper.
In the cross-border market that the Canadian trucking industry is being particularly hard hit. From November 2006 to November 2007, Canada’s total exports to the U.S. declined by 3.8 percent and imports by 1.9 percent.
However, as Cooper pointed out, these aggregate figures do not tell the whole story. Trucking specializes in relatively lower weight and higher value products when compared with other freight modes. A comparison of export statistics for November 2006 and November 2007 shows year-over-year decreases of 4.4 percent in industrial goods, 3.7 percent in machinery and equipment, 5.9 percent in automotive products and 9.9 percent in other consumer goods.
Cooper also raised the need for the government to take action to lessen the impact of the federal excise tax on diesel fuel.
“Unlike the GST, the excise tax on commercial diesel fuel is not a flow-through tax and therefore achieves little but to boost the government’s general revenues; but in so doing, it heaps an additional input cost on the trucking industry,” explained Cooper. “We have long argued that this type of tax is both unjustified and regressive; it should therefore be overhauled and treated as a flow-through tax similar to the GST, or preferably abolished altogether.”
The rising price of diesel fuel – up by 49 percent from 2004 to early 2008 – is yet another of the cost pressures being felt by the industry. Motor carriers have been able to pass some of this increase on to their customers through fuel surcharges, but current business conditions in the industry make this increasingly difficult to accomplish.
“Industry margins, traditionally thin, are being squeezed even more as many carriers find it increasingly difficult to fully offset the rising cost of diesel by way of fuel surcharges,” added Cooper.
Finally, MPs were told how trucking security programs, particularly at the Canada-U.S. border, continue to result in duplication, overlap and ever-increasing costs.
“The big picture – an appropriate balance between security and trade efficiency based on an assessment of risk – seems to have been lost,” said Cooper. “The situation is not sustainable. We can’t go on forever, layering one new program on top of another, further driving up the cost of transportation and harming Canadian competitiveness.”
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