INDUSTRY PULSE: Challenges barrage trucking’s best customers in 2005

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OTTAWA, Ont. – Manufacturing is a crucial source of business for Canadian trucking and as a result there is anxiety about its future freight volumes.

Statistics Canada, which provides monthly shipment volume reports on the manufacturing sector, provided the following year-end review:

“For Canadian manufacturers, 2005 will be remembered as a year of many challenges. Manufacturers coped with the highest value of the Canadian dollar in over a decade, soaring input costs and record high prices for petroleum. In addition, the sector also contended with unprecedented competition in the increasingly open and global economy.
Because of the challenges, manufacturing shipments rose only 3.1% to $611.6 billion in 2005, compared to an 8.5% advance in 2004.

A significant share of the increase in shipments for 2005 was directly linked to soaring industrial prices for petroleum and other goods now in high demand.

Petroleum and coal product prices peaked in September due to robust demand coupled with supply concerns. Despite recent price declines, petroleum prices in December remained about 25% higher than one year ago.
Excluding the price-influenced petroleum industry, total manufacturing shipments rose a more modest 1.5% in 2005.

The assembly of motor vehicles remained Canada’s largest manufacturing industry in 2005. Shipments were $69.7 billion, down 3.5% compared to 2004. Stiff competition, in addition to production slowdowns at some plants, contributed to the year-over-year drop.

Food manufacturers reported slightly lower shipments (-0.4%) of $68.4 billion for the year. Labour strife in the meat products industry partly contributed to the decrease in food shipments overall.

Rounding out the top five manufacturing industries in 2005 were petroleum, chemicals and primary metals. High demand, coupled with global supply concerns, drove up the value of petroleum and coal product shipments 21.6% to a record $54.7 billion in 2005.

Manufacturers of chemical products posted shipments of $47.9 billion, 5.0% higher than in 2004, while intense global demand for Canada’s primary metals increased shipments by 4.1% to $46.4 billion.

Notable industries hard hit in 2005 included wood products and clothing manufacturing. Shipments of wood products declined 6.0% to $35.4 billion, due in large part to significantly lower industrial prices for lumber.

Clothing manufacturers endured a tough 2005, the first full year since quotas on imported textile and clothing products disappeared as new rules from the World Trade Organization took affect. Contending with a flood of inexpensive Asian imports, Canadian clothing shipments plunged 12.9% to $5.6 billion in 2005, the lowest annual level since 1985.

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