INDUSTRY PULSE: US economy, dollar are "wild cards" in 2005 outlook
The outlook for the trucking industry should continue to be very positive in 2005, according to David Bradley, CEO of the Canadian Trucking Alliance and president of the Ontario Trucking Association.
Bradley delivered these remarks today in an address to his members at an annual general meeting held the afternoon before the opening of the association’s 2004 annual convention (Nov. 11 & 12, Toronto Congress Centre, 650 Dixon Road)
"While the capacity crunch which is driving the most sustained upward pressure on freight rates, accessorial charges and driver wages in decades has been more pronounced in the truckload (TL) sector, the fundamentals for both TL and less-than-truckload (LTL) freight look good going forward."
An economist by training, Bradley feels obliged, however, to add a note of caution to an otherwise optimistic outlook for the coming year. "The wild cards in the deck will be the US economy and the value of the Canadian dollar."
"At some point you’ve got to wonder if the continued uncertainty over the Mid-East situation, the prospect of ever higher fuel prices and a ballooning US budgetary deficit will eventually conspire to dampen US economic activity. I learned long ago never to count out the US economy but there are some warning signs," he explains.
He said that we could also see "a continued appreciation of the Canadian dollar against the US greenback, which in turn could impact on the competitiveness of Canadian exports and affect the pricing of transportation services."
On balance, however, he remains optimistic. "A modest softening in economic activity would likely have little impact on the capacity situation that is driving a lot of the changes underway in the trucking industry." He expects the driver shortage will get worse before it gets better.
On the regulatory front, Bradley says two issues are likely to dominate the industry agenda border security and hours of service. "The next few months will be critical in determining what the border will look like", he says. "There is a spate of new measures being introduced over that period US customs pre-notification, USVISIT, hazmat credentialing, a transportation worker ID card. The devil as always will be in the details."
All eyes will also be on the outcome of the legal and political wrangling over what the US hours of service regulations will ultimately look like. And, the long-awaited new Canadian federal hours of service regulations should also be finalized early in 2005.
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