TORONTO, Ont. — The Ontario Trucking Association’s (OTA’s) annual convention kicked off here yesterday, with a reminder from OTA president David Bradley that another challenging year is in store for the industry.
However, he tempered that remark by predicting those that survive the current economic storm will be in good position to succeed when a turnaround occurs. For many carriers, Bradley said 2008 will go on record as one of their most difficult ever.
“The ‘perfect storm’ has become an over-used expression of late, but it describes what the trucking industry has had to endure over the past year,” said Bradley.
The slowdown in manufacturing, high fuel prices, a sluggish US economy and the surge of the Canadian dollar all posed problems for the trucking industry in 2008, resulting in excess capacity and imbalances in many lanes, Bradley pointed out. Unfortunately, he said the industry can look forward to much of the same in 2009.
“There has been some positive things happening of late – fuel prices have softened, the Canadian dollar is off its peak and capacity has left the marketplace. But things remain extremely volatile and the changes in the fuel prices and dollar are themselves a reflection of the slowdown in worldwide economic growth brought on by financial and credit market woes,” Bradley said.
The big wild card in 2009 will be the length and depth of an expected US recession, according to Bradley. He also warned Canadian fleets could be impacted by the global credit crunch.
“A lower (Canadian) dollar and softer fuel prices are helpful and would normally be greeted with more enthusiasm, but if our biggest customer to the south is not buying then it won’t make that much of a difference,” he said. “Given the fact that over 75% of Ontario’s merchandise exports go to the US, representing about a third or more of provincial GDP, we cannot help but be negatively impacted.”
Bradley warned that carriers with weak balance sheets could be vulnerable and more capacity reductions will be realized over the next few months, which should create a low capacity situation when the economy recovers.
“Carriers that are able to weather this difficult period will be in good position to take advantage of a low capacity situation when demand starts to pick up again,” said Bradley.
Bradley concluded that the OTA will continue to lobby government to take legislative action where it would benefit the industry.
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