Stop us if you heard this one. A big fleet owner, a truck dealer, and an OEM sales rep are all sitting around the table…

Okay, there’s actually no joke here, but that’s really how this story begins. In fact, there wasn’t much to smile about listening to parts of that conversation at a customer appreciation dinner held by an OEM in Toronto in early spring.

Discussing the current Canadian freight environment with his tablemates, the owner of a reasonably large — and all things considered, financially stable southern Ontario trucking fleet — had brought up the plight of a separate carrier he knew of comparable size, but clearly, of lesser fortune.

This other guy, our storyteller explained, was recently told by a familiar customer that the rate would now be "renegotiated" on a weekly basis. "That’s not the fuel surcharge," he clarified. "That’s the rate."

The dealer then quipped. "That’s not a customer … at that point, you’re just working off a (load bid) board."

And so it’s gone in trucking over the last 18 months.

Asked if that anecdote is typical of the always-reactionary trucker-shipper relationship these days, Michael Ludwig retorts that "in this economy, more than a few [shippers] have realized there are enough savings that it pays for their transportation person to negotiate every load they move."

It’s quite likely that the worst of the
economic freight storm is behind Canadian truckers.

The owner of his own 18-truck namesake fleet in Simcoe, Ont., says he hasn’t noticed any particular-sized carriers — big or small — taking a disproportionate brunt.

In southern Ontario, it can be said, we’re all auto workers [and makers] now.

"The first place shippers look to when they have to come up with some dollars — whether it’s because of the economy or they have a change in personnel — is they always look at transportation," he says. "They have identified that they are a pack of wolves chasing a herd of caribou and there’s quite a few weak ones in that herd."

Is it true, though, that hunting season could be slowly coming to an end? While a turnaround isn’t imminent, there are some strong signs that the freight market has hit rock bottom and although we’ll likely be dragged along the ocean floor a few more months still, it seems better times (at least, less worse times) are ahead. Or, as Churchill proclaimed when the Second World War finally turned in the Allies’ favor, "This is not the end… this is the end of the beginning."

In its last Business Pulse e-Survey, the Ontario Trucking Association (OTA) found that the industry in Ontario and Canada-wide is showing the first indications of stability.

Out of 74 trucking companies of all sizes and sectors interviewed, the largest proportion (43 percent) said they were pessimistic about overall industry prospects over the next couple of months. That’s not such good news, of course. But what’s changed is that this is down from 52 percent who said the same thing in the first quarter of 2009. Plus, the percentage of carriers that are optimistic about industry prospects rose significantly to 27 percent from 17 percent.

Similarly, Nashville, Ind.-based FTR Associates also reported that the economic storm clouds are slowly parting. While imploring caution, the firm said that the enormous declines witnessed in the first quarter are unlikely to be repeated and after a flattish latter half to 2009, there should be some modest growth in early 2010.

Clayton Gording of Winnipeg’s YRC Reimer (formerly named Reimer Express) agrees that the freight market has had some breathing room since late spring, but it’s generally difficult to pinpoint what the triggers are.

"Certainly there’s some growth and not the week-after-week downturn we had in January. It’s kind of a good feeling," he says. "But whether it’s about an improving economy or whether it’s seasonal is hard to say."

It’s true that certain carriers — LTLers mostly — have enjoyed a decent-sized bump in demand in late spring over the last decade or so thanks in large part to a surge of big box, do-it-yourself home improvement and gardening retailers, among other seasonal products. In fact, some have argued that April to June has given to the rise of a new mini-peak shipping season.

There’s still quite a bit of carriers out
there chasing freight — and shippers know it.

Calyx  is the parent company of a stable of carriers that haul in these niche lanes, including Muir’s Cartage — a dedicated Home Depot provider. Company CEO Rob Donaghey says they’ve "been blessed to serve some of those people, so we always experience that peak season," although the depth of this recession has tempered expectations this year.

Other carriers, depending on their regional markets, have just as much reason to be thankful. Gording admits that keeping an active role in the robust provinces of Manitoba and Saskatchewan has softened the blow felt on cross-border LTL lanes.

"If you’re involved in intra-Prairie business you’re generally okay. You almost feel like you’re outside of the problem."

Not so lucky, though, are truckers heavily dependant on expedited freight, which has arguably had more chewed off of it than any sector over the last year. Rates have taken a severe beating from LTL and even truckload carriers with capacity to spare.

"Where customers a year or two ago thought nothing of paying a premium because they had to get something to a certain customer on a certain day, they now find any way they can to avoid doing that if they can," says Gording. With more shippers willing to sacrifice immediacy for cost, the "sector is suffering more than standard service, for sure."

As he often does when rates dip, OTA President David Bradley is warning shippers not to get too carried away squeezing all they can out of truckers.

"One thing is sure. When we come out of this mess, there will be less capacity in the trucking industry and those shippers that have tried to take advantage of the current situation may find themselves having a hard time finding anyone interested in hauling their freight," says Bradley.

How much tighter capacity gets remains to be seen. Surely, the rising cost of oil and the surging Canuck buck vis-à-vis the U.S. greenback will take a toll once more. 

Lower diesel costs this past year has given some struggling carriers a second wind, although, as Ludwig points out, not as much as some think since the ability to recoup fuel surcharges is pretty standard these days.

It’s his belief, then, that a freight recovery will be a lot slower than what some optimists have guessed. Why? It’s all about the trucks in the end.

"The finance companies can’t do anything with these trucks," says Ludwig. "You take a two-year old, $130,000 truck. It should be worth $80,000, but today on the street it’s only worth $40,000. So, why would you take that kind of a bath when the [finance company] is offering you relief of payment for x number of months to carry on as you are? There’s alot of that kind of ‘restructuring’ going on that’s keeping trucks out there."

The wildcard, as it’s always been in southern Ontario at least, is what happens in the automotive sector.

As Bradley routinely sticks to the end of any optimistic forecast, "all bets are off" if the automotive industry fails or things get worse in the U.S.

And that’s no joke.