Tighter capacity is on the horizon: CTA

OTTAWA — During the next month or so, there will be numerous media reports on what happened in 2008 and what could happen in 2009.

There will be lots of talk about recessions, or near-recessions, and how long it will take for the global economy to recover.

The Canadian Trucking Alliance however, is not focusing on the timeline, but rather the end result. According to David Bradley, CEO of the CTA, when the North American economy does stabilize and begin to recover, the demand for trucking services will likely outweigh the supply.

At that point, truck rates — which have been hammered during the past 18 months — will be under upward pressure again.

“It’s been a tough year for everyone, motor carriers and shippers, and this has resulted in downward pressure on freight rates in 2008. But shippers would be advised to partner with carriers now to lock-in capacity for when things do inevitably start to come back, which we hope will be sometime in 2009,” says Bradley.

The major problem facing truckers over the past year, or more, has been one of over-capacity – too many trucks for the level of freight being generated by the economy, notes the CTA.

“Most carriers experienced softer freight demand in 2008, though some sectors of the industry and some regions of the country have, like the economy, been harder hit,” explains Bradley. “It doesn’t matter where you operate, all carriers faced a major challenge this year with sky-rocketing diesel fuel prices and a slowing economy.”

As well as fuel prices, the rise in value of the Canadian dollar had a heavy impact on the manufacturing sector and the lagging U.S. economy impacted southbound freight volumes. According to Bradley, the trucking industry across North America has been shedding capacity during this economic rough patch.

“While there will continue to be tough sledding in 2009 – reflecting current global economic concerns and, as always, punctuated by a chronic long-term labor shortage – capacity of trucking services will be that much lower when things do turn the corner,” he notes.

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