Saturday, June 5, 2010

Canadian Trucking Boss Spotlights Oversupply Problems

More North American Hauliers Should Have Failed This Year
Shipping News Feature

CANADA – US – Last week at the 45th annual Canadian Transport Research Forum in Toronto, President and CEO of the Canadian Trucking Alliance (CTA) David Bradley came out and said what many freight industry analysts have been whispering for months now - not enough less than truckload (LTL), full load and drayage (container haulage) companies have gone into liquidation in the current recession to regularise the market.

"If I had to pick the failure of the trucking industry in last couple of years, it would be that not enough companies failed. We were hoping for the great cleansing to come and it didn’t happen," said Mr Bradley, "It takes a lot to kill a trucking company, there was probably hope on the part of the industry as a whole that we would see more capacity leave the industry through business failure. We tended to the view that there are too many people in business that don’t know what they’re doing, therefore too many people chasing too little freight.

“The saving grace is that trucking continue to find new ways to be more efficient. I would have thought after 20-odd years of economic deregulation we would have pretty much sucked that stone dry, but it’s amazing what people can do when they have to find increased efficiency and productivity and try to create that bottom line. Canada represents a strong market for U.S. producers and manufacturers. They need to get the goods here. U.S. carriers in their local region probably aren’t interested in it, so we’re starting to see some interest phenomenon in terms of paying for trucks to go down empty in order to bring that load back."

Bradley believes that the balance of cross border trade has changed of late with US truckers less likely to serve that market than their Canadian counterparts. The economic situation has caused a reversal of the predominance of southbound traffic which happened when the North Atlantic Free Trade Agreement (NAFTA) came into force. "Relatively speaking in terms of volumes and pricing, the northbound marketplace has been stronger than the southbound marketplace. The problem with that for Canadian carriers is that you have to have trucks down there in order to get that freight back."

Bradley, along with many other observers, also holds the financial institutions to blame for much of the current turmoil:

"Frankly, some of the private lenders, the leasing companies, those folks, made it too easy. They lent to too many people too much money. Now they’re sitting with a glut of used equipment that they don’t know what to do with," he said, continuing, "I think the survivors will be stronger as a result of this. I’m optimistic that trucking will remain dominant mode of transportation. The industry will shrink and grow with the economy, so it might be smaller in the short term over what it was before, but with the service that trucks provide they will continue to be the dominant mode. “