|February 13, 2006
Trucking – Booming in Alberta & B.C., but traffic slowdown in Eastern Canada
|an increasingly difficult 2006 as rising fuel costs, a soaring Canadian dollar and downturns in key industries threaten business.
David Bradley, the president of the Canadian Trucking Alliance, said the overall health of the industry is difficult to measure because
of its fragmented nature. For example, he said business has been booming in parts of British Columbia because of rising levels of
Asian goods moving through the Port of Vancouver.
And Alberta is on fire. "The oilpatch is going crazy," he said. "In Alberta, they've got more trucking business than they can handle, but
as you move east into Ontario and Quebec -- we're a reflection of the economy overall.
"In general terms, the carriers would say there is definitely a cautious tone to 2006."
In particular, Mr. Bradley says a rising Canadian dollar is hurting manufacturers' exports, which is having a direct impact on the
trucking sector in Ontario and Quebec. He also noted that the automotive and pulp and paper businesses are down. In addition to
general economic forces, truckers also face some specific headwinds that promise to raise their costs in 2006. That includes rising
fuel costs, new service rules in Canada and the United States and the introduction of pricier low-sulphur diesel fuel and more
expensive smog-free engines.
While a serious shortage of skilled truck drivers promises to offset some of the softened demand for trucking companies' services,
many are also losing out on important contracts because they do not have enough drivers.
As for individual companies, Mr. Bradley says there is likely to be continuing consolidation in the trucking industry as larger players --
Contrans Income Fund, Transforce Income Fund, Trimac Corp., Mullen Group, Vitran Corp. and Andlaauer Transportation Services --
continue to grow through acquisition of smaller carriers.
That said, he stressed there is still plenty of room in the industry for niche operators.
"You've either got to stay small and efficient or take advantage of economies of scale. The companies in the middle are the ones that
are going to be unsure of themselves."
Source: Chris Sorensen - Financial Post