Another Challenging Year in Store for Ontario Economy, Trucking Industry
But those who weather current storm will be in good position for when turnaround comes, says OTA president as association kicks off 82nd annual convention.
Today marks the start of the 82nd annual convention of the Ontario Trucking Association (OTA) and according to its president, David Bradley, while 2008 will be remembered as one of the toughest, if not the toughest, years on record for many Ontario motor carriers.
“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,” he said. Over the past 12 months or more, the trucking industry – which is as good a leading indicator of overall economic activity as you can get -- has been rocked by a number of factors beyond its control -- the slowdown in manufacturing brought on by the appreciation of the Canadian dollar, ongoing woes in the auto sector, stagnant or negative aggregate demand in the US, and sky-rocketing diesel fuel costs – all of which were reflected in excess capacity and greater imbalances in several key traffic lanes.
Bradley says that 2009 promises to be another challenging year. “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.”
While Canada is in better shape than most countries when it comes to the stability of its financial sector, Bradley cautions that “we are not immune from the credit crunch particularly in the short to medium-term. And, what happens with the US economy remains the chief wild card. Most pundits are pointing to a recession in the US economy next year; how deep and long it is will determine how impacted Ontario will be.”
“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.”
“Motor carriers whose balance sheets are already weak, could be particularly vulnerable. I expect we will see further reductions in capacity over the at least the next few months,” he says. “However, 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.”
To help members combat difficult market conditions, Bradley says OTA and the Canadian Trucking Alliance, will continue to push for policies and initiatives that stimulate and set the table for recovery. “The members have our commitment that we will be indefatigable in doing what we can to help get this economy back on its feet.” He points to the passage of Ontario’s speed limiter legislation, the development of a pilot of LCVs in Ontario, a new provincial grant program for auxiliary power units, progress on harmonizing the weight allowances on fuel efficient wide-base tires, and a campaign promise by the federal Conservatives to cut the excise tax on diesel fuel by 50% as examples of key initiatives that came to fruition in 2008.
"We have the strength and the will to bring positive initiatives to the table and to partner with government and other groups to bring them to reality, but we are also prepared to fight hard for the industry,” he says pointing to OTA’s campaign – which received support from the Ontario Premier and from both the federal and provincial finance ministers -- to get the State of Michigan to agree to reciprocal treatment for Ontario and Michigan carriers operating in each other’s jurisdiction and CTA’s efforts in Washington to convince the US Customs & Border Protection Agency to modernize its rules restricting when a foreign driver can move a foreign empty trailer as examples.
Bradley says that OTA is always looking for new member services and counts the association’s new group benefits program for employee health and dental coverage which was officially launched in July as a success already. “That program is growing by leaps and bounds because it saves carriers of all sizes money,” he says.
For 2009, Bradley says “there is a lot of work to do to ensure that the progress made on a host of issues stays on-track. We will be particularly concentrating on those measures, fiscal and otherwise, that will stimulate economic growth and investment in the broader economy and within the trucking industry and ensure that the economy is supported by an appropriate investment in highway and bridge infrastructure.”