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Winnipeg councillor pushes for truck bans, calls them "unsightly"

WINNIPEG, Man. The Manitoba Trucking Association (MTA) was left unimpressed after a city councillor proposed moving trucks off main thoroughfares without suggesting any reasonable solutions for their relocation.

Winnipeg city councillor Dan Vandal wants to see trucks vanish from a number of roads, claiming they are unsightly.

"We have to progress as a city, does anyone other than the trucking association like semi-trailers at Portage and Main?" Vandal said. "It's a no-brainer, we have semi-trailers that go down Provencher over the bridge, and then meander onto Portage Avenue. It's time to get rid of the tractor-trailers from Portage and Main and Provencher Boulevard."

Manitoba Trucking Association general manager Terry Shaw was surprised to hear yet another call for a truck ban on Provencher and other roads.

"To hear that Councillor Vandal is making comments on an increased ban is even more surprising and frankly, very disappointing," Shaw said.

"The Manitoba Trucking Association is a solutions-based organization. Our preference is to work in harmony with our elected leaders and other stakeholders towards a mutually agreeable result."

"We have heard loudly, clearly and regularly that Councillor Vandal doesn't want trucks on certain vital traffic corridors in Winnipeg, such as Provencher, and now possibly Portage Avenue. Unfortunately, what is noticeably lacking from those statements are any suggestions on reasonable alternative routes," Shaw added.

MTA president Norm Blagden explains that routes are based on a number of detailed factors.

"Truck traffic naturally gravitates towards the most efficient routes. The questions trucking companies, and the customers they serve, concern themselves with are: Is the route direct? Is it cost effective? Is it safe?" Blagden said.

"If trucking companies were provided with alternative routes to Provencher and Portage that better address those basic business needs, then the industry wouldn't be as reliant on them. Unfortunately, that isn't the case currently," said Blagden.

Shaw noted that it isn't just the trucking industry that would be affected by Vandal's proposal, but the impact would stretch beyond a number of key industries.

"The trucking industry employs about 20,000 Manitobans, and it is a critical service provider to other key Winnipeg industries such as construction, manufacturing and the retail trade. We question how a key to Winnipeg seeing 'progress as a city' includes the arbitrary discrimination of such a large segment of Winnipeg's population and industry," Shaw said.

If the ban is made official, the MTA projects a financial burden to the city's industries at an approximate cost of $600,000 annually.


Big picture trends and trucking

It's never easy to take broad economic trends and then figure out how they may or may not impact the trucking industry, but that's actually a regular occurrence at FTR's (Freight Analysis and Forecasting) annual Transportation Conference, now in its 9thyear.


It's never easy to take broad economic trends and then figure out how they may or may not impact the trucking industry, but that's actually a regular occurrence at FTR's (Freight Analysis and Forecasting) annual Transportation Conference, now in its 9thyear.

Big picture trends and trucking

That being said, though, such "trend analysis" doesn't always provide a happy ending for truckers. And where FTR's 2013 conference is concerned, an awful lot of challenges seem to be clouding the "big picture" for trucking over the next few years.

Is it a time of prolonged slow growth?

Lead off presenter Bill Strauss, senior economist for the Federal Reserve Bank of Chicago, made an interesting observation: the U.S. economy is the strongest in the world right now, but its 1.6% gross domestic product [GDP] growth rate in 2012 with a projected 2.1% for 2013 is in his words "nothing to be too impressed with." While the Federal Reserve as a whole thinks the U.S. economy will grow 3% in 2014 and a little over 3% in 2015, GDP is expected to decline again in 2016. "The Fed is not seeing 4% growth anytime soon," Strauss said. "It shows how disappointing this recovery is."

Are we switching from a manufacturing to service economy?

Noel Perry, FTR's senior consultant, suggested that one reason for the sustained "slow growth" being experienced by the U.S. is that our nation is in transition from a manufacturing to service-based economy. That changeover means two things, he explained. One is that our economy will become less capital-intensive and thus will be less "cyclical," as in devoid of extreme swings. Yet it also means it will take longer to return to the U.S. economy's pre-Great Recession "starting point," roughly two years longer.

How do those trends impact freight?

Perry thinks the net result of such sustain "slow growth" is that truck-related freight volumes will taper off over the next two years or so. Looking at the truckload market, he believes volumes will drop from a 4% annual average over the last 3 years to around 2% to 3% for the next two.

How worried should trucking be about future fuel costs?

Not much, thinks Perry, as even though diesel fuel prices are relatively high compared to historical data, they've been stable for the last several years. That's thanks to a rapid increase in the number of "proved" oil reserves now being brought online from all over the world but especially in the U.S. a direct byproduct, of sorts, from higher global oil prices. You can watch Perry discuss this trend in more detail in the video clip below:

Will slow growth affect traditional freight cycles?

In a word, yes, said Perry, and the trucking industry is already seeing that in the rapid decline and disappearance of the Labor Day-to-Thanksgiving holiday freight boom. Instead, a new season is developing, whereby May and June are becoming "hot" freight months as retailers ship more summer-related goods to market such as grills, bagged charcoal, lawn mowers, etc. Freight volumes as a result are also becoming steadier throughout the year, too, added Eric Starks, FTR's president, which is creating some consternation as well. You can watch him and Jon Starks, FTR's director of analysis, discuss that trend in more detail below:

The impact of government regulatory efforts will be huge.

For starters, FTR's Perry warned that the sheer magnitude of ongoing government regulatory efforts affecting the trucking business 26 by his count from a myriad of agencies could lead to a shortage of drivers of between 1 million and 1.4 million if they are all implemented as advertised. Hours of service (HOS) alone created the biggest "shock" to trucking's system, with a negative productivity impact calculated at 3% nationwide so far, he added. There are also potential tax implications, too. Still, Perry believes that if Congress loosens size and weight restrictions on trucking, much of that "regulatory headwind" might dissipate. That will be an interesting debate to follow.

Is another recession around the corner?

This is a huge worry and not one restricted just to truckers. On average, recessions occur roughly every 5 years or so; thus, being that 2014 will be the 5-year mark when the "Great Recession" ended (it "officially" occurred between Dec. 2007 and June 2009) another one would seem likely to hit next year. Well, there are different opinions on that. "Historically, since World War II, economic expansion cycles run about 5 years, so many think 'we're due' for a recession," said the Chicago Fed's Bill Strauss. "But that is not really how it works. Usually it's a 'shock' that trips up the expansion and by their very nature shocks are unanticipated." Here's the concern though: in a "slow growth" economy, the risk of "going negative" from a shock in terms of growth is far higher simply because the rate of growth is so low. So even a minor contretemps could potentially push the U.S. into a recession.

The biggest economic question mark is China.

One of the more worrisome items FTR's Perry put on the table is how China's economy will fare in the next few years. "South America's economies are all headed into the tank due to sovereign debt issues, India is in trouble because their sovereign debt has stopped growth, and while Europe is supposedly recovering, they haven't addressed their sovereign debt issues one ounce," he explained. That leaves China, the number one economy in the world, which hasn't suffered a recession in 25 years. "Asia's economies depend heavily on China as does the U.S.," Perry said. "What makes all this so dangerous is that all of our economic assumptions are based on continued growth from China. That's a ludicrous assumption. And if they melt down financially, it would send Europe back into recession, kill the U.S. export market, and destroy capital flows into the U.S." Right now, though, that particular scenario is remote simply because China sits on huge financial reserves. But as its economic growth has slowed, China is pumping more and more of those reserves into infrastructure construction and other projects. "So while it's unlikely China suffers a meltdown in 2014, at some point reality hits in 2015 or 2016," he said.

All of this is a lot of trucking to digest, no doubt. But it's worth it for carriers to start working them into their strategic plans, for sure.