An extended trade war could endanger the business operations of Canadian trucking carriers, according to the results of a recent survey released by the Canadian Trucking Alliance.
Sixty percent of survey respondents said their operations would face a serious risk as the trade war continues. Nearly 70 percent of carriers are tracking labour pool size, even though just 8 percent of trucking fleets laid off staff.
Almost 70 percent of respondents said loads headed for the US – including lumber, oil products, fertilizers, farming equipment, tires, and general food products – have been cancelled or halted. Tariffs are essentially pausing trade, with customers and suppliers struggling to determine the actual declared product value and the bearer of additional costs. Moreover, customers must adjust to just-in-time/emergency delivery options to mitigate tariff-related costs.
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“About 80 percent of Canada-US trade moves by Canadian trucks. We are now entering a business cycle with a tremendous amount of uncertainty brought on by tariffs,” said CTA President and CEO Stephen Laskowski in a statement. “This is further compounding poor economic conditions prior to tariffs being implemented, an underground economy that is wiping out competitiveness in the Canadian trucking industry and an artificial rush to get product over the border to avoid new tariffs.”
Canadian imports to the US appear little affected by retaliatory tariffs, with 70 percent of carriers reporting that northbound freight demand has not been impacted. The number of trucks crossing the Canada-US border has been maintained.
While the Buy Canadian campaign has affected market demand, domestic freight could not replace international business for 90 percent of respondents, given challenging business conditions and “the strong presence of the unchecked, underground economy in the trucking industry,” the CTA said.
“Our members’ customers are facing a precipitous drop in demand for their goods, which could leave trucks parked on the sidelines indefinitely. More bad news could be the breaking point for many in the industry,” Laskowski said. “Once capacity is drained from the cross-border sector, it will be dumped into the Canadian market, creating unsustainable business conditions and a nuclear winter for Canada-U.S. freight movement.”
Laskowski added that the Canadian economy and the trucking industry are entering “a dangerous point in history, leading to a game of attrition where companies compete to see who can hold on the longest before declaring insolvency.”
The CTA indicated that it had made the following recommendations to the Council of the Federation:
- Remove internal trade barriers
- Eliminate tax and labour code changes
- Crack down on the trucking industry’s underground economy
The CTA survey was conducted with executive members of carriers which are part of either the CTA or provincial association boards.