Ontario Trucking Association

Ontario Trucking Association

November 15, 2006 17:09 ET

Ontario Trucking Industry Outlook 2007

By: David Bradley, President, Ontario Trucking Association

TORONTO, ONTARIO--(CCNMatthews - Nov. 15, 2006) -

ATTENTION: Business and Transportation Editors

Perhaps the record crowds at the OTA convention are a harbinger of stronger times ahead for the Ontario trucking industry, but the economic signals seem to be pointing to another year of unspectacular growth in 2007, but growth all the same. The economist in me says that modest, sustainable growth is better than wide, boom-bust swings in the business cycle anyway. However, in an industry whose growth has outpaced that of the economy virtually every year since World War II, it is hard to accept sluggishness. This is especially true when only a few short years ago, the industry was experiencing - for the first time in decades - a capacity crunch which in turn provided the impetus for concerted efforts to improve the rate structure.

In recent months, someone complained to me that the economy is simply not generating enough freight. In my view, the economy is churning out precisely the right amount of freight given current levels of aggregate demand. The problem is, and this has been a chronic industry issue, there are perhaps too many trucks chasing that freight.

This is particularly true in certain sectors which are more susceptible to exchange rate fluctuations or changes in consumer buying patterns, etc. As always, a lot will depend on what business a trucking company is in. Ontario's construction sector, for example, is still quite strong. The problems in industries like automotive manufacturing, pulp and paper, etc., are well documented. It's not surprising then that bulk haulers are in general busier than van operations, which tend to be more susceptible to capacity swings.

While the consensus view amongst most economists is that 2007 will see more modest growth, there is one more wild card to add to the usual suspects (the value of the Canadian dollar and fuel prices) - that is the prospects for the US economy. Over the past couple of years, the industry has already had to adjust to shifting traffic patterns, where shipments from the US in many cases displaced exports to the US as the headhaul. Canada's trade surplus with the US has shrunk significantly. Yet Ontario's economic prosperity is still overwhelmingly dependent upon exports to the US (which reflect about 40% of the provincial GDP).

At the time of writing the US economy is slowing. The housing market which was rife with speculation is crashing. The US government's fiscal imbalance is soaring into the stratosphere. Consumers are in debt up to their eyeballs. However, one thing that history gas shown us is never to count out the US economy. This bears watching.

There will also be plenty of new regulations for the industry to adjust to in 2007 - e.g., hours of service, pre-trip inspections, and engine emissions standards. Ontario will introduce a new CVOR and facility audit protocol. The speed limiter issue should be dealt with. The report of the bi-national commission that has been studying where to locate a second border crossing at Windsor-Detroit will be issued. But, will the senior levels of government have the political will to actually implement the report's recommendation?

Speaking of politics, a provincial election will take place in Ontario on October 4th. And, the minority situation in Ottawa virtually guarantees that we will have to endure another federal election in 2007. It's always harder to get things done when governments are in pre-election mode. That is not always a bad thing, but there is so much that still needs to be done both in transportation and elsewhere. Ontario must to grips with the competitiveness challenges faced by domestic businesses. It needs a long-term plan for major highway infrastructure investment. It needs to tackle some important but very political issues like harmonizing the PST (and the MJVT) with the GST, so business inputs and investment are not taxed. There are still a host of issues at the border to be dealt with and perhaps new security programs to be introduced that we are not yet aware of.

It could be a rough ride at times next year, but I remain on balance optimistic. Despite its problems, the economy has shown more resiliency than perhaps we anticipated. Capacity will continue to be an issue and trucking will continue to be the preferred and predominant choice of shippers. As always the trucking industry will rise to whatever challenges are thrown its way.

The Ontario Trucking Association (OTA) is a business association representing motor carriers operating into, out of and within Ontario. The trucking industry is one of Ontario's largest employers. Trucks haul 90% of all consumer products and foodstuffs produced and consumed in the province and 80% of Ontario's trade with the United States. Founded in 1926, the association's membership comprises trucking companies of all sizes, shipping all types of commodities, from all regions of North America. OTA is a member of the Canadian Trucking Alliance. The Globe & Mail has stated that "OTA and CTA have been among the most successful lobbyists in the land."

Contact Information

  • Ontario Trucking Association
    Rebecka Torn
    Mgr. Communications
    (416) 249-7401 x 224 or Cell: (403) 993-6666
    (416) 245-6152 (FAX)
    Website: www.ontruck.org