Newspaper article The Canadian Press

Canada's Trucking Sector May Face 'Inflection Point' in 2015, Say Observers

Newspaper article The Canadian Press

Canada's Trucking Sector May Face 'Inflection Point' in 2015, Say Observers

Article excerpt

Canada's trucking sector faces uncertainty

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MONTREAL - High personal debt levels and rising taxes in Ontario and Quebec are constraining Canadian economic growth needed to support a recovery of the trucking sector, says the chief executive officer of TransForce, the country's largest trucking company.

Alain Bedard also said the industry was hit by plant closures in the manufacturing heartland of Ontario and Quebec, but he is hopeful that a recovery will begin next year.

"At best, we will probably see some improvement in 2015, slowly, very slowly in Canada," he said in an interview.

It's a viewpoint shared by David Bradley, president of the Canadian Trucking Alliance, which represents carriers, owner-operators and industry suppliers.

"I think it's approaching our time," said Bradley who estimates the industry is "probably 90 to 95 per cent" back from its low point, with some parts of the country and customers doing better than others.

The sector has been under pressure since 2006 when a rise in the Canadian dollar choked off southbound demand that had been growing for 20 years. The industry then moved into "unchartered waters" in 2008 when the financial collapse caused a 30 per cent reduction in volumes, forcing many drivers to flee their rigs.

The Canadian industry generally tracks the economy, so the outlook this year is for "modest choppy growth," said Bradley.

"Increases in volumes have been modest but sustainable and I think that people are generally optimistic," he said in an interview from Ottawa. "People have long memories and it wasn't too long ago that we were in a multi-year great recession."

Analyst Walter Spracklin of RBC Capital Markets recently raised his estimates for Canadian trucking companies on evidence pointing to improved industry fundamentals.

"We believe the industry is approaching an inflection point where demand (via higher volumes) is beginning to overtake supply, affording carriers greater pricing power that should translate into improved financial results going forward," he wrote in a report.

Spracklin said private trucking companies have a more positive assessment of current freight activity than public carriers. …

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