Driver shortage, limited access to capital hold back innovation in trucking, CTA says

OTTAWA (Oct. 3, 2002) — A shortage of skilled drivers and other workers is the most significant challenge to innovation in the trucking industry, the Canadian Trucking Alliance said yesterday.

The association released a list of five “major constraints in trucking” in response to a federal government initiative on Innovation & Transportation. They are: human capital (e.g. drivers and other skilled workers); financing; eroding highway infrastructure; combined with high Canadian taxes; and poor policies and regulation.

Because truck driving is not considered a skilled occupation, there is little prospect of meeting the demand for drivers from immigration, the CTA said in a statement. It noted the government’s strategy toward promoting Masters and Ph.D. level workers and ignores important skills in the transport sector.

The trucking industry is made up primarily of thousands of small companies and is cyclical in nature. This is not attractive to alternative investment sources (e.g. the equity markets) and the industry must resort primarily to debt financing through banks or other institutions. Consequently, the industry carries relatively high debt/equity ratios and is under-capitalized.

Truckers suffer higher tax levels compared to the U.S. Only three to four per cent of federal fuel taxes are invested in road infrastructure, resulting in substandard highways and a resulting increased operating cost for trucks, the association said. Monies collected from fuel taxes serve no policy purpose other than to raise revenues for the federal government — there is no recognition of the fact that there is a reduced environmental impact from today’s cleaner truck diesel fuel.

The association also noted that U.S. trucking companies can fully depreciate their equipment in half the time of Canadian carriers. Uncompetitive capital cost allowances, a higher level of tax paid on business inputs than any other sector, lack of tax relief for investing in environmental, safety and other technologies are all major constraints on the trucking industry. In addition, Canadian drivers receive only a 50 per cent tax deduction on meals, whereas the U.S. is now restoring an 80 per cent deduction.

“These issues are all extremely important when looking at where truck transportation fits in Canada’s Innovation Strategy,” said Bradley, “and we look forward to fruitful dialogue with federal ministers developing the strategy.”