More trucking firms need to die, says CTA boss

TORONTO — The president and CEO of the Canadian Trucking Alliance (CTA) says he’s surprised — and disappointed — more unsustainable trucking firms didn’t die in the months following the global economic collapse.

Speaking at the 45th annual Canadian Transport Research Forum in Toronto this morning, David Bradley said too many trucking companies are still chasing too little freight, driving rates ever downward.

"I’m sure we’re all going to talk about our failures this morning," he said, referring to the conference theme of successes and failures in transportation and logistics trends and policies. "If I had to pick the failure of the trucking industry in last couple of years, it would be that not enough companies failed. We were hoping for the great cleansing to come and it didn’t happen."

Bradley says that despite the most challenging time in living memory for most truckers, too many are still limping along.

"It takes a lot to kill a trucking company," he mused, noting that balance sheets are in tatters throughout the industry as debt-equity ratios have climbed and companies have become increasingly beholden to banks and private lenders.

"There are some opportunities there, though," he said. "You shouldn’t let a good recession go to waste. There was probably hope on the part of the industry as a whole that we would see more capacity leave the industry through business failure. We tended to the view that there are too many people in business that don’t know what they’re doing, therefore too many people chasing too little freight."

Bradley said the saving grace is that trucking firms continue to find new ways to be more efficient.

CTA CEO David Bradley wonders why more
trucking firms still aren’t in their twilight stage

"I would have thought after 20-odd years of economic deregulation we would have pretty much sucked that stone dry, but it’s amazing what people can do when they have to find increased efficiency and productivity and try to create that bottom line," he said.

Bradley said the balance and trajectory of trade has changed over the last three-and-a-half years. NAFTA created a boom in north-south traffic, with the head haul being the southbound leg, he said. But the recession has turned that into the back haul, with the head haul now being the northbound leg.

"Relatively speaking in terms of volumes and pricing, the northbound marketplace has been stronger than the southbound marketplace," he said. ‘The problem with that for Canadian carriers is that you have to have trucks down there in order to get that freight back."

Fortunately, however, Americans truckers tend not to like the border.

"Canada represents a strong market for U.S. producers and manufacturers. They need to get the goods here. U.S. carriers in their local region probably aren’t interested in it, so we’re starting to see some interest phenomenon in terms of paying for trucks to go down empty in order to bring that load back." he said.

"That’s one of the few positive things we’ve seen, but of course, that’s not sustainable."

Bradley said as the economy improves he’s hoping financial institutions will continue to regulate the credit market.

"Frankly, some of the private lenders, the leasing companies, those folks, made it too easy. They lent to too many people too much money. Now they’re sitting with a glut of used equipment that they don’t know what to do with," he said.

"I think the survivors will be stronger as a result of this. I’m optimistic that trucking will remain dominant mode of transportation. The industry will shrink and grow with the economy, so it might be smaller in the short term over what it was before, but with the service that trucks provide they will continue to be the dominant mode.