Ontario truckers feel blowback from US slowdown

TORONTO — Ontario truckers are feeling slightly less optimistic about the bellwether industry’s overall prospects over the next three months compared to the last quarter.

The latest Ontario Trucking Association (OTA) quarterly e-pulse survey shows that overall a majority (64%) of carriers are still feeling good about trucking, but that’s eight points lower than the 2nd quarter survey.

Also reflecting growing uncertainty about the economy, carriers who reported they were ‘unsure’ about the industry’s prospects increased five points to 26 percent.

The good news is that only nine per cent of carriers reported outright pessimism.

Overall, 67 percent of reported an up tick in freight volumes compared to a year ago, although fewer respondents said the same compared to three months ago.

Intra-Ontario freight volumes appear to be level as the majority of carriers (62%) indicate to change in volumes. A similar performance was reported in the interprovincial market, with 49 percent indicating freight volumes had stayed the same. 

The fortunes of the US economy remain
unclear and Canadian carriers
appear to be caught in the middle

Though, undoubtedly, Canadian carriers are feeling the effects of the U.S. slowdown.

A whopping thirty-one percent said southbound US volumes dropped in the last three months three months ago, up 14 percentage points from last quarter. Only 19 percent of respondents said that volumes were improving (compared to 39% last quarter).

About half of respondents said freight volumes heading northbound into Canada were improving — down 10 percent.

The good news is that 45 percent said that loaded miles are increasing, the largest rate to report this since OTA began surveying that data in 2008.

AT ALL COSTS

Carriers reported across the board increases in all major operating costs, including fuel. Around 38 percent said they’re paying between 15 and 20 percent more for diesel and another 23 percent reporting increases even higher than that.

Luckily, most shippers are accepting fuel surcharges. About 85 percent of carriers say tehir customers are paying a reasonable fuel surcharge, up 7 points from last quarter.

Labour costs — the largest expense — are also on the upswing, with 91 percent of carriers reporting increases in driver wages, about two thirds of which said they’re paying between 5-10 percent more than the last quarter.

Carriers were virtually unanimous in reporting higher costs for maintenance and tires (98 and 89% respectively).

RATING GAME

Just over a quarter of carriers suggested that intra-Ontario freight rates were improving modestly, while 61 percent feel rates are about the same.

Interprovincially, 46 percent says rates are better market. That’s up seven points and the highest value reported in previous OTA survey.

Not surprisingly, only a meager 14-percent reported stronger rates on southbound freight — down 11 percent; while northbound US rates are much stronger. (55% indicate improvement).

CAP ON CAPACITY

About 30 percent of carriers say capacity decreased from last quarter while 39 percent report little fluctuation. Carriers appear evenly spit three ways on whether capacity will continue to rise, fall or stay flat.

Carriers are also right down the middle on whether they’ll hire more drivers or owner-ops. Fifty-one percent says they plan to bring drivers in-house with the remaining 49 percent looking at free agents to haul their freight.

Meanwhile, a small majority (54%) say they won’t add any new tractors or trailers, another indication that capacity could tighten further.

As result, 21 percent report that customers are lengthening contract timeframes, locking in capacity.

On the flipside, a third of carriers say that shippers are taking longer to pay their bills — up 14 percent over last quarter and another reflection, says OTA, of softening economic activity.