The economy through orange-colored lenses

GREEN BAY, Wis. — Trucking companies that “understand flexibility and have solid control of their costs moving into 2009 will manage through the volatility and prosper greatly when demand returns to the market place in Canada."

That’s the forecast from an American-based trucking giant. Straight from Big Orange’s mouth.

The brass at Schneider Logistics, a division of Schneider National, based in Green Bay, has issued its annual State of the Industry review.

It’s a 38-page comprehensive look at where transportation markets are headed and it covers the planet, from China to Chattanooga.

From fuel costs to earthquakes, Olympic games to Olympian debts, the report discusses the future of LTL, truckload, intermodal and shipping: It covers rates, demand, supply and everything else you’re liable to lose sleep over.

There’re no rose-colored lenses here.

"Consensus forecasts agree that GDP will continue to fall hard and remain weak through the second half of 2009," it says of the North American market. "Every major leading indicator on a monthly basis continues to point straight down with many analysts unsure whether or not the market has reached the bottom.

Big Orange says Canada is more insulated from the
global recession than the US, but it isn’t entirely immune.

"There truly can be no recovery until these trends flatted or reverse."

Although the report does affirm that Canada’s economy has a more solid foundation than much of the world’s, it acknowledges that we’re still in bed with the starred-and-striped elephant in the North American room so our trucking industry will continue to react to the economy down south.

“Conventional wisdom would indicate that a lower Canadian dollar and softer fuel prices are helpful and would normally be greeted with more enthusiasm in the manufacturing and logistics sectors. However, if Canada’s biggest customer to the south is not buying then it merely offsets some costs and creates some short term cash flow but won’t make that much of a difference in terms of long term sustainability."

"Given the fact that over 75 percent of Ontario’s merchandise exports go to the U.S., representing about a third or more of provincial GDP, Canada cannot help but be negatively impacted."

Schneider takes note of special policies and initiatives pushed by the Canadian Trucking Alliance, which could stimulate and set the table for recovery.

Speed limiter legislation, the development of a pilot of LCVs (long combination vehicles) in Ontario, a new provincial grant program for auxiliary power units, progress on harmonizing the weight allowances on fuel efficient wide-base tires, and a campaign promise by the federal Conservatives to cut the excise tax on diesel fuel by 50 percent, were all mentioned. (Although, we must note, that the Harper government looks like it’s nowhere close to making good on that latter promise).

The entire report can be read by clicking here.