Canadian trucking industry is facing downtimes as consumer demand drops
Imagine Canada as a big puzzle, and the trucks are the pieces that help put it all together. They move stuff around, so we can have the things we need. But lately the Canadian trucking industry has been encountering some challenges. Jas Singh, owner of JK Transport clearly explains about this in one of his recent interviews.
“Business is slow right now, with fewer shipments,” said the owner of JK Transport, a trucking company in Brampton that he started 15 years ago. He says making profit is getting harder these days.
Costs have gone up while the money he makes for each delivery has gone down. A new truck now costs him $225,000, up from $135,000 in 2019. The trailers for his 15 semi-trucks now cost twice as much at $80,000. He used to make $2.30 per mile for deliveries, but now he can only charge $1.50 per mile.
“It’s been a tough year,” said the 45-year-old.
He’s not the only one struggling. The whole Canadian trucking industry is facing a tough market. Fewer goods are being shipped, and the prices for shipping are dropping. This is because people are buying fewer things, especially compared to when the pandemic was at its peak.
A report from Trucking HR Canada shows that over 20,500 truck driver jobs were lost in the first three months of this year, which is seven percent of the workforce. This is because there’s less demand for trucking services as the economy has slowed down a bit. While this might help with the shortage of truck drivers, it’s not good news for trucking companies that are already trying hard to survive in a competitive market.
Even though Canadians are spending money on things like travel and restaurants, they’re not buying as many things that need to be shipped in trucks. This is because prices are going up, and people are trying to save money.
Smaller trucking companies with fewer resources and contracts are having a tough time.
Mike Millian, President of the Private Motor Truck Council of Canada, mentioned that numerous smaller trucking companies are facing difficulties, particularly those depending on short-term shipments rather than long-term contracts.
The situation is made worse by fewer shipments coming from the United States. Canadian trucking companies are struggling to find shipments to bring back to Canada after delivering goods to the U.S.
“We often have to wait for one to three days to get a shipment back,” Singh said about his deliveries to California.
Just recently, a big American trucking company called Yellow Corp. went bankrupt after having financial problems for years. According to John Gradek, who teaches supply chain management at McGill University, there are many other trucking companies in a bad financial situation.
Trucking companies that make multiple deliveries for different clients during a single trip, known as “less-than-truckload” (LTL) operations, are finding it especially hard. These companies don’t have long-term contracts and have to bid every day for shipments.
Even big trucking companies are feeling the pain. TFI International, a big trucking company based in Montreal, has seen its revenues drop by 22 percent in the first half of 2023 compared to the previous year. This has forced them to lower their financial forecast for the second time this year.
All of this is happening at a time when trucking companies are dealing with higher costs, like more expensive diesel fuel and higher interest rates for truck leases. Plus, supply chain problems are also causing delays.
That’s why Jas Singh says, “There is No Profit Right Now” in the Canadian trucking industry.
Trucking Bloodbath is Just Getting Started!
Get to know the harsh reality of the Canadian trucking industry and why the load to truck ratio is declining. Explore all the real-world trends and updates of trucking with OpenFR8!
I am copyright writer with OpenFR8. I take a little bit of time to complete my blogs because I undergo research and analysis of each and every article to gather accurate information. For me, writing is not just a job; it feeds my creativity and desire to share insightful information with readers. As a writer, I like to present content that is valuable and easily understood by every individual. I believe in the power of words, and if they are used in a good manner, they can create many positive changes around us.