The ripple effect of US tariffs is being felt beyond the automative sector and throughout all parts of the supply chain, report Canadian trucking carrier members of the Canadian Trucking Alliance.
In a recent survey, executive members of carriers belonging the CTA or provincial association boards, indicate current business conditions are perilous.
Almost 70% of respondents indicate that loads to the US have been cancelled or paused, and include most commodities like lumber, oil products, fertilizers, farming equipment, tires and general food products.
Many report tariffs are essentially bringing trade to a halt, as customers and suppliers struggle to figure out the actual declared product value, who pays for these additional costs, and customers adjusting to just-in-time/emergency delivery options to manage costs associated with tariffs.
Canadian Imports from the US
Alternatively, counter tariffs are seemingly having little effect on Canadian imports to the US, as 70% of carriers report no impact on demand for northbound freight.
Business Conditions
While only a small percentage of trucking fleets have announced layoffs, (8%), almost 70% of carriers are stating they are monitoring the size of their labour pools. Even more concerning is the fact that many carriers (60%) state that a prolonged trade war could put their business operations at serious risk.
The number of trucks crossing the Canada-U.S. border over the last week has remained steady. Trade patterns have also shifted as costs continue to rise and market conditions become tighter. The Blue Water Bridge, for example, has seen a significant uptick in commercial traffic over the last several months, which may also be attributed to sharply increasing toll rates at the Ambassador bridge.
Carriers noted that the Buy-Canadian campaign has created some changes to market demands. However, only 10% of respondents say they can replace their international business with domestic freight, because of poor business conditions in the domestic market and the strong presence of the unchecked, underground economy in the trucking industry.
“About 80 percent of Canada-US trade moves by Canadian trucks. We are now entering a business cycle with a tremendous amount of uncertainty brought on by tariffs. This is further compounding poor economic conditions prior to tariffs being implemented, an underground economy that is wiping out competitiveness in the Canadian trucking industry and an artificial rush to get product over the border to avoid new tariffs,” said CTA President & CEO Stephen Laskowski.
“Our members’ customers are facing a precipitous drop in demand for their goods which could leave trucks parked on the sidelines indefinitely. More bad news could be the breaking point for many in the industry.
“Once capacity is drained from the cross-border sector, it will be dumped into the Canadian market, creating unsustainable business conditions and a nuclear winter for Canada-U.S. freight movement,” added Laskowski. “The Canadian economy, and the trucking industry that fuels it, are entering a dangerous point in history, leading to a game of attrition where companies compete to see who can hold on the longest before declaring insolvency.”
The Canadian Trucking Alliance has made several recommendations to the Council of the Federation to help address this situation, including the removal of internal trade barriers, tax and labour code changes and addressing the out-of-control underground economy in the trucking industry.