Ontario carriers polled by the Ontario Trucking Associationare increasingly frustrated and pessimistic about business conditions as they grapple with a freight recession, illegal competition, skyrocketing costs, and the looming threat of US tariffs on Canadian exports.
OTA conducted a survey of members to identify key trends and gain insight on business conditions in the Ontario trucking industry. Seventy one percent of respondents were carriers and 29% were suppliers and allied trades. The carriers collectively operate nearly 7,000 class 8 tractors in many different markets and employ around 10,000 workers. Nearly 60 percent of loads carried by this group is cross-border trade, with the remainder being internal domestic trade (42%).
When polled, 68% reported they expected conditions to worsen; 29% were unsure, and only 3% believed that conditions might improve in the short term.
Specifically, carriers suggest the tariff threat from the US led to an 18-percent average uptick in shipment cancellations from Canada to the US and a 14 percent increase in cancellations from the US to Canada. Essentially all products and commodity group appear to be affected, from parts for assembly line manufacturing, automotive, agricultural, food and food processing inputs, wood and other construction materials, and consumer goods, all reportedly impacted by the current business climate and decline in customer demand.
The political and media drive to ‘Buy Canadian First’ does not seem to be providing more than a very modest impact on operations. Only 16% of carriers indicated they have seen this marketing push reflected in their customer’s purchasing patterns, with an average reported increase of about 10%. The remaining 84% of carriers report they have not seen an obvious uptick in domestic shipments because of the ‘Buy Canadian’ campaign.
This market uncertainty is also having a direct impact on the industry’s workforce. Carriers suggest that if business conditions do not improve, the sector may see increased layoffs. Nealy one in three carriers surveyed (32%) said they have already laid off some employees. Fifty-one percent have not yet laid off employees, but said they could be forced to if conditions don’t improve.
Consequently, 62% of respondents say they would need to lay off employees in the event of a prolonged trade war with the US. Only 9% of respondents believed the impacts of potential tariffs would not necessitate in the reduction of their workforce.
When asked what the government could do to improve conditions and relieve pressure for carriers, the majority indicated authorities need to get a grip on the underground economy and start meaningful enforcement of carriers who break various laws and don’t abide by regulations.
“These carriers are undermining compliant and responsible carriers who are already grappling with increasing labour costs, a myriad of taxes in face of the worst freight market in nearly 40 years,” said Geoff Wood, OTA senior VP, Policy. “It is no wonder, then, that compounded by an out-of-control underground economy, the real potential of tariffs could be the final straw for more than a few responsible, compliant companies and their employees.”