For Jas Singh, the road to profitability keeps narrowing.
“The pace is slow right now, not a lot of loads,” says the owner of JK Transport, a Brampton, Ont.-based trucking company that Singh started 15 years ago.
Along with fewer loads, costs have skyrocketed as freight rates have plummeted.
A new truck tractor now costs him $225,000, up from $135,000 in 2019, according to Singh. Trailer prices for its fleet of 15 tractor-trailers doubled to $80,000. And he can only charge $1.50 per mile for deliveries that brought him $2.30 per mile last year.
“A lot of problems this year,” the 45-year-old said in a phone interview.
He is not the only one. The entire Canadian trucking industry is facing a shaky market as freight volumes and rates continue to fall – alongside falling consumer demand – from pandemic highs.
According to a report by Trucking HR Canada, the industry lost more than 20,500 driver jobs – or 7% of the workforce – in the first three months of this year compared to the end of the year. 2022.
“As the economy has slowed somewhat, so has the demand for trucking services,” said Craig Faucette, program manager within the occupational group.
Canadians continue to spend on services ranging from plane tickets to fine dining, but their craving for items shipped in a box has declined since 2021 and 2022.
“As the situation has improved, we’ve seen a slight slowdown as people have gone back to travelling, eating out…instead of buying items to renovate their home or garden,” said Mike Millian, President of the Canadian Company Trucking Association.
Inflation and rising interest rates have further dampened consumer demand. “It takes fewer trucks to transport the goods because there are not as many goods to transport. »
Small fleets with fewer resources and fewer contracts are particularly prone to a downturn, which comes as consumers spend more on services and less on household items.
“A lot of small fleets are struggling, especially those that rely on what we call the spot market,” Millian explained, referring to one-off shipments that aren’t subject to long-term contracts or schedules. recurring.
The even steeper decline in shipments to the United States has also reduced incomes for Canadian truckers, who struggle to find loads to bring back to Canada after making deliveries south of the border.
“We’re waiting one to three days for the shipment to come back,” Singh said of his shipments to California.
Earlier this month, 94-year-old U.S. trucking giant Yellow Corp filed for bankruptcy after years of financial woes, a demise that supply chain expert John Gradek calls “the visible part of the iceberg”.
“A number of carriers are in very, very tight financial situations,” said Gradek, who teaches supply chain management at McGill University.
LTL companies, which deliver multiple shipments to different customers at once, face a particularly competitive market.
Rather than having long-term contracts and regular income to rely on, “small businesses” are bidding daily for shipments on a range of apps such as Freightera and FreightSimple, Gradek analyzed.
Large companies also depend on LTL companies. TFI International, the Montreal-based trucking giant with more than 25,000 employees and more than 11,000 tractor-trailers, derives nearly half of its revenue from this segment.
“Our LTL revenue in Canada is plummeting,” CEO Alain Bédard told analysts on an August 1 conference call, adding that the unexpected drop is not unique to this division. Total revenue fell 22% in the first half of 2023 from a year earlier, prompting the nation’s largest trucking company to lower its financial forecast for the second time this year.
“We never expected such a significant market disruption in the second quarter,” Bédard said. Everyone is going through some kind of very difficult time in the freight transportation environment. »
He pointed the finger at consumers: “They don’t spend as much on their homes, they don’t buy TVs or patio furniture. »
The two-week strike by port workers in British Columbia last month added a stone to the edifice across the country, he added.
At the same time, profit margins in this overburdened industry have shrunk further. In the United States, freight rates for spot shipments fell 23% year over year in the second quarter and rates for contract shipments fell 14%, according to Coyote Logistics.
With constant cross-border transportation, Canadian trucking companies generally see similar trends to those in the United States, experts say.
Operating costs are skyrocketing as diesel fuel prices approach 2022 highs, interest rates on truck leases rise and supply chain rifts persist.
Back in Brampton, Mr. Singh summed up the situation: “There is no profit right now.”
