In 2015, the Canadian economy was uncertain at best with our depreciating loonie, the drop in oil prices, and flat Canadian Gross Domestic Product (GDP). In 2016, Chief Economists of some of Canada’s biggest banks said that Canada is headed for another rocky year. So, with the Canadian economy in its current state, what does that mean for the trucking industry? Here are 3 economic trucking trends to watch for in 2016:
1. Equipment costs will continue to rise. With the Canadian dollar hitting a new 12-year low at 69 cents U.S. in January, and forecaster David Doyle of Macquarie Capital Markets Canada Ltd predicting the dollar could go as low as 59 cents, costs to replenish equipment will continue to increase. Since Canadian truck dealers purchase their equipment from the U.S., Canadian buyers are now spending roughly 40% more on tractors, trailers, and replacement parts. These price increases are affecting the trucking industry as a whole, but for private fleet owners who don’t always have the same buying power as larger fleets, it’s even more economically challenging.
2. Costs to attract and retain drivers will increase. With the driver shortage expected to hit 33,000 vacancies by 2020, and the high driver turnover rate that many companies face, the cost to attract and retain drivers will continue to increase. Companies will need to spend more on advertising, recruiting, road testing, and background verifications to attract drivers and keep them in their seat. According to The Upper Great Plains Transportation Institute study, the average cost of turnover per driver is $11,500 (C$), making it even more important to retain current drivers.
3. Changing rules and regulations. Government changes in both the U.S. and Canada are having a large impact on trucking companies and their ability to manage their operating costs. Electronic logging devices (ELDs) will be mandatory for carriers in the U.S. in 2017, including Canadian drivers operating into and out of the U.S. The costs range from an annualized price of $165 to $832 per truck, plus “back-end” IT costs to integrate the ELD data. As well, a 100% increase from $205 to $401.67 US per commercial vehicle for a vehicle transponder paid to the US Custom and Borders Protection (CBP) and the Animal and Plant Health Inspection Service (APHIS) for commercial vehicles entering the US, means costs will continue to rise.
For private fleet owners, the rising costs of equipment, attracting and retaining drivers, and ever-changing rules and regulations might outweigh the benefits of running their own trucks. If you are interested in learning more about Canada Cartage’s unique fleet outsourcing model to see how we can help reduce operating costs, email us at firstname.lastname@example.org or visit www.canadacartage.com.