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Recovery Road
by Steve Macleod
Many of the names are the same, but many of the numbers are different. And in a reversal from our industry snapshot last year, things might actually be on the up and up. Around this time last year, the whole economy looked bleak, to say the least, and the state of the trucking industry didn't provide much hope. The price of diesel was putting the pinch on truckers, the high Canadian dollar was putting the pinch on manufacturers, and a tightened credit market was putting the pinch on everyone. Freight volumes were dwindling, job prospects were fewer and the experts were having a hard time seeing an end to the downward slide. As a result, a big chunk of the Top 50 Canadian for-hire carriers downsized between our 2007 and 2008 annual tally, and those that hadn't downsized had a lot of extra iron. As one Quebec-based fleet told us back in early 2008, business was "great, except for the number of trucks parked against the fence." Clayton Gording, president of Reimer Express Lines, which holds the 20th spot on this year's list, has seen a lot of ups and downs throughout the years. "It's been a wild ride to say the least," Gording tells us. "I've been with Reimer 42 years. But this is the worst I've been through." What a difference a year makes, sort of. The price of diesel is tolerable, our dollar sits below parity with the American greenback, and credit is more widely available. Of the Top 50 carriers on our list, 47 of them increased their total numbers in the 2009 edition, albeit only slightly for the majority of them. Freight volumes aren't even close to pre-downturn levels, and the growth by the Top 50 carriers was likely aided by job shedding and bankruptcies among smaller fleets who were unable to weather the economic storm. But even for the big boys there has to be work to increase numbers, and even slight growth brings hope to forecasters. Gording cautiously ventured there might be a "bit of a turnaround" by "the third or fourth quarter of the year," but qualified it by adding, "it's going to be slow." And some industry experts are also predicting a bounce back in the near future. According to Wall Street analyst John Oltesvig, who prepared a report on the trucking industry for the Gerson Lehrman Group, heavy-duty truck sales are among the first casualties when a recession hits. "Historically it has been demonstrated that heavy-duty truck sales go down first at the beginning of a recession and that they come back last at the end of a recession," Oltesvig writes. "Old trucks will cost too much to keep rolling, and new-truck depreciation will look attractive by comparison." Oltesvig says a 1% up tick in the Index of leading indicators at the end of May, "is pretty solid evidence that the recession is beginning to wind down, since there has never been an increase of that magnitude in the history of the index without the economy being in expansion mode." The folks at transportation forecasting firm FTR Associates agree, and say the two-year-old freight recession appears on the verge of hitting rock bottom, setting the stage for an incremental rebound over the next year. "We have credible signs of a bottom nearing," says Noel Perry, principal of Transport Fundamentals and a senior consultant and managing director for FTR, showing a list of economic indicators, mostly now heading up, whereas three months ago they were all heading downward. FTR economists believe as far as the freight recession is concerned, we'll be bouncing along that bottom for the next three quarters before freight catches up with improved GDP numbers, which puts the start of real freight growth in the first quarter of 2010. As far as economic indicators go, our Top 50 carriers are right on track.
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