MNI INTERVIEW: Canada Truckers See Worst Slump In Four Decades

Canadian truckers are selling their rigs and filing for bankruptcy as the U.S. trade war creates the worst market in four decades with damage spreading through the whole economy, the head of the industry's lobby group told MNI, suggesting one of the central bank's concerns about the downturn's scale is being realized.

"Canada-U.S. trade is the lifeblood for the Canadian economy. And I would say that in the last 12 to 18 months, we have had the worst freight economy for our members in 30 to 40 years," said Canadian Trucking Alliance President Stephen Laskowski. The group has 4,500 member firms and the industry carries the bulk of U.S. exports across the border, two-way trade worth CAD1 billion a day before the trade dispute.

Tariffs ranging from 25% to 50% on items from cars to aluminum are weighing on industry revenue, employment and investment, he said. The prospect of delaying a trade deal resolution into next year's technical review of the North American trade pact means there's no end in sight, Laskowski said after testifying to a House of Commons committee Tuesday. He spoke to MNI just after Prime Minister Mark Carney left a meeting with President Donald Trump with no trade breakthrough. 

"There is discussion that the next CUSMA agreement will look very different than previous. That sent shockwaves through my industry, because the vast majority of my members rely on north-south trade for their business," he said. 

NO ONE'S BUYING TRUCKS

"No one's buying trucks," he said. "They don't need more drivers at this time. They don't need more trucks and trailers, they're facing the worst demand for their services in thirty, forty, years. You're seeing bankruptcies." (See: MNI INTERVIEW: Job Losses To Rise Even With BOC Cut-Union Boss)

Four decades ago, Canada was coming out of a protracted slump made worse by painful tax hikes and government cutbacks. Fear that inflation would take off also pushed the BOC to become the first G7 central bank and the second after New Zealand to adopt numerical inflation targets. 

The Bank last month cut its key rate 25bps to 2.5% and withdrew a phrase about potential easing as it weighs elevated core inflation against weak exports and investment. It's clear to Laskowski the downturn has "absolutely" spread far beyond trade-sensitive industries like manufacturing. (See: MNI INTERVIEW: Further BOC Cut Unclear In Trade War Fog-Mendes)

"If less people go to a restaurant that's less food to move to the restaurant, that's less freight in a truck," he said. "If they're not buying TVs and stereos, again that's less retail items moved by truck."

WEAKER AND WEAKER

"And as this tariff war continues and the economy becomes weaker and weaker, my members become weaker and weaker because they serve all aspects of the economy," he said. 

Trump's comments to Carney about the U.S. seeking to compete rather than cooperate with Canada in sectors like autos suggests permanent damage, Laskowski said. 

"The great fear is starting to be realized. Customers of my members are starting to have hard conversations about their presence in the north-south lanes," he said. 

Carney and provincial leaders are doing some good work seeking to erase domestic trade barriers, he said. "Although all the excellent work that is undergoing with regards to internal trade barriers will help, it won't be enough."