The trucking industry has undergone many changes in 2021, and 2022 is filled with many uncertainties. Despite the potential for improvement of supply chain conditions and the Canada and US trucking industry as a whole, the COVID-19 pandemic is still slowing things down.
So, what can we expect from the trucking industry in Canada in 2022? We'll cover this in this post. But before that, here’s an overview of 2021 trends.
An overview of trucking industry trends 2021
- COVID-19 complicated merger and acquisitions activities, but dealmakers found alternative ways to close deals like visiting sites masked up and using Zoom to negotiate.
- There were surging freight demands as consumers shifted their behaviors to shopping online. Trucking company leaders grew their fleet to meet the increasing demand.
- The government-mandated that trucks be fitted with Electronic Logging Devices (ELDs) by June 2021. As a result of pandemic-induced challenges, the government opted for a phased-in enforcement process that will last 12 months, beginning June 2021.
- Vaccinations were finally readily available to truck drivers and a good number actually took the shot.
- Electric and automatic trucks came into the scope, and some deployments were done in Canada.
- In 2020, the pandemic sunk the market size to 9.5 billion (US dollars) due to the effect of the COVID-19 pandemic. Things got better in 2021 as the estimated market size for local freight trucking in Canada got over just 10 billion (US dollars).
- Over recent years, the long-distance trucking market in Canada has been fluctuating until it reached its peak in 2021.
Current trends, market situation, facts, and stats in the trucking industry
Unavailability of labor in some areas
Around 18,310 truck driver positions were
unfilled in Canada in the second quarter of 2021. The number of unfilled
positions for truck drivers has increased with a fluctuating trend in recent
years.
Closing down of trucking companies
Both small and large Canadian trucking
companies have closed due to harsh economic conditions. A reduction in the movement
of goods has immensely contributed to this.
Relocations in search of better market conditions
Trucking companies are moving to new
locations to ramp up their production operations and meet the current demand
for trucks.
Technology developments are on the rise
Many new technology developments are
coming to the industry and are likely to cause a market flip in 2022. If the COVID-19
pandemic doesn’t disrupt things, conditions in the market should improve. This
is highly needed to save companies that are likely to go down due to the
current market conditions.
Low trucking prices
The current price that trucking companies
operate at is so low— so low that truckers earn less than the average American
worker. This is because trucking companies charge less to get the limited
available work. In 2022, the pricing may improve or deteriorate further depending
on the market conditions.
High fuel prices
Diesel prices have been on the rise over
the years. Trucking companies are responding by going for alternative fuels or
upgrading to electric trucks.
Trends in the US extrapolated to Canada
North American supply chain likely to be distracted by vaccination mandates
Despite the effect of the COVID-19 pandemic
itself, the North American supply chain will be preoccupied with another issue—
vaccination mandates.
Ottawa signaled to supply chain
stakeholders that only fully vaccinated Canadian truck drivers would be allowed
to cross the US-Canada border. Washington made the same decision, and they
expect their vaccination guidelines to be finalized, issued, and enforced by
January 22.
The Canadian Trucking Alliance has urged
both governments to consult with key supply chain stakeholders and decide on
suitable dates to enforce the vaccination mandate. CTA says that the North
American supply chain is already struggling, and current dates will disrupt the
industry even more.
These mandates will more likely bring
additional costs for trucking companies. In this regard, the alliance continues
to urge the government to stick to its 2021 summer agreement of treating the
trucking industry as an essential service to caution it from economic sabotage
due to COVID-19.
ArriveCAN will become more popular
The government of Canada issued
guidelines about using the ArriveCAN platform as a way of storing and showing
proof of vaccination.
Public health and border officials urge
truck drivers to submit their vaccination on the ArriveCAN platform to avoid
potential penalties and delays at the border. There’re several changes on the
new ArriveCAN platform, and truck drivers are advised to take advantage of the
changes.
A good number of truck drivers may exit the industry
While there have been reports that there’s
an increase in the number of truck drivers being vaccinated in some companies,
a good number of truck drivers have hinted about exiting the industry over the
restrictive cross-border mandates.
If the mandates are effected this month,
there’s speculation that the industry could lose some 12,000 to 16,000
cross-border truck drivers. The CTA warns that a substantial reduction of
commercial truck drivers where there’s already a shortage could disrupt an
already struggling supply chain even further.
!Trucking Prospects for 2022 for Canada's MarketTrucking prospects for 2022 for Canada's market / TCI dry van truck
Trucking prospects for 2022 for Canada's market
Shipping conditions may improve but not so dramatically in the new year
Since the recovery from the pandemic
started in 2020, active truck utilization started moving off full utilization.
This trend is expected to continue in
2022, but truck utilization will still be high for the better part of 2022, as
it'll take time for the new rails to come online. For this reason, shipping
conditions are unlikely to improve dramatically in 2022.
Possible revenue growth in the trucking industry
The COVID-19 pandemic is shifting
consumers' habits to purchase goods online, and the demand for trucking
services is expected to increase even in 2022.
Since delivery time is crucial for
e-commerce merchants, the trucking industry may experience continued revenue
growth in 2022.
Shippers’ conditions are at the mercy of the Omicron variant
The latest shippers’ condition index
tracks show that shippers have been facing challenging transport conditions due
to reducing truck capacity and increasing fuel prices.
While freight analyst reports suggest
that things could get better at some point in 2022, the new COVID-19 variant
brings so much uncertainty. There's a high chance it could even disrupt demand
and supply in 2022.
Trade activity and retail sales are expected to increase
Despite the uncertainty of economic
recovery due to COVID-19, trade activity and retail sales are expected to
increase in 2022. The experience of truck drivers and the overall industry's
performance will therefore be enhanced.
Conclusion
The trucking industry in Canada is full of uncertainty in 2022, but we're optimistic things will get better. The biggest hurdles expected to face the trucking industry are vaccination mandates, a possible exit of drivers from the market, and disruption by the COVID-19 Omicron variant. But, only time will tell what obstacles the industry will face.
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Resources:
https://linchpinseo.com/trends-trucking-and-transportation-industry/
https://ontruck.org/omicron-wild-card-affecting-2022-shipping-conditions-ftr/