Trucking Prospects 2022. Is It Getting Any Better?

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 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/

https://ontruck.org/north-american-supply-chain-preparing-for-border-and-domestic-vaccination-mandates-cta/