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11
STRUCTURE OF THE TRANSPORTATION INDUSTRY
Trucking Industry
Trucking is a vital component for many industries in the Canadian
economy. For-hire trucking activities generate significant revenues
and account for many jobs within Canada. Estimates indicate that
more than 300,000 people worked in the for-hire trucking industry
in 1998, generating revenues of approximately $39.2 billion.
![](/web/20060212084152im_/https://www.tc.gc.ca/pol/en/Report/anre1999/graphics/chap11/99f11e03.GIF)
Major Events in 1999
Legislative and Regulatory
Proposed Amendments to the Motor Vehicle Transport Act,
1987
Following extensive consultations with provinces and stakeholders,
the federal Minister of Transport introduced proposed amendments
to the Motor Vehicle Transport Act, 1987 (MVTA) in March
1999.
Although interprovincial and international truck and bus (motor
carrier) operations come under federal jurisdiction in Canada,
the provinces have been primarily responsible for the regulation
of these carriers under the authority of the MVTA. Amendments
proposed for the Act were primarily designed to allow the provinces
to implement the national carrier safety compliance standard that
had been developed by the federal and provincial governments in
consultation with industry. Provinces are also adopting this standard
in their own legislation and regulations.
The proposed amendments had not gone through the complete legislative
process when Parliament prorogued in September 1999.
Internal Trade and National Harmonization
The transportation chapter in the Agreement on Internal Trade
calls for the complete elimination of economic regulation of trucking
in Canada. At the national level, this means repealing Part
III of the MVTA, which has permitted economic regulation of the
intraprovincial component of extra-provincial trucking.
On August 26, 1999, the Governor General in Council approved
an order establishing January 1, 2000, as the date for repeal
of Part III of the MVTANote 3 As of this date, trucking is
no longer subject to economic controls, such as economic
entry controls and tariff regulations, in any part of Canada.
Vehicle Weights and Dimensions
Vehicle weights and dimensions have a profound effect on trucking
costs, productivity and competitiveness, and are a major factor
in highway infrastructure costs. The interjurisdictional Task
Force on Vehicle Weights and Dimensions Policy, reporting to the
Council of Deputy Ministers Responsible for Transportation and
Highway Safety, co-ordinates policy through collective action
and acts as a forum for exchanging information on provincial initiatives.
In 1999, the Task Force developed and proposed national standards
for warning signs and for marking and lighting over-dimensional
vehicles and loads -- that is, those that exceed normal standards
and operate under special permits.
New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland
and Labrador, in consultation with Quebec, are developing a proposal
for uniform vehicle weight and dimension regulations within Atlantic
Canada, initially for use as a basis for consultation with stakeholders.
Meanwhile, Manitoba, Saskatchewan, Alberta and British Columbia
have been working closely with stakeholder groups to develop a
proposal to harmonize special permit requirements within western
Canada for heavy haul and overweight loads and to develop common
requirements for the movement of specialized equipment under permit.
North American Free Trade Agreement (NAFTA)
NAFTA's Land Transportation Standards Subcommittee (LTSS) was
formed to develop compatible technical standards for improving
the safety and efficiency of bus, truck and rail operations, and
governing the transportation of dangerous goods. The three
NAFTA countries also established a Transportation Consultative
Group (TCG) to address issues not related to standards, such as
cross-border operations and research and development. In 1999,
the group completed work on several driver standards issues for
truck operations through a series of agreements on operating and
medical requirements. It also continued to work toward the compatibility
of vehicle, driver and operator standards, with discussions focusing
on such issues as vehicle dimension safety performance criteria,
log books to record driver hours of service, and motor carrier
supervision.
Industry Events
As in previous years, 1999 had its share of mergers and acquisitions
of motor carriers. Examples involving some of the larger Canadian
carriers include:
- Mullen Transportation of Alberta purchased the remaining
60 per cent interest in Ontario-based Mill Creek, which specialized
in general freight to major centres in Canada, the US and Mexico.
(January)
- Contrans Corporation, through its subsidiary Laidlaw
Carriers, purchased Steel City Carriers, the trucking business
of RailAmerica Inc., based in Florida. Both parties agreed to
pursue rail-truck intermodal opportunities throughout North America.
(January)
- H&R Transport Limited, a Canadian carrier in the
refrigerated freight business, acquired C.H. Dredge & Co.
of Salt Lake City. The combined business will operate approximately
530 tractors and 700 trailers throughout the Canada and the US.
With a larger fleet, the company expects to lower the cost of
equipment and fuel, and operate more efficiently by reducing
the number of empty backhauls. (March)
- Trimac Transportation of Calgary acquired an 80 per cent
interest in Amer-Liquid Transport of Brownsville, Texas, expanding
its operations between the US and Mexico. Trimac has engaged
in crossborder operations since 1993 under an interline arrangement
with Intermex, a Mexican tank-truck carrier. (July)
- Trimac Transportation acquired three Nova Scotia-based
operations and one Newfoundland-based operation to further expand
its business in Atlantic Canada. These include Sullivan Fuels
Bulk Hauling Division of Sydney, Nova Scotia; Gateway Fuels Bulk
Hauling Division of Yarmouth, Nova Scotia; Roadmaster Transport's
Container Transport Division of Dartmouth, Nova Scotia; and J&L
Trucking of Botwood, Newfoundland. (September)
- Trimac Transportation agreed to buy Initial DSI Transports
of Houston for $68.3 million, further consolidating the tank-truck
segment of the industry. DSI bulk products, had revenues
of $156.2 million in 1998. The company has 34 terminals, mostly
in the Gulf Coast, Southeast and mid-Atlantic regions, and operates
a fleet of more than 900 tractors and 1,350 trailers. (December)
In transborder operations, besides mergers and acquisitions
of US-based carriers, Canadian carriers use partnerships
with US-based carriers to penetrate the US market. These
alliances not only expand the carriers' market, they redesign
the way carriers do business by allowing them to offer such services
as overnight, next-day and second-day delivery over a much broader
territory. In addition, such alliances can lead to the integration
of the carriers' information systems and the sharing of invoicing
and inventory control systems. There were numerous mergers, acquisitions
and alliances of carriers on both sides of the Canada-US border
in 1999. Some examples include:
- Trimac Transportation and four other bulk trucking companies
-- Groendyke Transport Inc., Manfredi Motor Transit Co., Superior
Carriers Inc. and Miller Transporters -- entered into a
pooling arrangement of load matching and capacity sharing. Member
companies have combined annual revenues of approximately
$1.1 billion. (February)
- North American Van Lines and Allied Van Lines
completed a $450 million merger. A new holding company known
as Allied Worldwide, operating in 36 countries with more
than 1,100 agents, expects to have annual revenues of more
than $2 billion. The company will operate North American Van
Lines and Allied Van Lines in the United States and Canada; Pickfords
in the United Kingdom; and Allied Pickfords in Europe, Australia,
New Zealand and Asia. (November)
Characteristics of the Trucking Industry
More than 13,200 freight carriers comprise the highly diversified
trucking industry. This number does not include small for-hire
carriers earning less than $25,000 in revenues, small private
carriers incurring less than $1 million in expenses,
or owner-operators.
These 13,200 carriers include approximately 10,300 for-hire
carriers with annual revenues exceeding $25,000, 450 private carriers
with annual operating expenses exceeding $1 million, and 2,400
courier companies. Another 40,000 owner-operators with annual
revenues exceeding $25,000 contract services to either private
or for-hire carriers or operate independently. These figures do not
include small for-hire and small private carriers, or organizations
such as farms, utility companies and municipalities that own and
operate trucks.
Trucking firms differ from each other in a number of ways:
- Size -- Companies range from single-unit owner-operators
to large firms operating thousands of power units.
- Equipment -- Some carriers use specialized equipment,
such as logging trucks, hopper-bottom grain trailers or cement
mixers; others use general-purpose vans or flatdeck trailers.
- Geographic coverage -- Intraprovincial carriers operate
locally within a province; interprovincial carriers operate across
provincial boundaries; international carriers move shipments
into the US.
- Type of services -- Some carriers provide truckload
service (full load/single shipper); others provide less-than-truckload
service (multiple shipments from multiple shippers); others haul
containers as part of intermodal operations.
- Alliances -- Some carriers handle general freight
in one region, while others interline with carriers in other
regions, even other countries.
The trucking industry comprises two major components: for-hire
trucking and private trucking. For-hire trucking companies offer
transportation services for compensation, providing either truckload
(TL) or less-than-truckload (LTL) services (or a mix of the two)
in domestic or international markets. For-hire trucking firms
can be further categorized into market segments according to the types
of freight carried, notably the following:
- General Freight carriers handle many different types
of freight in vans and general-freight trailers.
- Household Goods carriers use specialized trailers
to transport furniture and other personal household possessions.
- Liquid Bulk carriers use tanker trucks to transport
liquids such as petroleum, milk and chemicals.
- Dry Bulk carriers use dump or hopper-bottom trailers
to haul goods such as grain, fertilizer and gravel.
- Forest Products carriers use special logging trucks
to transport logs from the forest to the mill.
- Other Specialized Freight carriers include auto haulers
using special trailers to transport cars and trucks from production
plants to dealerships, and couriers that use a variety of
types of trucks to transport small parcels and mail.
General freight carriers dominate the for-hire sector, accounting
for almost 60 per cent of for-hire revenues in 1998. Table 11-2
compares the revenues of for-hire trucking firms according to
the types of freight carried for 1998.
![](/web/20060212084152im_/https://www.tc.gc.ca/pol/en/Report/anre1999/graphics/chap11/99t11e02.GIF)
Figure 11-4 presents the number of for-hire carriers earning
annual revenues of $1 million or more between 1990 and 1998. The
total number of for-hire carriers has increased steadily since
1990, with a major increase in 1995. Overall, the number
of carriers increased over the 1990 to 1998 period. However, this
increase partly reflects a new survey frame used by Statistics
Canada in its trucking survey.
![](/web/20060212084152im_/https://www.tc.gc.ca/pol/en/Report/anre1999/graphics/chap11/99f11e04.GIF)
The number of very large carriers (carriers earning more than
$25 million in revenues annually) has fluctuated between 55 and
75 firms over this period.
Table 11-3 shows the percentage share of total for-hire revenues
for each size of carrier from 1991 to 1998.
![](/web/20060212084152im_/https://www.tc.gc.ca/pol/en/Report/anre1999/graphics/chap11/99t11e03.GIF)
Revenues generated by carriers earning more than $25 million
steadily decreased as a percentage of total industry revenues
between 1991 and 1995, while the actual number of carriers
in this category remained relatively stable. This suggests an
increased level of concentration faced by this segment of the
industry. The proportion of their revenues to total industry revenues
declined from 33 per cent in 1991 to 25.7 per cent in
1997. Over the same period, there was an increase of ten per cent
in the share of revenues generated by carriers earning between
$12 million and $25 million.
However, in 1998, the number of carriers earning more than
$25 million increased by almost 20 per cent over 1997. This may
be the result of increased merger and acquisition action by the
large carriers in 1998. In turn, this could explain the decline
in the number of carriers in the group earning between $12 million
and $25 million.
The share of total industry revenues earned by carriers earning
between $1 million and $12 million fluctuated around 40 per cent
between 1991 and 1998. The small carriers earning less than $1
million saw their share of industry revenues drop to 12.4 per
cent in 1998.
Table 11-4 ranks the key Canadian-based for-hire trucking firms
by the size of their fleets. It also indicates the types of services
they offer.
![](/web/20060212084152im_/https://www.tc.gc.ca/pol/en/Report/anre1999/graphics/chap11/99t11e04.GIF)
Interprovincial and international activities, both of which
are under federal jurisdiction, are often referred to as extra-provincial
trucking. These activities accounted for over $14 billion
in 1998, 83 per cent of total for-hire trucking revenues. A significant
part of these revenues, 40 per cent, however, were derived
from intraprovincial operations.
Couriers
The courier industry, which transports small packages, is another
important segment of the trucking industry. This type of
service may provide door-to-door service or combine different
transportation services, such as intercity bus, air cargo and
LTL truck services.
Based on a daily average delivery of 1.5 million packages of
Canadian origin weighing less than 150 pounds, a recent studyNote
4 estimated that total 1998 revenues for the courier
industry were $3.5 billion.
The industry carries letters, envelopes, pouches, boxes and
cartons from Canada to destinations anywhere in the world. The
domestic lane, shipments that originate and are delivered to locations
in Canada, accounts for the majority of courier business in Canada
-- 95 per cent of total volume and 81 per cent of total revenue
in 1998.
Nine carriers account for approximately 80 per cent of all
courier traffic and revenues: Canada Post, Canpar, Federal Express,
Loomis, Purolator, RPS, TNT Express Worldwide and United Parcel
Service.
Private Trucking
Private trucking activities are conducted by companies, such
as retailers or manufacturers, who haul their own goods. Typically,
companies are involved in private trucking as they have a need
to control service. Their fleet costs are comparable with or lower
than those of for-hire carriers, and the visibility they receive
from using their own trucks is considered to be a positive factor.
In dollar terms, the for-hire sector and the private trucking
sector are approximately of the same size.
According to one recent study,Note 5 private trucking
services were valued at almost $19 billion annually. Private trucking
dominates the movement of freight within Canada's urban areas,
accounting for approximately 85 per cent of truck movements.
For the most part, private trucking fleets comprise straight trucks
and cube vans used for pick-up and delivery services to local
businesses. While little information exists on the urban
segment of private trucking, it is estimated to be valued in the
order of a $12 billion a year.
When they run long hauls with tractor-trailers, private carriers
may also obtain authority to haul goods for others. Under these
circumstances, they in effect compete with for-hire trucking firms.
Private fleets, an integral part of a company's distribution
network, provide a logistical support service to the companies
that own them. These companies tend to be retail distributors
for consumer goods, chemical products producers, pulp and paper
companies, beverage distributors, and wholesale distributors of
agricultural products.
Among the companies that operate substantial intercity fleets
are Canadian Tire, Labatts, Molson, Home Hardware, Liquid Air,
Kraft General Foods, Loblaws, 3M, Ault, Brewers Retail, Consumers
Distributing, DuPont, Dominion Textiles, General Electric, K-Mart
and Tim Horton Donuts.
The international, interprovincial and intraprovincial value
of private trucking is calculated by means of the market share
percentages established by the 1991 and 1995 CCMTA Roadside Surveys.
However, the methodology focuses on longer distance trips; as
a result, shorter distance trips, where private trucking is more
dominant, may be under-represented.
Private trucking accounted for 41 per cent of intraprovincial
trips, for an estimated value of almost $5 billion. Straight
trucks were used for 44 per cent of these longer trips and tractor-trailers
for 48 per cent. Shipments between Ontario and Quebec accounted
for 76 per cent of intraprovincial private trucking in Canada.
Overall, private trucking accounted for 22 per cent of interprovincial
trips and 28 per cent of international trips. The value of private
trucking is estimated at approximately $1 million for each of
these sectors. Private truckers are far more likely than
for-hire truckers to use straight trucks for these movements.
In 1998, Statistics Canada surveyed 396 private trucking companies
each with at least $1 million in operating expenses. Almost three
quarters of these carriers were from Ontario and Quebec.
Total operating expenses of these carriers, which were at $1.7
billion in 1997, reached $1.5 billion in 1998, the lowest level since
1990.
Owner-operators
Owner-operators work under contract for either for-hire or
private carriers, typically using their own tractors. Of the more
than 40,000 owner-operators in Canada in 1997, almost half were
under contract to carriers based in Ontario and Quebec and a further
one third were concentrated in Alberta and British Columbia. More
than 70 per cent of the owner-operators are under contract
to for-hire carriers.
Table 11-5 presents the number of owner-operators under contract
by carrier type, as well as revenues by province for 1997.
![](/web/20060212084152im_/https://www.tc.gc.ca/pol/en/Report/anre1999/graphics/chap11/99t11e05.GIF)
Bankruptcies
Bankruptcies are about as common in the trucking industry as
in the general economy, though there are some lags in the data.
Trucking bankruptcies dropped rapidly between 1991 and 1994, stabilized
in 1995, then increased in 1996 and 1997. Following a decline
in 1998, they increased again in 1999. Preliminary estimates for
1999 are based on the number of bankruptcies between January and
September.
Bankruptcies and other departures from the trucking industry
do not have a significant effect on the provision of freight
services. The majority of truck bankruptcies involve small operators,
with one or two trucks, or companies that provide services ancillary
to trucking.
Figure 11-5 compares the number of bankruptcies in the trucking
industry with those in the Canadian economy from 1989 to 1999.
![](/web/20060212084152im_/https://www.tc.gc.ca/pol/en/Report/anre1999/graphics/chap11/99f11e05.GIF)
Table 11-6 shows the number of trucking bankruptcies by region
between 1987 and 1999.
![](/web/20060212084152im_/https://www.tc.gc.ca/pol/en/Report/anre1999/graphics/chap11/99t11e06.GIF)
- Appendix 11-1 Railway Operators
by Region, 1999
Trucking Industry
- Appendix 11-2 Selected Urban
Transit Systems of Importance to Canada
NOTES
3
Order In Council Number P.C./C.P. 1999-1469.
4
1998 Canadian Courier Market Sizing Study, Infobase Marketing
Inc., October 1998.
5
L.P. Tardif Associates, "Profile of Private Trucking in Canada,"
January 1998.
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