7 ROAD TRANSPORTATION

INDUSTRY STRUCTURE

TRUCKING INDUSTRY

The trucking industry has a significant role to play in Canada's economy. The goods shipped by the for-hire carriers, private carriers, owner-operators and courier firms that make up the industry, range from raw materials, to components, and to final products. In total, the industry generated an estimated $61 billion in revenues in 2004.

Trucking firms can be broken down in a number of different ways: the size of their fleet; the type of equipment they use; the geographic scope of their operations; the type of services they offer; and, the type of freight they carry. They can also be differentiated by jurisdiction of operations. Carriers that operate solely within a province fall within that province's jurisdiction. Carriers that provide interprovincial or international (extraprovincial) trucking services fall entirely within federal jurisdiction.

For-hire motor carriers are those that haul freight for others for compensation, offering either truckload (TL) or less-than-truckload (LTL) services, or a mix of the two. These carriers are further categorized according to the types of freight they carry, such as general freight, household goods, liquid and dry bulk, forest products, and other specialized freight. There were approximately 10,000 for-hire motor carriers in Canada in 2004, compared with 9,600 in 2003.

The top 10 for-hire trucking companies,¹ based on total number of fleet units (straight trucks, tractors and trailers) in Canada, remained unchanged in 2005 over the previous year. They include TransForce Income Fund, Montreal, Quebec, with 12,183 units; Trimac Transportation Services, Calgary, Alberta, (8,803 units); Vitran Corporation, Toronto, Ontario, (6,682 units); TransX, Winnipeg, Manitoba, (4,698 units); SLH Transport, Kingston, Ontario, (4,622 units); Challenger Motor Freight, Cambridge, Ontario (4,588 units); Robert Transport/Groupe Robert, Boucherville, Quebec, (4,285 units); Mullen Transportation Inc., Aldersyde, Alberta, (4,026 units); Paul's Hauling Group, Winnipeg, Manitoba, (3,945 units); and Contrans Income Fund, Woodstock, Ontario, (3,400 units).

In 2005, there were some changes in the industry (acquisitions, strategic alliances and mergers of motor carriers).² Canada's largest for-hire trucking operation, TransForce Income Fund of Montreal, was very active, acquiring 13 other firms during the year. The Fund acquired Groupe 2 B Inc., Rebel Transport Ltd., Express Golden Eagle Inc. and Le Groupe Fortier in the last quarter of 2005. More recently, it completed the acquisition of Alberta-based Kos Corp. Oilfield Transportation Ltd. Kos offers a wide range of transportation services to the energy industry in western Canada. As for Trimac Transportation Services, Canada's largest provider of bulk trucking services, there was the formation of the Trimac Income Fund in February 2005 and a re-organization of the firm into Canadian and U.S. operating entities. Vitran Corporation consolidated its U.S. operations with the acquisition in 2005 of Chris Truck Line, a regional LTL freight carrier based in Kansas, with operations in the midwestern and southwestern U.S. More recently, it acquired Sierra West Express Inc., a regional LTL freight carrier based in Nevada, with operations in the western United States. The Mullen Group made a number of acquisitions during the year, including TL/LTL carriers in British Columbia and Winnipeg. Mullen also strengthened its position in the oilfield services sector through acquisition of Schmidt Drilling, Pe Ben Oilfield Services, Spearing Service Limited and Burnell Contractors Limited, all of which are Alberta-based. Contrans Income Fund divested its school bus assets in the course of the year, and acquired two flatbed trucking operations in Ontario, L.A. Dalton Systems and Hopefield Trucking Limited.

Owner-operators operate as small independent for-hire truckers. They own and drive their own trucks, hauling trailers for other carriers or directly for a shipper. There were an estimated 36,000 owner-operators in Canada in 2004, compared with 35,100 in 2003. Using owner-operators allows a trucking company to expand or contract their capacity in response to changing market conditions.

Couriers and parcel-delivery firms operate trucks and provide some of the same services as for-hire carriers and are therefore considered to be part of trucking activity. However, most companies use small cube vans, automobiles and even bicycles for deliveries. There are relatively few trucks — approximately 2,000 — used in the courier industry. Operations include same-day messenger delivery and overnight or later delivery. In 2004, the courier industry generated an estimated $6.0 billion in total revenues, based on average volumes of 2.4 million packages per day. There are approximately 17,000 small courier companies that generate revenues less than $1 million annually. The companies account for 97 per cent of the total number of courier companies yet account for only 14 per cent of total courier revenues.

Private trucking includes companies that primarily haul their own freight but occasionally haul goods for others for compensation. It is not covered by the for-hire segment. Because these trucks are operated by someone working for an industry other than for-hire trucking, the value of their services is captured under some other, nontrucking part of the national accounts (e.g., farming or manufacturing). Most companies that haul their own products in trucks they own do not record revenues for this operation. At $27.0 billion, the estimate for private trucking is better viewed as the operating costs of trucks for these companies. However, caution should be exercised when using this estimated value. To estimate the value of private trucking in 2004, the percentage increases/decreases in the for-hire sector since 1998 were applied to the value of private trucking as calculated in the January 1998 study Profile of Private Trucking in Canada.

Other includes that part of the industry that uses trucks for things other than hauling freight commercially. For example, municipal governments run some of the largest fleets on the road, using trucks as platforms for specialized equipment, such as garbage packers, treetrimmers, cranes or snowplows, and construction companies use trucks and trailers to transport heavy machinery between job sites.

The annual number of business bankruptcies in the trucking industry has decreased steadily in last five years. The 506 bankruptcies in 2005 was the lowest number since 1998. The number of trucking bankruptcies decreased 9 per cent in 2003, 19 per cent in 2004 and 14 per cent in 2005. These decreases are more pronounced than those observed for other sectors of the economy. Addendum Table A7-1 shows the number of trucking bankruptcies compared with the economy by region from 1990 to 2005.

In terms of revenues, general freight carriers continue to dominate the for-hire sector, accounting for almost 60 per cent of for-hire revenues in 2004. Specialized freight accounted for 17 per cent of total revenues. Table 7-2 compares the revenues of all for-hire trucking firms by the type of freight carried from 2000 to 2004.

TABLE 7-2: FOR-HIRE CARRIER REVENUES BY ACTIVITY SECTOR, 2000 – 2004
	(Millions of dollars)
				Share in per cent of total
Activity Sector	2000	2002	2004¹	2000	2002	2004
General freight	12,953	13,957	16,553	58.6	59.1	58.2
Movers	794	693	857	3.6	2.9	3.0
Liquid bulk	1,773	1,932	2,359	8.0	8.2	8.3
Dry bulk	1,557	1,602	2,236	7.0	6.8	7.9
Forest products	1,214	1,246	1,420	5.5	5.3	5.0
Other specialized freight	3,812	4,179	5,020	17.2	17.7	17.6
Total	22,103	23,609	28,447	100.0	100.0	100.0
	(Estimated number of carriers)
				Share in per cent of total
Activity Sector	2000	2002	2004¹	2000	2002	2004
General freight	3,248	3,416	3,642	34.9	35.3	36.1
Movers	374	545	588	4.0	5.6	5.8
Liquid bulk	692	799	782	7.4	8.3	7.7
Dry bulk	1,666	1,486	1,546	17.9	15.3	15.3
Forest products	1,252	904	907	13.4	9.3	9.0
Other specialized freight	2,085	2,532	2,631	22.4	26.2	26.1
Total	9,317	9,682	10,096	100.0	100.0	100.0

Note: Including motor for-hire carriers of freight earning annual revenues of $30 thousand or more.

Small for-hire carriers estimated for 2004.

Sources: Transport Canada, based on Statistics Canada, Quarterly Motor Carriers of Freight Survey (QMCF) (2000-2004) and Annual Motor Carriers of Freight Survey (small for-hire carriers), Service Bulletin Cat. 50-002

TABLE 7-3: DISTRIBUTION OF TOTAL FOR-HIRE TRUCKING REVENUES BY SIZE OF CARRIERS, 2000 – 2004
	Small Carriers (Less than $1 million)		Medium Carriers ($1 - 12 million)		Large Carriers ($12 - 25 million)		Top Carriers (Over $25 million)		Grand Total Revenues (Millions of dollars)
Year	Revenues (Millions of dollars)	Share (per cent of total)	Revenues (Millions of dollars)	Share (per cent of total)	Revenues (Millions of dollars)	Share (per cent of total)	Revenues (Millions of dollars)	Share (per cent of total)	Grand Total Revenues (Millions of dollars)
2000	1,366	6.2	9,514	43.0	4,660	21.1	6,562	29.7	22,103
2001	1,512	6.3	11,277	47.1	4,506	18.8	6,662	27.8	23,958
2002	1,586	6.7	10,073	42.7	5,091	21.6	6,859	29.1	23,609
2003¹	1,590	6.5	9,967	41.0	5,561	22.9	7,186	29.6	24,304
2004¹	1,800	6.3	11,964	42.1	7,292	25.6	7,391	26.0	28,447

Note: Including motor for-hire carriers of freight earning annual revenues of $30 thousand or more.

Small for-hire carriers revenues estimated for 2003 and 2004.

Table 7-3 shows total for-hire trucking revenues by size of carrier from 2000 to 2004, as measured by four categories of earned annual revenues: less than $1 million; $1 million to $12 million; $12 million to $25 million; and $25 million or more. Total revenues have almost tripled since 1991; the proportion of revenues for large carriers (earning between $12 million and $25 million), however, has increased, from 11 per cent in 1991, 21 per cent in 2000 to almost 26 per cent in 2004. Addendum Tables A7-2 and A7-3 show the same information over a longer time series.

Reported sales of Class 8 trucks³ fluctuate yearly, driven by a number of factors, including the profitability of carriers, carriers' fleet replacement policies, and the demand for trucking services. The demand for many trucking services tends to increase or decrease with market conditions; and swings in these market conditions tend to be exacerbated in the final demand for trucking services. Following the 2001 economic slowdown in both Canada and the U.S., truck sales in Canada have increased steadily each year to reach an all time record of 35,281 vehicles in 2005. Figure 7-1 shows the sales of Class 8 trucks from 1990 to 2005.

FIGURE 7-1: SALES OF CLASS 8 TRUCKS IN CANADA, 1990 – 2005

Source: Canadian Vehicle Manufacturers' Association

BUS INDUSTRY

It is difficult to categorize the service provided by the Canadian bus industry because of the variety of services offered and because individual operators and corporate owners commonly provide services in several of the recognized categories.⁴ For example, Laidlaw International Inc. is simultaneously a major school bus operator and, as Greyhound, the largest scheduled intercity service provider in Canada and the United States. Most bus operators in all categories offer some form of charter bus service.

Scheduled Intercity Service — Intercity bus service links all Canadian provinces and territories except Nunavut. The largest operator in Canada is Greyhound and its subsidiaries, which, as noted, are owned by Laidlaw. Greyhound primarily operates in Ontario and the four western provinces. Groupe Orléans is the major service provider in Quebec and the Maritime Provinces, operating as Orléans Express in Quebec and Acadian in the Maritimes. There are a number of smaller regional and local carriers, particularly in Quebec.

Charter, Tour, Shuttle and Other Commercial Services — These are a diverse group of services. Charter and tour operators primarily serve the discretionary travel market. Airport service is one of the most common forms of shuttle busing. Other commercial services include contracting busing, where the carrier provides regular service to a particular group, commonly workplace travel paid for by the employer. Some larger companies provide other services in addition to all these, Pacific Western Transportation Ltd. being the most prominent example. Other companies, such as Brewster Transportation & Tours and Coach Canada, concentrate on the charter/tour market. Pacific Western and Coach Canada also offer scheduled service in Alberta and Ontario, respectively.

School Service — School bus carriers transport students to and from school. While some school administrations in Canada provide this service directly, most contract it out to private operators. Besides Laidlaw, the larger school bus operators include First Bus, Pacific Western and Stock Transportation. Most school bus operators also provide some charter service.

Urban Transit Service — Over 90 cities, towns, regional municipalities and other urban entities in all Canadian provinces and two of the territories have transit service. Overall, the industry serves more than 20 million Canadians, using buses, coaches, trolleys, streetcars, light and heavy rail, and vans and taxis. Some urban transit operators offer school bus and charter services as well as dedicated services to persons with disabilities.

BUS TRANSPORTATION

The Canadian bus industry is made up of approximately 1,500 operators that collectively move more than 1.5 billion passengers each year. In 2004, the bus industry generated an estimated $7.7 billion in total revenues,⁵ including government operating and capital contributions. This industry can be looked at either by "segment" ( i.e., by main company activity as classified under NAICS), or by "service lines" (or service activities) performed.

Bus segments (NAICS) — In 2004, urban transit was by far the largest sector, with close to 67 per cent of total industry revenues, including government contributions (or 49 per cent of total revenues excluding government contributions). Operating and capital contributions from governments accounted for 53 per cent of urban transit operators' total revenue. Urban transit operators are typically dedicated to transit operations, with only a fraction of their revenues coming from other service lines.

The "school bus" sector ranked second with approximately 25 per cent of total bus revenues (excluding government contributions), followed by intercity operators and charter/tour operators. Almost all of these operators, regardless of their primary business, provided other service lines, demonstrating the varied nature of the industry.

Service Lines — Over the past number of years, industry diversification, mergers and acquisitions as well as consolidated reporting, have clouded the industry sectors. This has rendered the "segment" approach to evaluating the industry less reliable.⁶ Analysis by "service line" gives a better indication of activity in the industry. Overall, the industry has grown from $5.5 billion in 1997 to $7.7 billion in 2004, an average annual growth of slightly more than five per cent. However, this growth was unevenly distributed among service lines, averaging between no growth for "other passenger revenues" and 7.9 per cent for "charters, shuttle and sightseeing" services, the best performance of any of the service lines during this period.

Service line revenues have been somewhat higher since 2001 due to a new bus survey that captured a larger number of companies.⁷ In terms of passengers carried, urban transit services (including urban transit operators and other operators offering transit services) carried an estimated 1,700 million passengers in 2004, a 2.5 per cent increase over 2003. As for intercity services, Transport Canada estimated that 15.5 million intercity passengers were carried in 2004, a 10 per cent increase over the 2003 total. This increase shows a return to the 2002 levels, a recovery from events in 2003⁸ that affected tourism in Canada. Table 7-4 shows bus revenues by service lines from 1997 to 2004.

TABLE 7-4: BUS INDUSTRY REVENUES BY SERVICE LINES, 1997 – 2004
	(Millions of dollars)
	1997	1998	1999	2000	2001 ¹	2002	2003 ²	2004 ³
Number of companies	877	1,110	1,062	968	1,813	1,715	1,497	1,500
Business Lines
Urban transit services	1,672	1,694	1,817	1,956	2,092	2,234	2,317	2,500
School bus transportation	826	894	915	964	1,112	1,220	1,233	1,250
Charters, shuttle & sightseeing services	316	369	352	449	469	506	552	540
Scheduled intercity services	241	240	236	271	332	329	319	370
Other passenger/operating revenues	191	216	219	225	246	283	197	190
Parcel express delivery	79	87	88	96	98	100	101	105
Total (excluding government contributions)	3,326	3,499	3,627	3,961	4,349	4,672	4,719	4,955
Government contributions ⁴	2,137	2,386	2,562	2,271	2,355	2,440	2,774	2,780
Total	5,463	5,885	6,189	6,231	6,703	7,112	7,493	7,735

From 1997 to 2000: Includes bus operators with annual revenues greater than $200,000. Starting 2001, a new"Passenger bus and urban transit" survey was initiated by Statistics Canada covering a greater number of bus companies (no threshold revenues).
Preliminary data for 2003.
Data estimated by Transport Canada
Includes operating and capital government contributions for urban transit

Sources: Transport Canada, adapted from Statistics Canada, Passenger bus and urban transit statistics, Cat. 53-215, and Statistics Canada, Service Bulletin, Cat. 50-002; special tabulation based on NAICS and Canadian Urban Transit Association (CUTA).

URBAN TRANSIT

In 2004, urban transit operators earned $5.2 billion, 4.2 per cent more than in 2003. Government contributions remained the main source of revenues, accounting for 53 per cent of total urban transit revenues. Urban transit services followed with 44 per cent. From 1996 to 2004, government contributions increased on average by 3.8 per cent annually. Over the same period, urban transit systems' operating revenues grew by 5.2 per cent annually. As a result, the government's contribution to total urban transit revenues decreased from 56 per cent to 53 per cent. Addendum Table A7-4 shows revenue services offered by urban transit operators from 1996 to 2004. Figure 7.2 illustrates revenue sources for urban transit operators in 2004.

FIGURE 7-2: TOTAL REVENUES BY SOURCE – URBAN

Other contribution includes dedicated taxes, transfers from regional agencies, Reserve Funds.
Other revenues include charter, school bus and other passenger bus services.

Source: Transport Canada tabulation, adapted from Canadian Urban Transit Association (CUTA) data.

In terms of passengers using urban transit, ridership levels decreased throughout the early 1990s to a low of 1,353 million passengers in 1996. With the exception of a small decrease in 2001, the number of passengers has since increased steadily to peak at 1,598 million passengers in 2004. This is the highest level in the last two decades. A similar pattern existed for distance travelled by urban transit vehicles. Vehicle-kilometres jumped from a low of 716.4 million in 1996 to a high of 887.1 million in 2004. This is an average annual increase of 2.7 per cent. For ridership and distance data over a longer period, see Table A7-5 in the Addendum. Figure 7-3 illustrates long-term trends in the urban transit sector from 1982 to 2004.

FIGURE 7-3: LONG-TERM TREND IN URBAN TRANSIT, 1982 – 2004

Source: Statistics Canada, "Passenger bus and urban transit statistics", Cat. 53-215; special tabulations based on Canadian Urban Transit Association (CUTA) data

In terms of vehicles, the urban transit fleet jumped from 13,049 to 15,236 units over the 1996 – 2004 period, an average annual increase of two per cent. The main change in the make-up of the fleet was the replacement of standard buses with more accessible, low-floor buses. Transit authorities used a total of 5,018 low-floor buses in 2004, up from 499 in 1996, representing an increase from five per cent of total standard motorbuses to 44 per cent. See Addendum Table A7-6 for details on urban transit fleet composition over this period.

¹ Today's Trucking, March 2005. Return

² Globe and Mail, globeinvestor.com, press releases February and March 2006. Return

³ Class 8 includes trucks with a gross vehicle weight exceeding 15,000 kilograms. Return

⁴ The North American Industrial Classification System (NAICS) has been used in Canada since 1997. The bus industry is grouped under six headings: urban transit systems; interurban and rural bus transportation (scheduled intercity); school and employee bus transportation; charter bus industry; other ground passenger transportation (shuttle); and scenic/sightseeing transportation. Return

⁵ Estimates of the bus industry revenues are by Transport Canada as Statistics Canada passenger bus and urban transit survey results for 2004 were not released (under revision). Return

⁶ For example, from 1995 to 2000, the "segment" approach did not adequately measure the bus industry, as some scheduled intercity carriers were recorded under school bus operators due to consolidated financial reporting coming from mergers and acquisitions. This was one of many factors that triggered the redesign by Statistics Canada of a new passenger bus survey (implemented in 2001) to collect both industry and activity data. Return

⁷ From 1994 to 2000, the passenger bus and urban transit survey covered companies having annual gross revenues of $200,000 or more. Starting in 2001, however, the new passenger bus survey has covered all companies that have at least one bus establishment engaged in the provision of bus and urban transit services. Return

⁸ The SARS (Severe Acute Respiratory Syndrome) crisis in spring 2003, the conflict in Iraq, and the power blackout in August 2003 affecting the north-eastern United States and southern Ontario were some of the events that affected business and tourism travel. Return

Major Events

Infrastructure

Industry Structure

Passenger Transportation

Freight Transportation

Trucking Freight Transportation

Price, Productivity, Financial Performance