TransForce and Contrans acquisition – Good for the Canadian truckload industry?
The largest Canadian trucking company is about to become even bigger when the acquisition of Contrans is approved. According to Alain Bédard, Chairman, President and Chief Executive Officer of TransForce, the purchase will extend TransForce’s reach into the construction, mining and energy sectors.
Contrans provides bulk, tank, flatbed and other transportation services in Canada and parts of the US. Based in Ontario, Canada, its structure is similar to TransForce with liquid, bulk, flatbed, van, waste hauling and logistics divisions and several subsidiaries. Its freight-hauling subsidiaries include Archer Trucking, Brookville Carriers, Contrans Flatbed Group, Glen Tay Transportation, Laidlaw Carriers, with its tank, bulk and van divisions, Peter Hodge Transport, S&S Enterprises, Tri-Line Carriers and Tripar Transportation.
TransForce has been on quite a spending spree. This year alone it acquired US truckload carrier Transport America and Toronto-based less-than-truckload carrier Vitran. Bédard noted during a conference call with analysts that the acquisition of Contrans will create a “more efficient company that will be good for the Canadian truckload industry.” Indeed, if anything, it will certainly have a commanding presence. TransForce has at least 3,288 straight trucks, 3,774 tractors and 12,486 trailers. Contrans has 39 straight trucks, 1,493 tractors and 2,541 trailers.
The Canadian trucking industry is facing challenges, including some similar issues as the US trucking industry. For example, according to a study conducted by The Conference Board of Canada, Canada could experience shortage of about 30,000 truck drivers by 2020. The Chief Executive Officer of TransForce also noted high personal debt levels and rising taxes in Ontario and Quebec are constraining Canadian economic growth needed to support a recovery of the trucking sector. “At best, we will probably see some improvement in 2015, slowly, very slowly in Canada,” he said.
David Bradley, President of the Canadian Trucking Alliance, which represents carriers, owner-operators and industry suppliers also cited economic issues affecting the Canadian trucking industry. Bradley estimates the industry is “probably 90% to 95%” back from its low point, with some parts of the country and customers doing better than others. The sector has faced mounting pressures since 2006 when the value of the Canadian dollar increased and thus reducing demand from the US. Then, in 2008 the global recession resulted in a 30% reduction in truck volumes. Since then, improving signs have indeed emerged and opportunities are increasing for the Canadian trucking industry – particularly as cross-border trade continues to increase between Canada and the US and intermodal opportunities expand.