About the only thing a trucker, a banker and a trailer maker may share in common through this freight downturn is they’re all suffering to some degree, if in various ways.
Trevor Bent, CEO of Eassons Transport (the trucker), Tom Ramsden, vice president of Manac (the trailer maker) and Arun Rebello, national manager, transportation and logistics with TD (you guessed, the banker) shared a stage at the Truckload Carriers Association’s (TCA) annual Bridging Border Barriers event Nov. 19.
They each took questions from Mark Seymour, head of Kriska Transportation Group and TCA advocate, who questioned the banking industry’s role in contributing to the slow exodus of excess capacity.
The banker
“We have a lot of sickness in our industry, but not a lot of death,” Seymour said. “Why are the sick not dying?”
He suggested the banks are extending credit terms to unhealthy fleets because they’re reticent to foreclose on the equipment, extending the lifespans of frail carriers that should by now be defunct.
“I don’t want the equipment back,” Rebello agreed. “We have no use for the equipment, other than to try to sell it to another carrier, which is tough in this market.”
But he said most lenders are not actually extending credit to companies with weak balance sheets; they still expect to be paid. “We want the money back, that’s our business. We don’t want the assets back,” he said.
Rebello said banks aren’t treating the transportation sector any differently than in the past, even though times have gotten tougher. He urged carriers to look inward for ways to reduce costs before going to the bank for more money. And he doesn’t expect conditions to improve anytime soon.
“Everybody has to be nimble,” he urged. “Look at your bottom line and where you’re bleeding and make changes.”
Asked by a member of the audience if banks vet the carriers they’re lending to, to determine if they’re ‘Driver Inc.’?
“The simple answer is, do we look at it? Yes,” he said. “Do we have a role to play in enforcement? No. We, as a federally regulated institution, cannot take a stand as to who we finance based on how they operate.”
But Rebello did say lenders need to have boots on the ground and visit in person the companies that are asking them for financing. “I need to see your operations,” he said. “I need to be out in the field. I’m reviewing most of the transactions [at TD] and my first question is, ‘Have you met the individual? Have you walked the yard? Someone needs to tell me exactly what that operation is.”
The trucker
Easson’s Bent was candid about some of the tough decisions his Nova Scotia-based fleet has made through this downturn. It sold off its dry van division to focus on refrigerated freight and has shed about 60 trucks from its previous 350.
“There has been a lot of pressure over the last three years,” Bent said.
The company has become leaner and adopted a culture of continuous improvement, adopting six sigma initiatives. It has leveraged data to be more meticulous about fuel and diesel exhaust fluid purchasing, route optimization and other daily decisions that influence the bottom line.
Some of the changes have been painful. The company has cut RRSP contributions and frozen bonuses and cost of living increases. Operationally, it has added long combination vehicles (LCVs) to improve efficiency and drive revenue without adding more trucks or drivers.
Eassons also took advantage of the soft driver market to implement inward-facing cameras, suspecting there would be a quick return on investment. That move paid off – the company achieved $500,000 in “dollar one” cost savings ahead of schedule, within the first year.
“Every carrier today is looking for a win,” Bent said. “We’re not getting it on rates.”
The trailer maker
Tom Ramsden, vice president of Quebec-based trailer manufacturer Manac, said suppliers to the industry are also suffering. Manac has undergone three rounds of layoffs. It recently went to its office staff and asked them to reduce their hours by 20% so the company could retain their talent for the recovery.
That allowed it to avoid a 20% job reduction in the office. Ramsden admitted the company, through its finance division, may have been over eager with some of its lending during the post-Covid boom, but said those buyers it turned away landed trailers from other suppliers, contributing to the equipment glut.
Meanwhile, “non-traditional lenders jumped into the space,” he added. The result was too much available trailer capacity when the freight market took a dive.
The North American trailer market that was at about 350,000 units during the post-Covid peak is now seeing annualized demand of just 120,000 to 150,000 trailers. Manufacturers reliant on just dry van and reefer trailer production have seen their volumes plunge 70-80% while Manac, due to its diversity, has been somewhat protected and seen demand fall only 30-40%.
Tariffs are now adding to the pain. Manufacturers stocked inventory ahead of the tariffs but have mostly worked through those inventories and are now feeling the impact of 50% tariffs on steel and aluminum. U.S. steel and aluminum manufacturers lack capacity to replace Canadian supply but have opportunistically raised their prices domestically as well, Ramsden said.
Asked if allocations will likely be required when industry demand snaps back, Ramsden said he isn’t anticipating a sharp increase in orders this year or through 2026. Demand should improve in 2027, since fleets have skipped replacement purchases for three years running.
“If there is any allocation it will probably be in 2027,” Ramsden said. “I think 2026 will be a tough grind for the first six to eight months.”
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