Over the past few days I have had an opportunity to speak with several Canadian truckload carriers. The combined impacts of the increase in the Canadian dollar, the slumping U.S. economy and high fuel costs are taking their toll. It is clear that a number of trucking companies are “living in a world of pain.”

As an example, one trucker mentioned that their business has dropped by over fifty percent in the past few months. With the escalation in value of the Canadian dollar, southbound business from Canada to the United States has declined significantly. Rates per mile in the range of $0.90 to $1.25 are being quoted. While northbound rates ($2.15 to $2.75) are significantly higher, the round trip rates are often below breakeven levels. With so many truckload carriers focusing on domestic Canada traffic, this “feeding frenzy” is resulting rate cannibalization. As one trucker stated to me this afternoon, it is like “crows feasting on a carcass.”

At difficult times like this, there is much talk in the industry, talk about which companies are slashing rates to take on low margin business, talk about specific companies that are about to be acquired, talk of companies parking trucks. Fact and fiction mix with rumour and speculation.

My discussion with several truckers has elicited these conclusions. Only the strong and well managed will make it through the coming year. This is the time to “hunker down,” cut costs, park trucks, focus on those segments of the business with profit potential, maintain pricing discipline and “stay low to the ground”. The sun will rise again and improved profits will return as they always do. But the sun will not rise for every trucking company.

There are a number of Canadian trucking companies that are not going to make it through 2008. However, some will make it by going down a new path, by joining forces with other trucking companies. They will lower their centre of gravity by reducing overhead costs. They will stretch the workload of their dispatchers over a larger number of drivers and trucks. They will share facilities and focus on complementary businesses. In other words, they will change their business model to achieve and maintain profitability through this challenging period.

For many trucking companies, particularly those owned and managed by their founders, it becomes difficult to view the current situation with complete objectivity. A false sense of optimism takes hold which prevents one from dealing with the reality of the situation. As a result, some folks are inhibited from taking a bold step into new territory, of exploring other scenarios, whether they are an acquisition, a merger or partnership with a competitor or company in a complementary business.

So what can you do if you are in this situation? Feel free to contact me directly by phone or e mail. I would be happy to facilitate a dialog with other transportation companies that respond to this blog, if both parties express an interest.