U.S. election uncertainty making ‘very difficult’ freight market worse, TFI CEO says

By Christopher Reynolds, The Canadian Press on April 26, 2024.

The head of Canada's biggest trucking firm says the U.S. election is softening an already weak market for freight. A transport truck carries a cargo container at port in Vancouver, on Friday, July 14, 2023. THE CANADIAN PRESS/Darryl Dyck

MONTREAL – The head of Canada’s biggest trucking firm says the upcoming U.S. election is straining an already weak market for freight.

Uncertainty over the outcome of the political contest this fall means some customers are holding off on shipments until the result becomes clear, Alain Bédard, chairman and CEO of TFI International Inc., said on Friday.

On a conference call, Bédard gave the example of a green energy company spun off from General Electric, claiming GE Vernova’s wind turbine business could suffer depending on who wins after ballots are cast on Nov. 5.

“If it’s candidate one, he’s against windmills, so that business is going to fall. If you take the No. 2 guy, well he likes windmills, he’s more green. So that’s why we have these kinds of customers just sitting on the fence not knowing where the ball is going to drop – left or right,” Bédard said.

“We still anticipate this freight recession will not change probably before “˜25. We have an election year in the U.S. A lot of our customers are just waiting to see what’s going to happen.”

GE Vernova did not immediately respond to a request for comment.

A tough trucking environment in general has also hurt transport companies, the chief executive said, resulting in a seven per cent year-over-year drop in adjusted earnings per share in TFI’s latest quarter.

“Why is that? Because the truckload in Q1 was just a disaster,” he said. “It’s a very, very difficult market right now.”

Bédard was referring to the “truckload” segment of the business that carries full loads to a client, as opposed to “less-than-truckload” deliveries that make multiple drops of cargo for different clients on a single run.

Employment in trucking and logistics fell by about 38,000 jobs between 2021 and the end of last year, according to industry non-profit Trucking HR Canada.

The Conference Board of Canada has said household debt will hamper consumer spending this year, as Canadians’ penchant for online purchases continues to taper off from pandemic highs, leaving shippers in the lurch.

Bédard added that rampant undercutting of labour laws by some trucking outfits has harmed his company to the point where he is mulling a sale of one segment of TFI.

Asked by an analyst whether he would dispose of its Canadian truckload division, Bédard replied: “We’re asking ourselves that question.”

Bédard called the phenomenon known as Driver Inc. a “cancer” for legitimate truck companies as rule-breaking rivals gain a competitive advantage.

Driver Inc. refers to the misclassification of workers as self-employed, which means the company does not provide benefits or basic labour protections.

“Our Canadian business will shrink, absolutely, because of Driver Inc.,” he said. “People will lose jobs – good-paying jobs – at TFI because of that Driver Inc. unfair competition.”

The mislabelling of contractors who drive for only one company and do not own their trucks or control their own schedules is illegal – and risky, since workers do not receive basic entitlements such as workers’ compensation, paid sick leave, overtime or severance.

“They don’t pay any benefits to their drivers. That is really killing us,” Bédard said.

He added that he believes provincial and federal leaders will crack down on scofflaws, but noted that the problem has persisted despite years of warning calls from the industry.

This report by The Canadian Press was first published April 26, 2024.

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