International Study Reveals Top Concerns for Trucking Industry’s Business Performance in 2007
MONTREAL--Nearly 70 percent of trucking business leaders believe that fuel prices are placing the business at risk, according to an international survey of 1,200 trucking industry leaders in Canada, the U.S., U.K. and France. The survey, commissioned by GE Capital Solutions, a leading provider of financing for the commercial trucking industry, also reveals that driver shortages (69 percent) and excessive regulation (40 percent) are top threats to business performance. These concerns are compelling managers (92 percent in the U.S., 87 percent in France, 86 percent in Canada and 80 percent in the UK) to explore new methods for achieving efficiencies and additional cost savings.
Conversely, low business volumes were among the least of international executives’ concerns, most likely to be seen as a problem in the UK (12 percent) and least likely to be a problem in the France (6 percent), vs. the U.S. (9 percent) and Canada (8 percent).
“The transportation industry’s contribution to the Canadian GDP rose nearly 80 percent in the past ten years and is vitally important to our country’s economy,” said Patrick Palerme, president and CEO of GE Capital Solutions (Canada). “Seeking new methods for achieving greater operational and financial efficiencies to address economic and regulatory pressures will clearly remain the top priority for trucking industry leaders over the next 12 months.
“As business volumes continue to increase as expected, trucking companies will have to seek alternative ways of managing these market pressures to take advantage of future growth opportunities and maintain a healthy balance sheet.”
Despite a recent decrease in fuel costs, nearly nine in ten trucking executives believe fuel prices will increase over the next 12 months, and report that fuel costs represent approximately one-third of their overall costs. Despite an urgent need to address the impact of rising fuel prices on business performance, the study reveals only 7 percent are currently using alternative fuels, with the U.S. leading in this area. Trucking businesses in the U.S. were also most likely to be receptive to the idea of using alternative fuels (65 percent), while Canadian executives are the least likely (45 percent).
Trucking executives in each country say they will look to offset current and future fuel expenses. In addition to passing costs to shippers, trucking executives are focusing on other options, including:
- tighten supplier management (41 percent overall), (37 percent in Canada)
- seek alternative green initiatives (36 percent overall), (36 percent in Canada), or
- lease trucks to free cash flow (18 percent overall), (15 percent in Canada).
Driver Demand
Trucking industry leaders report that they are struggling to keep up with demand for drivers. A fifth (22 percent) of trucking businesses believe the shortage will impact their ability to deliver goods on time to existing customers, and are concerned that the shortage will significantly impact their ability to service additional business. In Canada, in particular, 13 percent of additional freight opportunities are at risk of being impacted, and as a result, companies are aggressively seeking ways for attracting and retaining drivers. More paid leave was cited as the number one recruiting and retention method across the U.S. and Canada (nearly 50 percent) and the U.K. (41 percent), followed by reducing paperwork (36 percent) and improving cab facilities (31 percent). Conversely, in France, better cab facilities were cited as the best method for attracting drivers.
Identifying Additional Cost Savings
One in four trucking leaders in Canada cite maintenance as the best areas for cost savings followed by insurance costs (12 percent) and salaries, tires and repairs/spare parts (all 7 percent). Reducing hefty maintenance fees (15%) and improving cash flow (10%) are the driving decisions to lease versus owning trucks in Canada.
Nearly half (47 percent) of international trucking businesses claim that purchasing new trucks could greatly reduce business costs and save management time. In fact, more than half (54 percent) of international trucking businesses overall intend to acquire new trucks in the next year. Of Canadian trucking businesses in particular, more than half (53%) intend to acquire new units in the next twelve months.
About the GECS International Trucking Industry Study
GE Capital Solutions in cooperation with Dun and Bradstreet, conducted a survey including 1,200 interviews with owners, partners, managing directors, finance directors, directors or managers of truck operating businesses in the U.S., U.K., Canada and France. Interviews were conducted anonymously by telephone from July 24th through August 18th, 2006.
About GE Capital Solutions
GE Capital Solutions provides leasing, lending and capital investment products and services to help business customers grow. It has over $90 billion in assets and serves more than a million clients around the world
For more than 20 years GE Capital Solutions (Canada) has been helping transportation dealers, manufacturers and end users grow their businesses. With more than 20 offices across the country and access to the resources of General Electric, GE Capital Solutions has the ability to deliver innovative solutions for all commercial financing needs. Visit us online at www.gecapitalsolutions.ca to find out more about us.