The trucking industry in Canada is essential for the nation’s economy, employing approximately 400,000 individuals and supporting over 500,000 businesses. This industry encompasses both private fleets that move goods for their own companies and for-hire carriers that transport goods for various organizations. Recognized as a critical service during the COVID-19 pandemic, the trucking sector helped maintain supply chains when there was a significant shift in consumer demand from services to goods, which increased the demand for freight transportation.
In August, Immigration Minister Sean Fraser announced that trucking is among 16 new professions added to the Federal Skilled Worker Program with the latest National Occupation Classification (NOC) to help tackle the persistent labor shortages facing the industry. Nonetheless, trucking companies continue to have difficulties in filling open positions, and impending retirements are anticipated to worsen the situation. According to a 2019 Statistics Canada report, 31 percent of male transport truck drivers are over 55, highlighting that a considerable segment of the workforce is approaching retirement age.
Consequences of Labor Shortages
The Conference Board of Canada reported that labor shortages in the transportation and warehousing sector cost the economy over $1.3 billion in 2022, with the total economic repercussions exceeding $4.3 billion when accounting for indirect impacts on other sectors. Projections suggest trucking labor shortages could reach between 25,000 in 2025 and 55,600 by 2035, severely affecting supply chains. Shortages are also expected in other transportation sectors such as aviation, marine, and rail.
The trucking industry is crucial for the supply chains of various sectors, including manufacturing, agriculture, and natural resources. Kristelle Audet, Principal Economist at the Conference Board of Canada, states, “The acute shortage of truck drivers in Canada is felt beyond the trucking industry,” emphasizing that trucking is vital for essential industries such as forestry, auto manufacturing, and retail.
Reasons Behind the Shortage
Multiple factors contribute to the driver shortage, including challenging working conditions, lengthy hours, and a lack of respect for the profession. Truck drivers typically earn wages based on kilometers driven, without compensation for delays during loading or unloading, leading to inconsistent incomes. Annual salaries for truck drivers average around $50,000, while long-haul drivers make about $63,000. However, the challenges associated with long hours, transporting heavy loads, and dealing with hazardous materials make the job more difficult. Additionally, the frequent time away from home dissuades potential candidates from entering the field.
To combat the driver shortage, various initiatives are being pursued. Government and industry stakeholders, including the Canadian Trucking Alliance (CTA), are striving to attract new drivers by promoting flexible schedules, competitive pay, and immigration pathways to access foreign labor. For instance, Alberta has committed $30 million to driver training programs to help alleviate the shortage.
Supply Chain Issues and Future Outlook
As of June 2024, Canada has nearly 152,000 business locations within the truck transportation sector, providing both general and specialized freight services. The specialized trucking segment experienced a price increase of 4.3 percent from 2023 to 2024, whereas general freight trucking saw a minor decrease of 0.5 percent. Recruitment remains challenging despite a reduction in long-term job vacancies, as only one in three advertisements remained open for more than 90 days. In the second quarter of 2024, over 60 percent of job vacancies required ongoing recruitment efforts.
The transportation sector faces persistent supply chain challenges. In the third quarter of 2024, nearly 20 percent of businesses in transportation and warehousing anticipated increased demand for goods or services over the next few months, but fewer than 10 percent planned to expand their workforce, indicating a continuing labor shortage. Furthermore, over 40 percent of businesses across sectors reported deteriorating supply chain conditions, with nearly half experiencing delays in deliveries.
Moving Forward
The shortage of truck drivers in Canada has roots that extend before the pandemic, but the situation has worsened due to retirements, a dwindling labor pool, and diminishing interest in the profession. To effectively tackle the driver shortage, it is crucial to reassess how drivers are compensated and treated. Zelek advocates for guaranteed pay and improved work-life balance as incentives to draw in and retain drivers.
Collaboration between the government and trucking companies is vital for developing a sustainable solution. Initiatives such as enhanced driver training programs, better salary structures, and government efforts to address illegal practices like “Driver Inc” are essential. “Driver Inc” drivers are paid “under the table” at competitive rates but lack traditional employment protections such as source deductions and overtime payment. Restoring respect for this essential profession that supports Canada’s economy is paramount. Through these collective efforts, the trucking industry can better navigate the evolving logistics landscape and ensure the stability of the supply chains integral to the country’s success.
