Canada has just gone through its own version of the insurrection that took place in Washington, DC. on January 6, 2021. Unlike the one-day invasion of the U.S. Capitol building, the Canadian protests were extended over 23 days, in multiple locations, and may not be over. The Protest label is truly not correct; the more appropriate label is an Occupation. Here are a few personal reflections.

Why did these protests take place?

The U.S. protest was intended to overturn the November 2020 election. Canada’s protests were initially directed at the country’s vaccine policies, specifically the vaccine and masking mandates.

The motivation of the so-called “Freedom Convoy” was a piece of federal regulation that requires unvaccinated Canadian truckers to isolate for fourteen days upon returning to Canada from the United States. Unvaccinated foreign truckers, however, are not allowed into the country. Despite 90 percent of Canadian truckers being vaccinated, the support of the Teamsters union and the Canadian Trucking Alliance, this policy energized a vocal minority on the Right.

I am a resident of Toronto, Ontario, Canada. I live in a city and province where Covid-19 is just about out of control. It did not have to be this way. The warning signs have been there for months. But the premier of this province just did not get it and still does not get it. The Covid-19 pandemic has exposed a core set of leadership skills that are determinants of how successful a politician is in managing this crisis. Premier Ford has not demonstrated that he has these key leadership attributes.

A Belief in Science

The science has helped us understand the key elements of this highly transmissible virus. The Ontario’s Covid-19 Scientific Table is composed of several very knowledgeable medical experts. They advised the politicians that the virus is spread between individuals who are in enclosed spaces and are close together. The scientists have told us for months that if we stay home, wear masks, and remain socially distant, we can greatly reduce the spread.

In Ontario, we are in the third wave of the virus. The number of new cases is rising on almost a daily basis. But Premier Ford has chosen to close parks, golf and tennis clubs but keep factories, warehouses, and places of worship open. Is there a need to manufacture ladies’ purses during a pandemic? Why place people in congregated indoor settings which increase the risk of catching the virus?

There is considerable euphoria in the trucking industry these days. The July 2020 issue of Broughton Capital Truck Freight Barometers® is entitled “Fasten Your Seatbelts! The Economy & Truck Marketplace are Poised to Surprise to the Upside.” The issue contains the following thoughts.

“In all three modes, the Broughton Capital Truck Freight Barometers® are reflecting an environment in which demand exceeds capacity by a significant margin . . . the underlying fundamentals have never improved this dramatically in such a short period of time. The rapid, intense improvement runs counter to typical seasonality, making the gains even more impressive. Normally, July demand is softer than June . . . This year's Q3 trends, however, are shaping up to be exceptional in every way.” The report goes on to say the following.

“Consistent with our very bullish outlook for the U.S. domestic economy, the demand side of the equation is expanding robustly. Meanwhile, the capacity side of the equation has been constrained, which magnifies the imbalance and contributes to an extraordinary surge in spot rates. Today's spot rate levels are poised to exceed contract rates. As spot rates had fallen in April to record low levels, both nominally and in terms of the gap between spot and contract rates, the meteoric rise in spot rates over the last 13 weeks has been even more spectacular.”

Similarly, the Morgan Stanley Freight (MSFI) Index “has improved sequentially and outperformed seasonality for the 7th time in a row . . . On absolute terms, the index now sits at the highest level for mid-August in over a decade . . . Our straight-line forecast now projects 2020 ending the year nearly on par with 2017 levels, the highest YE level on record.” There is encouraging news on the Covid-19 front. This week reported new cases of the virus in the United States have dropped into the 30,000 to 40,000 range and reported deaths have dropped into the 400 to 500 range. Do these numbers signal a strong fall and winter season for the North American freight transportation industry? Here are a few thoughts to consider.

In my previous blog (https://www.dantranscon.com/index.php/blog/entry/economic-recovery-and-the-future-of-the-freight-transportation-industry-part-1), I suggested that the economic recovery during the balance of this year will likely have a number of peaks and valleys that reflect the spread of Covid-19. In this blog I will explore some of Covid-19’s impacts on freight transportation.

The latest economic data “most closely resembles a horror movie with Q1 GDP posting the worst numbers since the global financial crisis, nearly a quarter of workers now unemployed, and durable goods showing the worst two-month streak since data collection began,” stated Brett F. Ewing, Chief Market Strategist, First Franklin Financial Services.  The job market halted its pandemic-induced collapse in May as employers brought back millions of workers and the unemployment rate unexpectedly declined. Tens of millions of American workers are still out of work, and the unemployment rate, which fell to 13.3 percent from 14.7 percent in April, remains worse than in any previous postwar recession. All the same, economists warn that it will take far longer for the economy to climb out of the hole than it did to fall into it.

The gains in May indicated that the Canada Revenue Agency, the U.S. Congress and the Federal Reserve had at least partly succeeded in limiting permanent economic damage by providing trillions of dollars in assistance to households and businesses. But that aid is now in jeopardy in the U.S., and economists warned that there was no guarantee the job market would continue to improve without it.

Even as the economy shows signs of revival, the United States is confirming more than 20,000 new coronavirus cases and 1000 deaths a day, with counts rising in at least 21 states. The protests over the past three weeks have brought thousands of people to the streets across North America, most close to one another. While many protestors are wearing masks, the lack of physical distancing will likely produce increased virus case counts in many locations.

The recovery of the North American transportation industry is contingent upon the revival of the economies of the United States and Canada. The movement of auto parts, housing supplies, manufactured goods, food stuffs. and a host of other products drive the economy. If there are any impediments to the smooth operation of North American supply chains, this has a direct impact on the Transportation industry. This blog will focus on the forces shaping the revival of the two economies. Part 2 will focus on what the freight transportation industry will look like after the recovery.

Since the beginning of the Covid-19 crisis, Canada has lost about 3 million jobs while the U.S. has lost about 40 million jobs. Many of the unemployed have been forced to stay at home due to the contagious nature of the virus. For the past week, the United States has also been rocked by protests in over 75 major cities because of the killing in Minneapolis, Minnesota of an African American man, George Floyd, by a white police officer.

Most U.S. states and Canadian provinces are in “the restart” period. With no vaccine for probably nine months or more, companies need to generate revenue and profits during the “next normal” phase. Businesses and consumers are having to learn to adapt to the public health guidelines in each jurisdiction (i.e. social distancing, handwashing, mask wearing, drive to work rather than take public transportation etc.) and the new operating procedures (i.e. curbside pickup, controlled entry to stores and businesses, working from home etc.).

In the space of a few months, we have discovered that jobs that no one thought could be done remotely can be handled very effectively with a laptop computer and video conferencing. Cash-strapped businesses are learning that they can cut costs through the reduction or elimination of office space and its attendant costs. Teleconferencing reduces the need for business travel, another cost saver. Commuting costs can be cut – a walk to the home office beats hours in a car or on public transit. Of course, not everyone can work from home.