New York, NY (PRWEB) April 19, 2014
Despite some initial bumps in the road, the Tank and Refrigeration Trucking industry has shifted smoothly over the past five years. “Still battling the effects of the recession in 2009, industry operators struggled to increase industry revenue due to declining shipments from manufacturing firms, constrained levels of consumer spending and continually increasing fuel costs,” according to IBISWorld Industry Analyst Nick Petrillo. A major turnaround occurred in 2012, however, as the total volume of Canadian trade experienced an impressive 2.3% increase, consumer spending grew 1.9% and industry revenue grew 0.6%, the industry's first increase in revenue since the recession hit. Tank and refrigeration trucking has continued its steady path in the years since, although industry revenue has declined overall at an annualized rate of 3.8% to $9.5 billion over the five years to 2014.
Rising fuel prices are a constant challenge for industry operators and price volatility has seriously impacted the industry's ability to levy stable fuel surcharges to its customers. As a hedge against spikes in the cost of diesel fuel, tank and refrigeration trucking companies typically add fuel surcharges to shipping contracts based on the forecast price of diesel fuel over the period. “Diesel fuel is derived from crude oil, the price of which experienced drastic changes over the past five years,” says Petrillo. The world price of crude oil skyrocketed 30.6% in 2011, increased only 1.0% in 2012 and is expected to decline 3.0% in 2014. This volatility will continue to pose a challenge for industry operators that seek to charge competitive rates to customers, but must also charge rates high enough to cover a substantial portion of the fuel costs incurred through shipping operations. Industry revenue is expected to decline an additional 0.5% in 2014.
While demand for tank and refrigeration trucking may not experience the same level of volatility as it had over the previous five years, industry revenue will ultimately benefit from stable demand from downstream customers. As consumer spending on staple goods, such as dairy, meat and other grocery products that require specialized shipping methods increases, demand for industry shipping services will grow.
For more information, visit IBISWorld’s Tank & Refrigeration Trucking in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry provides long-distance trucking services for cargo that requires specialized transportation. Companies in the industry transport bulk liquids, frozen goods, dry bulk materials, forest products, automobiles and other specialized freight between metropolitan areas. This industry does not include the transport of used goods.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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