The Feds Are Backing Up the Big Trucking Companies in Canada
May 28, 2020
Some of the trucking companies in Canada recently got great news from the federal government. These companies were told that they would be the lenders for some of the biggest firms throughout the country.
Justin Trudeau, the prime minister, stated that they are working to bridge financing and not just write blank checks. The financing is meant to help keep the larger companies in Canada from experiencing problems after exhausting all of their credit access during the COVID-19 pandemic.
The companies that generate annual revenue of US $214 million can access this program. It is not quite clear the number of carriers in Canada that will be eligible since there are only 3 public-traded trucking companies in Canada. There aren’t many larger freight shipping companies like there are in the US. However, it is estimated that there will be approximately 20 companies taking advantage of the program.
CEO of Bison Transport, Rob Penner, stated that is it good that these companies have this lifeline for when things downslide through no fault of the company. He was also concerned about the companies that were failing before the COVID-19 pandemic occurred.
With the lending program, there are many other measures being taken on the government in Canada to help with the COVID-19 fallout. They are following a better and more specific plan such as the wage subsidy 75% approach.
CEO and chairman of Challenger, a logistics company based in Ontario, Dan Einwechter, stated that he hopes they will never have to use that approach or program.
There have been some details released by the Canadian government regarding the Large Employer Emergency Financing Facility. However, officials have stated that any company that chooses to use this will have to follow exact rules and guidelines including limiting their executive pay and dividends.
Bison made around C $750 million during 2019 and they have approximately 2,900 employees. This freight shipping and logistics company is dealing with lower volumes of freight, higher costs, empty miles, and competitive pricing. Penner stated that they weren’t sure of Bison would participate in the program that is being offered. It would depend on the exact terms of the program.
For the carriers that don’t participate in the facility, they can still get benefits from the larger shippers through the extra backstops, mainly in the gas and oil sector.