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Transportation and Distribution: Industry Challenges in Times of Pandemic

Written By :

  • Guy Fauteux | Expert RCGT
    Guy Fauteux

    Consulting Partner FCPA Assurance and accounting

As a result of temporary stoppages in the local and global economies, many transportation companies in Quebec have experienced major difficulties. What have been the biggest challenges in this sector?

The onset of the crisis brought about a series of new challenges for trucking companies in Quebec: economic slowdowns, changes in the supply chain, and new measures for cross-border travel. The most significant issue for many trucking companies was profitability and transportation logistics. What makes a trucking company profitable is its ability to manage outbound and inbound delivery logistics.

Profitability of transportation

The transportation industry is highly dependent on the dynamics of the supply chain. Production stoppages for many companies around the world have had an impact on delivery and distribution needs. The decline in the flow of goods, caused by the global economic downturn, has affected the demand for deliveries to and from Canada.

For transportation companies, this meant that it was not uncommon to have a delivery request, but with no guarantee of a return trip with goods, which affected the profitability of a truck trip. As a result, transportation sector companies negotiated higher prices, with some of them having to increase prices by 40% in order to respond to the logistical changes caused by the pandemic.

Today, the impacts of the pandemic on the transportation and distribution sector are somewhat less pronounced in some companies since the production of several goods has resumed. In addition, the transportation sector remains an essential service in our economy.

Labour shortage

However, one of the biggest challenges affecting this sector, which was already very prevalent long before the pandemic, is the labour shortage.

This shortage of truck drivers has more devastating impacts within the sector than the pandemic. Even if companies increase wages, they are not able to meet their market demand. Across Quebec, it is projected that by 2023, there will be a labour shortage in 117 of the assessed occupations, including the transportation sector, where a large number of vacancies will need to be filled.

This labour shortage has rapidly worsened due to the pandemic as many truckers now refuse to make deliveries outside of Canada.

However, international recruitment can solve this problem. Auray Sourcing, one of our subsidiaries, offers Quebec and Canadian companies a recruiting and international mobility service to address the labour shortage issue.

Ensure the longevity of your business in times of crisis

Although transportation and distribution companies have been able to mitigate the impact of the pandemic, particularly thanks to their status as an essential service, this sector still faces significant challenges. In these times of crisis, it is essential to have a well-established plan in place to ensure your business’s sustainability.

Watch the interview with our expert on the new normal in the transportation and distribution sector.

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