MONCTON – Soaring diesel fuel costs and tightening credit are putting the squeeze on the province’s trucking industry.
The head of the Atlantic Provinces Trucking Association says the doubling of diesel fuel costs in the past two years has become the industry’s No. 1 worry, surpassing the shortage of long-haul drivers and border-crossing problems.
Peter Nelson, the association’s executive director, said Tuesday that Atlantic Canada’s economic competitiveness could be hurt if more isn’t done to help struggling trucking firms.
“Lending institutions and petroleum retailers are starting to put a lot of pressure on the trucking companies as well as individual truckers,” he said.
Nelson said the industry association is hoping to meet with the groups representing lending institutions and petroleum retailers, as well as shipping companies and producers in the near future.
“We all need to start talking about this situation because, at the end of the day, it’s just going to cost more for everything,” he said. “These increased transportation costs make us economically less competitive,” said Nelson.
The four Atlantic Provinces should be concerned about the issue, he said.
Nelson said the provinces could consider easing diesel fuel taxes.
In New Brunswick, the provincial government charges 16.9 cents per litre in tax for diesel fuel, compared to 10.7 cents for gasoline.
The province cut the gas tax by 3.8 cents in 2006 and offered a licensing fee rebate to owners of small diesel trucks and cars. However, no relief was extended to the trucking industry.
In addition to the fuel taxes, the province charges HST on fuel purchases, netting it further revenue. The HST also allows the province to earn more revenue as the price of fuel rises.
Diesel prices in the province have surged to a record $1.41 a litre. With crude oil continuing to hit new records on the global markets, the price for the diesel is set to climb further.
Oil hit edged close to US$120 a barrel in trading at the New York Mercantile Exchange on Tuesday, a new high.
A spokeswoman for the Department of Finance said the tax on diesel fuel will be reviewed, along with other provincial taxes, as part of a green paper on tax reform in New Brunswick.
Business groups representing large industry as well as small- and medium-size firms are supporting the call for a cut to the diesel tax.
“This is something we have been advocating as one of the non-profit-based taxes and levies that are a having negative impact,” said David Plante, vice-president for the New Brunswick division of the Canadian Manufacturers & Exporters.
Andreea Bourgeois, provincial director of the Canadian Federation of Independent Business, said her group supports cutting the diesel tax as well.
“We would be 100-per-cent behind such a move,” she said.
Valerie Roy, chief executive officer of the Greater Moncton Chamber of Commerce, said rising fuel costs and changes to payment agreements with fuel suppliers are becoming top concerns for transportation companies in the area.
“They’re being squeezed incredibly, not only by the tax situation, but also by the suppliers.”
Payment terms are shifting from traditional 30-day periods to as short as a week to two weeks, she said.
Roy said her organization supports a cut to the diesel tax as a way of offering the industry some relief.
“As a community that has between 12 to 15 per cent of our economy in the transportation sector and related industry, we have to be very concerned that the health of our companies remains strong,” she said.