TransForce sees Western Canada economy further weakening and spreading east

MONTREAL – Canada’s largest trucking company expects the Western Canadian economy will continue to weaken, spreading its pain across the country.

TransForce CEO Alain Bedard said Friday that low oil and commodity prices will remain a significant drag on growth while the low Canadian dollar has so far provided only a small boost to the manufacturing sector based in Eastern Canada.

“The situation in Alberta is terrible and it’s only going to get worse,” Bedard said during a conference call to discuss the company’s fourth-quarter and 2015 results.

Bedard said Alberta’s market for smaller truckloads, which was the best in Canada until a year ago, has seen volume shrink 25 per cent.

“Calgary is like a ghost town now,” he told analysts.

The Quebec-based company expects energy-related earnings in the province and in Texas will fall another $10 million over the coming year. Anything more than that will force it to shut operations as it did when it mothballed the oil rig moving business in both countries, he said.

Bedard said his company is also feeling pressure because low prices have virtually brought the mining sector to a standstill.

And even though the low loonie has helped forestry and building sector exports, the prospects for growth in the manufacturing sector are limited.

“We lost so much industrial capacity in the East. It’s never going to be the same, but at least we’re starting to see a little bit.”

TransForce (TSX:TFI) is counting on a strengthening of the U.S. economy later in the year and growth in its business supporting e-commerce to offset general economic weakness in Canada.

The company, Canada’s biggest trucker by fleet size and revenue, is forecasting that its e-commerce business that delivers online orders directly to customer homes could almost double next year as revenues rise from $100 million to between $150 million and $200 million.

TransForce says it has signed a deal with an unidentified major e-commerce player in Canada that will add courier service in Vancouver and Toronto. Meanwhile, it has expanded its relationship in the United States with Amazon, the world’s largest e-commerce player, by adding new distribution markets.