June 26, 2025 • 21 mins
James Menzies, Editor of Today's Trucking and TruckNews.com, returns to unpack the key forces shaping the trucking industry mid-year. From rising equipment costs and unpredictable tariffs to the freight recession's impact on rates and replacement cycles, James offers grounded insights into how fleets are navigating today’s uncertainty. We explore the stability of the medium-duty market, challenges tied to new EPA regulations, and how shifts in EV policy may slow, but not stop, adoption. With 2026 approaching and pre-buy questions mounting, James weighs in on evolving equipment trends and what the remainder of 2025 may bring.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:12):
Hello and welcome to another episode of the
Transportation Exchange podcastpresented by Rush Trucks and
Canada.
I'm your host, jason Cuddy, andjoining us again today is Mr
James Menzies.
Welcome back, thanks, jason.
Speaker 2 (00:22):
Always good to catch up with you.
Speaker 1 (00:23):
Yes.
Speaker 2 (00:36):
So we are back again, as we normally do.
We're halfway through 25, whichis hard to believe.
Welcome back.
You know, things change and itbecomes very difficult to
predict what's going to happento the market.
So we'll do our best.
You know it is a half yearpoint.
I think this is the year thatwe thought we're going to get
some kind of return to normal.
Speaker 1 (00:52):
And that hasn't been the case.
No, exactly.
So I guess we'll start where wenormally start.
Well, you know, trailers is, asusual, the leading indicator of
the industry.
What do you see out there?
Speaker 2 (01:00):
Well, if it's a leading indicator in the
industry, then it doesn't lookgreat.
I'd hate to be selling trailersright now because of course they
contain a lot of steel and weknow that steel and aluminum are
heavily tariffed by the US.
I think it's at 50% now.
It changes regularly andtrailers are one of those things
that if a fleet's going to becautious with their spending,
they might want to run thosetrailers an extra couple of
(01:22):
years or an extra few years,especially if they're not
putting a whole lot of mileageon them, because the freight
markets are in the toilet.
So trailer sales are reallydown for all right across the
industry.
Right, and it's been tough forthe trailer industry, as fleets
sort of sit on their hands andfigure out where the market's
going and they're trying not tospend any more money than they
have to.
And again, you know you get tothe point with a Class 8 truck
(01:43):
where you just have to replaceit because it gets so expensive
to maintain, whereas trailersyou can sometimes refurbish them
or hang on to them a littlelonger, and I think that's what
we're seeing in the marketplace.
Speaker 1 (01:52):
Yeah, I'd say so.
That's kind of the trend andthat definitely ties into what
we're seeing.
You know, on the retail side ofthe Class 8 side it's quiet.
Speaker 2 (02:01):
I think for the same reason you know there's just.
This year was supposed to bethe year that the freight
markets bounced back and it wassupposed to be a great year for
Class A truck manufacturers, ofcourse, because we had these
looming emission standards in2027.
And they were going to add alot of cost to the Class A truck
prices and fleets were going torush out and refresh your fleet
and buy all kinds of trucksbefore those emission standards
(02:21):
came into effect and refreshyour fleet and buy all kinds of
trucks before those emissionstandards came into effect.
However, with the newadministration in the US, while
they haven't exactly killedthose regulations yet, they're
expected to do so and they saidthey're going to reassess them.
So I think that eagerness toreplenish the fleet before 2027
has kind of evaporated, meaningagain, fleets are sitting there
(02:42):
sitting on their hands,wondering when's the freight
volume is going to return.
Speaker 1 (02:45):
Right, yeah, and I think a lot of them are.
It's a guessing game, like Iknow, even from the dealership
side.
You know, the unfortunate sidefor us is it's hard to advise
the customers because you don'tknow what's coming next, Right?
So we thought, okay, you knowthere's a potential tariff
coming in on the materials, somaybe try and get an order in
(03:05):
before that.
And then there was the risk ofit being tariffed coming across
the border and then if it wasmade in Mexico and coming into
Canada, was it okay versuscoming in from the US?
So there was so muchuncertainty that, I think, to
your point, everyone just kindof put a pause until it could
figure out what's actuallyhappening.
And we're still in that pauseBecause, like you said, steel
and aluminum has gone up, so arewe going to see another
surcharge bump in that?
What else is coming down in thenext half of the year?
(03:25):
No one knows right.
So it's hard for fleets whoreplenish on a certain cycle and
especially, as you said, ratesare down, to invest in new
equipment right now wherethere's so much uncertainty.
Other fleets have a certainbuying power or buying pattern,
so they will just obviouslyprocure as they need to, but
that may slow down too.
But the uncertainty part is thehard part to make a proper
(03:46):
business decision on what to dowith equipment.
Speaker 2 (03:48):
It is very difficult to understand the impact of
these tariffs because a truck,as you know, it's got many
different components on it andthose components are
manufacturers all around theworld, so it really doesn't even
matter so much where the truckitself is built.
Where are all those individualcomponents that are also being
tariffed coming from, Right?
So it's very difficult for abuyer right now to get their
head around.
How much more is this going toadd to the cost of a new truck?
Speaker 1 (04:10):
And I think the other part that makes it a bit more
challenging versus the COVIDtime.
So, covid, obviously youcouldn't get equipment, but then
obviously there's a hugesurcharge in all the different
costs.
So a lot of companies ran totrucks longer and would just
keep repairing them.
Now, same philosophy, but towhat you just said, the parts
pricing has increased, right, soyes, you're offsetting the
potential bump in cost of thenew equipment, but in doing so
(04:34):
your running costs ofmaintaining that it's gotten
extremely more expensive.
Just because the parts are,with all the different tariffs
on all the different parts, isrising.
That cost as well.
Speaker 2 (04:43):
So this one, it's harder to kind of win that
battle than it was, say, fiveyears ago, sure, and the other
big difference between now andCOVID is coming out of COVID
there was a freight boom Right,so those fleets were willing to
pay more money, whether it beused trucks or new trucks, they
were going to pay whatever ittook, because they had so much
customer demand that was pent updemand.
We don't have that freight boomright now.
In fact, we have the opposite.
(05:04):
We've been in the longestlasting freight recession in
history.
It's in its third year andwe're starting to see a lot of
bankruptcies, and maybe that'swhat has to happen in order to
bring more balance back to themarket.
A lot of those companies, likesome of those companies that
were formed during COVID orreally grew aggressively during
COVID, are struggling now Great,and they're falling by the
(05:25):
wayside.
Finally, lenders are coming andthey're saying you know, it's
time, we're not going to let you, we're only going to give you
so much rope.
Yes, and they're starting torepossess those units and shut
down those companies.
For the stronger companies withgood cash balances, that's good
news.
It has to happen, even thoughit's always unfortunate to hear
about because it always affectsdrivers.
Speaker 1 (05:44):
Yeah, it's hard to see the drivers get affected by
it.
But obviously the way certaincompanies have been structured
and what's happened in the lasthandful of years, it's starting
to crack and I think, to yourpoint, the carriers that run a
certain way, that have alwaysbeen the market norm, are happy
to see these companies go andthat obviously will hopefully
bring the rates up as they moveforward right.
So it's kind of the changing ofthe guard it needs to happen in
(06:08):
industry to kind of bring therates up, get the market
stabilized as far as that goesand have, you know, proper
carriers out there running andthen look forward to growing the
economy.
Speaker 2 (06:15):
Sure, and I mean the effect that the tariffs have had
on freight volumes can't beoverstated either, because you
see a big boom when the tariffsare announced, to get ahead of
the tariffs to get thewarehouses stocked, and then
when the tariffs are sometimesreversed and taken off, well,
now those warehouses are stockedand freight dries up because
you don't need that influx offreight coming into the ports
(06:35):
and then from there by truckinland.
So you know, my hats are off toany fleet manager right now who
can make sense of this and keeptheir business running
efficiently.
I think for now most of themare just trying to keep the
lights on and trying to getthrough it.
Speaker 1 (06:49):
Yeah, it's been the biggest challenge and I think,
you know, the medium duty marketis usually not as affected as
much.
You know, I think from our endit's quiet but it's.
You know, some of the smallertrucks seem to still be cycling
through that that small retailpiece where you know the
mom-and-pop shops, you know theyit's a couple trucks in their
fleet, so when those trucks godown they're replacing them,
right kind of thing.
So it's a different, differentpurchasing mindset, but so that
(07:12):
kind of is, you know, separateof what you're seeing on the
rate side.
Speaker 2 (07:15):
But yeah, yeah, and that's what I see too.
In terms of the medium duty,volumes and order activity, it's
not as volatile.
Um, those are business tools,you know, for the landscaper, he
needs a truck to get hisequipment or she needs her truck
to get her equipment from tothe job site, you know.
And when that truck breaks downit needs to be replaced.
So it's not a matter ofnecessarily having trucks that
(07:35):
you could park against the fencewhen you, when things get slow
right.
So you know medium duty.
I think I would agree with you.
It just looks from the stats.
I've seen that that's beensteadier, not strong by any
means, but steady yeah, I thinkit's the best way to put it.
Speaker 1 (07:48):
Yeah, um, and I, you know, you, we touched on the
tariffs and market uncertainty,you know, and what we're seeing,
especially on the us side, is,you know, I guess old
regulations or old rules havebecome brought back to life with
some enforcement, maybe touchbase on kind of what you're
seeing.
That creates again a bit moreuncertainty, not so much in the
market as far as rates, butmaybe what may affect drivers
and certain carriers runninginto the US and even some
(08:10):
certain states within the US.
Speaker 2 (08:12):
Well, the US is dealing with a big problem right
now with Mexican drivers whoare operating illegally within
the country committing cabotage,and so they're looking to crack
down on that, and one of theways that they're doing it and
something that has a lot ofCanadian fleets really concerned
is they've dusted off a rulethat's been around for over 20
years, which requiresprofessional truck drivers to be
proficient in English.
What they've done differently,though beginning June 25th
(08:36):
actually, is when they're goingto start enforcing this they've
rewritten the out of servicecriteria.
So now a driver who can'tcommunicate well in English is
going to be placed out ofservice.
Gotcha, and that's fleetsreally concerned, as drivers
really concerned, because youknow what's the standard going
to be.
The FMCSA put out guidance, butit's heavily redacted because
they don't want to give away thethe secrets of how they're
(08:57):
going to.
They're going to measure, butwill the driver who passes the
test with an enforcement officerin upstate New York have the
same experience in southernAlabama?
We don't know.
We don't know how muchdiscretion will be up to the
enforcement officer and howwe'll assure consistent
application of the rule.
And when a driver is placed outof service because he's not
proficient in English, well,it's not like a headlight that
(09:19):
you can replace at the side ofthe road, or you can't get a
bald tire replaced and be onyour way.
That driver's stuck there, he'sout of service or she's out of
service.
So that's going to cause a lotof concern for police, because
then they're going to have tosend someone else who can speak
better English there to rescuethe driver, the truck, the load.
And how much teeth is thisgoing to have?
How much enthusiasm are theenforcement officers going to
have to draw this line on thesand and enforce this?
(09:44):
It remains to be seen, and Ijust think it makes a lot of
drivers very nervous becauseit's something that they haven't
really, even though you had tospeak English.
Previously it was just acitation and now there's going
to be a series of tests.
Apparently, the first test willbe verbal.
They'll have to be able tocorrespond with the enforcement
officer verbally.
Following that, there'll be anoral test and if the officer is
(10:06):
still uncertain, there'll be asign test, where they're going
to have to make sense of andread signs, presumably that have
quite a bit of text on themwe're not talking about stop
signs and yield signs.
So I think that we have a lot ofnew Canadians as drivers.
Of course that don't.
You know, english isn't theirfirst language, and they could
get caught up in this.
Even French Canadian drivers,you know they might not be
fluent in English, and then youput them right in front of an
(10:28):
enforcement officer who'sdemanding them to take a test
orally.
You know, no matter how goodyour English is, you're going to
be nervous, yeah for sure.
So I think that's somethingthat will be interesting to see
how it plays out.
Maybe it'll be no big deal.
There's been some talk in theStates that this is going to
take all kinds of capacity outof the market and drivers aren't
going to be able to drive there, and it's going to be good for
freight volumes.
I don't know if that'snecessarily true, right, but
(10:50):
it'll be interesting to see justhow aggressive they are with
enforcement of this.
Speaker 1 (10:54):
Yeah, I mean it's something new and different that
you know it's been on the booksfor years but it's, you know,
basically switched and turned onand the the hard part will be
the discretion right becauseit's exactly up to the
enforcement officer, and so thatthat's the hard one where you
want to have like some sort ofbaseline.
Obviously, you know everyonekind of would know the baseline
because it's written, but howmuch is enforced will be.
Speaker 2 (11:14):
It will be the tricky part yeah, yeah, it'll be
really interesting over thecoming weeks to see how much
we've heard anecdotally fromCanadian fleets that have even
had drivers turn back at theborder due to language issues,
right, and that's a completelydifferent issue because that's
border protection, that's notCVSA, right, but there's just
this general sense ofprotectionism in the US that
(11:34):
didn't used to exist, that wehave to be mindful of Fair, fair
, fair and then other changes Iguess that we're seeing
happening quick.
Speaker 1 (11:40):
I mean a little bit in Canada here, just with
companies kind of leaving themarket.
But you know, ev technologyit's still very front and center
, it's obviously a big piece ofthe industry.
But you know there'sever-changing unknowns with the
EPA and in-carb regulations andhow strong is that agency in
driving kind of what they'vedriven the last, you know, five,
seven years?
Speaker 2 (12:00):
Yeah, that's really interesting because of course,
the EPA in the US is dialingback its regulations when it
comes to truck emissions.
It's interfering with CARB'sability in California to create
its own rules.
It wants one national set ofrules, which I think the
industry wants.
That might slow demand anduptake of electric vehicles, but
(12:20):
nothing's happening in terms ofthe technology curve right.
In fact, internationals, youknow, just came out with a class
8 electric truck and these areall global manufacturers and
they're not changing their viewof zero emissions trucks just
because of what's happening inthe us.
Because, you know, in canadaour, our regulations haven't
changed, europe's haven'tchanged.
(12:40):
So I think you're going tocontinue to see that technology
advance and you're going to seethe batteries become more energy
dense.
You're going to see weight comeout of those vehicles.
They're going to get better,which is great.
You might see the uptake slow alittle bit because they still
are considerably more expensive.
We had good news on that justrecently, in about mid-June the
(13:01):
ECO Camionage.
I apologize for my French butthat program which incentivizes
the purchase of heavy-dutyelectric trucks.
It had run out of money verysuddenly.
It was probably poorly managed.
A lot of people buying pickuptrucks got in there somehow and
it was drained of funds.
It's just been cashed up againand we don't know how much is
(13:26):
going to be dedicated to theincentives for heavy-duty trucks
, but at least it's going to beenough because some fleets were
sitting with electric trucks onthe dealer lots and weren't
taking delivery of them becausethey couldn't get that
government funding.
So the fact that that's back isgood news for Quebec and I
think we'll still see Quebec andBC sort of lead the uptake in
Canada and private fleetsPrivate fleets I mean you see a
(13:48):
lot of those companies thataren't necessarily doing it for
the cash ROI, they're doing itfor other reasons, for marketing
and for relations with theirstore owners, trying to get them
to adopt electric vehicles andput in charging infrastructure
and branding, and for drivers,because drivers really like them
.
So I don't think the technologyis going anywhere but I think
the uptake might slow.
And you know, for the classeight manufacturers that have
been around and have the dealernetworks, they can wait, they
(14:08):
can play the long game becausethey sell diesel trucks and
that's where they make theirmoney and 99% of the market is
still diesel.
Who it might hurt is some of thestartups, and we're already
seeing that.
We're seeing companies likeNikola go bankrupt and they're
in hydrogen and EV and some ofthe other companies that need ev
to come along, because that'sall they're in.
Right, they're gonna.
They're gonna have a hard timesurviving, but I think that the
(14:30):
incumbent oems are gonna do justfine yeah, I agree and I don't
see but the regulations changing.
Speaker 1 (14:35):
I mean they had you know different criterias and you
know quotas they had to hit forselling one of this.
You know the credit system soyou know that that takes a
little bit of pressure off.
That does go away.
Uh, you know specifically,obviously in california, but
obviously other states are goingto try and adopt some of the
carb stuff so that will make iteasier to continue selling the
diesel product because that wasa big concern with, you know,
being able to move stuff aroundand and just overall, just
(14:56):
production.
How do you manage that right?
So that takes a little bit ofpressure off and hopefully some
uncertainty of how you know howyou're going to grow that.
But I agree with you, I thinkthe technology will just keep
growing and growing and this mayhelp the.
This may give it a bit of timefor the infrastructure to try
and catch up with the technologyso that the regulations aren't
so far ahead of what's capableout in the market.
So hopefully, this might be alittle bit of a good.
I don't want to say reset, butkind of like a weight shift to
(15:20):
kind of match what's out there.
Speaker 2 (15:21):
Yeah, it's not going to go away.
Any fleet that's already madethe investment in charging
infrastructure and putting thosechargers, they've made that
investment and that's along-term investment.
So they're not going to get ridof these trucks.
They're not going to stopinvesting in the technology.
It's just those that haven'tyet dipped their toe in the
water.
They might take a little bit.
They might just wait a littlelonger until freight is a little
more consistent.
Speaker 1 (15:39):
Yeah, speaking of freight, you dabbled quickly on.
You know we've been in.
What are people kind of seeingor projecting potentially of an
uptick?
Speaker 2 (15:52):
Unfortunately, the most recent reports I've been
reading are that this freightrecession is probably going to
carry into next year because ofthat uncertainty that we've
already talked about and thechanges in freight flows.
You know, the fleets that aregoing to be the safest and
probably do the best are thosethat have multiple locations on
both sides of the border.
They can reallocate some ofthose trucks and if cross-border
(16:12):
dries up because of the tariffs, they can do more domestic and
whatnot.
It gets trickier for smallerfleets that are dedicated to one
particular lane or oneparticular commodity.
So I think that just has a lotof fleets nervous.
Nobody is calling for a freightboom right now.
In fact, there's just so muchuncertainty and so much
nervousness in the market thatthe most forecasters that I
(16:35):
watch are saying, okay, thisfreight recession is probably
going to go into 2026.
Now, right, and this again, aswe said earlier, this was a year
that was supposed to normalize.
Yes, so I I wish there wasbetter news on that front, but,
um, you know, I I don't see many, many bulls out.
Speaker 1 (16:48):
I see a lot of people that are pretty bearish on the
overall market going into nextyear, fair, and it kind of ties
into when we talked, you know,even last year.
Beginning of this year, youknow, 26 is going to be a
pre-buy.
And if not towards the end ofthis year, the 26 model year,
especially with the EPAemissions and the engine price
increases.
(17:10):
But you know, with EPA changingand maybe it won't be as
stringent as long as well, withthe freight recession, you have
two kind of perfect storms tobasically, you know, mitigate
this, this pre-buy so far, andwe pre-buy for a while.
Speaker 2 (17:16):
I mean, we don't even know if there's going to be
these costly new emissionstandards coming in in 2027.
So yeah, um, yeah that that, uh, and you know what I feel okay
about it because people a lotsmarter than me were also saying
that there was going to be agood year for for emission or
for pre-buying equipment.
So it wasn't just us that gottricked by that.
Speaker 1 (17:33):
That was a bit of a head shake yeah, so it's in for
you and the emission piece wouldbe.
I mean, obviously the oems arefar along with the engine
technology, so the technology isgoing to change and obviously
it'll be a price bump on it.
But it's all the.
I think the other factors aretapped onto with the extra
warranties and the other thingsthat you're being forced to take
in 27 that you didn't have to.
Right now that may go away,which hopefully for the fleets,
as it does get introduced if itdoes, at least it's not this
(17:55):
huge, massive spike in cost.
It'll be kind of just slight,slight increments, which would
be much better to absorb.
Speaker 2 (18:01):
Yeah, I mean I feel for the OEMs, they've already
invested millions of dollars, ifnot billions of dollars, to
reach those targets, because youdon't just flick a switch, no,
when there's a new emissionsregulation in 2027, you spend
years getting ready for it.
And they've done that.
They've done the work, they'vemade the investments.
Now how do they recoup thoseinvestments if there's not that
increased sticker price, right?
Speaker 1 (18:18):
yeah.
So it'll be interesting wherethat plays out.
But it's, uh, you know, aswe've seen here, just even at
that dealership level, likethere's, I wouldn't say an
uncertainty on our end, but justto just know direction or
decisive, it's just no directionor decisive, it's just, you
know, right now we just keepdoing what we're doing, but
we're not seeing anything yet,you know, indicating massive
prices increase or anything,because everyone's waiting for
EPA stuff.
Speaker 2 (18:36):
I think that's the same model for everybody in the
industry right now.
Just keep doing what you'redoing.
Yeah, and you know it's allabout survival and keeping the
lights on for now.
Speaker 1 (18:42):
Fair, All right, so then you know.
The million dollar questionquestion is what is the?
What's the rest of 25 look likedare we even hazard a guess?
Speaker 2 (18:51):
yeah, a lot of it is going to be dictated by the us
government and their policies ontrade, right and um, you know,
we, you can't really make senseof it.
It changes so quickly.
And, um, you know, we have anew government in canada too,
which is sort of you put a reseton relations with the us, true,
so it's very difficult to topredict.
I mean those, the, the tariffs.
(19:12):
Now, the most damaging ones areon steel and aluminum, and if
you're steel and aluminum hauler, that's a death sentence.
Yeah, but they could be liftedtomorrow, so it's very difficult
to hazard a guess.
You know, as I said before,most forecasters are not
predicting any big freightrecovery this year, so that's
probably going to have to wait.
But will another shoe drop?
(19:32):
I mean, I guess that's thebigger concern.
Will tariffs be extended toother products that aren't
currently being taxed at theborder?
Speaker 1 (19:39):
So what do you think?
I think the best answer is wedon't know, yeah.
Speaker 2 (19:42):
I think we have to go with that because it's just
unpredictable right now.
Speaker 1 (19:54):
And you know, in 24 years of covering the industry
I've never seen it sounpredictable, yeah, yeah, and
it's just unknown what happens,you know, between the different
trade regulations, everything.
So as those get hammered outand I'll give some clarity and,
you know, get some agreements inplace and hopefully I'll give
some certainty to to the marketand to the pricing, and then to
the rates, and then to theequipment and it'll start to
trickle through.
So you need the market to kindof just settle and have some
certainty and then people canthen make proper business
decisions at that point andthere could be some good that
comes with this.
Speaker 2 (20:12):
Now there's been a lot of talk we've been talking
and trucking for years now aboutthe need to improve or get rid
of interprovincial tradebarriers right and improve trade
from province to province.
Finally, that's being givensome attention.
Yeah, and that could reallyhelp trucking, because trucking
is one of those industries wherethere's there's 10 different
sets of rules.
If you're going to go to coastto coast, right, and if we can
eliminate some of those tradebarriers within Canada, that'll
(20:35):
help on the domestic front.
And finally, for the first time, it seems like they're serious
about addressing that yeah, itseems to be.
Speaker 1 (20:40):
I mean, the different provinces have been talking and
kind of making some agreementsbetween themselves, but it might
help from a national you knowfootprint to actually have that
in.
So, yeah, if there's any goodthat comes out of all this chaos
, that hopefully will strengthenthe Canadian economy and, you
know, for the carriers that dorun across the country, maybe
this, this is a boom for thempotentially as we move forward.
Speaker 2 (20:57):
And we've.
We've also talked in the pastabout how resilient the industry
is.
You know, that's the one thingthat's remarkable about trucking
it's resilient.
It's been through challenges8,09, COVID.
They always survive, theyalways find a way and I'm sure
this time they will as well, Iagree, yeah, it'll.
Speaker 1 (21:12):
it'll keep keep on trucking, yeah.
So anyway, thank you forjoining us again today and
providing us the you know a lookof where we are so far and
potentially where we're going.
You know the great unknown, butit's for sure All right.
Well, that concludes today'sepisode.
To catch past episodes, pleasecheck out
transportationexchangepodcastca.
Until next time, thanks forwatching.
Hello and welcome to another episode of the
Transportation Exchange podcastpresented by Rush Trucks and
Canada.
I'm your host, jason Cuddy, andjoining us again today is Mr
James Menzies.
Welcome back, thanks, jason.
Speaker 2 (00:22):
Always good to catch up with you.
Speaker 1 (00:23):
Yes.
Speaker 2 (00:36):
So we are back again, as we normally do.
We're halfway through 25, whichis hard to believe.
Welcome back.
You know, things change and itbecomes very difficult to
predict what's going to happento the market.
So we'll do our best.
You know it is a half yearpoint.
I think this is the year thatwe thought we're going to get
some kind of return to normal.
Speaker 1 (00:52):
And that hasn't been the case.
No, exactly.
So I guess we'll start where wenormally start.
Well, you know, trailers is, asusual, the leading indicator of
the industry.
What do you see out there?
Speaker 2 (01:00):
Well, if it's a leading indicator in the
industry, then it doesn't lookgreat.
I'd hate to be selling trailersright now because of course they
contain a lot of steel and weknow that steel and aluminum are
heavily tariffed by the US.
I think it's at 50% now.
It changes regularly andtrailers are one of those things
that if a fleet's going to becautious with their spending,
they might want to run thosetrailers an extra couple of
(01:22):
years or an extra few years,especially if they're not
putting a whole lot of mileageon them, because the freight
markets are in the toilet.
So trailer sales are reallydown for all right across the
industry.
Right, and it's been tough forthe trailer industry, as fleets
sort of sit on their hands andfigure out where the market's
going and they're trying not tospend any more money than they
have to.
And again, you know you get tothe point with a Class 8 truck
(01:43):
where you just have to replaceit because it gets so expensive
to maintain, whereas trailersyou can sometimes refurbish them
or hang on to them a littlelonger, and I think that's what
we're seeing in the marketplace.
Speaker 1 (01:52):
Yeah, I'd say so.
That's kind of the trend andthat definitely ties into what
we're seeing.
You know, on the retail side ofthe Class 8 side it's quiet.
Speaker 2 (02:01):
I think for the same reason you know there's just.
This year was supposed to bethe year that the freight
markets bounced back and it wassupposed to be a great year for
Class A truck manufacturers, ofcourse, because we had these
looming emission standards in2027.
And they were going to add alot of cost to the Class A truck
prices and fleets were going torush out and refresh your fleet
and buy all kinds of trucksbefore those emission standards
(02:21):
came into effect and refreshyour fleet and buy all kinds of
trucks before those emissionstandards came into effect.
However, with the newadministration in the US, while
they haven't exactly killedthose regulations yet, they're
expected to do so and they saidthey're going to reassess them.
So I think that eagerness toreplenish the fleet before 2027
has kind of evaporated, meaningagain, fleets are sitting there
(02:42):
sitting on their hands,wondering when's the freight
volume is going to return.
Speaker 1 (02:45):
Right, yeah, and I think a lot of them are.
It's a guessing game, like Iknow, even from the dealership
side.
You know, the unfortunate sidefor us is it's hard to advise
the customers because you don'tknow what's coming next, Right?
So we thought, okay, you knowthere's a potential tariff
coming in on the materials, somaybe try and get an order in
(03:05):
before that.
And then there was the risk ofit being tariffed coming across
the border and then if it wasmade in Mexico and coming into
Canada, was it okay versuscoming in from the US?
So there was so muchuncertainty that, I think, to
your point, everyone just kindof put a pause until it could
figure out what's actuallyhappening.
And we're still in that pauseBecause, like you said, steel
and aluminum has gone up, so arewe going to see another
surcharge bump in that?
What else is coming down in thenext half of the year?
(03:25):
No one knows right.
So it's hard for fleets whoreplenish on a certain cycle and
especially, as you said, ratesare down, to invest in new
equipment right now wherethere's so much uncertainty.
Other fleets have a certainbuying power or buying pattern,
so they will just obviouslyprocure as they need to, but
that may slow down too.
But the uncertainty part is thehard part to make a proper
(03:46):
business decision on what to dowith equipment.
Speaker 2 (03:48):
It is very difficult to understand the impact of
these tariffs because a truck,as you know, it's got many
different components on it andthose components are
manufacturers all around theworld, so it really doesn't even
matter so much where the truckitself is built.
Where are all those individualcomponents that are also being
tariffed coming from, Right?
So it's very difficult for abuyer right now to get their
head around.
How much more is this going toadd to the cost of a new truck?
Speaker 1 (04:10):
And I think the other part that makes it a bit more
challenging versus the COVIDtime.
So, covid, obviously youcouldn't get equipment, but then
obviously there's a hugesurcharge in all the different
costs.
So a lot of companies ran totrucks longer and would just
keep repairing them.
Now, same philosophy, but towhat you just said, the parts
pricing has increased, right, soyes, you're offsetting the
potential bump in cost of thenew equipment, but in doing so
(04:34):
your running costs ofmaintaining that it's gotten
extremely more expensive.
Just because the parts are,with all the different tariffs
on all the different parts, isrising.
That cost as well.
Speaker 2 (04:43):
So this one, it's harder to kind of win that
battle than it was, say, fiveyears ago, sure, and the other
big difference between now andCOVID is coming out of COVID
there was a freight boom Right,so those fleets were willing to
pay more money, whether it beused trucks or new trucks, they
were going to pay whatever ittook, because they had so much
customer demand that was pent updemand.
We don't have that freight boomright now.
In fact, we have the opposite.
(05:04):
We've been in the longestlasting freight recession in
history.
It's in its third year andwe're starting to see a lot of
bankruptcies, and maybe that'swhat has to happen in order to
bring more balance back to themarket.
A lot of those companies, likesome of those companies that
were formed during COVID orreally grew aggressively during
COVID, are struggling now Great,and they're falling by the
(05:25):
wayside.
Finally, lenders are coming andthey're saying you know, it's
time, we're not going to let you, we're only going to give you
so much rope.
Yes, and they're starting torepossess those units and shut
down those companies.
For the stronger companies withgood cash balances, that's good
news.
It has to happen, even thoughit's always unfortunate to hear
about because it always affectsdrivers.
Speaker 1 (05:44):
Yeah, it's hard to see the drivers get affected by
it.
But obviously the way certaincompanies have been structured
and what's happened in the lasthandful of years, it's starting
to crack and I think, to yourpoint, the carriers that run a
certain way, that have alwaysbeen the market norm, are happy
to see these companies go andthat obviously will hopefully
bring the rates up as they moveforward right.
So it's kind of the changing ofthe guard it needs to happen in
(06:08):
industry to kind of bring therates up, get the market
stabilized as far as that goesand have, you know, proper
carriers out there running andthen look forward to growing the
economy.
Speaker 2 (06:15):
Sure, and I mean the effect that the tariffs have had
on freight volumes can't beoverstated either, because you
see a big boom when the tariffsare announced, to get ahead of
the tariffs to get thewarehouses stocked, and then
when the tariffs are sometimesreversed and taken off, well,
now those warehouses are stockedand freight dries up because
you don't need that influx offreight coming into the ports
(06:35):
and then from there by truckinland.
So you know, my hats are off toany fleet manager right now who
can make sense of this and keeptheir business running
efficiently.
I think for now most of themare just trying to keep the
lights on and trying to getthrough it.
Speaker 1 (06:49):
Yeah, it's been the biggest challenge and I think,
you know, the medium duty marketis usually not as affected as
much.
You know, I think from our endit's quiet but it's.
You know, some of the smallertrucks seem to still be cycling
through that that small retailpiece where you know the
mom-and-pop shops, you know theyit's a couple trucks in their
fleet, so when those trucks godown they're replacing them,
right kind of thing.
So it's a different, differentpurchasing mindset, but so that
(07:12):
kind of is, you know, separateof what you're seeing on the
rate side.
Speaker 2 (07:15):
But yeah, yeah, and that's what I see too.
In terms of the medium duty,volumes and order activity, it's
not as volatile.
Um, those are business tools,you know, for the landscaper, he
needs a truck to get hisequipment or she needs her truck
to get her equipment from tothe job site, you know.
And when that truck breaks downit needs to be replaced.
So it's not a matter ofnecessarily having trucks that
(07:35):
you could park against the fencewhen you, when things get slow
right.
So you know medium duty.
I think I would agree with you.
It just looks from the stats.
I've seen that that's beensteadier, not strong by any
means, but steady yeah, I thinkit's the best way to put it.
Speaker 1 (07:48):
Yeah, um, and I, you know, you, we touched on the
tariffs and market uncertainty,you know, and what we're seeing,
especially on the us side, is,you know, I guess old
regulations or old rules havebecome brought back to life with
some enforcement, maybe touchbase on kind of what you're
seeing.
That creates again a bit moreuncertainty, not so much in the
market as far as rates, butmaybe what may affect drivers
and certain carriers runninginto the US and even some
(08:10):
certain states within the US.
Speaker 2 (08:12):
Well, the US is dealing with a big problem right
now with Mexican drivers whoare operating illegally within
the country committing cabotage,and so they're looking to crack
down on that, and one of theways that they're doing it and
something that has a lot ofCanadian fleets really concerned
is they've dusted off a rulethat's been around for over 20
years, which requiresprofessional truck drivers to be
proficient in English.
What they've done differently,though beginning June 25th
(08:36):
actually, is when they're goingto start enforcing this they've
rewritten the out of servicecriteria.
So now a driver who can'tcommunicate well in English is
going to be placed out ofservice.
Gotcha, and that's fleetsreally concerned, as drivers
really concerned, because youknow what's the standard going
to be.
The FMCSA put out guidance, butit's heavily redacted because
they don't want to give away thethe secrets of how they're
(08:57):
going to.
They're going to measure, butwill the driver who passes the
test with an enforcement officerin upstate New York have the
same experience in southernAlabama?
We don't know.
We don't know how muchdiscretion will be up to the
enforcement officer and howwe'll assure consistent
application of the rule.
And when a driver is placed outof service because he's not
proficient in English, well,it's not like a headlight that
(09:19):
you can replace at the side ofthe road, or you can't get a
bald tire replaced and be onyour way.
That driver's stuck there, he'sout of service or she's out of
service.
So that's going to cause a lotof concern for police, because
then they're going to have tosend someone else who can speak
better English there to rescuethe driver, the truck, the load.
And how much teeth is thisgoing to have?
How much enthusiasm are theenforcement officers going to
have to draw this line on thesand and enforce this?
(09:44):
It remains to be seen, and Ijust think it makes a lot of
drivers very nervous becauseit's something that they haven't
really, even though you had tospeak English.
Previously it was just acitation and now there's going
to be a series of tests.
Apparently, the first test willbe verbal.
They'll have to be able tocorrespond with the enforcement
officer verbally.
Following that, there'll be anoral test and if the officer is
(10:06):
still uncertain, there'll be asign test, where they're going
to have to make sense of andread signs, presumably that have
quite a bit of text on themwe're not talking about stop
signs and yield signs.
So I think that we have a lot ofnew Canadians as drivers.
Of course that don't.
You know, english isn't theirfirst language, and they could
get caught up in this.
Even French Canadian drivers,you know they might not be
fluent in English, and then youput them right in front of an
(10:28):
enforcement officer who'sdemanding them to take a test
orally.
You know, no matter how goodyour English is, you're going to
be nervous, yeah for sure.
So I think that's somethingthat will be interesting to see
how it plays out.
Maybe it'll be no big deal.
There's been some talk in theStates that this is going to
take all kinds of capacity outof the market and drivers aren't
going to be able to drive there, and it's going to be good for
freight volumes.
I don't know if that'snecessarily true, right, but
(10:50):
it'll be interesting to see justhow aggressive they are with
enforcement of this.
Speaker 1 (10:54):
Yeah, I mean it's something new and different that
you know it's been on the booksfor years but it's, you know,
basically switched and turned onand the the hard part will be
the discretion right becauseit's exactly up to the
enforcement officer, and so thatthat's the hard one where you
want to have like some sort ofbaseline.
Obviously, you know everyonekind of would know the baseline
because it's written, but howmuch is enforced will be.
Speaker 2 (11:14):
It will be the tricky part yeah, yeah, it'll be
really interesting over thecoming weeks to see how much
we've heard anecdotally fromCanadian fleets that have even
had drivers turn back at theborder due to language issues,
right, and that's a completelydifferent issue because that's
border protection, that's notCVSA, right, but there's just
this general sense ofprotectionism in the US that
(11:34):
didn't used to exist, that wehave to be mindful of Fair, fair
, fair and then other changes Iguess that we're seeing
happening quick.
Speaker 1 (11:40):
I mean a little bit in Canada here, just with
companies kind of leaving themarket.
But you know, ev technologyit's still very front and center
, it's obviously a big piece ofthe industry.
But you know there'sever-changing unknowns with the
EPA and in-carb regulations andhow strong is that agency in
driving kind of what they'vedriven the last, you know, five,
seven years?
Speaker 2 (12:00):
Yeah, that's really interesting because of course,
the EPA in the US is dialingback its regulations when it
comes to truck emissions.
It's interfering with CARB'sability in California to create
its own rules.
It wants one national set ofrules, which I think the
industry wants.
That might slow demand anduptake of electric vehicles, but
(12:20):
nothing's happening in terms ofthe technology curve right.
In fact, internationals, youknow, just came out with a class
8 electric truck and these areall global manufacturers and
they're not changing their viewof zero emissions trucks just
because of what's happening inthe us.
Because, you know, in canadaour, our regulations haven't
changed, europe's haven'tchanged.
(12:40):
So I think you're going tocontinue to see that technology
advance and you're going to seethe batteries become more energy
dense.
You're going to see weight comeout of those vehicles.
They're going to get better,which is great.
You might see the uptake slow alittle bit because they still
are considerably more expensive.
We had good news on that justrecently, in about mid-June the
(13:01):
ECO Camionage.
I apologize for my French butthat program which incentivizes
the purchase of heavy-dutyelectric trucks.
It had run out of money verysuddenly.
It was probably poorly managed.
A lot of people buying pickuptrucks got in there somehow and
it was drained of funds.
It's just been cashed up againand we don't know how much is
(13:26):
going to be dedicated to theincentives for heavy-duty trucks
, but at least it's going to beenough because some fleets were
sitting with electric trucks onthe dealer lots and weren't
taking delivery of them becausethey couldn't get that
government funding.
So the fact that that's back isgood news for Quebec and I
think we'll still see Quebec andBC sort of lead the uptake in
Canada and private fleetsPrivate fleets I mean you see a
(13:48):
lot of those companies thataren't necessarily doing it for
the cash ROI, they're doing itfor other reasons, for marketing
and for relations with theirstore owners, trying to get them
to adopt electric vehicles andput in charging infrastructure
and branding, and for drivers,because drivers really like them
.
So I don't think the technologyis going anywhere but I think
the uptake might slow.
And you know, for the classeight manufacturers that have
been around and have the dealernetworks, they can wait, they
(14:08):
can play the long game becausethey sell diesel trucks and
that's where they make theirmoney and 99% of the market is
still diesel.
Who it might hurt is some of thestartups, and we're already
seeing that.
We're seeing companies likeNikola go bankrupt and they're
in hydrogen and EV and some ofthe other companies that need ev
to come along, because that'sall they're in.
Right, they're gonna.
They're gonna have a hard timesurviving, but I think that the
(14:30):
incumbent oems are gonna do justfine yeah, I agree and I don't
see but the regulations changing.
Speaker 1 (14:35):
I mean they had you know different criterias and you
know quotas they had to hit forselling one of this.
You know the credit system soyou know that that takes a
little bit of pressure off.
That does go away.
Uh, you know specifically,obviously in california, but
obviously other states are goingto try and adopt some of the
carb stuff so that will make iteasier to continue selling the
diesel product because that wasa big concern with, you know,
being able to move stuff aroundand and just overall, just
(14:56):
production.
How do you manage that right?
So that takes a little bit ofpressure off and hopefully some
uncertainty of how you know howyou're going to grow that.
But I agree with you, I thinkthe technology will just keep
growing and growing and this mayhelp the.
This may give it a bit of timefor the infrastructure to try
and catch up with the technologyso that the regulations aren't
so far ahead of what's capableout in the market.
So hopefully, this might be alittle bit of a good.
I don't want to say reset, butkind of like a weight shift to
(15:20):
kind of match what's out there.
Speaker 2 (15:21):
Yeah, it's not going to go away.
Any fleet that's already madethe investment in charging
infrastructure and putting thosechargers, they've made that
investment and that's along-term investment.
So they're not going to get ridof these trucks.
They're not going to stopinvesting in the technology.
It's just those that haven'tyet dipped their toe in the
water.
They might take a little bit.
They might just wait a littlelonger until freight is a little
more consistent.
Speaker 1 (15:39):
Yeah, speaking of freight, you dabbled quickly on.
You know we've been in.
What are people kind of seeingor projecting potentially of an
uptick?
Speaker 2 (15:52):
Unfortunately, the most recent reports I've been
reading are that this freightrecession is probably going to
carry into next year because ofthat uncertainty that we've
already talked about and thechanges in freight flows.
You know, the fleets that aregoing to be the safest and
probably do the best are thosethat have multiple locations on
both sides of the border.
They can reallocate some ofthose trucks and if cross-border
(16:12):
dries up because of the tariffs, they can do more domestic and
whatnot.
It gets trickier for smallerfleets that are dedicated to one
particular lane or oneparticular commodity.
So I think that just has a lotof fleets nervous.
Nobody is calling for a freightboom right now.
In fact, there's just so muchuncertainty and so much
nervousness in the market thatthe most forecasters that I
(16:35):
watch are saying, okay, thisfreight recession is probably
going to go into 2026.
Now, right, and this again, aswe said earlier, this was a year
that was supposed to normalize.
Yes, so I I wish there wasbetter news on that front, but,
um, you know, I I don't see many, many bulls out.
Speaker 1 (16:48):
I see a lot of people that are pretty bearish on the
overall market going into nextyear, fair, and it kind of ties
into when we talked, you know,even last year.
Beginning of this year, youknow, 26 is going to be a
pre-buy.
And if not towards the end ofthis year, the 26 model year,
especially with the EPAemissions and the engine price
increases.
(17:10):
But you know, with EPA changingand maybe it won't be as
stringent as long as well, withthe freight recession, you have
two kind of perfect storms tobasically, you know, mitigate
this, this pre-buy so far, andwe pre-buy for a while.
Speaker 2 (17:16):
I mean, we don't even know if there's going to be
these costly new emissionstandards coming in in 2027.
So yeah, um, yeah that that, uh, and you know what I feel okay
about it because people a lotsmarter than me were also saying
that there was going to be agood year for for emission or
for pre-buying equipment.
So it wasn't just us that gottricked by that.
Speaker 1 (17:33):
That was a bit of a head shake yeah, so it's in for
you and the emission piece wouldbe.
I mean, obviously the oems arefar along with the engine
technology, so the technology isgoing to change and obviously
it'll be a price bump on it.
But it's all the.
I think the other factors aretapped onto with the extra
warranties and the other thingsthat you're being forced to take
in 27 that you didn't have to.
Right now that may go away,which hopefully for the fleets,
as it does get introduced if itdoes, at least it's not this
(17:55):
huge, massive spike in cost.
It'll be kind of just slight,slight increments, which would
be much better to absorb.
Speaker 2 (18:01):
Yeah, I mean I feel for the OEMs, they've already
invested millions of dollars, ifnot billions of dollars, to
reach those targets, because youdon't just flick a switch, no,
when there's a new emissionsregulation in 2027, you spend
years getting ready for it.
And they've done that.
They've done the work, they'vemade the investments.
Now how do they recoup thoseinvestments if there's not that
increased sticker price, right?
Speaker 1 (18:18):
yeah.
So it'll be interesting wherethat plays out.
But it's, uh, you know, aswe've seen here, just even at
that dealership level, likethere's, I wouldn't say an
uncertainty on our end, but justto just know direction or
decisive, it's just no directionor decisive, it's just, you
know, right now we just keepdoing what we're doing, but
we're not seeing anything yet,you know, indicating massive
prices increase or anything,because everyone's waiting for
EPA stuff.
Speaker 2 (18:36):
I think that's the same model for everybody in the
industry right now.
Just keep doing what you'redoing.
Yeah, and you know it's allabout survival and keeping the
lights on for now.
Speaker 1 (18:42):
Fair, All right, so then you know.
The million dollar questionquestion is what is the?
What's the rest of 25 look likedare we even hazard a guess?
Speaker 2 (18:51):
yeah, a lot of it is going to be dictated by the us
government and their policies ontrade, right and um, you know,
we, you can't really make senseof it.
It changes so quickly.
And, um, you know, we have anew government in canada too,
which is sort of you put a reseton relations with the us, true,
so it's very difficult to topredict.
I mean those, the, the tariffs.
(19:12):
Now, the most damaging ones areon steel and aluminum, and if
you're steel and aluminum hauler, that's a death sentence.
Yeah, but they could be liftedtomorrow, so it's very difficult
to hazard a guess.
You know, as I said before,most forecasters are not
predicting any big freightrecovery this year, so that's
probably going to have to wait.
But will another shoe drop?
(19:32):
I mean, I guess that's thebigger concern.
Will tariffs be extended toother products that aren't
currently being taxed at theborder?
Speaker 1 (19:39):
So what do you think?
I think the best answer is wedon't know, yeah.
Speaker 2 (19:42):
I think we have to go with that because it's just
unpredictable right now.
Speaker 1 (19:54):
And you know, in 24 years of covering the industry
I've never seen it sounpredictable, yeah, yeah, and
it's just unknown what happens,you know, between the different
trade regulations, everything.
So as those get hammered outand I'll give some clarity and,
you know, get some agreements inplace and hopefully I'll give
some certainty to to the marketand to the pricing, and then to
the rates, and then to theequipment and it'll start to
trickle through.
So you need the market to kindof just settle and have some
certainty and then people canthen make proper business
decisions at that point andthere could be some good that
comes with this.
Speaker 2 (20:12):
Now there's been a lot of talk we've been talking
and trucking for years now aboutthe need to improve or get rid
of interprovincial tradebarriers right and improve trade
from province to province.
Finally, that's being givensome attention.
Yeah, and that could reallyhelp trucking, because trucking
is one of those industries wherethere's there's 10 different
sets of rules.
If you're going to go to coastto coast, right, and if we can
eliminate some of those tradebarriers within Canada, that'll
(20:35):
help on the domestic front.
And finally, for the first time, it seems like they're serious
about addressing that yeah, itseems to be.
Speaker 1 (20:40):
I mean, the different provinces have been talking and
kind of making some agreementsbetween themselves, but it might
help from a national you knowfootprint to actually have that
in.
So, yeah, if there's any goodthat comes out of all this chaos
, that hopefully will strengthenthe Canadian economy and, you
know, for the carriers that dorun across the country, maybe
this, this is a boom for thempotentially as we move forward.
Speaker 2 (20:57):
And we've.
We've also talked in the pastabout how resilient the industry
is.
You know, that's the one thingthat's remarkable about trucking
it's resilient.
It's been through challenges8,09, COVID.
They always survive, theyalways find a way and I'm sure
this time they will as well, Iagree, yeah, it'll.
Speaker 1 (21:12):
it'll keep keep on trucking, yeah.
So anyway, thank you forjoining us again today and
providing us the you know a lookof where we are so far and
potentially where we're going.
You know the great unknown, butit's for sure All right.
Well, that concludes today'sepisode.
To catch past episodes, pleasecheck out
transportationexchangepodcastca.
Until next time, thanks forwatching.
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