Weakness in the overall trucking industry compounded by decelerating demand in the global economy hurts Canada's largest trucker - or does it?
Critics also point to the higher Canadian loonie harming exports from Ontario and Quebec manufacturers. Railways are doing better, but truckers struggle with overcapacity in challenging freight environment.
We looked at risks to TransForce Income Fund, Canada's largest trucking firm, in our article Lower Trade Slows Canadian Trucker. We concluded that long-term debt to pay for acquisitions is the predominant threat particularly if interest rates rise.
However, TransForce has established credentials, growing company revenues profitably even in challenging global trade conditions. The company's dominant position in the Canadian trucking industry bears witness to management's formidable track record.
Late in November, TransForce acquired 63-year-old trucking firm Thibodeau Group of Companies with its 815 employees. Thibodeau also comes with 400 diesel-powered tractors, 1100 trailers and 14 trucking terminals in Ontario, Quebec and the United States. Thibodeau generated some US$75 million in revenues in 2006.
Canada's largest trucker is using the global trade downturn to take over smaller competitors when prices are falling. The Thibodeau deal is expected to add $0.05 to TransForce earnings.
