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Canadian vaccine mandate to lead to inflation, empty shelves, trucking executives say

Reuters logo Reuters 20/01/2022 By Steve Scherer
FILE PHOTO: Transport trucks cross paths on the Peace Bridge at the Canada U.S. border in Buffalo © Reuters/HYUNGWON KANG FILE PHOTO: Transport trucks cross paths on the Peace Bridge at the Canada U.S. border in Buffalo

By Steve Scherer

OTTAWA (Reuters) - Canadian consumers should soon see higher prices and some empty shelves in supermarkets and other retail outlets because of disruptions stemming from a COVID-19 vaccine mandate for cross-border truckers, top trucking executives warned this week.

The mandate, imposed by Ottawa to help curb the spread of the virus, has cost six Canadian trucking companies about 10% of their international drivers, and many are hiking wages to lure new operators during what they said is the worst labor shortage they have experienced.

Within the next two weeks, consumers will see "there's not as many choices on the shelves," said Dan Einwechter, chairman and chief executive officer of Challenger Motor Freight Inc in Cambridge, Ontario.

"Eventually the prices will be passed on from the sellers of those products, because we're passing on our increases to them," he said.

Canada's inflation rate https://www.reuters.com/business/canadas-annual-inflation-rate-hits-48-dec-highest-since-sept-1991-2022-01-19 hit a 30-year high of 4.8% in December and economists said the vaccine mandate may contribute to keeping prices higher for longer. In the United States, inflation surged https://www.reuters.com/world/us/us-consumer-prices-increase-strongly-december-2022-01-12 7% on a year-on-year basis in December, the largest rise in nearly four decades.

FILE PHOTO: Canada's Prime Minister Trudeau visits a vaccination site in Montreal © Reuters/CHRISTINNE MUSCHI FILE PHOTO: Canada's Prime Minister Trudeau visits a vaccination site in Montreal

Prime Minister Justin Trudeau, who has championed vaccine requirements for federal employees, has resisted pressure from industry to delay or drop the mandate that was announced in November.

The vaccine requirement to enter Canada started on Jan. 15, and the one to enter the United States begins on Saturday.

Since more than two-thirds of the C$650 billion ($521 billion) in goods traded annually between Canada and the United States travels on roads, truckers were deemed essential workers until now and traveled freely even when the border was closed for 20 months.


Video: Canada-U.S. supply chain still could face disruptions due to vaccine mandates (Reuters)

Trudeau defended the mandate on Wednesday, saying Canada was "aligned" with the United States, its largest trading partner.

"We will continue to make sure that we are getting what we need in Canada while, as always, putting the safety and health of Canadians as our top priority," Trudeau said.

As many as 32,000, or 20%, of the 160,000 Canadian and American cross-border truck drivers may be taken off the roads by the mandate, the Canadian Trucking Alliance (CTA) estimates. The industry was short some 18,000 drivers even before the mandate, CTA said.

"We raised our base rate for cross-border drivers effective January 1 by almost 20% ... and it didn't gain us any drivers," said Rob Penner, president and CEO of Winnipeg, Manitoba-based Bison Transport. "There's more freight than there is people right now."

Canada's transport ministry had no immediate comment on the possible impact of the mandate.

BAD TIMING

The six executives who manage nearly 9,200 trucks between their companies and have a combined 173 years in the industry say strong demand for freight during a labor shortage will inevitably translate into higher prices for consumers.

"We've been oversold by 5% or 10%, depending on the day, for the last four or five months ... The timing of all this couldn't have been worse," said Mark Seymour, CEO of Kriska Transportation Group in Prescott, Ontario.

Canadian firms see labor shortages intensifying and wage pressures increasing, according to a Bank of Canada survey https://www.reuters.com/world/americas/firms-see-increasing-labor-shortages-wage-pressures-bank-canada-survey-2022-01-17 released on Monday. Investors increasingly expect https://www.reuters.com/world/americas/even-omicron-slams-canada-bets-january-rate-hike-rise-2022-01-18 the central bank to raise interest rates next week for the first time since 2018.

Fresh foods are particularly sensitive to freight problems because they expire rapidly, though all imports from the United States could be affected, the trucking managers said.

"We have to move the milk, we have to move food. But the rates are going to be much higher," said Doug Sutherland, president of Sutherland Group Enterprises in Salmo, British Columbia.

"Inflation is going to be the biggest impact of what's going on here."

($1 = 1.2478 Canadian dollars)

(Reporting by Steve Scherer; Additional reporting by David Ljunggren; Editing by Paul Simao)

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