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Ontario Trucking Association Carriers Withdraw Services from Ivaco

March 19, 2004 — A group of Quebec and Ontario trucking companies have banded together and withdrawn their services in an effort to recoup some of the millions of dollars owed to them by Quebec-based steel producer Ivaco, which was granted protection from creditors by the courts last fall. The service withdrawal occurred this morning when the companies' trucks failed to show up for their usual pick-ups and deliveries for Ivaco.

This is the first such action of its kind that anyone can recall in the trucking industry, but according to the president of the Ontario Trucking Association, David Bradley, it was a long time coming and may not be the last. "More and more big companies are resorting to protection under the Companies Creditors Arrangement
Act, so that it appears to have almost become a way of doing business. The secured creditors will at least get some of the monies that are owed to them, but the trucking companies will likely get nothing in the end, except the hope that they might have the privilege of serving the company when and if it emerges from protection or is sold. In the meantime, they are expected to continue to haul freight for the company. Their balance sheets have been greatly impacted and in many cases their own creditors are breathing down their necks. They believe it's not fair and they are fighting back."

At the time of writing, it was not clear what Ivaco's next step would be. The carriers hope the company will try and settle by paying them for freight services provided before the company filed for protection. Or, Ivaco might go to court to seek an injunction against the carriers forcing them to provide service during the re-organization. Or, the company might try and find other carriers to handle their transportation needs.

"The trucking industry has been taking it in the teeth for so long because shippers have been able to play one carrier off against another by relying on the threat of shifting the business to another carrier if the trucking company currently providing the service tried to kick up a stink," says Bradley. "But, there is no excess capacity in the trucking industry now, so I would doubt that it will be easy to find someone else to haul the freight."

The action taken by the Ivaco carriers will no doubt be watched carefully by carriers hauling for Stelco, who find themselves in somewhat similar circumstances. Ironically, while two of the country's major steel producers are in court protection, world steel prices have been sky-rocketing in recent months. World prices of steel products are up on average by about 30% since August of 2003.

The Ontario Trucking Association was founded in 1926 and provides services and policy advocacy for its members. The membership includes trucking companies from virtually all Canadian provinces as well as the United States.

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