December 15, 2022
CTA: The Government of Canada will be implementing new measures related to Paid Medical Leave (Bill-C3) on December 1. 2022. In practice, this new entitlement will provide all employees in the federally regulated private sector, including trucking companies, with ten paid sick days. These days will be in addition to the five days already provided under ‘personal leave’ and any vacation that may be taken. These 15 days have been permanently added to the Canada Labour Code and will begin to be available to current employees in 2023.
Current Labour Shortages
While some federally regulated sectors may attempt to explore staffing options to help mitigate the impact of this new protected leave, this option will largely be unavailable to most trucking companies. Over the course of 2022, Statistics Canada data on job vacancies for truck drivers in Canada has continued to show labour shortages in the sector reaching all-time highs. As of the end of 2022, available StatsCan data shows there are over 28,000 vacant truck driving jobs in Canada. With a job vacancy rate of 9.1%, trucking has the second highest vacancy rate in the entire economy. Moreover, as trucking also has one of the oldest workforces in the country, the labour situation in the trucking industry is not expected to improve over the near term, with tens of thousands of retirements expected in the 55-70 age bracket over the coming years. Simply put, labour redundancy and other staffing options will not be available to most fleets to help compensate for these changes.
Impact on Supply Chain
The Canadian Trucking Alliance (CTA) has warned for years of the worsening labour shortage in our sector, which is now well documented and understood within the supply chain. There is no doubt that the implementation of this new medical leave provision, without a substantive need for proof of illness, could have a compounding impact. It is for this reason CTA urged the Government of Canada to adopt a more phased in approach, which would have helped to lessen potential shocks to the system. Nonetheless, with the Government of Canada moving ahead with full implementation, the industry and shipping community should be prepared for further strains on capacity.
As CTA warned to the government, the main cost for trucking companies when it comes to these days is not necessarily the salary paid to the worker; it is the truck that will sit unexpectedly on short notice for possibly multiple days in a row, imposing logistical chaos on both the trucking company and their customers businesses.
While it is difficult to say definitively the impact paid medical leave will have, CTA believes we could see somewhere between 5% and 10% of total capacity removed from the system. While the true effects are yet to be seen, as a simple thought exercise, the Canadian supply chain is looking at the potential for 300,000 trucks to each sit on an unscheduled basis 10 to 15 days per year (300,000 trucks x 10-15 days x Impacted Freight). Even as a simple hypothetical exercise, it is easy to imagine how the impacts could be dramatic. The trucking industry is the backbone of Canada’s supply chain, connecting rail, air and ocean shipments to all sectors of the economy – from agriculture and natural resources to manufacturing, retail and beyond. When capacity is removed from our sector, it is removed from all other sectors that rely on our services to provide goods to our economy.
While on an individual micro level, each trucking company will work with customers to ensure – as best they can – capacity is available and service is predictable, at a macro supply chain level it is prudent to assume that the coming medical leave provisions could have an impact on trucking capacity throughout 2023, with reduced truck availability, and strained service capacity across the Canadian trucking industry and supply chain.