Truck Simulator 3 - Freight Recession
Truckers. Trucks. Cheap diesel. Farmers. Farming. Cheap diesel. The CRA comeback we've all been waiting for. Misinformation abounds. We're launching something cool.
Hi there!
The big news this week is…freight recession.
Winter has left us, finally, and most of us are seeing temperatures starting to scale to the sweltering heights of 15C. The sun has reappeared, albeit briefly. Positive vibes are starting to prickle the back of the mind. You’ve located your shorts. Things are looking around 10% sexier.
Farmers would agree. Spring is the planting season, and while the majority of Canadian agriculture is un-peeling the tarps and heaving themselves onto their tractors - the fresh warm air around the fields is now being additionally perfumed by cheap diesel.
Cheap diesel?! Did I read that right?! Isn’t diesel, like, much more expensive than gasoline now? Well, yes it has been. If you try to fruitlessly think about ‘the before times’, before masks, cranks and general mortal panic, you’ll remember that diesel was - if you ever bothered to look at the price - always a little more expensive, but pretty much on-par, give or take a few cents.
So what happened? When Covid hit, people stopped using gasoline to commute to work, and…well, go anywhere. Planes stopped flying. There was a crazy market readjustment where gasoline time-travelled to the 90s and bottomed out around 80 cents a litre (remember that!) then the market kinda yo-yo’d and now we’re back to a more recognizable $1.50-something. But truckers were still trucking. And truck they did - more trucking than ever before in the history of trucking. There were not enough truckers. There were not enough trucks. Ships were held up. Flights couldn’t fly. So trucks trucked harder than they’d ever trucked before. Suddenly demand for diesel went through the roof, while demand for gasoline bottomed out.
Part of this was the universal pass-the-blame joker card of ‘supply chain issues’. The farmers were still farming, the truckers were still trucking and while so many supply chains broke down or went on hiatus - it turned out people still needed to eat - and buy random things online at Canadian Tire. So it fell to the truckers to make it right. Supply and demand, baby. More trucks, more diesel, higher costs.
The other part of this was Russia’s increasingly insane invasion of Ukraine. This upped commodity prices, and caused a spike in oil and gas. This put additional price pressure on already pressurized prices.
And while Russia continues to extravagantly order bottle service on the wrong side of history, things have largely settled and calmed. ‘New normals’ and now just ‘Normal’. The commodities market has put its pants back on and paid the Uber clean-up fee. Supply chains have ‘healed’ which means, I guess, the therapy helped and they’re now back on Instagram apologizing for their ‘weaknesses’ and talking about what they ‘learned about themselves during a difficult time’.
But as supply chains have healed, the demand dropped. Supply and demand. With less trucks trucking, less ships shipping and less bored people at home paying over the odds for toilet paper on Amazon, the shipping rates have crashed.
But the shipping rates still have a fixed cost. Diesel is falling, but truckers still cost what truckers cost. Port volumes are dropping, but ships still have to sail the same routes in the same weather. Is this a harbinger of recession? It’s certainly a harbinger of a reduced demand in physical goods. But strong growth in the travel industry, as an example, and digital services is showing that maybe people are simply spending more on experiences and less on tchotchkes. Maybe we’re all just over…‘things’.
But - people still need to eat. The by-product of all of this is that lower diesel costs mean happier farmers. And let’s be honest - who doesn’t love a happy farmer?
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Top story this week☝️
The future of Small Business services and advisory cometh!
OK, this is a clear, shameless advertisement. We don’t often talk about ourselves much in The huuman Layer, because we figure you’d rather read pithy news stories and hot takes. But next week at huumans.com we’re launching something new called Minis. Minis is our take on accessible services for Small Business. Each Mini will be single cost, single service, have no commitments and will be as easy as buying toilet paper on Amazon. Need to file your personal taxes? Done. Want to talk to an expert for an hour about your numbers? We got you. Can’t sleep at night? We might have a solution for that (unless it’s a pressing medical issue).
Expect an update on Minis and some special offers - exclusive to The huuman Layer readers - next week (if we can get it launched in time).
If you have friends who would enjoy sleeping at night rather than worrying about their business, maybe share The huuman Layer with them so they can get first access to Minis…and maybe some sleep.
News 🗞️
More oil and gas woes
Alberta is ablaze. Well, part of it is. There are currently over 100 active wildfires in the provinces oil fields caused by an early dry spring - a clear symptom of climate change on the prairies. Which, yes, has a certain level of irony around it. Diesel prices may be down, but the commodities market is still ‘sensitive’, so any drop in supply runs the risk of price ‘adjustments’. But, like most things around big oil, this isn’t just a business story, there’s always a human impact - 29,000 Albertans were forced to leave home due to the risk. Link
Farm security looking shaky
Farmers, despite basking in cheaper diesel, are still struggling to create a legacy. Part of that is a lack of succession planning, but the other part is the sheer capital-intensive requirements around farming that are preventing newcomers to the industry. When we think of farming, we think of multi-generational family businesses, which is a symptom of agricultural land values. Add in the costs for equipment, live stock and property - then add in the risk of failure due to climate or market demands - and you have an essential industry looking at a bleak future. Link
And finally…
We all need to decide what side of AI we’re on. Link
The CRA is back, baby! Link
The drama of putting some guy’s face on the money. Link
The Data Room 🤖
The Data Room is getting spicy with News this week - a reminder that you, dear reader - are the antidote to Mark Zuckerberg’s plans of pivoting misinformation to no-information. Thanks for reading. We love you all platonically.
Getting Meta with the news
A new bill by the Federal Government could alter the way news is shared in Canada, and, as you’d expect, the big tech giants aren’t happy about it.
Meta is threatening to block news stories on Facebook and Instagram in Canada if the Liberals get their way with the new online news bill.
Meta believes news “doesn’t have much economic value” for their platform and Bill C-18 would require them to contribute financially to Canadian media organizations if their content is shared. Meta claims that less than 3% of a user’s feed is populated by news stories, so they feel it won’t make much of a difference, but that begs the question: what actually are the news media habits of Canadians?
Well, a 2022 digital news report by Reuters can give us a more comprehensive view on the Canadian news situation. The report suggests that 40% of Canadians use Facebook for news, and that 77% of us are getting our news almost wholly online. Instagram doesn’t draw the same numbers, but it is still ranked as the primary news source for at least 16% of us.
In Meta’s defense, 20% of Canadians claim that they see too much news on Facebook. If you’re thinking “these numbers seem really high if we’re talking about all of Canada” then we’ve got you covered: various sources point to around 68%-78% of all Canadians having a Facebook account. So, it seems that even if Meta’s claim that only 3% of a user’s Facebook feed contains news is correct, they’ve still got a massive position as a news media supplier here in Canada.
We’re not pointing any fingers, but maybe this correlates to another grim statistic - only 42% of Canadians trust news media “most of the time,” a decline from 58% over the last 4 years (if you think that’s bad, it’s only 26% in the US). Perhaps if the Liberals do pass this bill and Meta does block news stories we’ll see a major shakeup in the way news is consumed and perceived, given that the rise of misinformation strangely correlates with the rise of Facebook. Funny that.
By the way, if you’re wondering where you fit into all of this, about 17% of Canadians get their news in the form of emails. And we love you for it.
Market at-a-glance 📈
BOC Indicators (Link):
BOC Prime Rate: 6.70%
BOC Unemployment Rate: 5.0%
BOC CPI Inflation Rate: 5.2%
BOC $USD Exchange Rate (Link):
Low: 1.3354 CAD [0.7488 USD]
Average: 1.3516 CAD [0.7399 USD]
High: 1.3618 CAD [0.7343 USD]
Best GIC Rates (Link):
1-year GIC: 5.15%
3-year GIC: 4.85%
5-year GIC: 4.70%
Best 5Y Mortgage Rates (Link):
Variable: 5.40%
Fixed: 4.29%
Prime Rates (Link):
TD Bank: 6.70%
BMO: 6.70%
RBC: 6.70%
Scotiabank: 6.70%
CIBC: 6.70%
National Bank: 6.70%
CRA Canadian Pension Plan Rate: 5.95%
CRA Employment Insurance Rate: 1.63%
CRA Minimum Wage per Province: Link