President Trump’s proposed US tariffs are likely to result in increased costs, supply chain disruptions, changes in freight demand and customer loss for some Canadian transportation companies, according to an in-depth KPMG survey of business executives.
These and other outcomes will impact the operational efficiency and profitability of transportation businesses. They’ll have a significant impact on the procurement and delivery of major transportation projects in Canada, introducing new complexities, increasing costs and creating new risks.
To learn how Canadian business leaders were responding to the situation, KPMG undertook an in-depth survey of business leaders across Canada, with a sizeable contingent of transportation industry respondents.
Canadian business leaders expect tariffs to have a negative effect on the economic outlook. The majority (77 per cent) is bracing for a recession due to worsening US trade relations. Of those in transportation, 77 per cent felt their businesses would be impacted by US tariffs. Their top areas of concern include:
- Competitive edge: Losing customers to US competitors.
50 percent are extremely concerned, 35 per cent are very concerned - Logistics: Getting goods to and across the border, paying and collecting tariffs
50 percent are extremely concerned, 31 per cent are very concerned - Price: Managing prices and margins with customers
62 per cent are extremely concerned, 27 per cent are very concerned - Supply chain: Getting goods to manufacture and maintaining a robust and resilient supply chain
46 per cent are extremely concerned, 42 per cent are very concerned
Despite the ongoing uncertainty around the administration on tariffs, transportation industry players need to adopt a proactive stance in the face of evolving trade dynamics. They need urgently to develop concrete strategies to mitigate risks and adopt resilience measures to support growth and remain competitive. Many have already begun to address risks and protect their operations from trade uncertainty:
- 65 per cent of transportation companies are undertaking a strategic review of operations
- 85 per cent acknowledge they need to build supply chain resilience
Despite concern across the industry about the potential negative effects of tariffs on operations and profitability, being proactive with mitigation preparation can help Canadian transportation organizations stay resilient and weather the uncertainty, KPMG states.
(Dreamstime photo)