Oct. 17 (Bloomberg) -- Rejean Rioux reaches across his truck’s cab and hands over his wristwatch to show how a Quebec highway bottleneck slows companies such as Canadian Tire Corp.
At the bottom of an off-ramp near where the divided four-lane section of the Trans-Canada Highway ends, he pulls the oversized steering wheel and uses almost all the road’s width to turn his rig and two 53-foot trailers. Rioux and others must do this each time they pull double-trailer trucks off the highway and into a yard to break them up for the narrow road ahead.
“You need 30 seconds to make the turn,” Rioux said. Such hold-ups can determine “whether you make money or not,” he said after returning to his office.
The half-minute turn is just the start of delays for so-called long combination vehicles running between Montreal and the port at Halifax, Nova Scotia. The trip includes a 73-kilometer (45-mile) stretch of Highway 185 from the Quebec-New Brunswick border, through towns such as Saint-Louis-du-Ha! Ha!, that’s too narrow for the long trucks.
The time to break up the trailers, put a separate tractor on each and reassemble them can add a couple hours to each round trip, said Neil McKenna, vice president of transportation for Canadian Tire, the country’s largest auto parts and sporting goods retailer.
“This is the only area of Canada where we de-couple and couple en route,” McKenna said by phone from Montreal. The Highway 185 widening “is something that we would like to see go through sooner rather than later,” he said, as it will “make the supply chain that much more competitive.”
While Quebec has been planning the project since 2001, budget constraints are keeping the province from completing it. The highway serves as a symbol of the lack of coordination among Canada’s 13 provinces and territories, hobbling commerce in an economy that is struggling to return to full output amid a sluggish global rebound.
Bank of Canada Governor Mark Carney has pressured companies to diversify trade overseas and Prime Minister Stephen Harper has offered to help finance a bridge between Ontario and Michigan. At the same time, provincial governments haven’t always been as quick to facilitate trade. British Columbia Premier Christy Clark, for instance, has signaled she won’t allow Enbridge Inc.’s proposed Northern Gateway oil pipeline through her province from Alberta unless it gets a “fair share” of its revenue.
Quebec’s Transport Ministry hasn’t yet funded the third and final phase of Highway 185’s C$1.3 billion transformation, according to project manager Simon Lavoie. Finance Minister Nicolas Marceau of the separatist Parti Quebecois, elected last month, said Oct. 5 the province’s deficit will probably exceed a prior forecast of C$1.5 billion because of its decision to close a nuclear power plant.
The government is seeking to shrink the deficit and balance its budget by next fiscal year through such measures as the introduction of new tax brackets for people who earn at least C$100,000 ($101,300) annually. The PQ will need some opposition support for those plans because it won a minority of seats in the election. While the politicians wrangle, Quebec’s road construction needs remain.
“The potholes start as soon as you get into Quebec,” said Jonathan Lemco, principal and senior sovereign-debt analyst at Valley Forge, Pennsylvania-based Vanguard Group Inc., which oversees about $1.9 trillion in assets. Lemco, a Montreal native who travels back and forth throughout the year, says the province has “tremendous infrastructure needs -- I always check the shocks on my car when I cross over the border.”
Canadian Tire, which brings in goods from Asia through the Halifax port and ships rush orders or promotions on trucks rather than trains, uses the Transport Vroom Vroom company in Saint-Antonin, Quebec, and Rejean Rioux’s Gilbert M. Rioux & Fils Ltee in New Brunswick to break up and re-assemble the trucks. Canadian Tire shares fell 0.8 percent to C$71.00 at 11:24 a.m. in Toronto. The stock has returned 8.8 percent so far this year, below the 16 percent gain of the Toronto Stock Exchange’s index of consumer-discretionary companies.
The efforts can be “frustrating,” according to Rioux’s son Guy and daughter Melanie. Sometimes as an LCV is being re-assembled, bad weather sets in, meaning the trailers of rush jobs must be taken apart again and the cargo moved by two trucks.
“There is a lot of planning, and a lot of de-planning and re-planning” said Guy Rioux.
The process can reduce the savings from so-called long combination vehicles to about 30 percent from 35 percent, McKenna said. Without giving a detailed cost estimate, he said the longer trucks save 6.3 gallons of diesel per 100 kilometers and cut down on pollution. The delayed road expansion is also taking away part of the efficiency bonus of a Montreal-area distribution center the company built in 2009, McKenna said.
Work on the highway project began in 2001, and the second phase of construction is due to be completed in 2015, Lavoie said. The third phase will cover the last 40 kilometers, linking Saint-Antonin and Saint-Louis-du-Ha! Ha! at a cost C$482 million, according to a presentation posted on the ministry’s website. It requires the purchase of land and about 50 houses, Lavoie said.
“The project remains a priority for the Transport Ministry,” he said in a telephone interview from Rimouski, about 540 kilometers northeast of Montreal. “Trucking companies are used to breaking up the LCVs at the border,” he said.
The Canadian Trucking Alliance isn’t satisfied with the pace of the roadwork. The highway made the lobby group’s annual list of infrastructure priorities published last week.
“This is a fundamental issue for us,” said Normand Bourque, technical and operations coordinator at the Quebec Trucking Association. “The timetable we have been given runs through 2018 or 2019 to finish this work. We are asking for the work to be accelerated.”
The highway isn’t the only hurdle for LCV drivers. Some provinces don’t recognize licenses from other regions, meaning shipments are further delayed, according to Jean-Marc Picard, executive director of the Atlantic Provinces Trucking Association in Dieppe, New Brunswick. About a dozen companies in the Atlantic region use double-trailer trucks, and breaking them involves extra costs for labor, fuel and time, he said.
“Unfortunately they have to go through the same process as Canadian Tire,” he said. “We are pretty anxious that they twin the highway.”