For Immediate Release –
NATC FILES AN INCREASE AVERAGING 4.7%
ON US-CANADA CROSS BORDER TRUCKING RATES
The motor carriers operating in the cross border market are confronting serious challenges over and above those faced by carriers operating in the US or Canadian domestic markets. At risk is the ability of the industry to continue with the current improved transit times and offer the prompt and reliable service its customers have grown accustomed to.
The challenges faced by the trucking industry in general are:
the severe shortage of experienced drivers; increased incidence of
truck hijackings requiring enhanced security systems; higher equipment
costs exacerbated by the need to purchase additional “driver comfort options”
to attract/retain drivers; more stringent safety standards in Canada
requiring additional training, more frequent equipment replacement, increased
maintenance costs as well as lower productivity due to longer time needed
for security rounds. The industry is also faced with a marked decline
in the residual value of its equipment; escalating real estate costs
in all major centers in Canada; rising interest rates that make it
costlier to run businesses; and the necessity to make sizeable investments
in new technology to meet customer demand to transact business electronically.
In addition to the above, the trucking companies operating in the US-Canada
cross border market face other important challenges:
The carriers have determined that even without including the increased
costs of doing business in the cross border market, their operating
costs have increased by at least 4.8%. They
estimate the revenue needed to offset increased costs and generate
enough profit to make the investments essential to continued operations
is closer to 7- 8% as the 4.8% above does not include productivity losses
due to border crossing delays and the additional cost of attracting and
training drivers willing to drive across the international boundary.
Many carriers indicated they are experiencing much larger cost increases
and have no choice but to seek to recoup larger amounts.
It should be noted the fuel cost increases were excluded from the cost increase calculations as it is more efficient to recover them through fuel surcharges that fluctuate with the price of fuel and are phased out when fuel prices return to their pre-crisis level.
NATC’s General Rate Committee (GRC) approved a general increase in freight rates of $2.00 on minimum charges, 5.5% up to and including the 10M rates and 2% on 20M rates. The average overall impact of this increase is 4.7%. This increase is scheduled to become effective on September 5, 2000. While many individual carriers have announced higher increases that are already in effect or will become effective earlier, the GRC felt it was important to give customers as much advance notice as possible.
Many shippers and shipper groups have recently recognized declining or stagnant freight rates cannot continue and the industry needs to improve its margins so it can effectively deal with the problems confronting it. Their understanding will go a long way in ensuring the capacity needed in bringing their goods to market during the busy season ahead will be available. By allowing the industry to achieve acceptable profit levels and raise the funds necessary to deal with the daunting challenges it currently faces, users of trucking services will be able to maintain the high performance levels they are enjoying and now expect from their carriers.
NATC represents over 100 general freight carriers in matters related
to economics, pricing and finances, costing, as well as motor carrier statistics.
The NATC, whose members operate in all Provinces of Canada and all the
contiguous US, has been serving the trucking industry for more than 60
years.