TRUCKERS STRATEGIZE FOR NEW MILLENNIUM
In the eight years since deregulation, a transformed trucking industry has emerged - leaner, energized and eager to face new challenges. During these eight years, the industry re-invented itself, broadened the scope of service offerings, modernized fleets and invested in new technology. This was done despite virtually no increase in hundredweight revenue and a decline in tonnage. “Every nickel, dime and quarter that could be squeezed from costs have been squeezed out. We have down-sized, right-sized and re-engineered. We have listened to our customers, partnered with them to provide faster, better quality service and create win-win situations. We even walked away from non-compensatory business. Cost savings are becoming increasingly difficult, if not impossible, to find .”
At a recent meeting, senior executives from both the LTL and TL segments of the general freight trucking industry reviewed market trends, operating costs as well as present and anticipated service demands. Shipper associations predict further cycle-time and transit time compression, reduced inventory levels, increased inventory velocity and greater use of EDI in coming years. These are accelerating trends and trucking companies will play a vital role in making this a reality.
Canada is expected to show the greatest growth in GDP of the G7 nations in the coming year. This will not only generate increased service demands but the nature and sophistication of the services performed will continue to change. The demand for value added services and higher performance standards will accelerate.
In addition, the industry is faced with increased operating costs due to:
Looking at the poor return on investment, plus cost increases (excluding fuel) in excess of 3% as well as future demand, the Tariff Advisory Committee concluded an increase in rates and charges sufficient to generate a 3.5% improvement in operating margins is essential. This should be done as soon as practical. (Because of the volatility of fuel prices, it is suggested truckers continue to recover fuel increases through their surcharges.)
The trucking industry has come a long way indeed. Today carriers are responsive, flexible, sophisticated, state-of-the art, safety conscious and keenly aware of customer satisfaction. To be a part of the “tomorrows” and to continue to provide this vast array of quality/service options, it is imperative the industry be able to reinvest in itself. This reinvestment necessitates revenue enhancement through the 3.5% rate increase recommended. This is in the best interest of every shipper, receiver and consumer of transportation services.
The Tariff Advisory Committee is composed of chief executive officers elected by the membership of the Association. It is charged with reviewing economic and financial information pertaining to the industry and issuing recommendations.
The Freight Carriers Association of Canada represents over 100 trucking companies on matters related to: economics, costing, pricing and finances as well as motor carrier statistics. The FCA, whose members operate in all Provinces of Canada, has been serving the trucking industry for over half a century.
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