A RATE INCREASE IS RECOMMENDED ON U.S. – CANADA FREIGHT
Buffalo, NY, April 2006 – Driver Shortage Continues to Push Labour Costs Up – The driver shortage remains an enduring crisis that impacts carriers across Canada and the U.S. Trucking companies continue to invest in increased wages and fringe benefits, driver recruitment, and training in order to address this issue. Using information developed by Statistics Canada and the U.S. Teamster Agreement, NATC estimates that labour costs are rising 3.8% to 6.0% on an annual basis.
The North American Transportation Council’s General Rate Committee (GRC) met on March 2, 2006 in a meeting open to the public to consider a general rate increase docket with an impact not to exceed 6.5%. After an open review of cost increases, operating results and market conditions, the Committee reduced the increase to 5.9% effective April 17, 2006.
If the trucking industry is to be successful in attracting capital and maintaining capacity, rates need to be increased. The driver shortage, increased security costs, regulatory changes and the weak U.S. dollar are a few of the drivers currently increasing costs.
Security Costs – Carriers are working closely with government agencies to implement more secure and efficient movements of freight between the U.S. and Canada through programs such as C-TPAT.
Weak U.S. Dollar – Historically freight charges moving between the U.S. and Canada are paid in U.S. dollars. Due to the fall in the value of the U.S. dollar over the past year, the portion of expenses incurred in Canada (approximately 40% of total international expenses) now costs more U.S. dollars to purchase. It now costs approximately 6% more U.S. dollars to purchase all products and services within Canada as compared to last year.
Hours of Service (HOS) – The increased cost impact of the new regulations already applicable within the U.S. is estimated at 2% - 4% by the BB&T Corporation. The cost estimate is expected to be similar for the Canadian HOS regulations which are scheduled to become effective January 1, 2007.
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