Return to News Release Main Page- For Immediate Release - A FREIGHT RATE INCREASE OF 5.9% EFFECTIVE MONDAY, JULY 5, 2004 IS RECOMMENDED
Buffalo, NY, May 2004 – Currently there is little excess capacity anywhere within the trucking industry. This is especially true with U.S. – Canada cross border traffic that requires an increasing amount of expertise to handle efficiently. Major cost increases in labour, insurance, security and other non-labour cost components if not recouped by rate increases will further reduce capacity. The industry needs to invest in the drivers and equipment required to both maintain current levels of capacity, and meet future demands as the economy rebounds. The service levels that shippers currently receive and expect can only be maintained if the trucking industry’s profits can attract investors. Current inadequate profit levels, the aging driver workforce, delays at the border, security & insurance costs indicate that the days of excess capacity are over.
Increased Demands on Drivers and the Driver Shortage Push Labour Costs Up – Ever increasing safety and security measures and use of new technologies head the list of increased demands on today’s drivers. The industry is competing for drivers from a limited pool of experienced professionals. Trucking companies continue to invest in increased wages, recruitment, and training in order to meet the demand for drivers. Using information developed from Statistics Canada and the U.S. Teamster Agreement, NATC estimates that labour costs have increased by 3.8% - 5.8% on an annual basis. In addition to labour cost increases, non-labour costs (excluding fuel) are increasing at an annual rate of approximately 1.5%.
Insurance, Security and Safety – To meet the current environmental regulatory requirements and counter terrorism measures as well as to keep insurance costs as low as possible the industry has invested in security, training and safety. Significant insurance premium increases continue in spite of these investments and increases in their deductibles.
Hours of Service – It should be borne in mind that the cost increases associated with the Hours of Service changes already in effect in the U.S. and expected to become effective during the next year in Canada have not been quantified or included in these estimates of cost increases. The impact of these regulations is not yet known but their effect on operating costs is expected to be significant.
Fuel Cost Increases Are Handled Through the Fuel Surcharge Program - It is important to note that the cost increases discussed above exclude the impact of fuel cost increases. Experience has shown that the most efficient method of handling fuel cost increases is through the use of fuel surcharges that fluctuate along with fuel cost changes. The shipping public has recognized the need for the fuel surcharge currently in effect. For this reason the impact of fuel costs has been excluded from this rate increase recommendation.
The North American Transportation Council’s General Rate Committee (GRC) meets periodically to monitor economic conditions as well as the latest statistics on the profitability of general freight carriers. The Committee reviews major issues affecting the industry’s profitability and its ability to maintain and improve service. The Committee recently reviewed the current market conditions and the results of cost studies, which revealed major cost increases. After a thorough review of the information, the Committee approved a general increase in freight rates of 5.9% to become effective Monday, July 5, 2004.
The NATC represents general freight carriers operating throughout Canada and the U.S. in matters related to economics, pricing, finances, costing, as well as motor carrier statistics. NATC has been serving the trucking industry for more than 60 years. The GRC is composed of executives of member carriers.