Return to News Release Main PageNORTH AMERICAN TRANSPORTATION COUNCIL ANNOUNCES
A 5.9% RATE INCREASE ON U.S. – CANADA FREIGHTFor Immediate Release –
Buffalo, NY, July, 2003 – The North American Transportation Council’s General Rate Committee (GRC) has approved a 5.9% general rate increase effective August 4, 2003. The rate increase is in response to the increased cost of handling U.S. – Canada freight. Cross border carriers are facing significant cost increases in labor, equipment, insurance and security on both sides of the border.
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, August 4, 2003.
The Committee also recommends that the industry take the measures necessary to charge for all services performed. The costs associated with services such as appointment deliveries, border crossing delays, waiting time and handling of hazardous materials cannot be absorbed by the trucking industry.
Nature of the most significant cost Increases
Insurance and Security Costs Continue to Rise – It’s been almost two years since the events of September 11, 2001 and there is still no end in sight to premium cost increases topping 40% for some carriers. This is in spite of significant increases in deductibles in an attempt to control premium increases. With a limited number of insurance carriers writing insurance for trucking companies in Canada there is no end in sight to this crisis. New security measures and training have also increased costs for the industry.Environmentally Friendly Equipment Is Costly– The new U.S. EPA standards for environmentally friendly trucks is a significant cost to the trucking industry and has significantly increased the cost of each tractor. For long haul carriers that may replace a third of their fleet each year this cost increase is huge. The new equipment also increases the cost of maintenance and lowers fuel efficiency.
Driver Shortage and Increased Demands On Drivers Push Labor Costs Up - Using information from Statistics Canada and the U.S. Teamsters Agreement, NATC estimates labor has gone up by 4.7% - 6.5%. Some carriers are experiencing wage increases close to 10% in addition to increases in medical coverage of 30% or more. The shortage of drivers coupled with increased demands on current drivers in all areas including accreditation for border crossing initiatives, safety and security contribute to this cost increase. Trucking companies continue to step up their training in order to meet these demands.
In addition to the increases noted above, carriers are experiencing cost increases in virtually every aspect of their business.
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 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 who monitor the industry’s financial condition and performance and make recommendations.