For Immediate Release -
TRUCKING COMPANIES ANNOUNCE 4.7% RATE INCREASE
Fort Erie, ON., September 4, 1998. - Despite increased volumes beginning with the third quarter 1997, truckers' earnings continue to fall below acceptable levels. It is worrisome that despite increased volumes and persistent cost cutting, market conditions have held prices below levels needed to generate sufficient income for carriers to re-invest in their businesses. Re-investment is essential for carriers to continue to provide service in the years to come and to meet their customer's needs for value-added services and heightened performance requirements.
The industry's razor thin margins are being further squeezed recently by many market forces beyond the industry's control: · The Canadian dollar reaching record lows is causing sharp increases in the cost of replacement parts and equipment; · The driver shortage that plagues the industry, further exacerbated by the low dollar, has increased turnover costs and training have pushed driver wages to new highs; · More stringent safety and environmental regulations continue to increase fleet maintenance and compliance costs and also forces the replacement of older equipment more frequently; · The task of making computer software Year 2000 compliant requires carriers to make large capital outlays. · Other operating costs, labour and non-labour, continue to increase.
According to the price indices the FCA monitors, the general freight carriers operating costs have increased by 4.7% over the past year, and this does not include the increases associated with the dollar's decline.
The Tariff Advisory Committee (TAC) of the Freight Carriers Association of Canada (FCA) meets quarterly and monitors economic conditions as well as the latest available statistics on the profitability of the general freight carriers. The TAC continues to be alarmed by the analyses showing the average revenue per hundredweight has remained flat since 1989 and further economies through productivity enhancement are becoming harder to realize.
The TAC recommends the industry increase all rates and charges by at least 4.7% at the earliest possible date, as relief is urgently needed to recover cost increases. This amount is consistent with recent increase announcements by US carriers and rate bureaus not affected by the fall of the Canadian dollar. In many cases, larger increases will be required. Users and providers of transportation services must recognize this increase will not improve the carriers' profit margins but rather may only keep the carriers' margins from eroding further.
The FCA represents over 90 general freight carriers in 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 more than half a century. The TAC is composed of executives elected by the membership to monitor the industry's condition and make recommendations.
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