Freight Carriers Association / North American Transportation Council
August 1998
FCAS' TAC COMMITTEE RECOMMENDS 4.7% GENERAL RATE INCREASE
By: Micheline Tansey
As you are aware, the Tariff Advisory Committee (TAC) regularly monitors the financial condition of the general freight industry as well as operating costs and other issues affecting industry performance.
Their monitoring reveals that improved freight volumes and the exit of one of the largest LTL carriers in Canada during 1997 have created improved market conditions since mid 1997. Unfortunately, despite these improved market conditions the industry has only managed to achieve an operating ratio of 96.6 before interest and taxes (through the first quarter 1998) which roughly translates to a profit margin of less than 2%. This is alarming since a slowdown in the economy will erode these narrow margins further.
Operating costs have increased 4.7%, therefore, the TAC recommends a general rate increase of 4.7% to be implemented as soon as possible.
It is recommended the increase be announced to customers as soon as possible, but if possible, not later than October 13, 1998 so users of transportation services may be able to include the increase in their budgets for 1999 transportation.
Should you desire additional information or explanations, do not hesitate to contact me (Ext. 210) or David Sirgey (Ext. 214) and we will be pleased to provide it.
NATC ANNOUNCES 4.7% INCREASE EFFECTIVE 11/2/98
By: David Sirgey
The North American Transportation Council's General Rate Committee approved a rate increase of 4.7% across the board, except for accessorial charges which will not be increased. The rate increase will take effect Monday, November 2, 1998.
The committee reached this decision during its conference call of September 8, 1998. During the conference call Ms. Tansey informed the committee of rate action taken by major US bureaus and the latest available operating results of US carriers. Ms. Tansey also advised the committee of cost increases in US and Canadian labor, non-labor and fuel. After discussion a motion was made seconded and carried to amend proposal 1001u from 5.9% to 4.7% across the board, no increase on accessorial charges. The proposal was then unanimously approved as amended
By: Dave Sirgey
A large portion of the US LTL trucking industry has approved general rate increases for the fall of 1998. Major rate bureau increases to date are as follows:
Preston Trucking recently took a rate increase of 5.4 % effective August 3, 1998. We will keep you up-to-date regarding any future announcements.
SUPPORT FOR RETENTION OF ANTITRUST IMMUNITY ESSENTIAL LETTERS FROM MOTOR CARRIERS URGENTLY NEEDED
By: Micheline Tansey
We have redoubled our efforts to continue the Bureaus' antitrust immunity recently. Together with EC-MAC (Eastern-Central - Middle Atlantic) and RMB (Rocky Mountain Bureau) we have been hard at work on behalf of our members to ensure our antitrust immunity will be preserved beyond December 31, 1998. On August 5, 1998, the House Subcommittee on Surface Transportation held a hearing on Motor Carrier Economic Regulatory issues, and Ms. Tansey, presented testimony on behalf of six of the seven regional rate U.S. bureaus (SMC although invited to join in this testimony declined to participate).
Also on the panel with Ms Tansey, testifying on motor carrier regulatory issues (the Chairman merged the motor carrier and shipper panels) were:
During the verbal testimony, ATA expressed support for the retention of the immunity for the rate bureaus although their written statement, while supporting it for NMFTA, was silent as to the bureaus.
The NMFTA supported retention of immunity for the Bureaus and the MFCA expressed support for the classification but not for the Bureaus. The NITLeague expressed the sentiment that "Bureaus do not need the immunity to do what they do but they [the bureaus] are inconsequential and do not pose problems for us." However Ed Emmett expressed strong opposition to the immunity for the NMFTA.
The NASSTRAC spokesmen also expressed their discontent with the classification and lumped the bureaus along in their objection erroneously stating that Bureaus were still the underlying cause of new undercharge claims. Our testimony centered on the fact that pronouncements of the Surface Transportation Board (STB) since the beginning of 1997 are giving us strong reason to believe the STB intends to deny renewal of the Bureaus' 5a Agreements when the Bureaus file later this year. Faced with this prospect, possibly the only recourse available to us is to seek a legislative remedy to pre-empt any last minute STB action that would remove the rate bureaus' immunity.
In order to obtain some legislative help, since the beginning of this year, we have made contacts on the Hill to make members of Congress and their staff aware of our precarious situation. We are working with them to obtain an amendment to remove the 3 year renewal provision and raise the burden of proof threshold the STB must meet in order to remove the Bureau's antitrust immunity. With the next congressional session being a very short one, legislation to tack such an amendment is scarce, making it uncertain how this may be achieved.
We have contacted our members and provided them with a draft letter and the names of the Surface Transportation Committee members as well as members of the Senate.
We urge all carriers who have an office or a terminal in these districts to make it a point to send or FAX their letters of support as soon as possible. Only this type of grassroots effort will ensure the continuation of the antitrust immunity our industry has enjoyed since 1948. Every letter is important! Please send yours today!
Do not hesitate to call Micheline Tansey (Extension 210) if you desire additional information or assistance in drafting a letter.
CANADA/US IMPORT-EXPORT MARKET SIZE
By: Micheline Tansey
The following statistics reveal some interesting facts as to the relative importance of imports and exports in the Canadian and US economies.
While Canada and the US are each other's largest trade partners, the relative importance of this trade differs significantly between the two countries.
While any US economic boom or slump has a significant impact on the Canadian economy, the US economy is relatively unaffected by the Canadian market conditions.
The relative importance of Canada/US business likewise varies significantly between US and Canadian domiciled carriers. For the Canadian trucking industry, revenue from Canada/US traffic represents about one third of total revenues while for US carriers it is rarely more than 5% of total revenues.
QUÉBEC'S PROPOSED "CVOR" AND SAFETY RATINGS SYSTEM
By: Ken Leising
On June 20, 1998, the Québec National Assemble Bill 430 - An Act Respecting Owners and Operators of Heavy Vehicles - became effective.
The law changes the way truck transportation is legislated in Québec, starting with the end of the need for operating authorities, and the beginning of a safety registration system for vehicle Owners, operators and Load Brokers.
All carriers wishing to operate in the province of Québec must be registered by April 1, 1999.
Highlights of Bill 430;
The Ontario Trucking Association in co-operation with and under authorization of the Québec Trucking Association, is offering a ½ day training session on how the bill will affect your ongoing ability to continue operations in Québec.
Four (4) sessions are currently scheduled from October 13 through 16 at various locations in Ontario. Phone (416) 249-7401 for FAX (416) 245-6152 for further information.
By: Dave Sirgey
The next Tariff Advisory Committee (TAC) meeting will be held September 25, 1998. The TAC is charged with promoting the financial health of the industry.
On a regular basis, the Tariff Advisory Committee meets to review the latest information regarding operating costs, changes in productivity, fuel prices, market trends, long term financial projections and other information that affect the provision of transportation services by member carriers.
Based on these reviews, recommendations are made and supporting materials provided to the membership as well as released to the shipper community and the press through news releases and articles. Member carriers are entitled to review these non-binding recommendations and, where warranted adopt them.
In order to provide the committee with a snap shot of current conditions, we are conducting this survey. The committee needs your participation in order to have an accurate picture of the market.
If you would like to participate in this survey, please contact Dave Sirgey at (800) 559-7421 ext. 214.
STB AMENDS BILL OF LADING DECISION
By: Ken Leising
The Surface Transportation Board (STB) as issued a decision to change its Bill of Lading (BOL) decision in Docket No. ISM 35002.
In response to a NASSTRAC petition, which was outlined in our July Newsletter, the STB has decided to incorporate a compromise position on liability limitation developed by a Joint Committee including National Classification Committee (NCC) and NASSTRAC representatives.
The NASSTRAC and NCC members of the Ad Hoc Committee agreed that the new BOL could continue to cite the section of the ICC Termination Act concerning liability but agreed to disagree on its interpretation.
It is understood by both sides and the STB that the dispute will have to be settled by the courts or by legislative action.
By: David Sirgey
We are currently conducting a survey of operations managers, terminal managers and dispatchers within Ontario and Quebec.
We have also polled carriers serving the western provinces in order to determine if it is feasible to conduct similar surveys in western Canada. Preliminary responses indicate that we will have enough participants to conduct this survey.
If you are interested in participating in the compensations surveys, please call Dave Sirgey at (800) 559-7421 ext. 214.
By: David Sirgey
What is the average age of equipment being utilized by the motor carrier industry?
Has the industry changed its replacement policy due to safety programs such as "zero tolerance"?
FCA/NATC's Age of Assets survey will answer these questions and it will provide participants with a comparison of their fleet with the average fleet used in the industry today.
Please contact Dave Sirgey if you would like to participate in this survey.
REPORTING FINANCIAL INFORMATION TO REVENUE CANADA
By: David Sirgey
Revenue Canada will launch a new method for corporations to report their income tax returns beginning January 1, 1999.
The General Index of Financial Information (GIFI) will meet Year 2000 system requirements and offer corporations an electronic filing option.
For more information visit our web site at http://www.fca-natc.org and click on Industry Information.
By: Ken Leising
Following is a brief description of the QuickRAte System modules. If you are not already using the QuickRate System please give me a call to discuss what the system can do for you.
Call Ken Leising at (800) 559-7421 ext. 203 for further information.
NATC ANNUAL MEETING - click here for further information on the subjects to be discusses at the NATC Annual Meeting to be held at the Treasure Island Inn in Daytona Beach Florida from Thursday, November 19 to Sunday, November 22.
For further information contact Karen McSheffrey at (800) 550-7421 ext. 218.