By all accounts, NATC’s Annual Meeting held November 19-21, 1999 in Montreal was a huge success. In addition to networking  with  peers,  touring Montreal’s many attractions and enjoying some local culinary delights, our 35 attendees shared their vast knowledge during very informative meetings.  Around the table were pricing, marketing and logistics officials (some referred to as “legends” in the transborder market) who provided valuable input towards continued enhancement and modernization of the rate structures and rules tariffs.  NATC is very fortunate indeed to benefit from such a vast pool of knowledge.

 
Several participants commented on the high value they place on the networking opportunities offered by NATC’s meetings and how the contacts made and information gathered benefit them in the performance of their duties.

It was great to meet some new participants and to re-connect with old friends.

NATC’s Membership Meeting was held November 19, 1999.  The meeting Agenda included the election to NATC’s board of Directors.  Re-Elected to the Board were:

•  Mr. James Benninger, Fairway Canadian Express, Inc.
•  Mr. William Kimmel, QuikX Transportation, Inc.
•  Mr. Gary King, TST Overland Express, Div. Of TST Solutions, Inc.


Congratulations to our newly elected Board member:

•  Mr. Rick North, Cavalier/Georbon Transportation Services Inc.


The new Board met on November 20, 1999 and elected new officers for the 1999 – 2001 term:
 

• Chairman -  Mr. James Benninger, Fairway Canadian Express, Inc.,
• Vice-Chairman - Mr. Vernon Schrof, of Nussbaum Trucking Inc.
• Treasurer - Mr. David Jupp, of Concord Transportation, Inc.
• Secretary – Ms. Micheline Tansey
• Assistant Secretary – Mr. David Sirgey


The Board members, on behalf of the entire membership, thanked Bill Kimmel (QuikX Transportation, Inc.) who served as Chairman for the past three years and under whose watch the organization has made significant progress.

Had we known how warm Montreal is in November we would have set-up a golf tournament!

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 GENERAL INCREASE RECAP 

By:  Ken Leising

Both FCA and NATC recommended the 4.9 % general increase to become effective October 4, 1999. The FCA increase was implemented as scheduled for carriers who elected to do so. FCA increases are recommended by the Tariff Advisory Committee (TAC)  after a review of the industry’s financial condition; operating cost increases; market changes affecting profitability; as well as many other factors affecting the industry's operating results.  Carriers participating in FCA tariffs are required to  “flag –in” if they wish the increase to apply for their account.

The NATC increases are published under a slightly different procedure. The amount is determined by members of its General Rate Committee (GRC) after reviewing information similar to that described for FCA’s TAC shown above and becomes effective for all tariff participants unless they request otherwise.

The NATC increase met a bump in the road when on September 30, 1999 the Surface Transportation Board (STB) elected to “Suspend and Investigate: NATC’s increase along with the Oct. 1, 1999 general increases proposed by the Rocky Mountain Bureau (RMB), EC-MAC and the Middlewest Bureau (MWB). The action by the STB was prompted by a protest of the aforementioned Bureaus’ increases filed by NASSTRAC who for some time has used every opportunity to vent its concern to the Surface Transportation Board  that some unsophisticated shippers MAY be paying undiscounted rates published by the Bureaus.  The STB in a December 16, 1998 order had indicated that it would take this matter into consideration in a future proceeding yet to be announced.

Anticipating the STB’s conclusions, two bureaus (SMC³ and PITB) chose to publish blanket minimum discounts of 20% and 35% respectively,  for shippers not otherwise enjoying any discount.  In May 1999, when considering the October general rate increase,  NATC’s GRC  had an extensive discussion as to whether or not NATC should take a similar approach.  For very thoughtful reasons described below,  the GRC unanimously decided such a minimum discount would not be in the best interests of either NATC member carriers or their customers.

Major reasons why NATC should not publish a blanket minimum discount:
 

• Blanket discounts should be strictly the domain of individual carriers as it is an individual pricing decision.  Some carriers had previousily decided to establish such provisions in their own tariffs for marketing or other purposes while others chose not to for their own reasons.  It should remain an individual carrier pricing decision.
• The publication of a blanket discount in a bureau tariff would create much confusion for shippers and carrier personnel alike.  When bureau rates are incorporated by reference into individual carrier publications,  price quotations, or contracts, who knows whether the discount published in the bureau tariff or that published in the individual carrier tariff applies.  It was feared such provisions would cause  significant increases in overcharge claims.
• In the opinion of many, the baseline rates are barely adequate for certain types of freight movements or certain customers and if discounted at all would be uncompensatory.
• The matter has not been fully considered by the STB since it has not yet acted on the petitions for reconsideration filed in this matter.  Significant economic testimony was presented as to how the current basis for pricing is market driven.  It is impossible to predict whether the STB  will (as it might) conclude the baseline rates are acceptable as is, or may decide they should be reduced, or how this reduction if one is deemed necessary should be accomplished (it may well find that only a reduction of the baseline rates is acceptable).  Any action prior to  the STB’ s action on the petitions for reconsideration would be premature and could well bring a plethora of new problems in the future.
• The “small unsophisticated shippers” this blanket discount is purportedly meant to protect seldom, if ever, have a traffic manager who might even be aware such a provision exists so, if a problem really did exist, this “solution” would have little if any effect.
• There is no assurance that such blanket discounts will fully satisfy the shipper groups and remove their objections.
• There was strong feeling that after fully considering this matter the STB, as would any party familiar with current market conditions,  will conclude that rates today are actually market driven and should continue to be.


NASSTRAC did not protest the SMC³ or PITB increases on the grounds that they had taken a step in the right direction with the establishment of a blanket discount and for that reason, the STB did not suspend these increases.  In order to remove the NASSTRAC’s objections to the increases,  NATC’s GRC considered and approved  the establishment of a blanket minimum discount as the industry urgently needed the increase.  It should be noted however that NASSTRAC has stated that their removing their protest should not be construed as agreement on their part that the actions taken fully satisfied their objections.

In response to the STB3 action NATC cancelled the increase scheduled for Oct. 4, 1999, which led the STB to drop its previously ordered investigation. The General Rate Committee of NATC at its’ Oct. 21,1999 emergency meeting approved the following dockets which became effective November 1, 1999:
 

Docket 1003v – General rate increase of 4.9 %, This reestablished the provisions of the original general increase that was scheduled to go into effect October 4, 1999.
Docket 1004v – This docket established blanket 35 % discount items in NATC class tariffs. These items provide a 35 % discount to any member carrier’s customer paying freight charges (other than minimum charges) rated under an NATC class tariff, provided the customer does not have any discounts, commodity rates or class exceptions in place with the carrier.


In view of the published 35% discount provision and the possibility of undercharge claims that arise with it, it is imperative that all member carriers review all the application or non-application clauses they may have for possible conflict between the NATC tariffs and their own publications that may affect this provision.  This is necessary to ensure the minimum discount does apply if they so desire and does not apply if they do not want it to or conflicts with other provisions in their individual tariff.  Be sure that the tariff properly states how it will apply and that it does not conflict with prices you have in place. Please contact Ken Leising for assistance with any questions or concerns you may have in this matter.


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 FUEL PRICES 

No relief is in sight as fuel prices continue to rise in both Canada and the US.  The FCA/NATC calculated fuel surcharges were as follows for February 14, 2000:

Canadian Domestic US-Canada

• LTL  4.3% 3.2%
• TL 10.2% 7.4%

To illustrate the importance of implementing a fuel surcharge the following table shows the impact of the fuel cost increase on profitability if no surcharge is implemented.
 

By:  Dave Sirgey

FCA/NATC staff recently reviewed over 140 trucking websites.  The review included both US and Canadian companies and used various search engines.  Generally it was found that the majority of websites were information only sites.  Many of the sites visited were under construction and/or adding additional features.

The frequency with which specific functions were offered is as follows:
 

It was also noted in our review that some of our member carriers do not have websites or do not link their sites to FCA/NATC’s site.  For member carriers without websites we set up, free of charge, a company profile page that will list contacts and information about your company.  If you would like us to develop this page for you, or if you would liked to be linked to our website, please contact Mary Anne Vehrs at extenstion 200.

If you would like a more detailed breakdown of out website analysis, please let us know we will be delighted to provide the details of the review.

By:  Dave Sirgey

A recent Marketplace Survey of Canadian carriers highlighted the driver shortage as a key issue in the market today. Of the surveys respondents, 86% indicated that they do not currently have enough drivers and 71% of the respondents plan to add drivers in the next 6 months (if they can find them).  Two-thirds of the respondents also plan to add tractors and trailers in the next 6 months.

By:  Dave Sirgey

What is an appropriate rate for an 800lb. Shipment moving from Toronto to Montreal?  As Josef Messmer demonstrated at the NATC  annual meeting in Montreal it all depends the shipment’s characteristics.  Josef Messmer, Vice President of Transport Consulting Group took the committee from an “average” shipment to some better case and worse case scenarios.

Josef used industry average operating costs and performance statistics but changed, one at a time, various shipment characteristics. Using industry average costs and performance statistics, he demonstrated the magnitude of changes in profit (or loss) as shipment characteristics change.  Changes in packaging, mechanical or manual handling, density, total weight at pick-up stop,  and waiting time caused the operating ratios to range from 53 to 196.

Many participants commented this presentation was an eye opener as while they did realize to what extent a 15 minute wait, multiple shipment pick-up, or handling palletized v. loose freight affected the cost of providing  service,  the magnitude of the difference was much greater than they had thought.  Important facts to bear in mind when contemplating the application of blanket minimum discounts! .

The Cost Information System (CIS), a LTL costing system developed by TCG (Transportation Consulting Group -- the leader in LTL and TL shipment costing software development) was used to develop the information used in the presentation.  The many users of TCG CIS agree it is far and away the best product in the market today.  If you would like a copy of Josef’s presentation or additional information on this costing model, please contact Dave Sirgey at (905) 994-0560 ext. 214.
 

By:  Ken Leising

Our programmers are currently developing some new features to add to our current rating software. They include:

• Quicklanes -  The ability to utilize class rates as the rate level for a major lane.  The ability to import rates calculated in QuickLanes into QuickRate to rate shipments with these rates.
• QuickRate  -   The ability to set up lane specific rates to use in QuickRate. This includes the ability to use various weight breaks not just the standard class rate weights. Rate per cwt. or flat charges can be utilized.
• MakeRate for Windows - This utility will allow carriers to provide custom settings to install with a standard CD. The CD will contain the carrier’s base rates with no special settings (discounts, lane rates, etc.). When carriers wish to provide a customized rating system to a customer, Makerate will produce a disk that will add the custom settings to the system.

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