TRUCKING COMPANIES ANNOUNCE

Fort Erie, ON. August 16, 1999

Despite a booming economy and improved freight volumes, general freight carriers revenues have not kept pace with operating costs. The latest information available from Statistics Canada shows that general freight carriers' tonnage and ton-miles have gone up 7% while revenues lag with only a 2% year-over-year increase. Quarterly financial surveys conducted by FCA reveal similar patterns with the trend continuing through the first quarter of 1999. The major causes for the revenue shortfall are:

• Labour costs are increasing an average of 4.3% due to higher wages. This is further exacerbated by driver shortages pushing up training and turnover costs which are nearly impossible to quantify;
• The FCA motor carrier non-labour index, which reflects the price movement of goods and services motor carriers purchase shows an annual increase of 2.5% (Fuel is excluded from this calculation as fuel prices are treated separately due to their high volatility);
• The cost of providing service rises as carriers must continuously enhance performance levels and broaden the range of value-added services to satisfy customer expectations. Demand for time-definite or appointment deliveries, warehousing, sorting, segregating and sequencing shipments, automated shipment tracking etc. continues to increase. These services affect employee productivity and service unit costs;
• Y2K compliance costs have and continue to require large capital outlays;
• More stringent safety and environmental regulations (made costlier to manage due to the disparity between different jurisdictions) produce higher fleet maintenance and training costs and also require more frequent replacement of equipment;
• The weakness of the Canadian dollar against the US currency makes replacement parts and equipment more expensive.

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 is concerned about the industry's continued narrow margins despite a favourable economic climate. It is feared any economic slowdown would place many carriers in jeopardy since profits are insufficient to weather the impact of any tonnage reduction.

The TAC recommends trucking rates be increased by 4.9% not later than October 4, 1999. In many cases, larger increases are required, as many customers must realize their carriers must be compensated for the cost-saving value-added services they are performing for them. It should be noted that absent further productivity enhancements the recommended increase will not improve the carriers' profit margins but merely maintain the status quo.

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 over half a century. The TAC is composed of executives elected by the membership to monitor the industry's condition and make recommendations.

The NATC's General Rate Committee (GRC) approved a 4.9% across the board (excluding accessorial charges) general rate increase to become effective October 4, 1999.

Other increases announced by major bureaus or individual carriers are shown below.

NATC GENERAL RATE COMMITTEE

August 18, 1999 - the general rate committee has approved two rate restructure dockets. The first restructure proposal equalizes Hull, QC and Ottawa, ON rates at the same rate level. The proposal also adjusts rates between western Quebec and Middle-Atlantic territory in order to keep a logical rate progression. The second proposal adopts the same Ontario and Quebec point groupings for NATC as presently applicable in the FCA tariffs. The groupings use all 6 digits of the Canadian postal code with a 3 digit base code assigned to each postal code. If you have questions regarding either of these proposals please contact Ken Leising.

   FUEL PRICES RISING AGAIN-

Fort Erie, ON - August 13, 1999 - The Freight Carriers Association of Canada (FCA) monitors fuel prices paid by general freight carriers across Canada on an ongoing basis. In recent months carriers have experienced steep increases in diesel fuel prices with some carriers incurring increase greater than 20%.

A similar situation exists in the US and the major LTL carriers have implemented fuel surcharges (currently at 1.0% on all shipments--US Domestic as well as between Canada and the US). Many other carriers are following suit.

FCA's fuel surcharge calculation, using industry average fuel cost increases and industry average fuel to revenue relationships, result in carriers needing an additional 1.0% on LTL shipments and 2.3% on Truckloads to offset their fuel cost increases. Many carriers have paid larger increases and/or have higher percentage of fuel costs than industry averages (depending on length of haul and average load factors) and they require higher fuel surcharges to recover their cost increases.

Fuel price volatility is expected to continue and FCA's Tariff Advisory Committee is recommending motor carriers implement a fuel surcharge to offset the increase in fuel costs as soon as possible. The FCA has stepped-up its fuel price monitoring and is keeping all shippers and carriers who have so requested informed of all updates on a weekly basis.

The FCA represents over 90 general freight carriers in matters related to economics, costing, pricing and finances, as well as industry statistics. The FCA, whose members operate in all Provinces of Canada, has been serving the trucking industry for more than half a century. The Tariff Advisory Committee (TAC) is composed of motor carrier executives elected by the membership to monitor the industry's financial condition and make recommendations.

FCA/NATC continues to monitor fuel prices within Canada and produces a weekly fuel price calculation for Canadian Domestic and US-Canada traffic. Please complete the following to subscribe to the -

Released on a weekly basis (every Thursday evening).

Canadian Domestic Fuel Surcharge Calculation Exhibit and the US - Canada Fuel Surcharge Calculation Exhibit.

TO ORDER THE FUEL SURCHARGE BULLETIN PLEASE CLICK HERE

In a letter released June 25, the Canadian Trucking Alliance (CTA) called for stricter enforcement of Canadian immigration laws when it comes to the activities of American truck drivers in Canada. The letter is in response to the aggressive enforcement activity in recent months of the US Immigration and Naturalization Service (INS).

According to the CTA Canadian drivers entering the US have been the focus of rigorous examinations of documents for current and past trips. Following these inspections several drivers have been detained and/or expelled from the US and their tractor units seized and advertised for sale by public action, even though such action is legal only where there is suspicion of smuggling illegal aliens. Fines imposed have been in the range of $4000 (US).

Existing Canadian rules prohibit US drivers from making point to point moves within Canada. Despite recent changes in cabotage rules that liberalized regulations to allow freer movement of foreign vehicle in each country, both the US and Canada prohibit any movement of a vehicle by a foreign driver. CTA states that failure by Canadian authorities to enforce immigration laws results in an advantage for US carriers over Canadian carriers.

In announcing the approval of 53-foot trailers, by special permit, the Ontario Minister of Transportation stated "The 53 foot quad is a productive safe, and infrastructure friendly alternative to older quad equipment. It will provide the industry with increased flexibility within Ontario's existing vehicle weights and dimensions limits."

The 53 foot quad will require self-steering load equalizing axle technology. Only companies with satisfactory safety ratings will be able to apply for permits, which will cost $300 each. Specific technical and operating conditions must also be met. Contact Mary Anne Vehrs (ext. 200) for a copy of the permit conditions.

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