Freight Carriers recommend 5.8 % freight rate increase

The Freight Carriers Association (FCA) is recommending an increase in freight rates of 5.8% to become effective Monday, July 5, 2004. According to FCA, there is currently a lack of excess capacity anywhere within the trucking industry, and a further reduction in capacity will occur if major cost increases in labour, insurance, security and other non-labour cost components are not recouped by rate increases. FCA also recommends that the industry continue to emphasize the need to charge for all services performed.

The FCA says the industry needs to invest in the drivers and equipment required to both maintain current levels of capacity, and meet future demands as the economy rebounds.

Increased Demands on Drivers and the Driver Shortage Push Labour Costs Up Ever increasing safety and security measures and use of new technologies head the list of increased demands on today’s drivers. The industry is competing for drivers from a limited pool of experienced professionals. Trucking companies continue to invest in increased wages, recruitment, and training in order to meet the demand for drivers. Using information developed by Statistics Canada, FCA estimates that labour costs have increased by 5.8% on an annual basis. In addition to labour cost increases, non-labour costs (excluding fuel) are increasing at an annual rate of 1.4%.

Insurance, Security and Safety To meet the current environmental regulatory requirements and counter terrorism measures as well as keeping insurance costs increases as low as possible the industry has invested in security, training and safety. Significant insurance premium increases continue in spite of these investments and the carriers increasing their deductibles.

Hours of Service FCA says the cost increases associated with the Hours of Service changes that are expected to become effective during the next year have not been quantified or included in these estimates of cost increases. The impact of the new regulations is not yet known but their effect on operating costs is expected to be significant.

Fuel Cost Increases Are Handled Through the Fuel Surcharge Program – Cost increases discussed above exclude the impact of fuel cost increases. The FCA says 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.