TORONTO, Ont. — It will come as little surprise to motor carriers that shippers have been the biggest benefactors of deregulation.
A new Conference Board of Canada report, comparing a highly regulated environment (taxicabs) to a deregulated one (for-hire trucking) on behalf of the agri-foods industry, concluded that productivity gains realized by the trucking industry have in large part been passed along to shippers.
“In general, prices fell (in real terms) while productivity increased,” the report concluded, noting also there was some market instability as a result of new entrants getting into the trucking business.
From 1986 to 2003, trucking industry total factor productivity (TFP) increased by an average of 1.7% per year, while prices dropped in real terms (they rose 0.8% per year in nominal terms). This contrast occurred while input prices (fuel, labour, capital costs, etc.) rose 2.6% per year.
“In other words, carriers increased their productivity substantially,” the report concluded. “Competition ensured that a substantial portion of the savings from productivity gains were passed on to customers in the form of lower prices.”
Since input prices grew 29% faster than output prices, the Conference Board of Canada concluded that the trucking industry gave back 87% of its productivity gains.
“Put another way, 87% of productivity gains have been used to hold down output prices in the face of rising fuel, capital, labour and other costs, rather than to increase profit,” the report found.
The full report, called We Have Been Here Before, can be downloaded from www.e-library.ca.
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