Costs count

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OTTAWA, Ont. – While rates remain the top concern for Canada’s shippers, a recent survey finds that the majority of them have not swallowed a price increase in the past year.

This, among other findings, emerges in a Compas poll conducted late last year for the Canadian Industrial Transportation Association, Canadian Chemical Producers Association and Canadian Fertilizer Institute.

Sixty-five per cent of those who responded to the summer survey said their rates had not changed in the last year, while only one in four said rates increased during the same time period. Another six per cent saw rates drop.

In terms of selecting a carrier, 52 per cent said the quality of service was one of the three most important factors in their decision, while rates were cited by 31 per cent, and safety records hovered at 12 per cent.

Ironically, when they have complaints, it’s rates that top the list.

Transportation costs top their lists of concerns – cited by 37 per cent – followed by delays, at 21 per cent, and quality of service, at 13 per cent. Regulations (eight per cent); safety and competition/competitive pricing (seven per cent); road conditions (six per cent); and a lack of equipment (five per cent) rounded out the lists.

Still, shipping rates account for a relatively small share of the final prices passed on to consumers. The majority of shippers (59 per cent) say transportation represents less than 10 per cent of the selling price; 17 per cent said it accounts for 10 to 19 per cent; and three per cent said it accounts for more than 40 per cent of the price.

Yet that’s still top of mind.

Once they decide on carriers, few shippers say they sign long-term deals. Only six per cent contract services for four years or more. Contracts are more likely to be a year long (29 per cent signed such deals), but 24 per cent contract deals for two to three years, and another 23 per cent sign deals that last less than a year.

While they noted safety was an important factor in their decisions, only 27 per cent said they regularly review carrier records, and 25 per cent occasionally conducted such a review. Only 12 per cent did it when first hiring a carrier, and 27 per cent never looked at the ratings at all.

Sixty per cent said shippers have a role to play in monitoring truck safety, but 38 per cent said no role. Of those who did think they played a role, 22 per cent said it should involve auditing carrier safety records, 18 per cent said checking the condition of equipment, and 12 per cent said monitoring logbooks.

If a national carrier safety ratings system is put in place, 72 per cent said they were somewhat likely to use it. Forty-four per cent said it was very likely. But another 26 per cent said it wasn’t likely at all.

Regardless, trucks are getting their fair share of the freight.

“Trucking clearly accounted for the lion’s share of the shipping budget of firms during the past 12 months. Fully 95 per cent of firms devoted at least some of their budget to trucking … a majority of firms (61 per cent) devoted most of their shipping budget (over 75 per cent ) to trucking,” according to a summary of the report.

Trucking accounted for the largest share of Canada’s shipping budgets in 1999, with 95 per cent of surveyed shippers devoting at least some of their budgets to trucking. That compares to 47 per cent who ship by rail, 33 per cent by marine and 24 per cent by air. For that matter, 61 per cent of those surveyed spent more than 75 per cent of their budgets on trucking , while 35 per cent spent their entire budget on it.

That compares to rail-reliant shippers, who were twice as likely as those who spend less than half their budgets on rail to be concerned about costs (22 per cent vs 11 per cent) and rail competition (20 per cent vs 11 per cent), and somewhat more likely to be concerned about service quality (31 per cent vs. 20 per cent).

The good news is that truckers are doing a good job. Seventy per cent of shippers were satisfied with their service (21 per cent were very satisfied), while only five per cent weren’t. Another 15 per cent were neutral.

While 60 per cent expect shipping volumes to remain unchanged this year, a third expect business to increase. Only five per cent expect business to drop. n

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