For several years during the past decade, carriers from all modes made a concentrated effort to gain back efficiencies lost by wasteful shipping practices such as unnecessary waiting times to load and unload by instituting surcharges. A US...
For several years during the past decade, carriers from all modes made a concentrated effort to gain back efficiencies lost by wasteful shipping practices such as unnecessary waiting times to load and unload by instituting surcharges. A US study with direct relevance to Canadian trucking found that out of a 35-hour driver work week, 23 hours were spent just waiting to load and unload. It’s no surprise that Canadian motor carriers have been pushing shippers for detention surcharges. And carriers of all modes prior to the recession were keen to pass on other variable costs, such as fuel, to their customers through surcharges. Tight capacity across almost all modes, combined with high energy costs, and high shipment volumes starting in the third quarter of 2004 made for the most significant transportation cost increases since deregulation and surcharges were an important element. The trend lasted into 2006, sometimes with shippers reporting their transportation budgets being millions of dollars above budget while carriers were showing the best profit margins in recent memory. The situation reversed, however, as the North American economy first cooled in 2008 and then moved sharply downwards as the economy headed into recession in 2009, stranding carriers with considerable excess capacity and no bargaining power. With carriers conceding sizeable rate decreases, shippers also began going after surcharges. While the drop in fuel pricing made reduction of fuel surcharge levels inevitable, our research found that many of the gains made on surcharges such as detention were also lost.
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