OTTAWA, Ont. — Canadians can expect to see increases in the cost of consumer goods if fuel prices don’t come down soon, according to Canadian Trucking Alliance senior vice president, Graham Cooper.
That’s because fuel surcharges negotiated between trucking companies and their customers, to cover the extra cost of fuel price hikes, inevitably drive up the delivered cost of products, Cooper told an emergency meeting of the Commons Standing Committee on Industry, Natural Resources, Science and Technology.
“Fuel is the second largest component of a trucking company’s cost structure, next to labour,” Cooper explained to committee members, who called the extraordinary session due to recent fuel price volatility in the wake of hurricanes Katrina and Rita. “Ongoing increases in fuel prices are bound to have an inflationary effect on the price of goods on store shelves.”
Cooper explained that surcharges most carriers have negotiated with their customers were intended to compensate for fuel cost increases since prices first began to rise dramatically in 2001. He went on to explain how those fuel surcharges, for example a 25 per cent increase in the freight charge for a load of appliances from southern Ontario to Montreal, would add about $5 to the cost of each appliance.
But when questioned by the committee about “quick fixes,” Cooper refused to endorse the idea of a fuel excise tax reduction as a stop-gap measure.
“The federal government raises about $4.5 billion annually in excise taxes on motor fuels, but reinvests only about $350 million in road infrastructure,” he said. “The trucking industry wants to see the government shoulder its fair share of infrastructure investments, rather than using fuel excise taxes as a source of general revenue. Road users have for years been asking the government for a direct benefit from the excise taxes they pay when they buy diesel or gasoline.
“Reductions in vehicle speed – for passenger vehicles as well as heavy trucks – would have an immediate, measurable impact on fuel consumption.”
Truck News is Canada's leading trucking newspaper - news and information for trucking companies, owner/operators, truck drivers and logistics professionals working in the Canadian trucking industry. All posts by Truck News