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Motor carriers maintain operating ratio despite increasing costs

OTTAWA, Ont. -- Average operating revenues for Canadian for-hire motor carriers increased 5.2% to $1.83 million in...

OTTAWA, Ont. — Average operating revenues for Canadian for-hire motor carriers increased 5.2% to $1.83 million in the second quarter but their average expenses climbed 6.2% to $1.71 million, on a year-over-year basis.

Operating revenues totalled $5.30 billion, and operating expenses reached $4.94 billion, according to date released by Statistics Canada this morning.

The increase in expenses was mainly driven by higher miscellaneous expenses (+14.2%), purchased transportation (+13.3%) and payments to owner operators (+9.3%). The increased payments to owner/operators also indicates increased activity.

Despite the sharp increase in expenses, however, carriers’ average operating ratio (operating expenses divided by operating revenues) remained unchanged from the second quarter of 2003 at 0.93. Any ratio under 1.00 represents an operating profit. Arguably, ,a ratio of 0.95 or lower is considered healthy for trucking companies.

For-hire trucking transportation revenues from international movements increased 6.2% to $1.93 billion from $1.81 billion in the second quarter of 2002. Revenues from outbound movements were up 8.7% and revenues from inbound movements increased 3.9%.

The Statistics Canada survey also showed that the economic slowdown has to date not had an impact on mid-sized and large carrier numbers. There are an estimated 2,887 for-hire trucking companies based in Canada with annual revenues of $1 million or more. That number has stayed roughly the same compared with an estimated 2,889 carriers in the second quarter of 2002.

Small carriers (those earning less than $1 million in annual revenues, however, have suffered roughly a 25% decline in their numbers in recent years. There’s about 6,040 small for-hire carriers left in the Canadian market.

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