Tariff committee recommends freight rate increase

Truck News

FORT ERIE, Ont. — The Tariff Advisory Committee (TAC) has recommended carriers raise their freight rates 4.9% effective April 2, 2007 and rates from or to Alberta be increased an additional 3%.

If the trucking industry is to be successful in attracting capital and maintaining capacity, rates need to be increased, according to the committee. The driver shortage, labour cost increases and regulatory changes are just a few of the factors currently increasing costs for the trucking industry.

TAC, a committee of the Freight Carriers Association (FCA), meets periodically to monitor economic conditions as well as the latest statistics on the profitability of general freight carriers.

The FCA represents freight carriers operating throughout Canada in matters related to economics, pricing, finances, costing, as well as motor carrier statistics.

TAC reviews major issues affecting the industry’s profitability and its ability to maintain and improve service. The committee recently reviewed the current market conditions and the results of cost studies conducted by FCA, which revealed major cost increases.

Labour – using information developed by Statistics Canada, FCA estimates that labour costs for trucking companies have increased by 4.2% on an annual basis.

Non-labour (excluding fuel) – the FCA motor carrier non-labour index, which reflect the price movement of goods and services motor carriers purchase shows an annual increase of more than 2%.

Hours of Service (HoS) – the cost impact of the new HoS rules is estimated at 1% to 5%, dependent upon a carrier’s operations.

Revenue Improvement – based on Statistics Canada’s Third Quarter 2006 results for Top General Freight carriers, the industry requires a revenue improvement of approximately 1%.

Alberta Cost Increases – Statistics Canada estimates hourly labour costs for General Freight Trucking within Alberta up over 19% in November 2006 versus November 2005.

Accessorial Services – the costs associated with services such as appointment deliveries, waiting time, protective service, border crossing, return of pallets and handling of dangerous goods are not included in the rates and must continue to be assessed separately.

Cost Increases Excluded – the cost increases noted exclude the impact of the fuel price changes. Also excluded is the impact of the 2007 model engines as most of the industry has not yet purchased a significant amount of the new engines.

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