Thursday, October 29, 2009

Trucking Rates Down Across the Board

(Purchasing B2B – Scott Irvine)

Price index lets purchasers benchmark their contracts

The Canadian transportation industry is currently experiencing a “perfect storm” of economic factors. Lower fuel prices, slow economic growth and an improving Canada-U.S. exchange rate have all put significant pressure on carriers to lower rates, while buyers of over-the-road freight services are clearly benefiting.

According to the monthly Canadian General Freight Index (CGFI), prices paid by Canadian shippers in July 2009 for over-the-road truck transportation have declined 15.6% year-over-year, and a full 9.7% since December alone. A significant factor driving this decline has been lower fuel prices and the resulting reduction in fuel surcharges assessed by carriers (from 16.3% at the end of last year to 12.3% in July).

However, the base rates paid by Canadian shippers has clocked a decline of 5.7% since the beginning of the year, even when the impact of fuel surcharges is removed. This is a significant decrease in light of the usual trend of price increases levied by carriers. Read more here.