Pricing discipline required for trucking success
Nov 28, 2005 12:22 PM
Pricing discipline will be the keys to Canadian motor carrier success in 2006, regardless of which direction the economy takes, said David Bradley, chief executive officer of the Canadian Trucking Alliance and president of Ontario Trucking Association.
“The economic prospects for 2006 are tougher to call,” Bradley said. “It’s a mixed bag and trucking is a derived demand industry. So much depends on fuel prices, exchange rates and consumer confidence.
"On the one hand you have some economists talking about stagflation, while at the same time the Bank of Canada is taking steps to dampen activity saying that Canadian manufacturing is at full capacity. It also depends on what part of the country you operate in and which shippers you haul for. There has been a big difference if you were working for the oil patch versus hauling automotive parts or paper over the past year.”
Bradley remains bullish on trucking in 2006, for those who know their costs and resist pressure to discount freight rates or fuel surcharges: “There may have been some slippage in 2005 from the buoyant performance of the previous two years, but it is only a matter of time before the reality of continued cost increases for trucking labor, fuel and equipment set in. Those costs will have to be passed on.”
Diesel fuel costs, the second largest component of a carrier’s operating cost, increased by about 40 percent over the past year in Canada, but are for the most part passed along to customers in the form of fuel surcharges, he added.
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