Freight costs continue to rise for Canadian shippers

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Results published Wednesday, Dec. 1, by the Canadian General Freight Index indicate a slight increase in the cost of ground transportation for Canadian Shippers in September. The CGFI Total Freight Cost Index increased by .4 percent in September compared to August, while the Base Rate Index, which excludes the impact of fuel surcharges assessed by carriers, also increased by .7 percent. Average fuel surcharges essentially remained unchanged at 13 percent for the month.

This is the fifth consecutive monthly increase since the index reached a low point in April 2010. “Prior increases in overall freight costs for Canadian shippers were primarily driven by the domestic truckload sector, but we are now seeing increases in transborder LTL costs, which is contributing to this trend” says Doug Payne, president of Nulogx, which sponsors the CGFI.

Jason Granger, equity analyst for BMO Capital Markets, says the latest index is consistent with previous cycles. “Truckload pricing appears to be leading LTL pricing in the recovery as truckload capacity is quicker to exit the system,” Granger says. “However, as the pace of the economic recovery cools, supply pressure, as opposed to demand growth, could arguably be a more significant near-term catalyst for further improvements in industry pricing. Driver shortages, equipment shortages and business failures could all contribute to tighter supply conditions.”