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Panel: Economy Putting Pressures on Carriers, Rates

Leading shippers and carriers discussed key trends affecting their businesses at this week’s Surface Transportation Summit, including service expectations of customers, capacity and pressure on rates.

As reported by Truck News, Doug Munro, president and owner of Maritime-Ontario Freight Lines, he’s noticed increasing service expectations among customers, driven by IT systems and software and technological enhancements, which are driving greater accountability.

“We’re seeing a lot of demand from customers; they expect almost perfection. They expect higher levels of services,” he said, adding the downturn in the economy has led to a challenging environment for freight rates.

Dan Einwechter, chairman and CEO of Challenger Motor Freight, warned that despite  slowdown, carriers should remain steadfast on rates.

“It’s easy to cut your rate by 25%, which we saw during some of the tough times,” he said. “But that’s a 50% increase to go back up and psychologically, it’s hard for your customers to accept that.”

Jason Dubois, president of Len Dubois Trucking agreed rates are not where they should be.  “A lot of carriers don’t have the negotiating skills, or don’t even know what they need for a rate. They don’t know what their costs are. We have matured as a company over the last few years using software, industry benchmarking and really understanding what the rates need to be – not just what we think we can get.”

Munro said there should be some positive movement on rates if the economy picks up, especially with equipment costs and labour going up.

Alex Boxhorn, logistics manager, Loewen Windows, said shippers are more likely to accept rate increases if the carrier has done a good job at communicating the reasons and proves all steps have been taken to eliminate inefficiencies.

“As a shipper, my first question will be what you as a carrier are trying to do to improve efficiencies within your own fleet to address costs and mitigate increases,” he said. “Then, how can we as shippers help you eliminate waste in your processes?”

Ginnie Venslovaitis, past director, transportation operations, Hudson’s Bay Company, said capacity is not affected by the number of trucks but by whose available to operate them.

“I think the challenge is more about the driver,” she said. “The carriers have all the tractors and trailers sitting up against the fence but if there’s not a warm body to put in the seat, there is a capacity issue.”

She said she’s not seeing a lack of capacity in the marketplace currently, but “if we start to turn around and come back and grow, are carriers going to be investing in more tractors, trailers and equipment, or not replacing what they have and letting it die on the vine? It’s borderline, I think.”

Click here for the Full report.

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