What do Canadian freight rates in 2009 tell us about the recession and the recovery? BNN discusses the country’s only transportation tracking index with Doug Payne, president, Nulogx.
Canadian Freight Rates Paint a Picture of the Recession and Recovery in 2009
February 25th, 2010 by nulogx No comments »Freight Costs for Canadian Shippers Fell 9.6% in 2009, But Appear to be Stabilizing
February 24th, 2010 by nulogx No comments »
Results published today by the Canadian General Freight Index (CGFI) indicate that although the cost of ground transportation for Canadian Shippers declined by 9.6% since December of 2008, freight costs appear to be stabilizing as we move forward into 2010.
From December 2008 to December 2009, Base Rates, which exclude the impact of Fuel Surcharges assessed by carriers, fell 7.8% and Average Fuel Surcharges also fell by a total 13.1%, resulting in an overall decrease of 9.6%.
“During the first 8 months of 2009 there was significant volatility in freight costs, however it appears that the index has begun to stabilize” says Dr. Alan Saipe, President, Supply Chain Surveys Inc. “While there are slight pressures in Base Rates, these are being offset by modest increases fuel surcharges”
In December 2009, overall freight costs rose by .2% when compared to November. Base Rates, which exclude the impact of Fuel Surcharges assessed by carriers, fell .1%. This small reduction was offset by a 3.7% increase in Average Fuel Surcharges when compared to the prior month. December’s stabilization has been consistent since September of 2009 with freight costs having varied by only .4% in total.
“This data correlates well with the prevailing opinion that our economy is slowly starting to recover from the recession that started more than 18 months ago.” says Doug Payne, President for Nulogx, “The continuous flat-line performance over the past few months suggests that carriers have adjusted their operations to match changing market demands, and that we will continue to see stable freight prices in the near future.”
Increased Fuel Surcharges Offset Reductions in Transportation Costs for Canadian Shippers in November.
January 28th, 2010 by nulogx No comments »
TORONTO, ONTARIO–(Jan 27, 2010) – Results published today by the Canadian General Freight Index (CGFI) indicate that the cost of ground transportation for Canadian Shippers in November remained virtually unchanged since the prior month.
Overall freight costs decreased by only .1% in November when compared to October. Base Rates, which exclude the impact of Fuel Surcharges assessed by carriers, fell 1.5% while Average Fuel Surcharges increased by 7.4% from the prior month; negating the benefit of the Base Rate reduction “After many months of steady decline it appears that we are entering a period of stabilizing freight costs” says Doug Payne, President for Nulogx. “Going forward we anticipate that further cost reductions for shippers will come from improved productivity, as opposed to the market forces that have been at work over the last 18 months.”
The CGFI is sponsored by Nulogx, a leading Transportation Management Solutions provider, and is used by shippers and carriers to benchmark performance, develop business plans, and secure competitive agreements. It was developed with the assistance of Dr. Alan Saipe. The most recent results are available at the CGFI website: www.cgfi.ca.
The Canadian General Freight Index Falls Slightly In October
January 5th, 2010 by nulogx No comments »Results published today by the Canadian General Freight Index (CGFI) indicate that the cost of ground transportation for Canadian Shippers declined slightly in October after rising in September. Since the beginning of the year, the index has fallen in eight of the ten months, and has declined 9.6% in aggregate.
Although overall results declined, Base Rates, which exclude the impact of Fuel Surcharges assessed by carriers, rose .3% in October; only the second monthly increase since the beginning of the year. Offsetting the increase in base rates was a drop in average Fuel Surcharges, resulting in slightly lower overall costs.
“A slight increase in the domestic market seems to have been countered by weaker rates in the Trans-Border market,” says Alan Saipe, President, Supply Chain Surveys Inc., and long time analyst and observer of the transportation and logistics industry.
The CGFI is sponsored by Nulogx, a leading Transportation Management Solutions provider, and is used by shippers and carriers to benchmark performance, develop business plans, and secure competitive agreements. It was developed with the assistance of Dr. Alan Saipe. The most recent results are available at the CGFI website: www.cgfi.ca.
Forecasting Ground Freight Costs for 2010
December 16th, 2009 by nulogx No comments »Get ready for a bumpy ride as freight costs to hit bottom and then start to climb.
By Dr. Alan Saipe, president, Supply Chain Surveys, Inc.
[Excerpt from Canadian Transportation & Logistics Magazine - November 2009]
ulogx, a leading transportation management solutions
company, launched the Canadian General Freight Index
(CGFI) in September. The index gives us a clear picture
of how average Canadian over-the-road freight costs change from
month to month.
With such a good picture of what has actually happened in the
marketplace, it is possible to make a reasoned forecast of where
costs are likely to go in the months ahead. We expect that average
ground freight costs will be 6.2% higher in 2010 than they were in
2009, and that average fuel surcharges will finish 2010 at 20.6%
of base freight costs.
Looking Backward
Ground freight costs rode along with the economy in 2008 and
2009. Figure 1 shows the Canadian General Freight Index from
July ’08 through to August of this year. In the last six months of
2008, freight costs peaked and began to decline. In the first eight
months of 2009, that decline continued – the index has fallen
15.8% from its peak in July ’08, and 10.0% from its value in
December ’08.
Nulogx, a leading transportation management solutions company, launched the Canadian General Freight Index (CGFI) in September. The index gives us a clear picture of how average Canadian over-the-road freight costs change from month to month. With such a good picture of what has actually happened in the marketplace, it is possible to make a reasoned forecast of where costs are likely to go in the months ahead. We expect that average ground freight costs will be 6.2% higher in 2010 than they were in 2009, and that average fuel surcharges will finish 2010 at 20.6% of base freight costs.
Looking Backward
Ground freight costs rode along with the economy in 2008 and 2009. Figure 1 shows the Canadian General Freight Index from July ’08 through to August of this year. In the last six months of2008, freight costs peaked and began to decline. In the first eight months of 2009, that decline continued – the index has fallen15.8% from its peak in July ’08, and 10.0% from its value in December ’08.
Two main factors have brought freight costs down. First, crude oil prices have fallen sharply from their peak in mid-2008, which produced a corresponding sharp decline in fuel surcharges. Figure 2 shows fuel surcharges as a percent of base freight costs. Note the smooth decline through March, the level stretch through May, and the start of an uptrend in June.
Secondly, freight rates have also come down. Figure 3 shows that overall average rates in Canadian dollars grew in the last half of 2008, and have fallen in the first eight months of this year. You can see that domestic rates and cross border rates have behaved differently. Domestic rates came down sooner than cross border rates which didn’t start their decline until the spring of 2009. Note that cross border rates in Canadian dollars are impactedby the Canadian/US exchange rate.
Looking Forward
Forecasting is always difficult – and forecasting 2010 freight costs at this time is particularly treacherous for several reasons.
• The global economy is still coming out of recession. Although good progress is being reported, no one really knows precisely when the world economy will be firing on all cylinders again.
• Significant uncertainty exists about both the future price of crude oil and also the Canadian/US exchange rate – two critical variables that have a large impact on Canadian freight costs.
• The Canadian General Freight Index has only been in place for several months, so we are still learning how to make the best use of this new microscope on over-the-road freight costs.
Nonetheless, we have developed a forecast for 2010 which we present below. We have based our projections on three scenarios: slower growth, expected growth, and faster growth. Each scenario makes somewhat different assumptions about what lies ahead. See Figure 4 for the detailed assumptions in each scenario.
Looking forward, we expect Canadian ground freight costs to hit bottom in the fall of 2009 and then grow through to the end of 2010. The Canadian General Freight Index which stood at 834.2 at the end of August is expected to close the year at about 883 and then to grow to the 950 range by the end of next year. Figure 5 provides a more detailed look at the results in each of the three scenarios. We expect the actual results to fall somewhere within the bounds of these three scenarios.
The numbers tell an interesting story. We project Canadian ground freight costs in 2009 will average from 7.1% to 7.4% less than they did in 2008. An economy in recession and lower crude oil costs will have brought freight costs down in 2009 to well below 2008 levels. However, these costs will increase in 2010. Just how much depends on many external factors. We expect that average ground freight costs will be about 6.2% higher in 2010 than they were in 2009. Our projections show that this year-over-year increase may be as low as 3.6% and may be as high as 9.0%, depending upon how quickly the world, US and Canadian economies grow. We have also projected that average fuel surcharges as a percent of base freight costs will finish 2009 between 17.2% and 17.8%, and will increase to between 18.9% and 22.3% by the end of 2010.
THE CANADIAN GENERAL FREIGHT INDEX – What’s it all about?
The Canadian General Freight Index is published by Nulogx and tracks actual changes in over-the-road freight costs month by month. The index is derived from a database of more than $750 million in annual freight transactions. What is in the index? Domestic and cross border truckload and LTL transactions. The index includes base freight charges, fuel surcharges and other accessorial charges. The index is sensitive to the Canadian/US exchange rate because some of the charges are in US dollars. What is not in the index? The index is restricted to general over-the-road freight. It does not include liquid bulk, dry bulk, forest products or other specialized freight. Note that the index cannot separate contract vs. spot transactions. Trends in the index are more important than any single month’s results. The index is representative of Nulogx customers which may not be the same as the market at large. How closely your over-the-road general freight costs will track the CGFI will depend upon a number of factors – especially how closely your mix of freight matches Nulogx mix.
More information is available on the Index’s Web site, www.cgfi.ca, or from Nulogx, www.nulogx.com.
The Canadian General Freight Index Increases In September Although Base Rates Continue To Decline
November 26th, 2009 by nulogx No comments »
Results published today by the Canadian General Freight Index (CGFI) indicate that the cost of ground transportation for Canadian Shippers increased in September for the first time since April; primarily due to increases in fuel prices.
The CGFI September results show that Fuel Surcharges assessed by carriers continued their recent upward trend, increasing eight percent month over month, and 26% since their lowest point last May. When the impact of rising Fuel Surcharges is removed from the CGFI findings, Base Rates actually declined slightly, dropping an additional point six percent (.6%) from August results.
“Ground freight costs which have trended down for more than a year appear to have bottomed and are starting to increase again,” says Alan Saipe, President, Supply Chain Surveys Inc., and long time analyst and observer of the transportation and logistics industry. “In September, Less Than Truck Load (LTL) Base Rates reversed their recent trend and increased. Although Truck Load (TL) rates declined in September, when Base Rates for all categories of ground transportation were combined, and the impact of rising Fuel Surcharges was included, total Ground Transportation costs increased point eight percent (.8%).
The CGFI is sponsored by Nulogx, a leading Transportation Management Solutions provider used by shippers and carriers to benchmark performance, develop business plans, and secure competitive agreements. It was developed with the assistance of Dr. Alan Saipe. The most recent results are available at the CGFI website: www.cgfi.ca
Canadian General Freight Index (CGFI) hailed “leading edge” at this year’s 23rd Annual Conference on Transportation Innovation and Cost Savings.
November 25th, 2009 by nulogx No comments »SPECIAL REPORT: 23rd Annual Conference on Transportation Innovation and Cost Savings
Lean and green logistics front and centre for supply chain professionals
By JACK KOHANE
November 9, 2009
Here is an excerpt from Mr. Kohane’s recent Special Report hailing CGFI as “leading edge” at this year’s 23rd Annual Conference on Transportation Innovation and Cost Savings.
New and leading edge at this year’s conference was the Canadian General Freight Index, just launched by Nulogx Inc., a Toronto-based transportation management solutions company. Scott Irvine, the company’s vice-president of business development, said that the CGFI is the one index that tracks freight prices in Canada. “It is generated from a database of over three million truck freight transactions and $1 billion in spend,” he said. “Results include data from over 100 operating entities and almost 1,000 carriers. Its benefits are that it can help you compare your company to the market out there.”
According to Mr. Irvine, the strengths of the CGFI (www.cgfi.ca), which was developed with the assistance of Dr. Alan Saipe of Supply Chain Surveys Inc., are that its information is reviewed monthly for validity and customers can contribute data in exchange for detailed analysis. Although the public has access to high-level information, Nulogx customers receive more detailed analysis in exchange for contributing their data to the index.
Its limitations, Mr. Irvine noted, include: the information is restricted to “general over-the-road freight”; it excludes bulk, liquid and other specialty transportation services; and it does not separate the contract versus the spot markets.
Overall, the CGFI (published the last Wednesday of every month) is a useful tool that can be used to benchmark performance, develop operating budgets, and assist in negotiating agreements, Mr. Irvine touted. “It enables buyers and sellers of transportation to make important decisions based on facts not previously available. It offers a good statistical estimate of actual market behaviour, highlighting changes in the prices paid for freight transportation by Canadian shippers.”
The Full Article can be read here: SPECIAL REPORT: 23rd Annual Conference on Transportation Innovation and Cost Savings
Trucking rates down across the board
October 30th, 2009 by nulogx No comments »The Canadian transportation industry is currently experiencing a “perfect storm” of economic factors. Lower fuel prices, slow economic growth and an improving Canada-US 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 percent year-over-year, and a full 9.7 percent 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 percent at the end of last year to 12.3 percent in July).
However, the base rates paid by Canadian shippers has clocked a decline of 5.7 percent 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.
Further examination of the CGFI data shows the drop in freight costs has been closely correlated with the slow-down in the North American economy. Not surprisingly, cross- border less-than-truckload transportation base rates are down more than 20 percent since the end of last year.
Truckload rates are down approximately five percent across the board during the same period, while domestic less-than-truckload rates appear to be relatively stable.
What does this mean to Canadian shippers? A lot! Based on information presented at a recent industry conference, transportation represents on average 60 percent of a company’s total supply chain cost. Delivering a five percent improvement on this expense item has the potential to significantly improve bottom line performance.
The information on freight rates is generated by Nulogx, a provider of transportation management solutions. The company has created a massive database of current shipment activity and rates. According to Alan Saipe, president of Supply Chain Surveys Inc., and long-time industry analyst who helped create the CGFI, “Nulogx has been able to leverage its extensive database of more than two million annual transactions to develop a unique insight into Canada’s freight market.”
The CGFI is a free service available to the general public through the CGFI.ca website. Nulogx can also provide to customers access to more detailed information based on shipment sizes and regions.
How can Canadian purchasers of transportation benefit from this information? The first and most obvious action would be to benchmark your performance against the index. Have your costs declined 9.5 percent in 2009? Are you paying more or less than 12.3 percent on average for fuel surcharges? Are there some undiscovered opportunities for improved performance?
All of the recent data clearly suggests now is an important time to evaluate your transportation costs.
Scott Irvine is vice-president of business development with Nulogx Inc. He may be reached at scott.irvine@nulogx.com The freight rate index can be found at www.cgfi.ca
Canadian Transportation & Logistics – Transportation TV
October 29th, 2009 by nulogx No comments »HOW LOW IS LOW? We all know the recession has battered trucking rates. But exactly how much have they fallen? Find out what the Canadian General Freight Index shows. Click on the image below to see video on www.ctl.ca
Nulogx Inc.: The Canadian General Freight Index Falls 0.2% in August – The Year-Long Decline in Ground Freight Costs May Be Coming to an End
October 28th, 2009 by nulogx No comments »TORONTO, ONTARIO–(Marketwire – Oct. 28, 2009) – Results published today by the Canadian General Freight Index (CGFI), indicate that the steady decline in the cost of ground transportation for Canadian Shippers appears to be slowing down. The August General Freight Index results produced a small 0.2% decrease from the prior month.
At the same time Fuel Surcharge as a percentage of Base Freight Costs is trending upwards, increasing 2.8% month over month, and 17.1% in the last three months, though still 55.1% less than one year ago. The Base Freight Index was also down month over month with the 4 month moving average showing a small 1.5% decline in August.
The most recent results are available at the CGFI website: http://www.cgfi.ca/
The CGFI is sponsored by Nulogx, a leading Transportation Management Solutions provider and is used by shippers and carriers to benchmark performance, develop business plans, and secure competitive agreements. It was developed with the assistance of Dr. Alan Saipe, President, Supply Chain Surveys, Inc., a long-time analyst and observer of the transportation and logistics industry.
According to Saipe, “Freight rates were only down slightly in August, while fuel costs and surcharges continued to rise. We may be near the end of the decline in general freight costs, which have fallen 15.8% since July 2008. We expect that as the economy strengthens, the costs of ground transportation will start to increase again.”
About Nulogx;
Nulogx provides technology and services to improve the transportation process and reduce costs. With an ability to offer the combined value of a best-in-class TMS Application, expert Managed Services, and the largest Freight Audit and Payment service in Canada, Nulogx can provide unprecedented value to North American shippers by improving freight planning and management processes, delivering robust business intelligence in actionable management reporting formats, and providing cost effective alternatives to managing transportation tasks.
About Dr. Alan Saipe
Dr. Alan L. Saipe is the President of Supply Chain Surveys, Inc a provider of management surveys and consulting services. He held academic appointments at York University, and the University of Toronto. He led the supply chain logistics consulting practice at KPMG Consulting. Today, his consulting services include Management Surveys & Benchmarking, Improving Operating Results, Senior Advisory Services and Mediation & Conflict Resolution.
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