Canada's trucking industry: nickels and dimes add up to a profitability crisis

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Grant Thornton LLP reports that intense cost pressures are driving the
nation's trucking firms to adopt surcharges in all major cost categories.

TORONTO, Aug. 10 /CNW/ - Canada's trucking industry is experiencing a
period of unprecedented growth accompanied by dramatic change, with rising
commodity prices, an evaporating driver pool, and stringent border security
measures driving down the bottom line for the nation's privately owned
mid-sized carriers, according to a Grant Thornton report on the industry. As
various surcharges pile up at firms straining to maintain profitability, the
trucking industry is at risk of becoming a business of nickels and dimes, with
the potential to pass on significant cost increases to Canadian consumers.
Recently released, Grant Thornton Trucking Insights 2007 reports that the
cost of doing business has never been higher than in today's highly regulated
and ultra-competitive environment, but the nation's stressed supply chain may
have a blind spot when it comes to sharing the burden of escalating
transportation costs. The report finds that senior executives in the trucking
industry expect to increase billing rates in response to growing cost
pressures, but shippers struggle to absorb the increases for the following
reasons:

<<
- Surcharges have emerged in almost every major cost category as
carriers struggle to cope with external cost pressures that may be
here to stay;
- Escalating prices at the pump have driven the adoption of fuel
surcharges across the board;
- Currency surcharges have helped to bring the soaring loonie back down
to earth on international routes; and
- Increased border security and delays at customs have given rise to
security and wait time surcharges.
>>

"Most of our clients are making attempts to assess surcharges to the
shippers for cross-border shipments. Sometimes they are flat charges or they
can be a percentage of the value of the move. Irrespective of how they are
assessed, it is critical that the shippers provide adequate compensation to
the carriers in order for these amounts to be passed along to the drivers",
says Paul Coleman, Partner, Grant Thornton LLP.
With the adoption of realistic and flexible costing models that insulate
firms from the shocks of shifting market forces, the time for Canada's
trucking industry to secure future profitability is now. If not addressed, the
current crop of cost increases may end up being just the thin edge of the
wedge for Canadian consumers.
For a full copy of the report, contact Paul Coleman (519-672-2930;
[email protected])

About Grant Thornton Trucking Insights 2007

Recognizing that Canada's trucking industry is experiencing unprecedented
growth and change, Grant Thornton conducted in-depth, one-on-one interviews
with senior executives at 22 privately-owned, mid-sized trucking firms based
in Ontario.
Key objectives of these meetings included the following: probing the
business trends affecting today's trucking firms, understanding emerging
threats to profitability, and highlighting the industry's leading strategies
for cost management and continued profitable growth.
A review of recently published information on Canada's transportation
sector was undertaken in late 2006. Practitioners from the Grant Thornton
trucking practice provided insight from their client-based experience.

About Grant Thornton LLP

Grant Thornton LLP is one of Canada's largest accounting and consulting
firms focused on serving privately owned and public companies. Our team of
practitioners offers a full range of services including audit, tax, business
and financial advice and more. With offices from coast to coast, and access to
a network of member firms worldwide, rest assured you'll be receiving a wealth
of experience accumulated on a global scale with the professionals at Grant
Thornton LLP.

Chartered Accountants
Management Consultants

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For further information: or to arrange an interview, please contact:
Paul Coleman, Partner, Ontario Trucking Practice, Grant Thornton LLP, T: (519)
672-2930, E: [email protected]
 
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