The Canadian General Freight Index Shows Volatility in February

April 29, 2010

trucking freight ratesResults published today by the Canadian General Freight Index (CGFI) indicate that the cost of ground transportation for Canadian Shippers increased 1.6% in February, offsetting a similar decline in January.

Base Rates, which exclude the impact of Fuel Surcharges assessed by carriers, also increased by 2.1% with average Fuel Surcharges increasing 1.6% from the prior month; both balancing similar declines during the prior month.

“February’s results are essentially at the same level as the last quarter of 2009 with less than a 0.5% overall variance“says Dr. Alan Saipe, President of Supply Chain Surveys Inc.

“These results confirm our opinion that rates are stabilizing within the marketplace as both shippers and carriers adjust to the current economic situation,” says Doug Payne, President of Nulogx.  “We expect that cost reductions resulting from market factors will become more elusive for shippers in the coming months” continues Mr. Payne.


The Canadian General Freight Index Declines Slightly in January

April 7, 2010

Results published today by the Canadian General Freight Index (CGFI) indicate that the cost of ground transportation for Canadian Shippers decreased slightly in January.

Overall freight costs fell by 1.2% in January when compared to December.   Base Rates, which exclude the impact of Fuel Surcharges assessed by carriers, fell 1.4% from December.   Average Fuel Surcharges also fell .5% from 14.20% in December to 13.70% of Base Freight costs in January.   Offsetting these declines were slight increases in Other Accessorial charges assessed by carriers.

To view the results, sign up online at http://www.cgfi.ca to receive the results to your inbox the last Wednesday of every month,


Freight Costs for Canadian Shippers Fell 9.6% in 2009, But Appear to be Stabilizing

February 25, 2010

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.

February 2, 2010

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 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 16, 2009

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.

figure1

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.

figure2

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.

figure3

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.

figure4

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.

figure5

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.

figure6


Canadian Transportation & Logistics – Transportation TV

October 29, 2009

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 http://www.ctl.ca

Candian General Freight Index on Transportation TV


Tracking Canadian Freight Rates

September 29, 2009

BNNA look at the newly-launched Canadian General Freight Index (CGFI) and what the tracker says about transportation costs during the recession. BNN talks to Doug Payne, president, Nulogx.

Watch the Interview on BNN here.


Follow

Get every new post delivered to your Inbox.