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Looking ahead at Freight Costs

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Alain Saipe

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Looking ahead at Freight Costs

  1. 1. Supply Chain Surveys Inc.<br />Looking Ahead At Freight Costs<br />Dr. Alan L. Saipe<br />September 14, 2010<br />
  2. 2. Topics<br />About CGFI<br />Where we are in the business cycle<br />How costs and prices have behaved<br />What will the future hold?<br />2<br />Supply Chain Surveys Inc.<br />
  3. 3. The Canadian General Freight Index<br />The CGFI<br />Published by Nulogx since September of 2009 – data starts in January 2008<br />Tracks changes in over-the-road freight costs month by month<br />Derived from a large database of freight transactions<br />Costs include base freight charges, fuel surcharges and other accessorial charges<br />Includes domestic and cross border truckload and LTL transactions<br />3<br />Supply Chain Surveys Inc.<br />
  4. 4. The Canadian General Freight Index<br />The CGFI<br />Published by Nulogx since September of 2009 – data starts in January 2008<br />Tracks changes in over-the-road freight costs month by month<br />Derived from a large database of freight transactions<br />Costs include base freight charges, fuel surcharges and other accessorial charges<br />Includes domestic and cross border truckload and LTL transactions<br />Limitations<br />Restricted to general over-the-road freight<br />Does not include liquid bulk, dry bulk, forest products or other specialized freight<br />Cannot separate contract vs. spot market<br />CGFI is representative of Nulogx customers and may not be the same as the market<br />Trends are more important that any single month’s results<br />4<br />Supply Chain Surveys Inc.<br />
  5. 5. The Business Cycle<br />5<br />Source: Tradingeconomics.com<br />Supply Chain Surveys Inc.<br />
  6. 6. Cost Behavior<br />CANADIAN GENERAL FREIGHT INDEX<br />Includes<br /><ul><li> Base Freight Cost
  7. 7. Fuel Surcharge
  8. 8. Other Accessorials</li></ul>2008<br />2009<br />2010<br />6<br />Source: Nulogx<br />Supply Chain Surveys Inc.<br />
  9. 9. Price Behavior<br />CANADIAN BASE FREIGHT INDEX<br />7<br />Source: Nulogx<br />Supply Chain Surveys Inc.<br />
  10. 10. Rate Changes in the Four Segments<br />8<br />Source: Nulogx<br />Jan 08 to Dec 08<br />Dec 08 to Dec 09<br />Dec 09 to Jun 10<br />Supply Chain Surveys Inc.<br />
  11. 11. Fuel Surcharges<br />9<br />Source: Nulogx<br />Supply Chain Surveys Inc.<br />
  12. 12. US Domestic Freight<br />10<br />Source: Cassinfo.com<br />Supply Chain Surveys Inc.<br />
  13. 13. Cross Border Freight<br />11<br />Source: Public Borders Operators Association; BMO CM Research<br />Supply Chain Surveys Inc.<br />
  14. 14. The Cost of Fuel<br />12<br />Source: economagic.com<br />Supply Chain Surveys Inc.<br />
  15. 15. What Determines Fuel Surcharge?<br />13<br />Supply Chain Surveys Inc.<br />
  16. 16. Looking Ahead <br />Timing is tough to call…<br />US economy is recovering slowly - a double dip seems unlikely but is still possible<br />Global trade is still sluggish<br />Canadian economy is also recovering slowly<br />The cost of fuel seems to have found a new range <br />14<br />Supply Chain Surveys Inc.<br />
  17. 17. Looking Ahead <br />Timing is tough to call…<br />US economy is recovering slowly - a double dip seems unlikely but is still possible<br />Global trade is still sluggish<br />Canadian economy is also recovering slowly<br />The cost of fuel seems to have found a new range <br />What lies ahead…<br />If the recovery continues much as it has been, general ground freight rates should grow at an avg. annual rate of 3% - 5% through 2011. If the economy weakens, look to the low side.<br />Fuel surcharge should stay in the 13% to 16% range, unless crude cost rises sharply.<br />15<br />Supply Chain Surveys Inc.<br />
  18. 18. Dr. Alan Saipe<br />Dr. Alan Saipe is the President of Supply Chain Surveys, Inc. He has been part of the transportation and logistics industry for many years as a manager, a consultant and an educator. He held academic appointments at the Faculty of Administrative Studies, York University, and the Faculty of Management, University of Toronto. He led the Supply Chain Logistics consulting practice at KPMG Consulting. Supply Chain Surveys consulting services include Management Surveys & Benchmarking, Improving Operating Results, Senior Advisory Services and Mediation & Conflict Resolution.<br />16<br />Supply Chain Surveys Inc.<br />

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