FedEx Reducing Costs to Increase Its Profits

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SCL shipper, carrier panel looks at costs, outlook for 2013

MISSISSAUGA, Ont., -- Shippers and carriers met to discuss costs and challenges ahead for 2013 during Supply Chain Canada’s breakfast seminar this week in Mississauga.

Lou Smyrlis, Editorial Director, Transportation Media, spoke of the volatile and fragile economic recovery faced by countries worldwide and how Canadian shippers and carriers thought these challenges might play out in their businesses.

Jim McKay, Walmart Canada Corp’s Director, Transportation, said the company would focus on reliability with respect to servicing its stores and DCs in 2013. Fuel efficiency, and keeping costs low would also be key areas of focus.

Ian Murray, General Manager, Marketing, with Canadian Pacific Rail, said the number one driver of change for 2013 will the change in leadership at the railway under new CEO Hunter Harrison.

“There will be a huge focus to move the needle on reliability and speed, foundational to what we’re doing, and to moving assets more efficiently while controlling costs,” said Murray.

Doug Munro, President, Maritime-Ontario Freight Lines Limited, said there are challenges ahead in trying to get compensatory rates in a market of overcapacity and stagnant growth.

“It’s trying to get top line revenue when costs on the bottom are pushing up all the time. It’s about maintaining margins,” said Munro.

Excess capacity is also a major issue for the marine sector, said Michael Broad, President, Shipping Federation, as is slow trade growth worldwide.

“Record numbers of containerships, along with swelling international trade, and the high cost of inputs, are the three issues of concern,” he said.

In terms of priorities heading into 2013, Murray said service quality would be at the top of the list.

“It’s making sure we’re making commitments and delivering to those commitments, and controlling our resources much more closely than we have in the past,” he said.

Keeping service levels up is also a priority for Munro.

“It’s educating customers on the one hand, but with the markets so competitive we have to maintain a high level of service. Without that, nothing else matters. My outlook is that 2013 is going to be a bit of a tough year but I think we’re getting a bit of market share from our competitors,” he said.

Walmart Canada’s McKay said 2013 will be about finding increased reliability through relationships, and also about fuel, cost mitigation and balancing the inbound and outbound flow of goods.

“Global trade is expected to increase 3-5 %. We’re hoping for the best but will have to take a look at controlling costs and keeping efficient,” said Broad of the marine industry outlook.

Murray noted there is ample room for collaboration between the modes in the year ahead.

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Ground transportation costs drop in May: CGFI

TORONTO, Ont. -- The cost of ground transportation for Canadian shippers decreased 0.29% in May when compared with April results, according to the latest results from the Canadian General Freight Index (CGFI).

The Base Rate Index, which excludes the impact of accessorial charges assessed by carriers, decreased by 0.3% when compared to April.

Average fuel surcharges assessed by carriers have seen a decrease from 22.4% of base rates in April to 22.1% in May.

“We are experiencing a marginal decrease in base rates and a slight increase in accessorials, while fuel remained relatively flat,” said Doug Payne, president and COO of Nulogx, which facilitates the CGFI. “It appears that marginal base rate gains in the domestic LTL and truckload markets were offset by marginal decreases in the cross-border LTL and truckload markets.”

For more information, visit www.cgfi.ca.

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Ground transportation costs remain constant, base rates fall in September

TORONTO, Ont. -- The cost of ground transportation for Canadian shippers in September remained the same month-over-month, according to the latest figures from the Canadian General Freight Index (CGFI).

However, the Base Rate Index, which excludes the impact of accessorial charges assessed by carriers, decreased by .1% for the same period. It was the first decrease in base rates since March.   

Offsetting the decrease in base rates were slight increases in both average fuel surcharges assessed by carriers and other accessorial charges. During this period, fuel surcharges assessed by carriers equated to 20.16% of base rates, up from 20.1% in August. The combined effect of lower base rates and higher accessorial charges resulted in no change in average transportation costs for Canadian shippers, according to the report.   

"The slight decrease in Base Rates was predominantly driven by reduced costs in the transborder truckload sector," said Doug Payne, president and COO of Nulogx. "Over the summer, these movements were subject to significant cost increases and it is possible that these are easing somewhat."

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Frozen Food Express Sets Non-Driving Staff Cuts to Reduce Costs

Frozen Food Express Industries said Tuesday it will reduce its non-driving employee payroll by about 12%, to cut costs, and that a planned equipment sale was ahead of schedule.

The refrigerated carrier said it would take a charge of about $400,000 in the fourth quarter and that the action would save it about $500,000 annually.

FFE on Friday reported a third-quarter loss of $13.7 million, and the company said last month that it plans to sell more than 400 dry vans and almost 300 tractors to truckload carrier Celadon Group.

It said it expects to receive about $21.9 million in cash in the fourth quarter and January from the equipment sale.

“The reduction, although regrettable, had to be made at this time as the sale of equipment was conducted much quicker than we expected,” CEO Russell Stubbs said in a statement.

Frozen Food Express is ranked No. 57 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers, and is the fifth largest refrigerated carrier.

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