A strong increase in cross-border less-than-truckload (LTL) rates, largely from the U.S. to Canada, helped drive up freight costs for Canadian shippers in December, according to Canadian General Freight Index (CGFI) figures released today.
Freight costs increased by 1.25% in December from the increase in base rates and fuel prices, the February 27 report from Nulogx’s CGFI said. The monthly index, sourced from Canadian shipper transactions for over-the-road freight, also will soon appear on FreightWaves’ SONAR platform.
The biggest driver for the increase – pricing for northbound LTL freight from the U.S. to Canada as demand increases faster than capacity.
“I don’t know what’s driving it,” Doug Payne, President and chief operating officer of Nulogx, told FreightWaves. He speculated that consumer demand in Canada could be a factor.
Cross-border LTL rates in December were above levels of a year earlier. Domestic and southbound cross-border truckload remained below the previous year’s levels.
December’s increases follow a rise from November. Payne attributed part of the overall increase to the impact of the strike by Canadian National rail workers in November, and the resulting shift from the railroad to trucks.
Payne said he anticipates freight rates to continue to increase, with the uptick in northbound LTL continuing. The shift toward U.S. to Canada LTL happened several years ago, Payne said.
The long-term outlook remains unclear, due to the uncertain impacts of the coronavirus and the shakiness in the Canadian economy.
The coronavirus may drive up over-the-road rates, but also could hurt volumes depending on where and how the outbreak impacts the global supply chain, Payne said.
“It’s a double-edged sword,” Payne said.
Before the recent uptick, the CGFI shows that freight prices had a slow, stable decline in 2019 in contrast to the U.S.
“Canada is a different sort of beast,” Payne said.
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