At its March 1, 2005, public GRC meeting, SMC³ presented the results of specific economic data collected from its carrier members, the LTL (less-than-truckload) industry and other data sources. Following this presentation and an open discussion, a motion was adopted to docket a proposal to increase rates and charges in all SMC³ Tariffs having application on Interstate and/or Foreign commerce.
Pursuant to SMC³’s notification to the public, a hearing was held in Atlanta and was attended by carriers, shippers and other members of the transportation community. At that time the proposed increase was discussed and subsequently approved at a reduced percentage than originally docketed.
“The sole purpose of this general rate increase, as always, is for the carriers to more nearly meet their revenue needs so they can work toward a healthy operating ratio and attract capital,” says Jack Middleton, president and CEO of SMC³.
GRC members attending the public hearing cited increased operating costs driven by insurance rates, labor needs and security requirements, as key factors attributing to the need for a rate increase. Other comments centered around legislative regulations such as the 2007 engine emissions requirements and changes to the way individual states handle toll increases. While fuel costs are also a burden to carriers, these costs were not included as part of the GRI discussion because fuel is addressed in a surcharge.
The integral factor in formulating the annual GRI is SMC³’s Carrier Cost Index. The CCI reflects the market basket of products and services consumed by LTL carriers in their operations. Because motor carrier costs involve numerous inputs that are unique to the motor carrier industry and the actual carrier involved, SMC³ developed the CCI in 1999 to more accurately quantify the increased labor, labor-related and non-labor expenses in a carrier’s operations. This assists carrier efforts to obtain adequate revenue, thereby enabling the carrier to continue operations, attract capital and serve the shipping community.
SMC³ plans to release an executive summary detailing the cost drivers affecting the approved rate increase prior to the increase’s May 2nd effective date.