The Canadian Mover – Fall 2001/Winter2002: Bourassa

Lyse Bourassa, National Director, Supplier Alliances, Royal LePage Relocation Services

Increasing market share is certainly one of the most important goals of every business, and the moving industry is definitely no exception. Since deregulation of the trucking industry occurred, heavy discounting has ensured gains in market share, but at what cost? Long-term negative impacts of discounting include reduced maintenance, affecting our public highways and the security of all drivers, and a reduction in service levels. Discounting has also led to diminished returns on investments, thus eroding profit margins.

The moving industry overall has experienced significant increases in the cost of doing business; however, Royal LePage Relocation Services (RLRS) has been able to provide its clients with high-quality moving services and, at the same time, pass on considerable cost savings, by leveraging its buying power. As the second-largest purchaser of moving services in Canada, RLRS has held the line on tariff increases for the past eight years, while cost increases have been adding pressure to it and to carriers committed to providing high-quality and consistent service to their customers.

On April 1, 2001, the Government of Canada awarded its mover relocation contract at a rate 40% higher than last year’s. As a result, the Canadian moving industry was able to recoup some of its losses with its largest client.

The highest-quality service at the best value is at the heart of what RLRS strives to deliver to corporate Canada. By maintaining the tariff at its current level, RLRS was risking potential negative effects on service quality levels. Quality of service could also be affected by the drivers, who might be inclined to lower their standards of service as their compensation – calculated as a percentage of the tariff – fell in relation to their costs.

Results of an industry study of pricing and costs from 1993 to 2001 reflect business-climate and economic factors. The study found that, since 1993, costs have increased by an average of 30%, which confirms Statistics Canada’s findings on cost increases within the transportation sector during that period. Diagram 1 illustrates the percentage increases in various moving-company costs in the period covered by the study.

Following the completion of a thorough review of moving costs, with input from various industry leaders, Royal LePage Relocation Services has negotiated an increase in its tariff.

Royal LePage believes the increase offers fair compensation to the moving industry, and sees its decision as part of an industry trend. The tariff increase is expected to improve the company’s ability to deliver top-quality service and value to its clients.

An Increase in the Moving Tariff…Was it warranted?