Currency exchange rates can have a serious impact on the profits and losses of cross border carriers. Changes in exchange rates can wipe out your profits or they can increase gains; depending on what side of the border you operate from and what direction the exchange rate is trending. To protect yourself from these changeable conditions, international carriers require a financial strategy that will insulate against currency fluctuations. Currency Rate Fluctuations Over the past 10 year period (2005 2015), the average mean for the value of the Canadian dollar against the US dollar sits around $0.93. During this period the trend line of exchange rates looks very much like a roller coaster with extreme highs and lows at both ends of the scale. CAD to USD Rates: Mar., 2005: $0.8314 Jan., 2006: $0.8642 Jan., 2007: $0.8584 Nov., 2007: $1.0905 (highest) Jan., 2008: $1.007 Jan., 2009: $0.8260 Mar., 2009: $0.7729 (lowest) Jan., 2010: $0.9636 Jan., 2011: $1.0014 Jan., 2012: $0.9911 Jan., 2013: $1.0143 Jan., 2014: $0.9405 Jan., 2015: $0.8527 This erratic trend is punctuated with peaks and valleys that feature extreme fluctuations, most notably during the financial crisis of 2008/2009. Current trends are reflective of a strengthening US dollar with economic signs of it continuing to climb in value. The Challenge: Cross Border Issues for Trucking Companies Moving freight cross border poses a special kind of problem for trucking companies as it often results in invoicing those customers in foreign currency. As the value of the US dollar changes in relationship to the Canadian, so does profit on the load. For example: If the exchange rate between the time of order intake and the time the bill is paid fluctuates by 3 cents (which is more than possible), a carrier having $100,000 in receivables can lose $3,000 in exchange. Thats a heavy loss to any business. It can have serious consequences on a carrier servicing a long term cross border contract with set terms. How Currency Trends Effect the Trucking Industry Fifteen years ago, when the Canadian dollar was $0.62 compared to the US dollar, the cost of manufacturing goods was significantly less north of the border. This set the stage for Canadian carriers to dominate the US-Canada cross border market with full loads and cheaper operating costs. The economic landscape was severely altered in 2008 and again in 2011 when the US dollar sank below parity. This set the stage for a more advantageous market for American carriers. Today it is a significantly different story. Canadian manufactured goods have lost the distinct advantage they once enjoyed changing cross border economics. American freight carriers now compete more aggressively, pulling north with higher paying freight. Competition for Cross Border Trade is at an All-Time High Todays reality: Competition for cross border trade is at an all-time high. At the same time, profit margins continue to shrink in a fragile global market. Maximizing on currency exchange can play a pivotal role in your trucking companys ability to remain competitive and profitable. The Solution: Currency Fluctuation Strategy for Freight Carriers While most trucking companies are aware of the challenges associated with fluctuating currency, very few take the time to shop the market for the best exchange rate. The daily demands of running a trucking company, and the need to access cash right away, often results in busy companies going straight to the bank as a default choice when exchanging currency. This can be an expensive decision as banks traditionally charge hefty rates on currency exchange. Exchange rates, service charges and bank fees and are the backbone of a banks revenue source. Have a currency fluctuation strategy: Having a strategy to manage the changing effects of currency fluctuation is highly recommended. One approach is to purchase currency in advance to limit volatility. Another is to establish a working relationship with a money converter that offers the best exchange rate when converting USD and Canadian funds. Ideally, it is best to work with an exchange service that understands the trucking industry and can provide you with financial advice with full knowledge of the transportation industry. The Best Exchange Rates for Trucking Companies Even if you take the time to shop for the best price, most companies do not have sufficient volume to get the best available exchange rate. For small to medium size carriers, retail is often the best rate they can obtain. How to level the playing field: Accutrac Capitals solution to currency exchange solves this problem. Our unique approach provides the ability to immediately convert US and Canadian dollars…at the best price for each of our customers. Heres how it works: Accutrac Capital combines the currency exchange volume of all our customers to negotiate the best exchange rates and then we pass these saving on to you. It's a simple process; inform us of the amount to be exchanged and Accutrac Capital will quote our best rate. Once you approve, your funds will be converted and made available to you immediately. This levels the playing field, allowing any size fleet to obtain significant savings through convenient, easy to manage services. Now, even small trucking companies have an equal opportunity to be competitive and go head to head with larger fleets. For more information about currency exchange rates for the trucking industry, contact Accutrac Capital today.