Operational Cost of Trucking Up 7.7%, ATRI Report Says
The costs associated with trucking have increased, according to the American Transportation Research Institute.
The report was published Nov. 4 and is based on data from 2018.
The average marginal cost per mile incurred by motor carriers rose to $1.82, a 7.7% increase from 2017’s cost of $1.69.
By costs per hour, carriers expenses were $71.78, up from $66.65 in 2017.
ATRI divided marginal costs into two categories: vehicle- and driver-based. Vehicle-based costs include fuel, truck lease or purchase payments, repair and maintenance, insurance premiums, licenses, and tolls. Driver-based costs include wages and benefits.
The report shows 2018 costs are the highest since the organization’s data collection began in 2008.
It highlights the strong economic environment that benefited trucking in 2018. However, these economic conditions also put pressure on nearly every cost for carriers.
Only tires showed no increase, likely due to a large U.S. surplus of styrene butadiene rubber, a synthetic rubber used to replace natural rubber in tires, according to ATRI.
Fuel costs experienced the highest year-over-year growth, reaching 43 cents per mile, a jump of 17.7% from 36 cents in 2017. According to the U.S. Energy Information Administration (EIA), the price of ultra-low sulfur diesel was $3.17 per gallon in 2018 compared with $2.65 per gallon in 2017. And as of this October, the price was $3.05 per gallon.
Avery Vise, vice president of trucking research at transportation intelligence firm FTR, said fluctuations in diesel costs don’t depend on trucking alone. He added the U.S. petroleum supply has been good, contributing to lower costs.
EIA said the U.S. produced 10.99 million barrels of crude per day in 2018. So far this year the average is 12.26 million bpd.
Fuel costs made up 24% of carriers’ total average costs in 2018.
The 43% share for costs per mile for driver wages and benefits (33% and 10%, respectively) is attributed to the driver shortage — the No. 1 trucking concern based on ATRI’s list of industry issues released Oct. 6. American Trucking Associations projects the industry was short 60,000 drivers.
ATRI Senior Vice President Dan Murray told Transport Topics he’s uncertain whether increases in bonuses and wages put a dent in the driver shortage. “It’s a good thing that wages go up because most research and anecdotal information says a satisfied driver stays put and is considerably safer than a dissatisfied driver.”
Repair and maintenance costs rose to 17.1 cents per mile from 16.7 cents, which ATRI characterized as a counterintuitive increase because of the record sales of new trucks and trailers. Class 8 tractor sales boomed in 2018, seeing a 32.1% increase year-over-year.
The report shows, on average, seven years lapse until a truck tractor is replaced.
James Griffin, chief operating officer and chief technology officer at Fleet Advantage, said trucks become exponentially more costly to maintain as they age because they experience more breakdowns and component failures. Fleet Advantage uses data analytics to offer leasing and truck life cycle management solutions.
Newer trucks generally require more basic tasks such as oil changes and tire checks.
“As your fleet gets older, it takes more skills and more time and more expensive parts,” Griffin said. “It’s kind of a triple whammy.”
Industry sectors experience repair and maintenance costs differently, the ATRI report said, stressing that specialized carriers consistently pay more per mile (23 cents in 2018, up 1 cent from 2017). Less-than-truckload paid 18 cents, down a penny from 2017, and truckload paid 15 cents, up 2 cents from 2017.
Griffin said safety technology in trucks can help costs decrease. For example, he said a large company recently adopted collision avoidance systems fleetwide and reduced its rear-end collisions by 80%. He said those collisions are among the most costly.
According to ATRI’s report, operations in the Northeast were the costliest in 2018, at $1.96 per mile. The region presents heavy population concentrations and numerous tolls.
The West was not far behind, reflecting an average cost per mile of $1.81. It is characterized by longer trips and traffic congestion in coastal areas.
Carriers that do business in the Southwest and Southeast reported the lowest operating costs per mile in 2018 — $1.58 and $1.68, respectively. The cost in the Midwest was $1.73.
As for how 2019 is developing, Murray said a softening economy could present challenges to fleets because costs are going to remain stable. For example, a new truck won’t get cheaper even if the economy slows.
“If the economy doesn’t sort of strengthen, we could see a pretty considerable increase in either bankruptcies or consolidations,” Murray said. “It is going to put a lot of pressure on the industry to basically hang in there as long as we can until the economy turns.”
This article was originally posted by Transport Topics.