In a recent analysis by The American Transportation Research Institute (ATRI), motor carriers’ operational costs of trucking were quantified and documented, providing critical data so they could work to provide correct information to policymakers about how new funding strategies could negatively impact the freight movement. Because this study has been completed for 9 years now, the metrics continue to become more precise, resulting in an invaluable look at how the costs of the trucking industry have changed over time.
Marginal Cost of Operation Influencers
Many types of data were collected in 2016 in order to calculate the marginal cost of operation. These included:
- Fuel – Fuel costs have represented between 30-40 percent of overall cost per mile during each year the study has taken place. However, prices declined steadily in 2015 and 2016 making the percentage lower for the second year in a row.
- Equipment – Overall operating costs can be affected by age and type of equipment as well as the turnover rate. In this year’s study, owners of both truck tractors and straight trucks reported longer use before replacement. This trend explains the increased maintenance and repair costs that are predicted to increase.
- Driver Pay – For the 4th year in a row, driver benefits and pay are both reported to have grown. This is most likely due to a shortage of qualified drivers. According to the American Trucking Association, the currently estimated shortage of 50,000 drivers is predicted to grow to an alarming increase of 175,000 drivers in 2025. In addition to the current and predicted driver shortages, another demographic is predicted to negatively affect the industry as well. This is the fact that over 50% of the qualified workforce is over the age of 45 while less than 5% are between the ages of 20-24. Shortages such as this will continue to push driver wages and benefits higher, further impacting the overall cost of ownership.
A Closer Look at Line Item Costs
Looking at costs with an eye to the long-view helps to give historical perspective to compiled data. For instance, the knowledge that diesel prices were the highest in 2008, topping the pumps near $4.80 per gallon and stabilizing between $3.75 and $4.15 per gallon between 2011 and 2014 gives an understanding of just how relatively low diesel prices dipped in February of 2016 when they reached $1.98 per gallon.
Another cost that the study looked at historically was that of leasing or purchasing equipment. A reported increase in such payments in 2016 brought the current average to 25.5 cents per mile. This increase certainly factors into the higher Cost Per Mile.
Repair and maintenance (R&M Costs) were determined with several factors in mind. These included the age of trucks and trailers, vehicle configurations and technologies used. The average costs in this survey grew by 1 cent, making this the highest recorded year since the data was first collected 9 years ago. This is mainly be attributed to a shortage of diesel technicians.
Commercial truck insurance premiums also rose one percent this year, bringing the total to 7.5 cents per mile. Specialized carriers reported a much higher increase of 9.0 cents per mile. Compiled data verified that carriers with less than 100 power units experienced the highest rise in insurance premiums while the largest fleet operators reported a much smaller increase.
Other line-item expenses that were factored into this year’s study included permits and special licenses, tires and tolls.
Making Sense of the Data
Making sense of all of the data means making calculations that result in understandable bits of information. One such calculation resulted in an average Cost Per Mile (CPM) in 2016. This year’s average was $1.592, up just one percent from last year. Seemingly, the increase in driver wages and benefits was offset by the decrease in fuel prices bringing the averages relatively close together.
In addition, data was compiled to attain the average cost per mile by region. These findings showed the least expensive region to be the Midwest ($1.540) while the most expensive was the Northeast ($1.655).
By documenting and compiling this data, the ATRI has, once again, provided invaluable information which can be used for benchmarking. Such information is frequently used by carriers working to see if costs are in line with a nationwide average.