Wednesday, January 17, 2018

Wages replace fuel as the highest carrier average marginal cost


Tuesday, September 27, 2016
by THE TRUCKER NEWS SERVICES

ATRI’s report on motor carrier operational costs noted that in response to lost productivity because of the current HOS rules, some carriers reported having to increase driver wages to offset that lost productivity experienced by drivers. (The Trucker: LYNDON FINNEY)
ATRI’s report on motor carrier operational costs noted that in response to lost productivity because of the current HOS rules, some carriers reported having to increase driver wages to offset that lost productivity experienced by drivers. (The Trucker: LYNDON FINNEY)

ARLINGTON, Va. — The American Transportation Research Institute (ATRI) said its findings of its 2016 update to “An Analysis of the Operational Costs of Trucking” showed a decline in the average marginal costs per mile and that wages have replaced fuel as the highest cost.

Using financial data provided directly by motor carriers throughout the country, this research documents and analyzes trucking costs from 2008 through 2015 providing trucking industry stakeholders with a high-level benchmarking tool, and government agencies with a baseline for future transportation infrastructure improvement analyses, ATRI officials said.

The average marginal cost per mile in 2015 was $1.59, a 6 percent decrease from the $1.70 found in 2014.

This decline in average marginal cost per mile is attributed mostly to the steady fall in fuel prices experienced throughout 2015, but also identifies the late 2015 economic softening that continued into 2016.

And, for the first time since ATRI started collecting the industry’s operational costs data, driver costs now represent a higher percentage of overall costs than does fuel, ATRI said.

The report showed driver wages represented $0.499 of the average marginal cost per mile compared with $0.403 for fuel costs.

Driver benefits were $0.131 per mile.

Of the total average costs per hour of $63.70, driver wages represented $19.95 of that total while fuel costs were $16.13 per hour.

Driver benefits cost $5.22 per hour.

The report says that the higher marginal costs of wages comes at a time when the trucking industry continues to experience a severe and growing shortage of qualified drivers.

“While the 2015 economy began to weaken, the American Trucking Associations still estimated a shortage of 48,000 drivers in 2015, with projections that the shortage could increase to 175,000 by 2025,” the report said, noting that one of the challenges facing the industry is the aging workforce.

A 2014 ATRI study identified alarming demographic trends facing the industry, with 55.5 percent of its workforce 45 and older, and less than five percent of its workforce in the 20- to 24- year old age bracket.

Additionally, the driver population is likely being impacted by strong housing and commercial real estate growth, which provide an alternative higher-paying job opportunity, although these jobs are very sensitive to economic factors, the report said.

For instance, many thousands of truck drivers originally lost to oil-drilling in North Dakota, have returned to for-hire trucking industry jobs now that a large percentage of wells have been capped.

The report noted that another challenge for the driver population was the changes made in July 2013 to the Hours of Service rules, which had a documented impact on carrier productivity and driver earnings.

In response, some carriers reported having to increase driver wages to offset the lost productivity experienced by drivers because of the more restrictive HOS rule provisions which often forced truck drivers into morning and evening rush hour driving.

“The combined impact of these forces in the industry will likely continue to result in increased driver wage and benefit costs as fleets strive to keep their experienced workforce and recruit additional drivers,” the report said.

 “ATRI’s ‘ops cost’ research is an excellent barometer of the state of the nation’s economy, as it documented the softening in 2015 but also indicates that costs will be on the rise in 2016,” said Bob Costello, Chief Economist for the ATA and a member of the ATRI Research Advisory Committee.

New to this year’s report is additional information on fleet-wide fuel economy and operating speeds and the relationship between speed limiter use and fuel economy.

Since its original publication in 2008, ATRI has received over 10,000 requests for the Operational Cost of Trucking report, and it continues to be one of the most popular reports among industry stakeholders.  In addition to average costs per mile, ATRI’s report documents average costs per hour, cost breakouts by industry sector, and operating cost comparisons of U.S. regions.

A copy of this report is available from ATRI by clicking here

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