ARLINGTON, Va. — With economic activity strengthening in 2017, the average marginal cost per mile incurred by motor carriers increased 6 percent to $1.69, according to the American Transportation Institute’s 2018 update to “An Analysis of the Operational Costs of Trucking,” which was released Tuesday.
Using financial data provided directly by motor carriers throughout the country, this research documents and analyzes trucking costs from 2008 through 2017, providing trucking industry stakeholders with a high-level benchmarking tool and government agencies with a baseline for future transportation infrastructure improvement analyses.
ATRI said cost increases were broad-based in 2017, with growth in nearly every major line-item over the year.
However, even though the year-over-year average marginal costs per mile increased both in 2016 and 2017, it is lower than it was in 2014, when the costs per mile was $1.703.
Driver wages increased for the fifth consecutive year. The combined cost of driver wages and benefits represent 43 percent of the overall cost per mile.
The ATRI report noted that driver compensation, inclusive of wages, benefits and bonuses, has been the biggest source of cost increases incurred by motor carriers since 2012.
Even when overall marginal costs were declining due to falling diesel fuel prices, increases in driver wages and benefits served as mitigating factors.
At the same time, driver bonuses, while not a marginal cost, have been robust as carriers seek to entice new entrants into the industry, retain their existing workforce, and reward drivers for excellent safety and operational performance.
The driver bonus cost center is growing quickly is in the amount and types of bonuses employers offer to drivers.
A growing majority (62.7 percent) of respondents indicated that they pay drivers some type of financial incentive or bonus beyond wages.
Survey respondents listed their most common incentives and bonuses as safe driving, on-time delivery performance, and additional financial incentives to attract and retain qualified drivers.
Respondents reported paying drivers an average bonus of almost $1,300 for safe driving in 2017, a decrease from the $1,500 paid out to drivers in 2016. On the other hand, drivers who met the criteria for on-time delivery bonuses were rewarded handsomely in 2017, receiving an
average annual bonus of approximately $2,500, well above the rate of $1,950 observed in 2016.
With respect to future driver compensation, the survey report said that while the freight market in 2017 saw freight demand improvements from 2016, the freight market has boomed in 2018. With this strong demand for truck transportation, the report said, shippers are experiencing severe truck capacity constraints due in part to the driver shortage.
Numerous reports indicate that carriers have had to increase driver pay and expand benefits packages yet again in 2018 in an effort to recruit and retain truck drivers. Additionally, a majority of motor carriers now offer sign-on/stay-on bonuses to improve recruitment and retention efforts, while other carriers have been forced to raise their bonus offers to remain competitive.
As a result, the overall compensation package offered to drivers can be expected to improve further in 2018, boosting the related line-item marginal cost centers.
Fuel prices rebounded from decade-lows and the growing cost and sophistication of newer truck models continues to drive up costs for both purchasing and repair and maintenance.
There is a significant variance on fuel costs when broken into fleet size.
Fleets with more than 1,000 power units averaged 31.3 cents per mile while fleets with between 251 and 1,000 power units averaged 31.8 cents per mile.
Those figures compared with an average of 46.1 cents per mile for fleets with 26-100 power units and 43.6 cents for fleets with between 101 and 250 power units.
At the time of the report was released, national diesel prices were $3.26 per gallon, up 23 percent from the average price observed across 2017.
Diesel prices are projected by the EIA to remain near this level for the remainder of the year.
Although fuel prices are known to be highly volatile due to geopolitical concerns and unpredictable supply disruptions, it is clear that motor carriers can expect fuel costs to continue to exert upward pressure on overall line-item marginal costs in next year’s report.
Overall, motor carrier operational costs have now surpassed the 10-year average since ATRI began its annual Ops Costs research.
The average marginal costs per hour increased to $66.65 in 2017, compared with $63.66 in 2016.
ATRI’s 2018 report also includes a new “Industry Sector in Focus” analysis, this year reporting operational costs for tank fleet operators.
“ATRI’s Operational Costs research is such a powerful tool for fleets of all sizes. Better understanding how our costs stack up against our industry peers enables us to implement operational efficiencies and improve our bottom line,” said Dean Kaplan, CEO of K-Limited Carrier.
The Trucker News Staff produces engaging content for not only TheTrucker.com, but also The Trucker Newspaper, which has been serving the trucking industry for more than 30 years. With a focus on drivers, the Trucker News Staff aims to provide relevant, objective content pertaining to the trucking segment of the transportation industry. The Trucker News Staff is based in Little Rock, Arkansas.