Trucking Costs Rise on Higher Wages to Retain and Attract Drivers

October 03, 2018 by Alan Adler, @AlanAdler

The cost to keep a truck on the road reached its highest level in four years last year.

The industry’s driver shortage, which pushed wages, benefits and bonuses higher, was the main cause, according to a new analysis by the American Transportation Research Institute.

The average cost per mile paid by motor carriers increased 6 percent in 2017. That was three times the rate of inflation. Driver wages rose 6.6 percent in 2017, Benefits climbed 11.2 percent.

Labor made up the biggest cost for carriers for the third consecutive year. Wages and benefits accounted for 43 percent of the overall cost per mile driven, ATRI said.

The industry faces a shortage of drivers because it is failing to attract younger truckers to replace retiring baby boomers, ATRI said. Nearly 57 percent of drivers are 45 or older. Less than 5 percent of drivers are in the 20- to 24-year-old age bracket.

Costs rose in practically every line item that ATRI has studied annually since 2008. Equipment lease and purchase payments, repair and maintenance, permits and license costs and tolls all rose from 2016.

ATRI, the research arm of the American Trucking Associations, analyzes confidential industry data from carriers and consults with company executives to compile its report.

“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, chief executive of K-Limited Carrier in Toledo, Ohio.

The cost of diesel fuel, depressed in 2015 and 2016 because of a supply glut from U.S. shale oil, rose 9.3 percent last year. Hurricane Harvey shut down a quarter of U.S. refining capacity in August 2017.

Diesel fuel costs 23 percent more so far this year. It is expected to remain at current levels, according to the U.S. Energy Information Administration.

Meanwhile, demand for newer trucks surged in the fourth quarter of last year. That growth has continued with record orders through August of this year. Sophisticated new tractor-trailer models cost more to buy and to repair as advanced driver-assistance features like automatic emergency braking and lane-departure warning become standard.

Maintenance and repair costs rose just 0.3 percent last year due to 13.6 percent fewer miles driven. The average mileage driven per truck in the ATRI analysis in 2017 was 89,804 compared with 103,945 in 2016. fewer miles required fewer repairs.

Maintenance and repair costs have risen more than 60 percent since ATRI began its costs analyses in 2008.  The trend is expected to continue as more trucks with harder-to-fix advanced technology enter the fleet, the industry has to pay higher wages to fill diesel technician jobs, and maintenance costs rise for door-to-door e-commerce deliveries.

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