Total Trucking Industy Operating Costs Jump 9.3% to $1.706; Fuel, Oil, Wages Remain Largest Expenses

This story appears in the Sept. 24 print edition of Transport Topics.

Total operating costs for the trucking industry rose 9.3% in 2011 to an average of $1.706 a mile, the highest cost since the American Transportation Research Institute began tracking the figure in 2008.

The largest cost for fleets remained fuel and oil, which totaled 59 cents a mile in 2011. That was followed by driver wages, at 46 cents a mile.

“Costs are accelerating in this industry for three reasons — driver wages, new [Environmental Protection Agency] engine costs and fuel,” said Max Fuller, CEO of U.S. Xpress Enterprises.

ATRI said 2011 marked the third straight yearly increase for per-mile costs. Declining fuel prices caused total costs to fall to $1.451 in 2009, from $1.653 the year before.

Dating back to 2008, total costs have grown 3% a mile, ATRI said in its Sept. 12 report.

The survey this year included a total of 42,000 trucks. While ATRI did not disclose the number of fleets, the group said the survey consisted of 64% truckload fleets, 16% less-than-truckload fleets and 20% specialized fleets or ones that did not fall into the other categories.

Researchers then weighted responses to achieve a balanced representation of the industry.

In 2011, LTL fleets had the highest cost per mile, $1.93, ATRI found. Specialized carriers spent $1.79 per mile, and TLs were $1.57.

That differs from 2008, when specialized carriers had the highest cost, $1.87 per mile, followed by LTLs at $1.81 and TLs at $1.48.

The upward trend largely matches the finances of LTL carrier A. Duie Pyle.

“We’re seeing just about a 10% annualized increase in our costs per mile,” President Steve O’Kane told Transport Topics.

ATRI said that, over the study’s four years, the largest cost increase occurred in permits and licensing, a 147% increase.

“You’re talking about more than a doubling of permits and licenses over the four-year period, from 1.6 cents per mile to 3.8,” Dan Murray, ATRI’s vice president of research, told TT.

Murray speculated that state and local governments are using the trucking industry to bring in additional money while they continue to search for revenue as they emerge from the recession.

“One hypothesis is that’s an easy way to generate public-sector revenue without having to go to the marketplace and ask for a gas tax increase,” Murray said.

“That is putting more pressure on small carriers,” he said. “Some carriers have no margins left.”

O’Kane said Pyle’s per-mile costs are higher than the overall average, in part because the fleet is in the Northeast, where congestion is greater and wages are higher.

“Wages have continued to escalate, and tolls here in the Northeast are going crazy,” he said.

As Pyle’s fleet depreciates, the cost of keeping the trucks on the road also increases, O’Kane said, and tires cost about double what they did five years ago.

“Tires have gone wild,” he said.

ATRI’s survey found that tires accounted for one of the largest cost increases since 2008, along with repair and maintenance.

“We’re not surprised by the price of tires over the years going up 40%,” Murray said. Tire production uses a large amount of petroleum, and as fuel and oil prices have increased over the years, so have the costs to make tires.

The 48% increase in costs to maintain equipment since 2008 probably relates to fleets’ keeping trucks longer during the recession in an attempt to make money, he said. While that reduces the costs of buying new equipment, those trucks almost certainly require more frequent and involved maintenance to keep them on the road.

Murray predicted that the 2012 survey will show lower maintenance costs. Sales of new trucks have increased, which he said probably means fleets are replacing older trucks, which will reduce maintenance costs.

ATRI initially started conducting the cost research to provide government entities with an accurate average of costs for transportation planning purposes, Murray said. But it also has become a benchmarking tool for trucking fleets to compare their operations against their peers.

“Accurate, up-to-date operational costs are essential for our industry,” Chad England, chief operating officer at C.R. England Inc., and a member of ATRI’s research advisory committee, said in a statement. “Given the current economic climate, the more financial data carriers have to analyze, the more opportunities there are to improve operations.”

Senior Reporter Rip Watson contributed to this story.