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The Roemer Report October 2015
 


ATRI Report: Operational Costs of Trucking. Equipment costs up; Fuel down. Insurance ticks up slightly. Higher costs for drivers if you can find them.

Recently, the American Transportation Research Institute (ATRI) released its “An Analysis of the Operational Costs of Trucking: 2015 Update.” In total, survey respondents operated 54,833 tractors and/or trucks, accruing an estimated 5.3 billion miles in 2014. These carriers also utilized 154,993 trailers in their operations. By fleet size the largest number of respondents (35.7%) operated fleets ranging from 26 – 100 units, followed by 251 – 1000 vehicle fleets at 17%. Regionally, Midwest fleets were one of the largest responding groups at 27%. All in all, there were responses from fleets across the industry big and small and representational of most all fleet operations in the U.S.

According to ATRI, based on data collected from survey respondents, “the average marginal cost per mile in 2014 was $1.703 for the for-hire sector of the trucking industry, a 2.7 cent increase over the average cost per mile found in 2013.” Fuel continues to be the largest CPM line-item, says ATRI’s report, even though on-highway fuel prices decreased steadily in 2014. Although fuel prices fell throughout 2014 and reduced the fuel cost per mile, the overall increase in CPM was led by reported increases in truck and trailer lease and purchase payments, especially in Specialized carrier operations.

Increasing driver pay to recruit and retain drivers, was also identified as a cost “driver” and, says the report “it is likely that the trucking industry will continue to see overall operating costs rise in spite of projected fuel price decreases.” Not surprising to anyone, the trucking industry continues to experience a severe and growing shortage of qualified drivers. The American Trucking Associations (ATA) estimated a shortage of 30,000 drivers in 2014 with projections that the shortage could increase to 239,000 by 2017.

Another challenge facing the industry is the aging workforce. A 2014 ATRI study identified alarming demographic trends facing the industry, with 55.5 % of its workforce 45 and older, and less than five percent of its workforce in the 20 to 24 year age bracket. Additionally, says the report, the driver population is likely being impacted by strong housing and commercial real estate growth, which provide  alternative job opportunities for folks who may choose construction over truck driving as a career option.

Another challenge for the drivers were the changes made in 2013 to the federal Hours-of-Service (HOS) 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 due to the more restrictive HOS rule provisions, says ATRI.

With increasing freight demand and growing repair and maintenance costs, fleet operators say the report, are moving quickly to replace older equipment and those purchases are priming a jump in insurance premiums. Truck insurance premiums can vary widely between carriers – particularly based on miles-traveled exposure, says ATRI. Working with industry experts, the institute says it included insurance costs as a line-item in its analysis because most insurance risk assessments are based on mileage exposure and vehicle replacement costs.

Most should be aware that carriers often pay liability and cargo premiums by the mile. According to the fleets surveyed commercial truck insurance premiums increased an average of 7.1 cents per mile, something that was consistent with Specialized carriers reporting the highest truck/trailer lease or purchase payment CPM, Specialized carriers also reported the highest insurance CPM (9.0 cents), with LTL and TL carriers reporting a similar average cost per mile of 6.7 and 6.5 cents, respectively.

Regardless of what your equipment replacement activity was in 2014, the impact of this spending on your operation’s insurance premiums can be managed and should be carefully discussed with your insurance carrier. With a professional on hand, he or she can help you assess how your new equipment, along with its contemporary safety equipment and other operational features can influence how much you will pay for insuring those new trucks, tractors and other equipment in your fleet. Similarly retiring aging assets can also impact over all cost and may influence your trade cycles if there are opportunities to save as a result of turning over aging vehicles in your fleet.

 

Labor Department Reports Poor Job Creation in Trucking

Federal government data show that job creation in the trucking industry hasn’t been nearly what it was cracked up to be in the third quarter, according to an item in FleetOwner.com. Following the adjustments in the latest monthly jobs report from the U.S. Dept. of Labor, says the report, September, with 4000 trucking-related jobs lost, marked the second consecutive hiring decline.

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Infrastructure Spending Planned in Missouri

Feds decide to send Missouri a million dollars to help fix damaged bridges in the state. While the US DOT announcement says the money’s for “immediate repairs” it’s unclear whether or not the money will actually be available to have an real effect.

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Happy Days for U.S. Heavy Vehicle Market

According to TireReview.com the U.S. heavy-duty truck and trailer markets will both have a near record year in 2015.However, the demand for commercial vehicles is expected to peak later this year, so there is concern in the industry about sales activity in 2016 and beyond. Both markets, says the report, experienced record or near-record order years in 2014, with trailers coming in at an astounding 360,000, and Class 8 trucks at 302,000.

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Is Platooning All that it’s cracked up to be?

Productivity, safety and fuel economy could be increased by running trucks together. But is it practical? According to a story appearing in Heavy Duty Trucking, attendees at a recent TMC meeting raised questions regarding the technique’s practical applicability. To get to the bottom of it the American Trucking Associations’ Technology & Maintenance Council just okayed the adoption of a White Paper: “Automated Driving and Platooning Issues and Opportunities” which discusses where development is and what its prospects are.

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EPA Announces New Ozone Rules

The Diesel Technology Forum recently issued a statement in response to the revised national ambient air quality standard for ground level ozone issued by the U.S. Environmental Protection Agency. "Today's announcement by EPA sets the bar higher for cleaner air. The increasing use of new generation of clean diesel technology will be an important asset for states in helping to achieve these more stringent standards," said Allen Schaeffer, executive director of the Diesel Technology Forum, a non-profit group which represents diesel engine, vehicle and equipment makers, fuel refiners and suppliers of engine and emissions control technology.

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The ROEMER Report  

I'm Wellington Roemer. Publisher of the Roemer Report. Since 1978, The Roemer Report has been giving trucking executives the information you need to run your business. We research the industry's metrics, politics, developments, technological and operational trends so you don't have to. Our Report saves you time by digesting key industry news into short, clear stories. - Avoiding information overload. Thank you for giving the Roemer Report your attention today, we work hard to be worth your time.

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