Fleet Cost-Per-Mile Data Analyzed

September 24, 2013

Given current fuel prices, motor carrier fuel costs are almost certain to continue to be the first or second largest cost center for fleets and increasing freight demand, new government regulations and an aging workforce will continue to intensify the shortage of qualified drivers. These are some of the findings of the American Transportation Research Institute's (ATRI) 2013 update to "An Analysis of the Operational Costs of Trucking."

The research identifies trucking costs from 2008 through 2012 derived directly from fleets' financial and operational data and provides carriers with an important high-level benchmarking tool and government agencies with real world data for future infrastructure improvement analyses.

"Although we have seen conditions improve since the Great Recession of several years ago, an uncertain economic future means we have to be ever diligent in watching costs. ATRI's report provides critical financial data for carriers to use in benchmarking fleet performance and seeking opportunities for improved operations," remarked Phil Byrd, Sr., president and CEO of Bulldog Hiway Express and first vice dhairman of the American Trucking Associations.

Since its original publication in 2008, the Operational Costs of Trucking reports continue to be one of the most requested ATRI reports among industry stakeholders. In addition to average costs per mile, ATRI's report documents average costs per hour and includes cost breakouts by industry sector.

Much has changed in the trucking industry over the past six years, researchers found. After severe downsizing during the Great Recession in 2008 and 2009, the industry began to see slight increases in freight demand in 2010 and 2011, with moderate growth continuing through the second quarter of 2013. Fuel prices, one of the largest components of industry operating costs, were volatile following the Recession, reaching historic highs in 2008 and then decreasing dramatically in 2009 before rising once again in 2010.

Diesel fuel prices have remained relatively stable since 2011 however, with average prices remaining close to $4 per gallon. Additionally, a series of internal and external factors are creating what some industry experts say will be the industry's worst shortage of qualified drivers ever, leading to serious concerns over capacity constraints and increased modal diversion for longer-haul truck trips.

Petroleum prices rose to an unprecedented level in July 2008, reaching over $145 per barrel before decreasing dramatically in late 2008. This translated to average U.S. diesel prices of well over $4.50 per gallon during the summer of 2008 (Figure 1). However, by March 2009 diesel prices had fallen to $2.02 per gallon. Prices rose steadily through 2010 before stabilizing in 2011 and 2012. On-highway prices averaged $2.47 per gallon in 2009, $2.99 in 2010, $3.84 in 2011 and $3.97 in 2012.

Based on the Energy Information Administration's (EIA) diesel price information and market conditions, the American Trucking Associations' (ATA) Economic and Statistics Group estimated that the trucking industry spent $199.95.4 billion on diesel fuel in 2012. This is considerably higher than the $143.4 billion spent on diesel in 2011. The EIA is predicting that diesel prices will moderate over the next two years, however, and it estimates an average retail diesel price of $3.81 per gallon for July through December 2013 and an average of $3.77 per gallon for 2014, even though diesel prices are currently higher than these estimates ($3.91 per gallon as of 8/26/2013).

A severe and growing shortage of qualified drivers continues to impact the industry. ATA estimated that there was a shortage of 20,000 to 25,000 drivers at the end of 2012 and predicted that this number could increase to 239,000 drivers by 2022.

Driver downsizing during the recession, an aging workforce, new government regulations and high training costs for new drivers have reduced the number of truck drivers in the U.S. Previous research by ATRI, for example, found that 83% of carriers surveyed reported that the Federal Motor Carrier Safety Administration's (FMCSA) Compliance, Safety, Accountability (CSA) had made it somewhat or much more difficult to find new, qualified drivers in 2012.

Additionally, construction and natural gas production have grown dramatically recently and carriers must compete with these high paying jobs for drivers. It is still unclear, however, how large of an impact the driver shortage will have, as the industry continues to expand its workforce. The U.S. Bureau of Labor Statistics (BLS) projects that employment for "heavy and tractor-trailer truck drivers" will increase by 21% through 2020, resulting in over 330,000 new jobs. This presumes that a qualified driver pool exists to fill this estimated demand.

A copy of the full report is available from ATRI by visiting http://atri-online.org/2013/09/04/an-analysis-of-the-operational-costs-of-trucking-a-2013-update-report-request/

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