Tires, Equipment Inflate Industry Expenses After Two-Year Cost Lull, ATRI Study Says

Trucking industry costs dipped slightly from 2008 to the first quarter of 2010, but higher costs for equipment and tires have continued to drive up costs since then, a new American Transportation Research Institute report said.

The June 15 report showed that expenses fell from $1.653 per mile in 2008, when the survey began, to $1.491 per mile in last year’s first quarter as fuel costs dropped. In 2008, fuel accounted for 63.6 cents a mile of trucking’s costs, making it the biggest single cost item. Fuel costs fell to 46.5 cents in last year’s first quarter, when the survey ended.

The 16.8-cent-per-mile drop in fuel costs represented almost all the total per-mile cost swing of 16.2 cents a mile during the survey period. All other combined trucking costs, including wages, benefits, truck payments, insurance, maintenance, tires and tolls as well as permits, changed just 0.6 cents a mile.

Fuel continues to be a huge factor for fleets as diesel has climbed $1.035 a gallon from the end of 2010’s first quarter to last week.

“The rise in average marginal cost experienced between 2009 and the first quarter of 2010 is expected to continue, given the macroeconomic and industry trends,” the report said, particularly citing fuel expense.

The report showed modest in­creases from 2008 to 2010’s first quarter in equipment costs — to 23.5 cents a mile from 21.3 cents and maintenance, which rose to 12 cents a mile from 10.3 cents. Permit and licensing costs rose to 2.3 cents a mile from 1.6 cents.

On the other hand, insurance premiums dropped slightly over the same period, slipping to 5.2 cents per mile from 5.5 cents, and tire costs also dipped to 2.6 cents per mile from 3.0 cents. Toll costs were unchanged at 2.4 cents per mile.

ATRI Vice President Dan Murray told Transport Topics that events since the survey ended are affecting equipment, tire and toll costs.

Equipment and tire prices didn’t start rising in earnest until after the survey ended and orders for newer, more costly equipment began to roll in, Murray said. Tires didn’t rise sharply until the price of petroleum — a key tire component — began to climb in the latter months of 2010, he added.

Murray confirmed that the rising maintenance costs reflected the aging of the truck fleet, and he said fleets are buying new equipment now because it is more economical than coping with high — and rising — maintenance costs.

Toll costs will rise because it’s an easy form of funding for government agencies at a time when state and local budgets are shrinking and there is no new federal transport spending legislation to aid funding, Murray said.

The report also cited the potential for higher driver wages, as a shortage of drivers puts pressure on pay.

The report by ATRI, the research arm of American Trucking Associations, was a follow-up to its first study of trucking costs, released in December 2008.

“There’s a lot of benefit to a survey like this,” said Mike Card, president of Combined Transport Inc., Central Point, Ore.

“When we ask local departments of transportation to improve roadways, we have scientific backing to show what our costs are,” Card said. “The other benefit to me and other trucking company owners is that we can use this information as a best practice or gut check to see how our costs stack up.”

“It allows us to talk to our customers about what we are going through,” Card added.

The survey was based on data gathered from operators of more than 22,000 trucks driven more than 2 billion miles.

Nearly all costs were counted as marginal costs that vary based on the time and miles trucks are operated. Only truck-washing costs and management incentive payments were counted as fixed costs.

The report also measured operating costs for different sectors of the industry.

For specialized fleets such as tank carriers, the per-mile cost dipped from $1.87 in 2008 to $1.62 in the first quarter of 2010. Over the same period, the declines were $1.81 to $1.52 for LTL and $1.48 to $1.42 for truckload fleets.