ATRI: Costliest year ever in trucking
On Wednesday, the American Transportation Research Institute (ATRI) released its annual report on the operational costs of trucking. The report, which has been published annually since 2008, is based on motor carrier financial and operations data from 2021.
Below are some highlights from the report and press release:
- Total marginal cost of trucking increased 12.7% in 2021 to $1.855 per mile, the highest on record. Fuel was the leading contributor (up 35.4% compared to 2020), followed by maintenance (18.2% higher compared to 2020) and rounded out by driver wages (up 10.8% compared to 2020).
- Total marginal costs adjusted on a cost-per-hour basis increased to $74.65.
- Fleets with 100 or fewer trucks spent 4.9 cents more per mile than fleets with over 100 trucks, closing the gap with larger fleets by 70% compared to 2020.
- Due to driver shortages, total driver compensation increased to a total of 80.9 cents per mile.
- Empty miles or “deadhead” decreased to 14.8% and average truck fuel economy increased to 6.65 miles per gallon.
I found the last piece in the news release most notable: “The financial health of trucking remained strong throughout 2021 despite spiking costs, with an average operating margin in most sectors at 10%.”
I would have predicted an increase in average operating margin past 10% due to the surging spot and contract rates, but it appears based on the data that trucking remains a lower margin operation. This data is useful, as aside from publicly traded trucking earnings info, it can be very difficult to judge the overall health of the trucking segment. This is in part due to the extreme segmentation and variations among motor carriers.
ATA survey: Truckload drivers earn 18% more than 2 years ago
I’m on a survey reporting spree and this one comes from the American Trucking Associations regarding a survey of driver pay. The driver compensation study, released on Wednesday, uses data from 2021 and compares it to 2019.
Below are some highlights from the report:
- Truckload drivers’ median compensation was $69,687 in 2021, including bonuses but no benefits, 18% more than the average compensation in 2019.
- 90% of survey respondents in the truckload sector increased pay in 2021, with an average increase of 10.9%.
- Referral bonuses used in recruiting averaged $1,150 in 2021, an increase of $150 compared to 2019.
- 96% of carriers offered a referral bonus.
- Sign-on bonuses were offered by 54% of truckload carriers surveyed, but the increase in the bonus was $750. (A specific figure on the size of that bonus was not disclosed, but a graphic puts it in the range of about $1,750-$1,800.)
FreightWaves’ John Kingston writes: “The ATA study is notable also because it surveys private fleets and breaks out that data separately. The median pay for employee drivers who worked for a private fleet was $85,000 in 2021, which the ATA said was equivalent to 2019 despite the gains made by over-the-road truckers in overall truckload carriers.”
Market update: Variations in diesel fuel prices continue to impact carrier pricing
Winter is coming and so comes the potential for higher fuel costs. The price of diesel published by the EIA, a foundation of most fuel surcharges, currently stands under $5 a gallon, at $4.993 per gallon. While this is an improvement from diesel’s peak at $5.81 per gallon on June 20, the impact will be felt differently depending on what part of the country trucks are fueling.
Volatility in the diesel market and price movements for ultra low sulfur diesel (USLD) on the CME commodity exchange point to the potential for higher diesel prices due to the European natural gas crisis. This is due to substitution from natural gas to fuel oil, which can create greater demand for the share of a barrel of oil, leaving less for gasoline, distillates and fuel oil.
In an interview with FreightWaves’ Rachel Premack, Kingston said, “The world of diesel needs to look very closely at what happens with the whole Russian natural gas situation. When you don’t have enough natural gas, you inevitably turn to diesel or some kind of distillate as a substitute. Whether it is for an industrial process [or] whether it’s to generate electricity, diesel can be a substitute for natural gas.”
Smaller carriers and owner-operators that lack the security fuel surcharges or fuel discounts will continue to experience margin volatility. This variation in fuel pricing by region will continue to impact trucking decisions for smaller carriers, as declining spot rates put more focus on operating in areas where diesel fuel prices are manageable.
FreightWaves’ SONAR spotlight: Consumer Price Index unchanged for July
SONAR Tickers: PPI.ALLCOM, CPI.ALL
Summary: The Consumer Price Index (CPI) and Producer Price Index (PPI) are the topic of conversation for many as they both showed signs of easing in the latest release. The CPI remained at 0% for the month, showing no increase. Much of the decline came from a downward movement in energy prices. This can be seen in gasoline falling by 7.7%. The PPI declined 0.5% on a monthly basis, and similar to the CPI, energy prices were the main cause for the drop. The easing is welcomed news; however, this does not signal that the battle with inflation is over. Inflationary pressures will persist throughout the year, and energy prices will have headwinds going into the winter months.
The Routing Guide: Links from around the web
A Shell executive reveals how the energy giant wants to decarbonize the shipping industry (FreightWaves)
Trucking execs see volatile demand as retailers cut inventory (Transport Dive)
Fertilizer shippers seek carrier reforms to address supply chain snags (FreightWaves)
DAT and Convoy: A load board love affair hits the rocks (FreightWaves)
Latest IEA report has plenty in it to concern diesel consumers (FreightWaves)
Feds drop fraud charges against Celadon trucking executives (FreightWaves)
