Blog by Tommy Ruke, The King Pin – Leading Expert in Truck Insurance
ATRI’S ANALYSIS OF THE OPERATIONAL COSTS OF TRUCKING: 2019 UPDATE
This report reflects 2018 operating costs. To download the full report at no cost, go to truckingresearch.org.
Each year, ATRI reports on a survey they conduct. You need to understand who responds and how their information is used. First, ATRI is an affiliate of the American Trucking Association, so their research is for large interstate fleets (private and for-hire).
Results are a reflection of 79% of motor carriers with more than 26 power units.
- Average age of power unit – 4.4 years
- Average miles – 91,506 – A little higher than last report
- Replacement – 7 years, 700,000 miles
Overview of results
- Increased costs from 1.691 in 2017 to 1.821 in 2018 – 7.7%
- Concern – 2019 was a “very” good year as to hauling rates as was most of 2017
- 2019 has not been as “good” – More capacity – Reduction in demand – Less revenue per mile, so if insured does not pay close attention to cost and usage they will have concerns soon
The three areas of cost an insured (motor carrier) has little if any control of have increased the most.
The pressure will be on smaller motor carriers and particularly new ventures that do not have control over cost.
To offset the increases in cost, a typical business plan is to push the cost back to the customers. Trucking is different – No control of cost and little, if any, control of revenue per mile. The revenue per load/mile depends on demand as reflected by the “spot” market rates (these are typically brokers/load board rates). Public information, rates are down this year and looks like they will keep sliding down – Not a lot but enough that may cause problems for small motor carriers who do not/cannot get contracts from shippers.
Based on the 1.821 a unit, 100,000 miles a year, it costs $182,100 to keep a unit on the road with no backroom cost/location cost, bad debit/profit if any. Typically the motor carriers need 2.40 to 2.50 per mile rates. Remember paid for only loaded miles, not empty (unladen) miles.
Revenue per unit needs to be $225,000 to have any return on their investment and time for an over 300 mile radius operation and with one driver per unit.
There are a lot of interesting facts in the report and I hope you will download it. Hopefully, this information will give you knowledge as you deal with insureds.