Record-High Expenses Challenge Trucking Profitability i

• Operating costs for trucking companies reached a record high of $2.270 per mile in 2023, driven by increases in wages, equipment, and insurance costs.
• The soft freight market in 2023, coupled with rising costs, squeezed profitability across the industry, particularly in the truckload and specialized sectors.
• Deadhead mileage and driver turnover increased in 2023, further contributing to the challenges faced by trucking companies.

By David Hollis of TruckersNews

Operating expenses for trucking companies increased in 2023, according to the results of a new study released on Friday.

The American Transportation Research Institute's 2024 Analysis of the Operational Costs of Trucking found the overall marginal costs of operating a truck hit $2.270 per mile in 2023, a new record high. While the increase was only 0.8 percent over the previous year, when surcharge-protected fuel costs are excluded, marginal costs rose 6.6 percent to $1.716 per mile, according to the study.

ATRI's annual report analyzes line-item costs, operating efficiencies, and revenue benchmarks by fleet sector and size.

Overall, 2023 expenses rose moderately across most categories, with average costs across line-items increasing at less than half the rates experienced during 2021 and 2022, according to the study. It found:

• Truck and trailer payments grew by 8.8 percent to $0.360 per mile
• Driver wages grew by 7.6 percent to $0.779 per mile
• Repair and maintenance costs grew by 3.1 percent to $0.202 per mile
• Insurance premiums grew by 12.5 percent to $0.099 per mile after two years of negligible change

ATRI said the soft 2023 freight market -- which continues in 2024 -- posed many challenges for operational efficiency. Deadhead mileage rose to an average of 16.3 percent for all non-tank operations, and driver turnover rose by five percentage points in the truckload sector.

These pressures combined with low freight rates strained profitability across the industry, said ATRI in a statement announcing the release of its study.

Average operating margins were 6 percent or lower in all fleet sizes and sectors other than LTL. The truckload and specialized sectors experienced drops in per-mile or per-truck revenue, and most saw “other costs” – expenses outside of the core marginal line-items – increase as a share of total revenue.

By Zerohedge.com 

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