Taking advantage of unexpected cost savings and profits due to historic pandemic, the transportation industry is facing a boom that could lead to the closure of shipping companies.
“Given rising oil prices, driver bonuses and equipment purchases / rentals, vehicles are likely to face higher operating costs in 2021 and 2022,” according to the to the latest analysis on trucking expenses released Tuesday by the American Transportation Research Institute (ATRI).
“Ongoing shortages and supply chain problems will create new challenges for the industry. At the same time, an increase in traffic levels and a decrease in average traffic speed from 40.62 in 2020 to 40.24 mph, mark the gradual return of less desirable pre-pandemic conditions.
ATRI’s latest analysis, based on marginal costs incurred in 2020, included data from 138,930 truck tractors and 418,520 trailers of varying types, representing over 12 billion vehicle miles traveled. The study found that overall operational costs for small carriers fell 3.1% in 2020 compared with 2019 and dropped 2.7% for large carriers (see table).
According to ATRI, Carriers can benefit from extremely low fuel costs and reduce road traffic, which is likely to reduce potential costs – to offset higher costs in other areas.
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The report also highlights the large cost differences between fleet size and fleet sectors that ATRI has previously identified. For example, fleets with five to 100 power units were unable to take as much advantage of economies of scale in repair and maintenance costs relative to both larger carriers and smaller owner-operators.
In addition, while fleets with fewer than five power units typically have less purchasing power, they offset this by spending less on insurance premiums and repair and maintenance than fleets with five to 100 power units.
“Small fleets in general also benefited from an unusually strong spot market as demand exceeded larger fleets’ capacity,” according to the report. With regard to driver compensation costs, “carriers pursued two distinct strategies for navigating a competitive labor market: Small fleets offered comparatively higher wages while large fleets offered comparatively higher benefits.”
Despite higher costs for carriers on the immediate horizon, ATRI found reasons to be optimistic. For example, carriers will have opportunities to increase net revenues in 2021 and 2022 as capacity-related pricing rates exceed cost rates, the group stated. “After summer declines, truck tonnage increased in August and September of 2021. Spot rates and contract rates have continued to climb steadily throughout 2021 across all sectors.”

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