Examining the Increased Costs of Operating a Truck in 2024
AGX Freight operates as both an interstate “for hire” motor carrier and a property broker. We understand the unique challenges of the current freight market, which have persisted for more than 20 months now. While the supply chain shocks of the global pandemic have substantially abated, the current imbalance between freight demand and transport capacity is causing significant damage to the core foundation which underpins reliable, safe truck transportation in the United States.
The American Transportation Research Institute's (ATRI) report on the operational costs of trucking reveals that despite cooling inflation and GDP growth improvements in 2023, the freight market faced significant challenges caused by elevated operating costs and declining rates.
Marginal costs of trucking increased to $2.270 per mile in 2023, which is a 33.5% INCREASE over a Pre-Pandemic (2019) cost of $1.70 per mile.
After hovering between $0.086 and $0.088 per mile for three years, marginal insurance costs increased by 12.5 percent in 2023 to $0.099 per mile. This figure includes auto liability and cargo insurance coverage but not physical damage coverage.
Truck and trailer payments, repair and maintenance, insurance premiums, tires, and driver wages all set record highs in 2023.
A driver’s average wages were $0.779 and benefits $0.188 per mile versus $0.554 and $0.19, respectively in 2019.
Marginal insurance costs increased by 39.4% in 2023 to $0.099 per mile versus $0.071 in 2019.
Carriers with fewer than 5 trucks spent the least on truck and trailer payments, and they spent the most on repair and maintenance.
FMCSA registration data showed that in December 2023 there were 578,329 single-truck, single-driver for-hire carriers.
Truck parking was voted the second highest issue facing the trucking industry in 2023, behind the economy.
New Class 8 sales were down by over 1,000 units in each of the first four months of 2024 compared to a year earlier and used Class 8 sleeper prices in 2024 have thus far leveled just above the $60,000 mark.
Truck and trailer payment costs do not move directly with market availability and pricing because many fleets finance truck over 2-5 years. Many fleets that acquired trucks in 2022 will continue making elevated payments on those assets in 2024, and some will continue to do so in 2025 and 2026.
Shippers place high demands on motor carriers and brokers to provide superior service while ensuring safety of the motoring public and protection and security of the cargo. Small carriers make up the vast majority of truck capacity in the United States. Many, if not all, depend on third party logistics companies to arrange the efficient movement of freight by motor carriers. Brokers serve tens of thousands of shippers and carriers, bringing together the transportation needs of the cargo interests with the corresponding capacity and special equipment offered by rail, motor, air, and ocean carriers.
With operating costs on the rise and the importance of brokers to connect shippers and motor carriers, let’s hope freight rates increase to sustain and reward the industry that moves America!!