Shippers face myriad factors when deciding whether to outsource their logistics and trucking operations or to keep them in-house and operate a private fleet. While some of the largest companies like Walmart and PepsiCo have gone the private fleet route, owning and maintaining trucking assets simply doesn’t make sense for many other businesses. 

That’s especially true in the face of rising costs to operate a truck. In fact, those costs reached a record high last year. As shippers navigate costly logistics, here are six headlines to keep up with the latest on trucking costs and other supply chain news. 

The Cost of Truck Operation

Operating a truck is a costly endeavor. The total marginal cost of truck operation rose to $2.27 per mile last year – a new record, according to an annual report by the American Transportation Research Institute, highlighted in a Transport Topics article. 

The costs rose despite fuel costs falling by 8.8 cents per mile. On an hourly basis, truck operation costs increased to $91.27. In 2022, costs per hour were $90.78, and costs per mile were $2.251.

When fuel is taken out of the equation, costs rose 6.6%, “higher than a lot of us were hoping and expecting,” Alex Leslie, an ATRI senior research associate and co-author of the report, told Transport Topics.

What’s behind the spiking expenses? The report named line items such as truck and trailer payments, driver wages, and maintenance costs, all of which increased from 2022 to 2023. Deadhead mileage, which is when a tractor operates without hauling a trailer, rose last year. That adds fuel costs and wear-and-tear expenses — without the earnings of hauling freight. Insurance premiums spiked by 12.5% as trucking companies faced nuclear verdicts and high awards from juries.

The rising costs for truck operators – whether large carriers, owner-operators, or private fleets – come against a backdrop of a freight recession. For several months, the market has been characterized by low trucking rates, due to excess capacity slowly exiting the market and a decrease in shipper demand following pandemic-era highs. 

So far this year, some trucking costs are continuing to increase marginally, like costs for maintenance, trucks, and trailers. But tire costs went down. 

The bottom line, according to Leslie: “Right now, it looks like costs are still trending up overall in 2024, but not by as much as we saw in 2023.”

Big Trucking Companies Feel the Pinch

The largest carriers are feeling the strain from higher costs and an enduring freight recession. On Transport Topics’ Top 100 For-Hire Carriers List, several companies have seen their revenue and profits decline, the publication reported.

Revenue at UPS, No. 1 on the list, fell below $91 billion last year. In 2022, the parcel giant had surpassed $100 billion in annual revenue. FedEx, in the No. 2 slot, brought in $87.7 billion in revenue in its latest fiscal year, down from $90.2 billion the prior year. And No. 3, J.B. Hunt, saw revenue drop below $11 billion last year, down from $12.4 billion the year before. 

However, several other carriers have grown their businesses, leading them to jump up on the Top 100 list. Heartland Express is now No. 36, up from No. 58, as it acquired Smith Transport and CFI. 

Trucking Jobs Flatline

Continued low spot rates are contributing to some lackluster results in truck transportation jobs. 

FreightWaves reported that in June, Bureau of Labor Statistics data revealed 1,548,600 job openings in the sector. That’s virtually the same as the 1,548,700 job openings in May. 

The job numbers are the lowest they’ve been since October. The good news, according to BLS’ vice president of market intelligence, is that employment is stable.

“We think stability in employment levels is a best-case scenario in the short term,” David Spencer said.

Analysts expect spot rates to rise in the summer peak season, which could bolster the truck transportation job figures. 

The Aging Trucking Workforce

As trucking jobs remain flat but stable, very few young drivers are joining the workforce. 

Commercial Carrier Journal conducted a survey of company drivers and leased owner-operators. The results: 74% of respondents were 55 years old or older. The remainder were 35 to 54 years old, and none were under the age of 35.

The average age of respondents was 59.5 years old. By comparison, the median age in the overall labor force is about 42 years old.

Trucking’s aging workforce would typically be a big concern for the industry’s future, except for the fact that many drivers have no intention of imminent retirement. In CCJ’s survey, more than half of respondents said they either hadn’t decided when they would retire or that they plan to drive as long as their health allows.

A Cross-Border Conundrum

For truck drivers and companies based in Mexico, a California rule taking effect next year could present some challenges. 

California’s Clean Fleets rule mandates fleet owners to remove international combustion engine vehicles at the end of their useful life, according to FreightWaves. That includes trucks that cross the border from Mexico into the U.S. 

Many cross-border trucks in Mexico are older, used diesel vehicles from the U.S. The fear is that complying with California’s rule and acquiring electric vehicles could put some Mexico-based fleets out of business. The majority of Mexico’s 200,000 trucking companies are small businesses, operating one to five trucks. An electric truck can cost upwards of $100,000. In addition, EV infrastructure is lacking in Mexico, with just over 1,000 charging stations in the country, many of which are concentrated around large cities. 

Rail Workers Vote to Strike

At the other border, a strike isn’t out of the question.

Workers from Canada’s largest railroads, Canadian National and Canadian Pacific Kansas City Southern, voted in favor of striking unless they get a new labor deal, Supply Chain Dive reported. 

While that doesn’t necessarily mean a strike will happen soon, it positions union members to stop work unless they receive a new contract to replace the last deal, which expired at the end of 2023. The union is seeking improved wages, better working conditions, and flexibility on fatigue management. The union represents workers who are engineers, conductors, rail traffic controllers, and more. 

This is the second time this year that the union voted to authorize a strike. The first time, Canada’s Minister of Labour intervened, requesting information on how a work stoppage could affect Canadians’ safety and health. Legally, the Canadian government has to make a ruling before the union is permitted to strike. 

Keep Trucking Costs in Check with Entourage Freight Solutions

Truck operating costs are at a record high, and they’re only increasing. Rising costs will no doubt reverberate to shippers, whether you contract your freight transport or operate a private fleet. 

That’s why shippers need access to freight management services and real-time data, to keep on top of their shipments and ensure their costs are in check. 

Entourage Freight Solutions provides steady services that can help you navigate an ever-changing logistics environment and receive important information in real time. 

Entourage Freight Solutions offers the following services and many more:

• Our LTL service provides on-demand access to capacity, along with real-time data and peace of mind in this high-stakes world. 
• Our Freight Management lets your team stay organized across inbound and outbound logistics, tracking market capacity and using automation notifications to keep everyone informed. 
• Our Refrigerated transport provides expertise in everything from finished goods to raw materials, ensuring products arrive on time and in top condition. 

Request a quote today to see how Entourage Freight Solutions can help with your freight movement and other supply chain needs.