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Tips on tools to combat rising trucking costs

September 27, 2023 Admin No Comments

Tips on tools to combat rising trucking costs

For the second year in a row, trucking costs are rising. That’s according to the American Transportation Research Institute’s An Analysis of the Operational Costs of Trucking: 2023 Update. In the highly respected ATRI report, in 2022 the average cost per mile rose to $2.25, reaching a point 21.3% higher than in 2021.

In the same period and continuing today, declining freight volumes and excess carrying capacity have compounded the impact of higher costs on trucking operations. In effect, lower rates and fewer hauls mean less revenue to offset necessary expenses.

What can be done? While truckers can have little impact on freight volumes or rates, there are tools and services that can help keep down the expenses identified by ATRI as the primary causes of rising costs.

Tackling high fuel prices

It’s probably no surprise that diesel price increases made up most of the jump in costs in the ATRI report. While fuel costs are largely out of any trucker’s control, drivers and fleets can still save at the pump by employing several approaches, including:

  • Fuel optimization tools that detail the best prices and volumes to purchase over a given route
  • Fuel discount programs, often available for no fee, can save at least 20 cents per gallon or $40 when a typical tractor with twin 100-gallon tanks fuels up.
  • Fuel cards that discount purchases and can provide savings from 6 cents up to 43 cents per gallon.

Negotiating lease or purchase payments

Ranked as the second highest cost in the ATRI study were truck and trailer lease or purchase payments, which increased 18.6% from 2021 to 2022. In many cases, these high costs result from agreements entered during the pandemic when rates peaked, equipment was scarce, and vehicle prices were high.

Faced with either fixed loan or lease costs or rising variable rates, fleets and drivers have few alternatives. However, options for reducing these costs may be available from lenders, including negotiating new lease payment plans or refinancing loans.

Focusing on timely maintenance

Repair and maintenance costs spiked 12% from 2021 to 2022 in the ATRI report, primarily due to parts shortages that caused prices to increase and from rising labor rates for technicians.

To offset those price hikes, a tried-and-true approach is to keep up on routine maintenance, which not only brings efficiency gains but can also help prevent larger, more expensive equipment problems.

One example, and a significant cost that is tracked separately in the ATRI report, is for tires. Starting with the basics, routine rotation extends tread wear and, in turn, tire life.

Maintaining recommended tire pressure also ensures proper wear and can improve fuel efficiency. Properly inflated, rotated, and balanced tires improve ride, which reduces strain that causes premature replacement of other parts and components as well.

Across the board, tracking maintenance schedules can be very effective, and technology can help with systems that can be set up to send reminders when it is time for scheduled service to occur.

Mitigating insurance premiums

Truck insurance premiums already make up almost 9 cents of the $2.25 average marginal cost per mile in the ATRI report and insurance industry experts expect commercial vehicle liability costs to continue to increase at faster rates.

Nevertheless, here are six things that truckers and fleets can do to mitigate the cost of high and rising insurance premiums:

  1. Choose a plan with a higher deductible. You can pay a lower premium by agreeing to pay more in the event of an accident.
  2. Look for insurance discounts. For example, some providers offer discounts to for-hire drivers who agree to grant access to their driving data through an electronic logging device (ELD). Other insurers may reduce rates for experienced drivers with clean driving records or newer equipment with advanced safety features.
  3. Pay your premium annually. Insurers will often give you a discount—sometimes as much as 20%—if you can pay for insurance in a lump sum rather than spreading payments out monthly.
  4. Shift to a mileage-based policy. Designed to lower insurance costs, these programs can allow fleets to pay premiums based on the amount of mileage they drive.
  5. Modernize your fleet. Insurers see newer trucks as less risky and will sometimes lower their rates. For example, having the latest collision avoidance, electronic stability control, and onboard monitoring systems can make a difference.
  6. Maintain Clean Driving Records. Insurers raise rates for fleets and drivers they perceive as risky. Hiring and retaining drivers with good driving records can help lower rates, and pre-employment screening can ensure candidates have clean records.

Be proactive in combating outside forces

Today, significant forces outside of any fleet or driver’s control affect their profitability, making it even more crucial to take advantage of cost-saving strategies. That’s especially true in an uncertain economic environment where freight rates are dropping while many necessary and essential costs are rising.

Fortunately, there are many services, tools, and practices that can help fleets and drivers. Taking an active role in finding and using those solutions is one way to lower costs and maintain profitability.

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