It’s no secret that trucking costs are rising, but there are several factors causing the increases. The biggest ones are fuel, labor, pay, equipment, and healthcare, all of which have seen jumps in recent years. Because all of these areas are climbing when it comes to costs, some companies are really struggling to stay afloat. It’s hurting businesses, the trucking industry as a whole, and the people who rely on having their goods shipped across the city or across the country. No matter how far a truck needs to travel, it has to be cost effective for it to do so or it won’t be going anywhere.
Fuel is Becoming Increasingly Expensive
Fuel prices ebb and flow, but the cost of diesel has been on an overall rising trend for the last several years. In April of 2018, the cost of diesel rose another three cents, making the average cost across the country $3.04 per gallon. In some parts of the country, that is nearly $1.00 per gallon higher than a year ago. There doesn’t seem to be much of an end in sight to that either, as demands for diesel continue to grow.
The higher fuel prices are requiring trucking companies to spend more, and the costs of the tractors and trailers, coupled with the increase in fuel, are driving some companies and owner-operators right out of business. The companies that manage to survive the rising fuel costs have no choice but to raise their prices.
Labor Costs Continue to Climb
Like fuel prices, labor costs are also trending upward. A higher minimum wage is resulting in higher wages for other workers, who expect their pay to rise so they still feel they are being fairly compensated. As truckers demand a better wage right from the beginning and throughout their careers, some companies have to scale back their fleets because they can no longer pay drivers what they require. When that’s put together with a driver shortage, it can really make it difficult for some companies to keep their trucks moving.
Owning Trucking Equipment is Expensive
Whether the driver is an owner-operator or a company needs to buy more trucks for its drivers, the purchase of equipment continues to rise. Oil prices are going up, which means things made with oil – like tires – are also rising in price. A new semi truck in 2018 generally costs between $110,000 and $195,000. Then there is nearly $15,000 in maintenance, the $30,000 to $80,000 cost of a trailer, and all the other expenses like permits, registration, and insurance. It can become extremely expensive, and the price of buying a truck is rising each and every year. Many companies are buying used to save money, but that can mean mechanical problems, repairs, and higher maintenance costs as well.
The Rising Price of Healthcare Matters
If a company is big enough, they have to provide healthcare to their employees, and that includes their truck drivers. As healthcare costs rise sharply and steadily, a lot of companies can’t afford to pay the prices that are being asked for healthcare. That means they have to cut hours and jobs to stay small enough to avoid fines if they don’t offer healthcare.
With an average estimated cost of $500 per driver per month for health insurance, this can quickly become a problem for a company with a large fleet. An additional concern is that many companies did not offer insurance in the past and changing healthcare rules have forced their hand, costing them more.
Because of all the concerns that are surrounding trucking today, some shippers are even getting rid of their own private trucks and fleets. In return, they need a company that they can hire to ship their goods at a reasonable price. Fortunately, there are options for that, including shipping for LTL, truckload, temperature protect, and hazmat needs. Using an outside company can help reduce the burden businesses face when it comes to affordable trucking options. Visit RoadScholar.com today and explore all of the services we have to offer.