ATRI: Operating Costs Report

Using financial data provided by motor carriers from all sectors and fleet sizes, the American Transportation Research Institute (ATRI) annually documents and analyzes detailed trucking costs. Mining operating expense data from 2008 through 2019, ATRI released its 2020 update to “An Analysis of the Operational Costs of Trucking” with a bit of relatively good news for fleets and operators.

• Cost per mile goes down: ATRI says the average marginal cost per mile experienced by carriers in 2019 decreased 9.3% to $1.65. In comparison to the last freight softening, which ATRI explains took place in 2016, marginal costs were still six cents higher. According to ATRI, the analysis provides the industry and government with essential benchmarking data to help all stakeholders with their transportation planning and infrastructure improvement analyses. ATRI’s Operational Costs of Trucking (Ops Costs) research was driven by the need for more accurate trucking industry operational cost data by motor carriers and government transportation planners.
• Crunching good data, making the industry smarter: With primary metrics focused on marginal line-item costs associated with per-mile or per-hour operational costs, ATRI says that while previous outside studies did offer operational cost measurements, it was “modeled’ data and considered by many industry experts to be inaccurate and often subjective. ATRI’s says its Ops Costs analysis crunches real-world data derived from industry operations. Their most recent report documents the freight slowdown that occurred the second half of 2019. That economic softening, combined with a number of independent factors — including lower fuel prices — decreased the marginal cost of trucking.
• Counter-intuitive finding: Driver wages down, but bonuses up: Interestingly, the Institute’s research reveals that combined driver wage and benefits decreased in 2019 — from 77.6 cents per mile in 2018 to 69.3 cents per mile in 2019; a “counterintuitive” decrease says ATRI,  given the driver shortage. However, ATRI data shows bonuses for drivers increased “universally,” with retention bonus increases as much as or more than 80%. ATRI surmises that while the cost per mile for total driver compensation fell, carriers are “clearly’ addressing the driver shortage via alternative channels.
• Insurance costs went down: According to the 2020 report, truck insurance premiums saw their first decline since 2012, decreasing from an all-time high of 8.4 cents per mile in 2018 to 6.8 cents per mile in 2019, says ATRI. Analysts say the decrease is based on additional research with the commercial insurance industry. ATRI notes that insurance cost volatility is related to numerous factors – including the impact of fewer miles driven by some carriers during the COVID-19 quarantine. Recent research the Institute notes, found that the size of truck-involved litigation verdicts is increasing dramatically over time, directly impacting insurance costs. Although 2019 insurance costs show a per-mile decrease, insurance companies are reporting trucking fleets are assuming higher risk levels, using tactics like higher deductibles, self-insurance, expanding use of insurance captives, and lower levels of excess liability coverage to reduce insurance costs.

Given the substantial insurance cost increases over the last several years, it appears that the industry may have hit the ceiling in its ability to continuously cover annual double-digit increases in insurance premiums. ATRI finds fleet size is also playing a bigger role in how insurance costs and risks are managed. Breaking down the insurance cost per mile by fleet size, ATRI says the smallest fleets, those with less than 26 power units, reported insurance costs of over 15 cents per mile in 2019.
Fleets with more than 1,000 power units reported insurance costs of 5.3 cents per mile. Not surprisingly, says ATRI, specialized fleets reported the highest insurance costs per mile with 7.5 cents per mile. These carriers, explains ATRI, often haul more dangerous freight or extremely valuable cargo, and therefore insurance costs adjust accordingly.
The good news is insurance and claims decreased every year from 2017 and stabilized at nine cents per mile in the 2019 data. ATRI found private fleets, as units of non-trucking companies, generally have more resources and strategies for hedging insurance cost increases.
According to insurance industry experts, insurance costs will continue to increase in the near future, but at a slower rate of growth. Calling it a moderating effect, ATRI says the lower rate of growth will likely be attributable to increased use of active safety systems and some positive changes associated with state-level tort reform. 
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