Trucking is Still the Main Method of Transporting Freight
In spite of the issues related to congestion, infrastructure, and numerous regulations, trucking is still the primary method of transporting freight. According to reports by U.S. trucking associations, trucks move 70% of all domestic freight by weight and 74% of freight by value.
Trucking is the most popular method of transporting freight used worldwide. Even though speed and quality of service may decline outside of industrialized areas, it’s still considered the best means for freight transport. Even when freight is being transported by sea or air, there is usually a truck delivering the goods from the port of arrival to the final destination.
Short overview of the trucking industry
According to the American Trucking Trends report, 70% of freight is transported by trucks and the trucking industry makes a significant contribution to GDP. The industry is a major employer – there are 3.5 million truck drivers in the United States. The industry employs more than 8.7 million people, which means that one out of every 15 people working in the US is employed in trucking.
In 2012, 9.4 billion tons of freight was transported by trucks, or nearly 70% of all the freight tonnage transported domestically. The trucking industry collected around $642 billion in revenues, which is over 80% of all freight revenue in the country. The industry paid $37.8 billion in state and federal highway user fees.
The greatest challenges faced by the industry include congestion, a crumbling infrastructure, legislation, and driver shortages. Positive changes are brought on by technology which is being rapidly employed by trucking companies. Competition within the industry should ensure that the benefits of technological developments are passed on to the users.
Technological improvements benefit the operator as well, of course. But ultimately, the user of the service is the one that should experience the largest benefits. By raising the general quality of service, lowering the costs of providing the service, and improving the service offering, technology helps in meeting customer needs.
Costs of trucking
The Truckers Report has made an estimation of the costs that the trucking industry faces. Let’s start with some general numbers. The average per mile operating cost for the trucking industry is $1.38. The average total yearly cost of operating a commercial truck is $180,000. The average commercial truck driver spends more than $0.004 per mile on coffee. This results in over $600 a year being spent on coffee per industry driver.
The largest operating expense in transporting freight by trucks is diesel fuel. It represents 39% of the total operating cost, i.e. $0.54 per mile. A commercial truck can easily consume more than $70,000 worth of diesel fuel per year, or around 20,500 gallons of fuel. By comparison, a standard car spends around 500 gallons of fuel per year.
The second largest operating cost in the trucking industry comes from driver salaries. Although drivers spend a fair amount of time in docks and traffic, standard commercial truck driver salaries are based on the distance driven, per mile. Driver salaries represent 26% of overall expenses, or $0.36 per mile.
Truck cab and trailer
Maintenance of truck cab and trailer is the third largest operating cost in the trucking industry. It represents 17% of overall expenses, with a cost of $0.24 per mile. That $0.24 per mile adds up to $30,000 annually, which is only 1/5 the total purchase cost of a new truck or a trailer.
Repairs and maintenance
Costs related to repair and maintenance amount to 10% of overall expenses, or $0.12 per mile. The most common maintenance issues in commercial trucks are those related to air line/hoses, alternators, wiring, and brakes. These can amount to $15,000 annually, per truck.
There are more than 9 different types of insurance policy for the industry. Having multiple insurance policies can amount to an insurance cost of over $6,500 a year. Therefore, insurance represents 4% of overall expenses, or $0.05 per mile.
3% of overall expenses (or $0.03 per mile) is dedicated to tires. Rethreading is less expensive than getting new tires and is a large portion of this cost. An average tire can cost over $250 and annual tire expenses can exceed $4,000. This amount of money is enough to purchase new 16 tires annually, but still not enough to replace every tire of an 18-wheeler.
Permits, licenses and tolls
Required permits and licenses for the industry and equipment, as well as continuous travel on toll roads amount for 2% of overall expenses ($0.02 per mile). As of 2011, total US toll road mileage exceeds 5000 miles, which includes all US interstate and non-interstate roads.
Benefits of trucking in transporting freight
Truck transportation is the most popular method of transporting freight because of several unquestionable advantages. One of the greatest advantages is the opportunity to deliver goods directly from sender to recipient. Truck transportation provides an opportunity for a complete “door-to-door” service.
It is fast, convenient, and reduces costs of loading, unloading, and storage of cargo. Delivery time by truck does not depend on plane and train schedule. Therefore, two undeniable advantages of truck transportation are speed and urgency of delivery. Another advantage of truck transportation is the fact that the client can establish the departure time and the arrival time of the cargo by himself.
Truck transportation can be cheaper than other modes of transportation for short hauls such as those shorter than 400 miles. It can also be cheaper for small shipments regardless of the distance. Trucking is highly flexible – it can transport goods to wherever there are roads and streets. Trucking can provide a regular service, and the freight can be loaded and unloaded quickly.
The trucking industry also allows for an opportunity to embrace new technologies and use a wide variety of equipment such as GPS technology, as well as use of big data. GPS technology has greatly improved the overall operation of trucking companies. It provides multiple benefits to trucking businesses, including faster and more efficient transportation processes, greater security of freight transport, and better time management.
Many commercial trucking companies have already invested in GPS tracking tools. They have become a key part of transportation logistics that helps in facilitating more efficient transportation solutions. Commercial freight transporters use GPS devices on their trucks to allow for widespread fleet tracking.
The use of GPS technology has numerous benefits. It enhances the ability of trucking companies to become more responsive and reliable in their transportation business. Aside from efficient tracking capabilities, GPS technology also provides faster and cost-effective transportation solutions, improved logistics, and greater employee productivity and management.