National Trucking Week – Sept. 3-9 – is a time for the industry to celebrate its workforce and take a brief bow for the efficient and reliable service it provides to everyone who makes a purchase, visits a hospital or clinic, or puts their garbage out weekly at the curb. We all take part in activities that are made possible or easier because of trucking companies and their employees.
Despite the hype around automated trucks, the nuts and bolts of this industry haven’t changed much over the years. However, trucking companies are facing ever-increasing costs, which means even though transportation is a small component of the price of most goods, consumers should expect somewhat higher prices. “Free shipping” is good marketing, but the cost of transportation is buried in the overall price.
For trucking companies, costs fall into three broad categories: equipment, fuel, and labor. All of these categories are experiencing increases.
The cost of equipment is rising as truck engines become more technologically advanced and emissions-reduction features add additional complexity and weight. Because a truck’s weight is regulated, heavier equipment means it must carry less cargo, which lowers a truck’s productivity and revenue. Maintenance on more advanced equipment is also more time consuming and therefore costlier.
Diesel fuel costs continue to increase, although price alone is not the only reason fuel costs add up. Any idling time due to both planned (construction) or unplanned (highway closures) delays raises the cost of transport. Congestion in major centers, where more and more Canadians are choosing to live, is also adding to costs. For example, according to the Canadian Chamber of Commerce, the Top 20 bottlenecks in Canada (including four in Vancouver) cause commuters to spend an additional 10 million hours per year sitting in traffic. Embedded in that gridlock are trucks trying to deliver cargo.
Many trucking companies are spending more time recruiting and training workers, which requires resources. And, electronic logging devices, which are required in the majority of trucks by year end in the U.S. and projected for 2019 in Canada, will record truck drivers’ time more accurately, accounting for every minute of their work day. Even though truck drivers have a generous allotment of work time (14 hours per shift, maximum, in Canada) and driving time (up to 13 hours within that shift), unproductive time like waiting to load or unload, or unexpected delays will shorten a driver’s day. As a result, more drivers and more equipment will be needed to do the same amount of work.
Costs are going up for many industries, not just trucking. But trucking is a highly competitive industry that operates on very low margins. In order not to lose business, companies have been poor at communicating cost increases and, historically, have simply handed over any efficiency gains they’ve made to shippers – their immediate customers – and, finally, to us, the end consumers of their services and the goods they carry.
The Conference Board of Canada reached that conclusion when it compared the cost of trucking services over time to the price companies charge their customers for those services. However, the opportunity to improve efficiency (through equipment or practices that reduce fuel usage) and mitigate increasing costs into the future is limited. It will no longer be sustainable for the industry to shelter its customers from rising costs in order to retain their business. Instead, trucking companies will need to price their services to better reflect the cost of new equipment, fuel and competitive compensation and training for their workers. And that will affect all of us, as the ultimate beneficiaries of their services.
A few extra dollars will be a small price to pay in trade for the many comforts the trucking industry delivers.