Economic Factors Impacting Trucking Industry

ECONOMIC FACTORS IMPACTING TRUCKING INDUSTRY

1. Equipment costs: The cost of equipment is increasing persistently. The initial cost of acquiring new trucks is highest which includes up fitting as well as overhead costs of funding is highest. The Canadian dollar hit a 12 year low at 69 cents and could go as low as 60 cents U.S. The costs to replenish the equipment for trucks will keep on increasing, however. Since most of the equipment that go into trucks are imported from U.S., the Canadian truck dealers have to spend 40% or even more on trailers and replacement parts. Truck manufacturers have decided to reduce the production capacity of the trucks so this can also increase the price or actual costs of the trucks.
   
2. Costs to attract and retain drivers: With the driver shortage expected to hit 33,000 vacancies by 2020, and the high driver turnover rate that many companies face, the cost to attract and retain drivers will continue to rise. Companies will need to spend more on advertising, recruiting, road testing, and background verifications to attract drivers and keep them in their seat. According to The Upper Great Plains Transportation Study, the average cost of turnover per driver is CA$1,500, making it even more important to retain current drivers.
   
3. Changing rules and regulations: Government changes in both the U.S. and Canada are having a large impact on trucking companies and their ability to manage their operating costs. Electronic Logging Devices (ELD’s) will be mandatory for carriers in the U.S. in 2017, including Canadian drivers operation into and out of the U.S. the costs range from US$165 to US$832 annually per truck, plus “back-end” IT costs to integrate the ELD data. Apart from that, a 100% increase from US$205 to US$401.67 per commercial vehicle for a vehicle transponder paid to the US Custom and Border Protection (CBP) and the Animal and Plant Health Inspection Services (APHIS) for commercial vehicles entering the US, means costs will continue to go up.

1. Price of Diesel:  The trucking industry is vital for both commerce and business. The fact of matter is that, over 80% cities in the U.S. receive their goods exclusively by truck. With this massive demand, the trucking industry is also expected to consume expected amount of fuel. On average, it is estimated that motor carriers consume over 38 billion gallons of diesel fuel in order to move 10 billion of freight annually. Diesel is one of the highest expense second to labour costs, and it has the potential to take up to 25% of the operating costs.