Various fleet benchmarking reports have quantified increases. While the numbers vary depending on the source, the overall findings indicate rising costs. The National Private Truck Council’s (NPTC) Benchmarking Survey Report 2024, which was released on Aug. 22, found that among private fleets, overall equipment and maintenance costs per mile increased 76% since 2020.
Similarly, the American Transportation Research Institute’s (ATRI’s) Analysis of the Operational Costs of Trucking: 2024 Update says that overall operational cost per mile, which includes fuel, truck payments, insurance, driver turnover and more, has reached a new record high of $2.270 per mile. It has increased 37% since 2020.
Identifying Key Cost Levers
Scott Craig, director of sales financial consulting at Penske Truck Leasing, said several critical cost centers affect the price of trucking operations.
These include:
Equipment Prices: Higher raw material costs, labor rates, stricter emissions requirements and consistent demand are making new equipment more expensive. New model years cost significantly more than in the past. While figures vary depending on individual trucks' make, model and features, the ATRI study found that truck/trailer lease or purchase payments increased 33% since 2020. Emissions requirements will continue to become more stringent over the next few years, which will further contribute to rising equipment costs.
Technology and Safety Features: New model years typically bring additional technology designed to enhance driver safety, vehicle efficiency and overall fleet management. Advanced driver-assistance systems (ADAS), collision avoidance technologies, lane-keeping systems and automation features are increasingly being built into new trucks as standard offerings. While these innovations improve safety and fuel efficiency, they also contribute to the upfront cost of new trucks.
Maintenance Costs: Maintenance is a critical component of fleet safety and efficiency. With the increase in technology on trucks and trailers, systems are becoming more complex and creating new maintenance requirements as well as uncertainties. Additionally, as equipment costs rose and shortages loomed, many fleets were holding onto equipment longer. As fleets age, maintenance and repair expenses naturally increase. ATRI estimated that repair and maintenance costs have increased 36% since 2020, while tire costs have increased 7% over the same period. Penske has seen industry service vendor and dealer prices grow 20-30%.
Prolonged Inflation: The U.S. Consumer Price Index (CPI) has experienced notable fluctuations over the past few years, reflecting varying inflation rates. From 2021 to 2022, the CPI witnessed a significant surge, with inflation peaking at 9.1% in June 2022 — the highest in recent decades. Inflation began to moderate in 2023. Over the past 12 months, the all-items index rose by 2.6% (as of Nov. 13). Craig added that inflation within the transportation industry has run higher than the overall cost of inflation.
Financing Costs: In addition to higher costs for equipment, fleets have been faced with higher interest rates. The current U.S. Prime Rate at 7.75% (as of Nov. 8) is up significantly from January 2022. As the cost of borrowing increases, financing for capital investments becomes more expensive, driving the overall cost of equipment higher. To curb inflationary pressures, the U.S. Federal Reserve began a series of interest rate hikes in 2022, which continued until mid-2023 for a combined increase of 525 basis points or 5.25%. Lenders have also imposed stricter lending standards since 2020.
Taking Control
Costs are likely to remain high, especially as regulatory requirements on the industry increase, but the right partners can help mitigate rising expenses. “When rates are high, as in the current environment, it leads to customers’ delaying their decision as they wait for reductions or rates to improve, but waiting for prices to drop can lead to missed opportunities,” Craig said.
He added that there are several opportunities for fleets to manage upward cost pressures. These include:
Investing in Late-Model Equipment: Although equipment is becoming more expensive, it has new features that can improve overall performance. ADAS, such as collision avoidance systems, lane departure warnings and adaptive cruise control, result in a safer vehicle. New equipment can enable greater intervals between services, and telematics can allow technicians to diagnose issues remotely.
Managing Fuel Spend: Fuel remains one of the highest costs for fleets, and even pennies per gallon add up. Choosing the right specifications for a vehicle's application is one of the biggest opportunities to improve fuel economy. Opportunities for savings include engine downsizing and downspeeding, transmission and adaptive cruise control. Penske offers one of the top five largest fueling networks in the U.S., offering competitive prices in 42 states.
Maintaining Equipment: Regularly servicing equipment for optimal performance maximizes miles per gallon. For example, dirty or clogged filters force engines to work harder, resulting in higher fuel consumption while properly inflated tires reduce rolling resistance, which can reduce fuel consumption by 3% to 5%. Additionally, predictive, data-driven maintenance helps fleets avoid more significant issues, minimizing unexpected downtime.
Utilizing Leases: Leasing or renting equipment gives fleets access to the latest technology without the significant upfront capital costs. Plus, fixed-pricing leases that bundle maintenance provide an additional cushion against fluctuating costs, which helps companies better manage long-term budgets without surprise expenditures.
Analyzing the Vehicle’s Lifecycle: Fleets can evaluate their current lease cycles to determine if there are any cost reduction opportunities that may be available to them if they consider slightly longer or even slightly shorter leases. “It’s all about striking the optimal balance between lifecycle, vehicle technology, fuel efficiency, maintenance and repair costs and exposure, and uptime,” Craig explained.
Maximizing Vehicle Utilization and Capacity: Effective utilization of each vehicle is key to cost savings. Solutions can include slip seating and assigning multiple drivers to the same vehicle over different shifts, maximizing payload by optimizing the weight or cubic volume inside the trailer, and focusing on backhauls to reduce empty miles. Penske’s free, easy-to-use fleet benchmarking tool powered by Catalyst AI™ gives fleets customized benchmarks to compare against similar fleets on fleet utilization, performance and efficiency.
Using Private Fleets: Utilizing a private fleet can help companies control costs. The NPTC’s 2024 Survey found that during the pandemic, a lot of companies turned to private fleets because they couldn’t get capacity from for-hire carriers. Even though 72% of respondents indicated that capacity was more available in 2023, private fleets continued to expand.
Optimizing Routes: Re-examining routing models can help identify opportunities to increase efficiency. Fleets can also re-examine customer delivery expectations and business rules, which can uncover cost-saving opportunities, such as combining shipments or avoiding delays at a dock.
Leveraging Onboard Technology: By maximizing the capabilities of onboard technology, fleets better track asset performance and predict maintenance needs, reducing the risk of breakdowns and downtime. Onboard technology, such as collision avoidance systems, dashcams and telematics, can also improve safety and driver performance, which can help fleets manage insurance and liability costs.
Investing in Drivers: The driver shortage continues to pose challenges for the industry, making it critical to prioritize driver quality and retention. Minimizing turnover reduces recruiting and training costs, and late-model, well-maintained equipment can improve driver comfort and satisfaction.
Working with Us
Penske offers fixed-pricing leasing and rental options that lock in costs, including maintenance and tire expenses, providing a predictable and manageable solution for long-term budget planning. Penske’s fleet has more than 100,000 premium spec'd short- and long-term lease and rental vehicles to meet a wide range of business needs.
“We're committed to helping our customers navigate rising operational costs with practical, data-driven solutions,” Craig said.
Penske has an experienced, in-house, 24/7 roadside assistance team that can support drivers and coordinate replacement vehicles in the unlikely event of a breakdown to keep drivers and loads moving.
Customers can also fuel at Penske's network of over 100 fueling locations nationwide. This gives fleets access to competitively priced diesel fuel and detailed fuel reporting to help track fuel consumption trends, monitor costs, and identify patterns that may be negatively affecting fuel efficiency.
To learn more, contact us today.
Source: The State of Sustainable Fleets 2024 Market Brief