What Business Leaders Need to Know About Trucking Prices in 2023
March 09, 2023
By Blair Robbins
The transportation and logistics industry and its role in the supply chain is a crucial component of the U.S. economy. With each passing year, new factors such as geopolitical and global market risk, labor trends and developments in technology come into play that affect the cost of transporting goods.
Moving into the second quarter of 2023, trucking continues to serve as the cornerstone of how goods and materials are moved, accounting for over 70% of the nation’s freight, by weight. Here, we’ll discuss some of the several key trends logistics leaders need to know about truck shipping, and how it plays into the ever-fluctuating cost.
Trend #1: Rising Consumer Price Index
The impacts of an inflationary market and a rising consumer price index (“CPI”) on the trucking industry, both in the U.S. and internationally, cannot be ignored.
The CPI is a measure of the average change over time in the prices paid by consumers for goods and services. A higher CPI means higher inflation, which in turn, indicates higher prices rise across the board—from raw materials and labor to the costs of borrowing and capital investments.
The current CPI number is at 6.4%, which is up by 0.5% from December 2022 to January 2023. Therefore, it is important for trucking industry leaders to keep an eye on inflation and the CPI as it directly affects shipping prices. Moreover, this also factors into exchange rates, which in turn affects the cost of shipping goods internationally.
Trend #2: Diesel Prices on the Rise
A more obvious correlation, rising diesel prices play a direct role in driving up the price of freight shipping via truck. Although diesel prices have decreased from their recent peaks of over $5, they are still quite high, currently at nearly $4.50 per gallon, almost double the price from just a year ago.
The increase in diesel prices is the result of several factors, including supply chain disruptions, strong demand and limited refinery output. As a result, freight transportation companies are often applying fuel surcharges or cutting out empty-cargo miles to protect margins.
Logistics leaders should monitor diesel prices and fuel surcharges closely, as they directly impact shipping costs.
Trend #3: New Proposed Speed Limits for Commercial Trucks
The Federal Motor Carrier Safety Administration (“FMCSA”) plans to unveil its final proposal regarding commercial motor vehicle speed limits this June.
This would affect freight trucks with a gross weight of 26,001 pounds or more equipped with an electronic control unit that’s capable of being governed. Under the proposal, vehicles would be required to have speed-limiting devices installed, which must be set to a maximum speed of 65mph and used at all times while in operation. This regulation would affect the trucking industry in many ways; for instance, it would add complexity in load planning and logistics needs for trucking companies.
Proposals like this, as well as required e-logs, will have a significant impact on the trucking industry, and companies will need to adapt to these changes to protect margins and remain competitive. It remains to be seen how this new regulation will affect shipping prices, but trucking companies must prepare for potential changes to maintain profitability.
Trend #4: Labor Costs
According to the Department of Labor's final employment report for the truck transportation sector in 2022, there has been a consistent increase in the number of workers employed. In January 2023, there were 1,614,000 workers, compared to 1,610,600 in December 2022 and 1,599,400 in November 2022. This trend indicates a steady growth in trucking jobs, with demand for new workers.
While there was a small decrease in the average hourly wage for truckers in December 2022, at $29.54, wages rose in both November 2022, to $29.73, and in October 2022, to $29.68. This suggests that despite fluctuations, the overall trend is towards higher pay for trucking professionals due to the growing demand for their services.
Trucking companies must continue to offer competitive wages and benefits to attract and retain employees in this growing industry. This growth in the trucking industry is a positive sign for the economy as a whole, as it indicates that the demand for goods and services is also increasing.
Trend #5: Increased Automation
The trucking industry is undergoing a significant transformation as automation technology continues to advance. Automated and artificial intelligence systems can improve the efficiency of trucking operations, reduce labor costs and increase shipping volumes.
While the upfront costs of automation can be significant, the long-term savings can be substantial. However, it is important to note that the adoption of automation technology may result in job losses, which can lead to broader economic impacts.
In conclusion, the trucking industry currently faces a range of macro- and micro-level trends that are influencing the expenses of transporting goods. Logistics leaders must remain nimble to navigate these challenges effectively and capitalize on the emerging opportunities.