2011 equipment costs reduced, but still strong
September 8, 2011
Carriers’ equipment costs are set to show a sizable increase in 2011. Costs incrementally increased after 2007, following the introduction of increasingly more expensive power units. However, the sharp drop in replacement of older units during that time led to only a minor increase in per-mile costs. That changes in 2011.
The continued introduction of clean technology engines and aftertreatments, and a strong surge in new equipment sales for replacement of older vehicles have led to a significant jump in equipment costs. A new tractor is up to 80% more expensive than the unit it replaces and maintenance costs will also rise as fleets rehabilitate stored or older equipment.
Aside from profit margins, equipment costs are the smallest cost segment that we measure, accounting for just under 15% of per-mile costs.
2011 will see nearly a 10% jump, followed by a further 12% in 2012. Some of the increases for 2011 have now been pushed into 2012. Growth will slow down as we move into 2013, but remain at a strong level as the freight environment stays solid and the replacement cycle nears its end. 2013 is expected to see growth of 8%.
Our truckload costs data is based on factoring the per-loaded-mile impact of basic cost inputs: Equipment, Labor, Overhead, Fuel, Margins. We use publically-available data from security analysts and trade organizations and forecast the cost and margin elements, factoring in inflation and industry conditions.
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