Truckload breakeven price jumps, poised to increase in 2025

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Truckload breakeven price per mile is at $2.72, according to an analysis report by JBF Consulting. The figure is a 4.4% increase from its estimate last September.

Using data from American Transportation Research Institute, U.S. Energy Information Administration, Federal Reserve Bank of St. Louis, and DAT Freight & Analytics, Chris Doersen, executive principal of client delivery at JBF Consulting, said their analysis also factors in the cost side and empty miles. “The reality is carriers are very often outside of certain dedicated contract, type of environments that are typically running 10% to 20% empty miles, especially with the lower amounts of freight today.”

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“This time next year, we’re going to be looking at a significant increase of 15% to 20% in overall costs if things stay fairly status quo,” said Doersen.

The report indicated that the total cost per mile is $2.31 based on a low national average estimate for newer equipment. This is compared to ATRI’s 2021 figure of $1.855 (mostly due to fuel differences), ATRI’s 2022 figure of $2.251 (similar to JBF’s recent calculation), and ATRI’s 2023 figure of $2.270 (also similar to JBF’s September 2023 update, once adjusted for fuel).

[RELATED: ATRI’s analysis on the operational costs of trucking in 2024]

The empty miles cost is $0.408 per mile based on an empty miles percentage of 15%, which, the report noted, has increased from previous years due to a rise in empty miles caused primarily by a decrease in overall freight.

Contract rates in the current market have been gradually declining over the past year, the report indicated, now hovering around $2.40 per mile. The ongoing convergence of contract and spot rates highlights the breakeven operating costs for more stable lanes, where empty miles are often minimized. 

The report noted that cost factors have changed in the past year, too. Though fuel costs have decreased, driver wages, lease/purchase prices, and maintenance costs have risen.

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Notably, it’s the first year that driver wages and benefits have reached $1 per mile in costs. Lower fuel costs may have contributed to wage increases without significantly raising total costs or prices, the report said.

Looking at fuel, prices were about $0.13 per mile higher compared to last year at this time. While fuel trends are difficult to anticipate, Doersen said they anticipate an increase in the coming months, especially if interest rate cuts stimulate the economy and OPEC reduces supply.

Despite the decline in fuel costs, the spot market remains steady at or above $2.00 per mile. As in the previous year, prices have little room to go lower, the report noted, as many carriers are likely operating at breakeven or at a loss on spot moves to reduce empty miles, which may not be viable in the long term.

Aging equipment is a factor that is putting pressure on the projected increase of costs, said Doersen. Older trucks and trailers have to be replaced, and the replacement rate accelerates. “We’ve hit a point where most rates [are around] 40% increase on the cost structure right now from five years ago.”

To mitigate the impact of costs, from the carrier perspective, Doersen said, “If you have a good relationship with your shippers, try to give them a little bit of a heads-up to soften the blow when these price swings do start to happen.”

“From a shipper perspective, there’s a lot more incentive right now to go to contract rates away from the spot market. So, carriers that are operating more in the spot market may look to shift more to contract rates for short periods of six to 12 months and see if they can get a higher rate right now,” he said.

While the report indicated an increase in costs, Doersen pointed out that for a decline to happen, there would need to be a new wave of drivers to join the workforce, as well as government support to offer subsidy programs.

“Anything over the course of the next year, shifting inventory closer to demand points, and just actually, reducing the amount of freight, would see an overall cost drop, but that’s also going to have a corresponding demand drop as well,” he added. The other factor that could impact cost downward is a true recessionary period, which hopefully doesn’t occur.

Pamella De Leon is a senior editor of Commercial Carrier Journal. An avid reader and travel enthusiast, she likes hiking, running, and is always on the look out for a good cup of chai. Reach her at [email protected]