Trucking costs in 2016 and beyond

on November 3, 2015

At one time, most experts were predicting that 2015 would see some major price increases for trucking.   Well the year is almost 75% over and prices did not seem to explode.   The beginning part of 2015 saw some sharp increases, however from early summer on, prices have leveled or even dropped a bit.  Experts now believe that the 2015 trucking price increases will end up in the 4-5% range.

The biggest reason that trucking prices stayed fairly even is that fuel prices dropped to historic lows.   To review, we showed this chart in a previous post that shows what goes into motor carrier costs.   The percentages are changing since fuel is dropping, but fuel and driver make up over 60% of the total cost.


The chart below shows Crude Oil spot price trends.    One can see that crude oil prices dropped to nearly 50% of their peak levels in 2011.   Diesel fuel costs have been trending the same.



The next chart is income for over the road drivers.

driver salary

Chart taken from  Source.

According to , truckers salaries increased 17% since 2011 while everyone else averaged 4%.    Most experts were expecting this increase salary to start impacting trucking rates in 2015.

The economy did not heat up the way everyone thought, so demand did not quite meet expectations.   So, all factors considered, 2015 did not see the price increases that some experts were predicting.

What are the experts predicting for 2016 and 2017?   Some are predicting double digit increases.  Candace Holowicki, director of global transportation and logistics for $1.5 billion manufacturer TriMas Corp.  Stated the following”

“…That 4-6 percent range for truck pricing increases is not the peak of this rate cycle, Albrecht warned. “I think 2016 and 2017 will make 2014 look like child’s play,” Albrecht said. “There’s an incredible storm of regulation coming (in those years) that will make the shipper’s job incredibly challenging.”  Source

What will drive costs in 2016 and 17?

Fuel Costs

According to, oil prices will bottom out in early 2016 and then start to gradually increase, and start to level out in 5 -7 years. (see chart below).



If this is true, then fuel cost would probably have minimal impact on trucking costs, although if we look back at any point in time,  oil prices do not ever  change gradually,  they spike up and down and are far too volatile to base long range price calculations from it.

Driver Costs

This variable is much easier to forecast, the demographics are clear:  there is a much higher number of truckers entering retirement age than potential placements going into training programs.   Currently there is a shortage of drivers; some estimates are saying 30,000 or more and that in 5 years the shortage could be close to 100,000.   The laws of supply and demand will invariably continue to drive trucker’s wages and benefits up until the short fall starts to equalize. Thus it appears that driver costs will continue to increase at the rate previously shown.  Driver wages and benefits are now over 35% of trucking costs.


There are a string of regulations that could be going into effect in late 2016 and 2017.   These include changes in drug testing, driver log rules and potentially other regulation to address the perceived safety issues seen in 2013 and 2014.  Many are predicting that these regulations will increase trucking costs. Source.


While the global economy is tending toward stagnation, The US economy still looks like it could be strong and many experts are saying the recovery will continue into 2016.  Source   This puts more demand on goods transports and should be another factor that will drive trucking costs up.

It would appear that all the factors point to a continued increase in trucking costs at a faster rate than experienced in the last 2 years.   So the question is not if prices increase, but for how long will this trend continue?

What will push costs down?


Perhaps the biggest emerging technology that could reverse the driver shortage trend is “driverless transport”.   This is no longer a dream as driverless cars and trucks are being road tested with impressive results.   According to driverless trucking will emerge as a viable transport by 2020 and the majority of drivers could be replaced within the following decade source.  If this is the case then the largest cost component for trucking will start to decline and the labor shortage will start to turn into a surplus.  With driverless trucks and vehicles, accidents should dramatically go down, as would insurance costs as well as other costs associated with a human driver.   The downside is something to ponder however; there are 3 million truckers that are potentially facing outsourcing.   Also there is an entire industry of roadside cafes and motels that service those truckers.   The advent of driverless vehicles could put another dent in our middle class, as truck drivers get paid a pretty good salary compared to other blue collar jobs.

Other technology changes such as better routing software and safety controls for trucks with drivers are factors that could help keep costs down in the short term.

Panama Canal Expansion

This long awaited expansion could be finally completed in 2016.  The impact of this expansion is hard to calculate.   Many believe that with the expansion, shippers will choose to keep cargo in the water longer and rely less on rail and over the road trucking to complete the journey.   It is possible that the transport dynamics of North America will change, but whether this truly results in reduced demand on trucking, or merely shifting the geographic remains to be seen.    Most don’t believe that this will impact trucking.


Regardless of how optimistic the industry is about implementing driverless vehicles or implementing cost reduction technology, there will probably be very little impact over the next 2-3 years.  So the short term issue of trucking costs skyrocketing appears viable.