32
Motor Carriers Motor Carriers

Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Embed Size (px)

Citation preview

Page 1: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Motor CarriersMotor Carriers

Page 2: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Intercity Trucking Ton-Miles

Page 3: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Intercity Trucking Tons

Page 4: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Significance of the Industry

• 2.4 million jobs in 1998• Average compensation = $ 37,036• Trucks logged 353 billion miles for

business purposes (does NOT include government and farm)

• US paid over $120 billion for highway transportation (1998) – 86% of the nation’s total freight bill.

Page 5: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Types of Motor Carriers

• For-hire –Provides services to the public &

charges a fee for the service

–Local vs. Intercity Operators• Local carriers pick up & deliver freight

within the commercial zone of a city

• Intercity carriers operate between specifically defined commercial zones.

• The two often work in conjunction

Page 6: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Types of Motor Carriers

• Private Carriers –Provides a service to the industry or a

company that owns or leases the vehicles, but does not charge a fee.

–May transport commodities for-hire• In this capacity, the private carrier is

really an exempt for-hire carrier.

Page 7: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Types of Motor Carriers

• Exempt Carriers –Specifically exempt from economic

regulation

–Gains this status by• Type of commodity hauled (I.e.,

agricultural commodities)

• Nature of its operations (incidental to air transportation)

Page 8: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Types of Motor Carriers

• Common Carriers– Required to serve the general public upon

demand, at reasonable rates, & without discrimination.

• Contract Carriers– Service specific shippers with whom the

carriers have a continuing contract.

– Thus, typically not available for public use

Page 9: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Types of Motor Carriers

• Truckload (TL) Carriers– Provide service to shippers who tender sufficient volume

to meet the minimum weights required for a full truckload shipment and TL rate (or who will pay the required amount).

• Less-than-Truckload (LTL) Carriers– Provide service to shippers who tender shipments lower

than minimum truckload quantities, such as 50 to 10,000 lbs.

– Consolidate numerous smaller shipments into TL quantities for Intercity transport

– Disaggregate TL shipments at destination for delivery in smaller quantities.

Page 10: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

US Distribution of Motor Carriers

Page 11: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Number of Carriers

• 458,634 interstate motor carriers were on file with the Office of Motor Carriers in 1998.

• 70% operate with 6 or fewer trucks.

• Does not include private fleets.

Page 12: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Industry Structure

Page 13: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

General Service Characteristics

• Offers highest Accessibility of any mode–Can serve virtually any location

–Not constrained by waterways, rail tracks, or airport locations

–Almost every shipping & receiving locations is accessible via highways

Page 14: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

General Service Characteristics

• Speed– For loads traveling less than 500 miles, usually

can deliver in less time than any other mode– Even over 500 miles, can be, in the right situation,

faster than air– For example, shipment traveling 600 miles

• Truck = 12 hours (600 miles @ 50 mph)• Air could take up to 24 hours

– Flight time = 1 ½ hours– 3 hours needed for pickup and another 3 for delivery– If only 1 flight per day is scheduled, shipment might have to

wait 24 hours before it lifts off.

Page 15: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

General Service Characteristics• Cargo-Carrying Capacity

– Though smaller than many other modes, shippers can enjoy the TL rate (volume discount) with a lower volume.

• Most TL minimums set at 20,000 – 30,000 lbs• Rail carload minimums are often set at 40,000 – 60,000

lbs.• Barge (water) minimums are set in terms of hundreds of

tons

– Smaller shipping size provides buyers and sellers with

• Lower inventory levels• Lower inventory-carry costs• More frequent services

Page 16: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

General Service Characteristics

• Smoothness of Transport– Given the suspension system and pneumatic tires used on

trucks, motor carriers offer smoother rides than rail or water– Results in less damage to the cargo (though some does

occur)– Less damage results in reduced packaging requirements

and thus packaging costs

• Customer Focus– By it’s very nature, the industry tends to be more customer-

or marketing-oriented– Due in large part to the small size of most carriers (must

offer higher service to compete)

Page 17: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Types of Vehicles• Line-Haul Trucks

– Tractor-trailer combination of 3 or more axles– Capacity depends on size (length) and state maximum

weight limits• Most states now allow tractor-trailer combos with 5 axles that can

haul a maximum of 80,000 lbs gross weight (110,000 in Michigan)• Most vehicles weigh (empty) 30,000 lbs, leaving a maximum net

payload of 50,000 lbs or 25 tons.• Anything over 5 axles generally requires a special permit

– Capacity is also affected by the density of the freight• A 53’ x 8’ x 8’ trailer has 3,392 cubic feet of space• If the commodity hauled has a density of 10 lbs per cubic foot, the

maximum payload for the vehicle would be 33,920 (3,392 cubic feet x 10 lbs./cubic foot)

Page 18: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Types of Vehicles

• City Trucks– Normally smaller than line-haulers and are single

units– Typically 20 to 25 feet long with a cargo unit 15 to

20 feet long.– There is growing use of small trailers that are 20 to

28 feet long.

Page 19: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Types of Vehicles

• Special Vehicles– Dry Van

• Standard trailer or straight truck with all sides enclosed

– Open Top• Trailer top is open to permit loading of odd-sized freight

through the top

– Flatbed• Trailer has no top or sides; used extensively to haul steel,

lumber, etc.

– Tank Trailer• Cylinder trailer used to haul liquids

Page 20: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Types of Vehicles

• Special Vehicles– Refrigerated Trailers (Reefers)

• Cargo unit with controlled temperatures

– High Cube Trailer• Cargo unit has drop-frame design or is higher than

normal to increase cubic capacity

– Special• Vehicle with a unique design to haul a special commodity;

such as liquefied gas or automobiles

Page 21: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Equipment Types

Page 22: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Terminals• Pickup and Delivery (PUD) Terminals

– Freight is collected from shippers and brought to the PUD terminal where it is consolidated with other loads going in the same direction or to the same destination.

– Consolidated shipments loaded onto a line-hauler for transport to the destination terminal.

– At the destination terminal, line-hauler is emptied, and the combined shipments are separated and reloaded unto city trucks. City trucks then deliver the shipments to the ultimate consignee.

Page 23: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Terminals

• Pickup and Delivery (PUD) Terminals– PUDs are also used for

• Sales, billing, and claim handling• Limited vehicle maintenance• Change freight from one carrier to another

– PUDs are also called end-of-line terminals.

Page 24: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Terminals

• Break-Bulk Terminals– Basic function is the separation of combined

shipments– Freight is unloaded from consolidated truckloads,

sorted by destination, and reloaded for dispatch to destination.

– Generally, break-bulk terminals are centrally located within the carrier’s operating scope and at the junction of major east-west and north-south highways. Provides greater efficiency.

Page 25: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Terminals• Relay Terminals

– Unlike PUDs and Break-Bulk terminals, the freight is never touched at a relay terminal.

– Necessitated by the maximum hours-of-service regulation that is imposed on drivers.

• 10 hours maximum driving after 8 consecutive hours off-duty.

– At the relay terminal, one driver substitutes for another (hence, the term slip seat that is also used for relay terminals)

– Relay terminals are normally located within a maximum of 10 hours driving time from the point of origin.

– Alternative to the relay terminal is the sleeper team – 2 drivers.

Page 26: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Cost Structure• Approximately 70 to 90 % of motor carrier costs are

variable.– Allows the carrier to increase/decrease the number of

vehicles used in short periods of time and in small increments of capacity.

– Low fixed costs due to• Public financing of the highway system• Terminals are less expensive than those used by other modes• Bulk of the carrier’s cost is associated with daily operating costs –

fuel, wages, & maintenance

– In 1995, average total cost to operate a tractor-trailer was 130.2 cents per mile (70% of which was variable costs

Page 27: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Cost of Operating a Tractor-Trailer, 1995

Page 28: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Labor• Accounts for 29% of total costs per vehicle mile• Usually absorb about 50% of a carrier’s revenue

dollar.• Average annual wage (1997) was $37,036• Average hourly compensation was $12.83• Typical over-the-road driver paid 32.5 cents per mile• Local drivers paid by the hour• Driving Time Regulations (USDOT)

– 15 hours on-duty after 8 hours off-duty– 10 hours driving after 8 hours off-duty– Cannot accumulate more than 60 hours on-duty in 7

consecutive days, or 70 in 8.

Page 29: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Fuel• 130% increase in diesel fuel prices from 1976 to 1985

– 1976: 11.6 cents/mile (19.8% of total cost/mile)– 1985: 24.6 cents/mile (21.1% of total cost/mile)– 1995: 19.2 cents/mile (14.7% of total cost/mile)

• Fuel Taxes– Primary reason for growth in fuel costs– Motor carrier industry paid $23.8 billion in federal and state

highway user taxes in 1995– Federal Fuel Tax is 24.3 cents per gallon– States tack on anywhere from 2 cents to 24.5 cents per

gallon– Thus, total tax on a gallon can be as high as 48.8 cents (out

of average total cost of $1.10/gallon)

Page 30: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Federal Highway Trust Fund Tax Rates

Page 31: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Operation Ratio• Measure of operating efficiency used by motor carriers.• Function of operating expenses and operating revenues

– Operating expenses are those expenses directly associated with the transportation of freight, excluding non-transportation expenses and interest costs.

– Operating revenues are the total operating revenues generated from freight transportation services.

• The closer the ratio is to 100, the more indicative of the possible need to raise rates to increase total revenues.– For example, an operation ratio of 94 means that 94 cents of every

operating revenue dollar is consumed by operating expenses.– This only leaves 6 cents to cover interest costs and provide a return to

the owners.

• Operation ratio for most motor carriers generally range between 93 and 96.

Page 32: Motor Carriers. Intercity Trucking Ton-Miles Intercity Trucking Tons

Operation Ratio

Operation Ratio =

Operating expensesOperating revenues

X 100