We wrote recently about the increase in insurance for trucking companies in Texas – and indeed nationwide. But there’s an increase of other operating costs across all hauling services. Much of this stems from decisions that will eventually bring cost benefits, but in the meantime they cause costs to rise.
In this article, we’ll look at the extra costs involved so that you know why your costings have risen unavoidably when you contract your deliveries out to trucking companies. These extra costs include:
- Elimination of paper permits
- Toll road increases
- Fuel price increases
- Freight verification processes
- Environmental Protection Agency (EPA) clean energy standards
Let’s look at them in turn.
Elimination of Paper Permits for Trucking Companies
Trucking Laws and Regulations
The federal government, along with various state governments, has enacted laws to transition from paper-based to electronic permitting systems. They aim to streamline and modernize the permitting process for truckers
They’re phasing in this transition from paper permits to electronic permits over several years, with specific deadlines for compliance.
New technology needed
Electronic permits are expected to improve efficiency, reducing the time and effort required to obtain and manage permits. However, truckers need to adapt to new technologies, which may require initial training and adjustment. This increases company costs.
For example, trucking companies need to implement electronic systems capable of handling permits, which often involves online portals and apps. In time, the new systems will bring savings, but in the short term, there are extra costs.
Compliance and enforcement
Although the electronic permits allow for more effective monitoring and enforcement by regulatory agencies, there are penalties for non-compliance. As we saw before, insurance companies pass on their own risk costs. This, in turn, means that trucking companies’ insurance costs rise to cover cases where there’s proven non-compliance.
From the above, it’s obvious to you, as a general contractor, that there are initial setup costs that may have to be passed on to you by trucking companies.
Fuel Prices for Trucking Companies
Gas prices are continuing to rise in Texas – and in the US in general. Unfortunately, the DFW area has the largest number of roads and new infrastructure projects needing dump truck hauling services and is also the center of the dearest gas prices in Texas.
Current wars and geopolitical instability are one factor in these rises. But there’s also the warmer weather to factor in, which always brings higher demand and higher prices.
Another factor in fuel prices and rising costs for trucking companies is the more global view. When gas stations sell different blends in order to reduce emissions, this brings a spike in demand for certain specific crude oil grades – which influences oil prices.
So, unavoidably, there’s an interplay of factors affecting rising fuel prices that hauling services must absorb or pass on in their contracts with you.
Toll Road Increases for Trucking Companies
Whenever Texas introduces new toll roads, trucking companies that work for you have to pay every time they use them. The Dallas-Fort Worth area is large, with an increasing amount of new roads being mandated – such as the expansion of the Dallas North Tollway.
In addition, tolls themselves are increasing all the time to keep up with building and maintenance costs.
In an unfortunate catch-22 situation, however, the toll money not only contributes to paying for the construction, but impinges on the finances of those who are helping build them! This brings difficult decision-making for both trucking companies and general contractors.
To cover these higher toll costs, truckers and trucking companies may need to charge you more for delivering goods via these routes.
Trucking Companies and Freight Verification Processes
The process of checking and confirming that shipments of goods are legitimate and accurate is vital when freight fraud has become commonplace. There are costs involved here, too.
Why is Freight Verification Needed?
Firstly, verification prevents theft by counterfeit truckers intercepting goods. Secondly, it ensures goods listed on the paperwork match what’s actually being shipped. But thirdly – and critically – it protects the goods and reputation of the reliable trucking companies you need for timely completion of your projects.
The way this works is that someone checks the ID and credentials of the driver and trucking company. They check the goods are as stated and use technology such as GPS to track shipments in real-time to make sure they’re on the right route and not being tampered with.
Costs and Benefits
There’s a cost to setting this up, which may have to partially pass up the line to general contractors. Verification is expensive in terms of additional staff and checking time.
On the plus side, in due course there are cost benefits as
- company losses reduce,
- criminals give up their activities as fruitless, and
- customers gain trust in the company and satisfaction with their methods.
In the interim, however, freight verification is another factor in the rising costs you see in the trucking industry in Texas and elsewhere.
Let’s look now at our final point: the EPA and clean energy standards.
EPA and Clean Energy Standards for Trucks
In an effort to help keep the air and water clean and protect the environment, the EPA has introduced new rules to make truck engines burn fuel more cleanly.
This makes sense to the population in general. But the rules impact trucking companies.
How Do These Rules Affect Trucking Company Costs?
- Truckers might need to buy new trucks with cleaner engines – which are more expensive.
- Upgrading older trucks to meet these new standards also costs money.
- Cleaner engines often need more expensive fuel.
- Keeping these cleaner engines in good shape can require more maintenance – again, costly.
You can mentally set these costs against the longer-term fact that cleaner engines use fuel more efficiently. And that drivers will be healthier and stay in the job longer, thus avoiding some of the early retirement issues that cause a driver shortage.
In the short term, however, this is a cost to trucking companies that they have to either shoulder, partially absorb, or pass on to you, the general contractor.
Cowboy Trucking Understands the Problems of Rising Costs
As a family-owned firm, Cowboy Trucking understands that you have budgets to meet as you contract with trucking companies for your hauling needs. In our experience, ongoing partnership and good communication are the best ways to meet our own requirements and yours in terms of budgets.
We are 100% reliable in all aspects of trucking, with decades of holding to the high values instilled by our founder. Let’s have that technical conversation and work out a plan to get your job done.