Falling fuel prices drive down variable costs, boost truckers' bottom line

Apr 20, 2016 Kevin Jones | American Trucker

The average net income for owner-operators was $61,167 in 2015, according to data collected and analyzed by financial consulting firm ATBS. This is the first time that owner-operators have earned an annual average income of $60,000 or higher, and ATBS suggests the increase in income is positive news for both truckers and carriers, who have recently seen a shortage of available drivers.
 
“Breaking the $60,000 income barrier should help attract more people to the career of truck driving,” says Todd Amen, President and CEO of ATBS.
 
Changes to drivers’ cost structure were the greatest contributor to the increase in net income. While fixed costs actually increased by 0.9%, variable costs were down by a whopping 26%, ATBS reported.
 
Specifically, the cost of diesel fuel dropped dramatically last year, and lower fuel costs had a tremendous impact on drivers’ variable costs. Fuel per mile costs were down 32.7% compared to 2014.
 
“While fuel costs are largely hedged in trucking through the fuel surcharge, a rapidly falling fuel price can certainly be helpful to the bottom line, as it was in 2015,” says Amen. 
 
But despite driving more miles in 2015 and with lower variable costs, drivers saw a lower total revenue in 2015 over the previous year. Revenue per mile was down 9.9%, gross revenue was down 8.4%, while total miles driven was up 1.8%. This lower revenue is primarily a function of fuel surcharge reductions, Amen notes.
 
For 2016, Amen anticipates the trend in owner-operator income will remain flat. Factors that may challenge growing net income for drivers are a slow freight market and the beginning implementations of ELDs.
 
Amen also recommends that owner-operators work with a financial consulting firm such as ATBS to further increase their profits. On average, ATBS clients earn a 40% higher net income than their industry peers, the company says.

Each year, ATBS conducts an analysis of data collected from its owner-operator clients. ATBS provides consulting, accounting, and bookkeeping services to over 20,000 independent contractors. From these services, ATBS has been able to analyze financial trends in the trucking industry since 2003.