Motor Carriers

Lecture Objectives:

Understand how motor carriers operate

How motor carriers compete
Look into the future of the industry

Lecture Summary:
Motor Carrier Industry Structure

According to the American Trucking Association (ATA):

Trucks moved roughly 67% of the nation's freight by weight

About 3 million class 8 trucks used for business purposes
About 6 million commercial trailers registered

According to US Department of Transportation (in 2010):

1.3 million total trucking companies

408,782 for-hire carriers
662,544 private carriers
168,680 other interstate motor carriers

Most trucking companies are small businesses:

90.2% operate 6 or fewer trucks

97.2% operate fewer than 20 trucks

Trucking is a vital industry for the economy:

About 7 million people employed throughout the economy in jobs that relate to
trucking activity
About 3 million truck drivers employed

Basic Operations

Truckload (TL)

Moved directly from shipper to consignee

Average 242 miles
Many small carriers
Weight 20,000 to 50,000 lbs.

Less-than-Truckload (LTL)

Picked up, moved to a terminal, reloaded for line-haul, delivered to terminal,

locally delivered
Average distance about 550 miles
Requires national or regional network
Weight 50 to 10,000 lbs.
About 150 carriers

Parcel

Home/business pickup, consolidated, moved to sortation facility,

trucked/flown/railed to distribution center and home/business delivered
Weight 1 to 150 lbs.
Fast (good for time-sensitive goods)
Very expensive
Competition

There are few ways in which firms can differentiate themselves, the main area of
competition is price.

Cost structure: high variable costs (70-90%), low fixed costs (10-30%)
Government support of highway structure
Terminals not too capital intensive
Operating cost in the United States are currently between$1.20 - $1.80 per mile
Carriers use fuel surcharges to recover some of cost