Trucking

The Cost of Speed

Sam Tibbs

Data Science, CloudTrucks

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March 2022

In March 2021, when Diesel was $3.07 a gallon, we wrote “if diesel goes above $4 per gallon, it will be the top expense again for truckers”. Well, just a few days ago the US Energy Information Agency (EIA) reported the National Diesel price at $4.85 per gallon, the highest ever reported by the EIA, so there is no doubt that fuel cost is now your largest expense. While none of us have any control over fuel prices, we do have some control over our fuel costs by choosing the speed at which we drive. With the goal of providing helpful information to our Business Partners, we have updated the Cost of Speed Blog for the current cost of Diesel.

I’ll begin again with my grandmother Dora, who grew up during the Great Depression, who told me at an early age, "It's not what you make, but what you keep." When running your business, it is key to know all of your costs. Granted, not everything is easy to track, this is especially true for Diesel, given the varying prices and the fill up schedule not matching the load schedule. To help with this, CloudTrucks has recently added the Fuel Receipt program to the Business Intelligence Tool that allows you to store a picture of your fuel receipt and enter your fuel purchase information. Participation will ensure all the taxes you paid at the pump are used to properly calculate your IFTA payments (as you likely know, lost receipts lead to higher IFTA payments) as well as monitoring your fuel costs, which will be reported back to you via the Business Intelligence Tool. (My recommendation, if you haven’t already, is to upload receipts back to Jan 1 of this year.) 

In addition to keeping better track of your expenses, we also want to help reduce them. What if I told you that with careful driving you could reduce your fuel costs by $10,000 to $15,000 per year?* Megafleets sometimes achieve this by installing a speed governor on your truck (maybe you flashback to a turtle race you have been stuck behind). However, as an non-force dispatch owner operator, you have the freedom to run your business as you see fit (safely and legally of course). Our goal is to equip you with the knowledge of how regulating your speed can save you money.

Using a study from the Oak Ridge National Laboratory that uses actual trucks across multiple terrains and load sizes, we estimate how much extra it costs to save an hour of time by driving faster. The original Cost of Speed Blog (see below) was done in March 2021 when diesel was $1.78 less per gallon, but it includes some timeless details that make it worth the time to read, if you haven’t already.

Assumptions:

  • 1000 miles on flat terrain
  • $4.85 per gallon of diesel
  • Average total weight of 63,233 lbs

Result:

Traveling 1000 miles at 60 mph instead of 75 mph would mean an extra 3.4 hours of driving time (16.7 hours vs. 13.3 hours), but would reduce your total fuel costs by $136 (from $667 to $532). Of course, your time is limited and highly valuable, so a better answer is what are the savings on an hourly basis? That saves $40.92 per hour (which as an hourly rate is equivalent to $81,846 for a full time job**), substantially higher than the average hourly wage of $27.72 for the Transportation and Warehousing Industry in Feb. 2022. When Diesel was $3.07 the savings was $25.90 per hour, so quite an increase.

Traveling 1000 miles at 70 mph instead of 75 mph would mean about an hour extra of driving time (14.3 hours vs. 13.3 hours), but would reduce your total fuel costs by $48 (from $667 to $619). That equates to saving $50.70 in fuel cost per extra hour driven, which as an hourly rate is equivalent to $101,393 for a full time job. If diesel goes to $6 per gallon (and we all hope it doesn’t) the hourly rate increases to $62.72 per hour, which as an hourly rate is equivalent to $125,434 for a full time job.

Below is the same info in a table format at the current diesel price as well as other speed and diesel prices variations.


In summary, driving faster burns more fuel, but in the tradeoff between fuel cost and time there is a large opportunity for savings. How to use this info? Well, that is actually quite complicated because fuel is expensive and your time is very valuable.

The most obvious case for driving slower is where (1) you knew that you were going to arrive hours early at your current speed and (2) it was very unlikely that you would get unloaded early on your current load or very unlikely to get loaded early on your next load, then reducing your open road speed and planning for the extra driving time makes sense, assuming you have adequate hours and are not fatigued.

Even though it was mentioned in the earlier blog version, it is worth mentioning again. There are additional meaningful benefits of reduced speed not accounted for above: 1) less wear and tear on your equipment and tires, 2) less chance of an accident, and 3) less severe accidents.

*Todd Amen, CEO of ATBS, said “... fuel is your number one cost and just by managing it you can save $10,000 to $15,000 per year.” DAT iQ Live, Ep. 169 @ 19:45, https://www.youtube.com/watch?v=HJRo9Dl3TQk

** This assumes 40 hours a week for 50 weeks a year.

March 2021

CloudTrucks is consistently working hard to help our Business Partners be more successful. Why? Because CloudTrucks only does well when our Business Partners do well.

As a member of the data team, I am constantly crunching numbers to contribute to our common goals. One major long-term goal we have is inspired by a phrase my grandmother, who grew up during the Great Depression, would say to me, "It's not what you make, but what you keep."

This is sound life advice on many levels and is very similar to the advice I hear from successful Owner Operators or when I read posts from groups like Facebook's Rate Per Mile Masters. You have to know and minimize your costs.

Per the American Trucking Research Institute, the second largest expense for trucking, after pay and benefits, is fuel. In 2012 and 2013, high prices made fuel the top expense, and if diesel goes above $4 per gallon, it will be the top expense again for truckers. While there is very little to be done to change the cost per gallon, you can reduce your fuel cost by reducing your travel speed. To that point, what is the cost of speed?

I first started thinking about this years ago when a mentor of mine commented on how another truck passed him "at a high rate of fuel consumption." Driving faster saves time but costs you more in fuel.

A rough rule of thumb that does not account for lower efficiency at higher speeds is that every additional 1 mph increase in cruising speed reduces mpg by 0.1. For example, increasing speed from 65 mph to 70 mph will lower your mpg by around 0.5 mpg. To help put that in perspective, hauling an additional 10,000 lbs also causes a 0.5 mpg reduction.

Using a study from the Oak Ridge National Laboratory that uses actual trucks across multiple terrains and load sizes we are able to get some estimates to compare how much extra it costs to save an hour of time by driving faster. So without going too deep into the weeds, here is the summary:

Assumptions:

  • 1000 miles on flat terrain
  • $3.07 per gallon of diesel
  • average total weight of 63,233 lbs

Result:

Traveling the 1000 miles trip at 60 mph instead of 75 mph would mean the trip took an extra 3.4 hours of driving time (16.7 hours vs. 13.3 hours), but would reduce your total fuel costs by $86 (from $422 to $336) for the trip. Of course, your time is limited and highly valuable, so a better answer is what are the savings on an hourly basis? That is equivalent to $25.90 per hour, which at 40 hours a week for 50 weeks a year is an annual rate of $51,807.

Here is the same info in a table format for 60 versus 75 mph at current diesel price as well as other speed and diesel prices variations.

In summary, driving faster burns more fuel, but in the tradeoff between fuel cost and time there is a large opportunity for savings. How to use this info? That is actually quite complicated because fuel is expensive and your time is very valuable.

The most obvious case for driving slower is where (1) you knew that at you were going to arrive hours early at your current speed and (2) it was very unlikely that you would get unloaded early on your current load or very unlikely to get loaded early on your next load, then reducing your open road speed and planning for the extra driving time makes sense, assuming you have adequate hours and are not fatigued.

At the current price of fuel the savings equates to an hourly rate of $25.90 to $32.09 per hour, roughly equivalent to a $52,000 to $64,000 a year salary. And if the price of diesel increases, the fuel savings increase as well.

There are additional meaningful benefits of reduced speed not accounted for here, such as less wear and tear on your equipment and tires as well as less chance of an accident or a less severe accident should one happen.

Overall, understanding the cost of speed is just one of our many tips for success for freight brokering or truck driving in general

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