Trucking Cost Analyzed
Analyst takes deep dive into reasons for escalating costs for cattle transport.
Not everyone has what it takes to be a professional trucker — particularly a long-haul driver specializing in livestock transportation. It can be a dirty job. Besides that, the hours can be brutal. There’s an extra measure of responsibility associated with transporting live, perishable cargo. Truckers are subject to a lot of rules and regulations. Equipment and operating expenses are high. There are plenty of hassles, and few drivers get rich from pulling a bullrack.
Don Close, chief research and analytics officer for Terrain, talked about cattle hauling costs during the 2023 Cattle Industry Convention in New Orleans, La. [Photo by Troy Smith] |
“I wouldn’t do what livestock haulers have to do for $5.50 per mile,” said Don Close, during the 2023 Cattle Industry Convention in New Orleans, La. Close is chief research and analytics officer for Terrain, a source of ag industry analysis. He reported to the National Cattlemen’s Beef Association (NCBA) Ag and Food Policy Committee, delivering results from an analysis of cattle transportation economics.
According to Close, the committee had asked him to do a deep dive to expose the real drivers of high cattle transportation costs, which have increased dramatically through the years. Close looked back as far as 1980, when the average charge for livestock transportation was $1.25 per loaded mile. By the end of 2022, the average rate per loaded mile was $5.50. Many people naturally assumed high fuel costs were too blame.
“And they’re right,” said Close. “The increase in livestock transportation cost is highly correlated to the increase in diesel fuel prices.”
U.S. Energy Information Administration data for 1980 shows an average retail price of No. 2 diesel at 82¢ per gallon. The average price for 2022 was $4.98. But there are other costs affecting livestock transportation rates.
“The cost of tires has doubled, or more than doubled, in recent years, from about $300 to $650 (apiece). Insurance costs are through the roof, too, and most haulers have to carry at least $1 million in liability insurance,” Close said.
For large carrier companies, he added, hired labor costs continue to increase, and the number of retiring drivers exceeds the number of available replacements. Additionally, many over-the-road drivers are opting for short-haul work. Consequently, many big fleet carriers have largely exited the business.
“Everybody knows transportation costs are huge, but I don’t think we realized how many miles are involved or how the cost relates to animal value,” said Close, sharing numbers showing how cattle are hauled more and farther than ever before.
The miles add up, especially when considering distances involved with moving Florida calves to the Texas Panhandle, California cattle to the Pacific Northwest, or western feeders to the Plains. Close’s research suggests that the typical calf sees an average haul of 700 miles. For a yearling, the average is 400 miles, and fed cattle going to slaughter travel an average of 150 miles.
“Collectively, with three ownership changes, the typical animal is transported 1,250 miles,” stated Close. “I think that’s a conservative estimate.”
Close also looked at freight costs as a percentage of load value. When considering a potload of calves weighing 48,000 pounds, transportation costs represent 2.7% of load value, accounting for $8 per hundredweight (cwt). For a load of yearlings, freight costs are 2% of load value and account for more than $4 per cwt. For fed cattle, the numbers are 97% and $1 per cwt., respectively.
“When you add it all up over an animal’s lifetime, there are $14 per hundredweight in freight costs,” said Close.
These costs affect every cattle producer, in Close’s opinion, even the guy who hauls his calves to the sale barn in his own gooseneck trailer. He may think he’s escaping high transportation costs, but Close says that guy couldn’t be more wrong.
“The buyers know how to calculate freight, and it’s figured into what they’re willing to bid,” he explains, “so everyone is affected.”
Editor’s note: Troy Smith is a freelance writer and cattleman from Sargent, Neb. Lead photo by Getty.
