Parts and labor costs climbed late into last year, jumping 1.9% during the third quarter of 2023, according to data released Thursday in the latest Decisiv/TMC North American Service Event Benchmark Report.
The increase follows a 1.3% decline in the second quarter across the top 25 Vehicle Maintenance Reporting System (VRMS) codes. The jump in costs reflect an equal rise in parts and labor expenses – both of which rose 1.9% individually during the third quarter, according to the report. On a year-over-year basis, parts costs are up 0.9% and labor costs rose 4.9% for a total combined increase of 2.5%.
Despite running fewer miles, handling less freight and an influx of newer less maintenance-intensive trucks, Decisiv President and CEO Dick Hyatt said fleets and service providers still face inflationary cost pressures on parts prices and higher labor costs.
Detailed data from Decisiv on quarter-over-quarter combined parts and labor costs indicated increases in 18 of the 25 VMRS codes. Year-over-year, parts and labor cost increases were seen in 22 VMRS codes. The data on 25 VMRS codes accounts for more than 97% of total parts and labor costs for more than seven million assets and over 300,000 monthly maintenance and repair events at more than 5,000 service locations.
Considering that truck tonnage and consequently mileage continue to decline, the report concludes the likely explanation for higher parts costs is the impact of ongoing inflationary pressures. In September, the American Trucking Associations’ seasonally adjusted For-Hire Truck Tonnage Index decreased 1.1% compared to the previous month and was down 4.1% year-over-year, the seventh straight annual decrease and the largest over that period.
In the same month, ATA’s not seasonally adjusted index, which represents the change in freight tonnage actually hauled by fleets, was 6.8% below August. The labor costs side of the equation is equally challenged, driven in large part by the ongoing technician shortage affecting dealers and fleets.
Based on data from the U.S. Bureau of Labor Statistics, the costs associated with technician recruitment will not see any relief for the foreseeable future, with a projected need of about 23,900 heavy vehicle and mobile equipment service technicians annually over the next decade.
The Decisiv/TMC North American Service Event Benchmark Reports are generated using data from the Decisiv SRM platform on service and repair events for more than 7 million commercial assets operating across the U.S. and Canada. The industry’s largest asset service management system is being used to manage a weekly average of 70,000 service events at nearly 5,000 locations.
