A new report from American Trucking Associations’ Technology & Maintenance Council and Decisiv indicates parts and labor costs fell in the fourth quarter of 2024.
After rising in Q3 2024, following three consecutive quarterly decreases, combined parts and labor costs fell again by 1.6%, according to the latest Decisiv/TMC North American Service Event Benchmark Report. Lower costs in Q4 compared to the previous quarter reflect an expected drop-in service activity following traditionally higher pre-holiday freight volumes in the third quarter of each year. ATA’s for-hire truck tonnage Index supports this conclusion by indicating declines in November and December of last year, the association added.
“Lower parts and labor costs are good news for service providers and fleets after last quarter’s increase,” Decisiv CEO Dick Hyatt said in a news release. “While they indicate that parts supply chains are more stable and there is improved continuity in the ranks of technicians, the data also show that service operations are handling an increase in events more productively and efficiently.
“With more effective service management, communication, and collaboration practices between their in-house operations and dealers, fleets are realizing how best practices can lead to a better bottom line.”
The benchmark report is based on comprehensive service data. For the report, Decisiv collects and analyzes parts and labor costs for 25 vehicle maintenance reporting standard (VMRS) system level codes. These codes account for more than 97% of total parts and labor spending and more than 7 million assets during 300,000-plus monthly maintenance and repair events at 5,000-plus service locations.
Also in the quarter, combined costs increased in only nine of the 25 VMRS systems tracked in the report, compared to 19 systems in the previous quarter, Decisiv added. The latest quarterly decrease is more significant considering the report is based on an increase of 4.7% in the number of service operations.
The latest quarter-over-quarter data also indicate decreases in parts costs of 1.5% and labor expenses of 1.9%. The lower costs in Q4 may point to stabilizing parts prices and in some cases are lower due to a replenished supply chain. While the number of operations is up, lower labor costs are also possibly the result of less turnover in the ranks of technicians employed by fleets and dealers.
Year-over-year combined costs in Q4 dropped 1.6% on decreases of 2% for parts and 0.9% for labor. Illustrating this represents a continuing trend, the decreases follow a 1.3% drop in combined y/y costs in the Q3 report.
Y/y parts costs also fell for the second quarter in a row. However, the lower y/y labor costs were a reversal of the higher expenses seen in the annual comparison in Q3.
“Reduced parts and labor costs are great news to fleets,” said Robert Braswell, TMC executive director. “The information provided by the Decisiv/TMC North American Service Event Benchmark Report gives council members an excellent means of comparing how their operations are performing to industry trends so they can take action accordingly.”