The line haul cost and cost drivers for road freight transportation in China

In recent years, many companies of road freight transportation in China have suffered from performance decline and business distress because of the continual rise of the costs and the long-term downturn of the freight rate. The line haul cost model with light-duty truck for a round trip is developed, and sensitivity analysis and tornado graphs are conducted to estimate the line haul cost and to identify the cost drivers in this study. It reveals that the fuel cost accounts for more than half of the total cost and the average cost per ton-km is even higher than the average freight rate. The fundamental issue for China's road freight transportation is that the lower freight rate and the rising cost squeeze the profit margin down to no-profit even to deficit. The companies will lose the ability for improvement and innovation, and furthermore, may lose the competitiveness and sustainability.