Answer to Question #230009 in Economics for Pearl

Question

Select an existing motor carrier company operating in South Africa and answer the following.
4. Identify the two cost components that have the most impact on company finances and explain why you believe so.
(10×2=20) Please provide intext reference as well as references.

Answer 1

The two cost components that have the most impact on motor carrier company finances are driver compensation and fuel. Driving labor expense is the single largest expense for trucking companies. Depending on the geographic region, operating mode and length of haul, the combination of driving compensation, benefits and payroll taxes ranges from 28% to 50% of revenue. Fuel represents the second-largest variable operating expense for any company or owner-operator. However, the difference between a top and bottom performer in trucking is directly correlated to the ‘net fuel expense’ calculation.