Unsustainable Now: The Fuel Cost Surge Threatening the Survival of Repo Agents

GUEST EDITORIAL

Recovery agencies across the country are facing mounting pressure as fuel costs surge and assignment volumes drop sharply. Yet despite these challenges, many in the industry still underestimate the true cost per mile, leaving agencies exposed to unsustainable losses. This breakdown highlights the real numbers behind the work and why understanding them is critical to staying viable in today’s market.

I speak with many agents across the country often. Many discussions recently are in reference to the sudden rise in fuel costs. It’s surprising that many still do not calculate the cost per mile correctly. Most agencies’ truck costs are about the same with a few variables.

I put together this chart below to reflect the actual cost per mile with a reflection of current fuels costs in Texas for Diesel. I have attached the excel file for all to use if they need it.

Click HERE to Access Excel Sheet!

Below is a representation of an agent going across town and checking an account. This is the cost for one run. Averages are likely over 1 run per recovery. Theres’s variables of labor that are not calculated that must also be factored.

If drivers ran this with one hour of minimum pay of 15.00 per hour, the cost to the agency over 82.00 for the one run. Reality is no driver will work for 15.00 an hour taking the risks in the field so that’s just a number for simple math.

Note: the calculator is for more miles on regular maintenance than manufacturer recommendations. Cost is greater if performing regular maintenance to manufacturer recommendations.

Many offsets are put into place to ensure cost effective assignment runs. The MPG of a vehicle is easy to calculate. 11.5 MPG is just under .50 cents per mile here in Texas. Flatbeds often range from 7-10 mpg.

Many agents and lenders need to understand the math a bit better. There are endless variable to this, and the numbers are the basics to get a understanding of what goes into cost of travel. Places such as California the cost per mile is higher due to the fuel costs, and overall taxes. There is no blanket fee, or one price solution to mileage / surcharges nationwide.

The squeeze on agencies is a hard press.

The expenses have been rising over several years. The sudden and sharp rise of fuel costs over the last month is a heavy financial burden to many. Repo assignment volume has also taken a sharp dip over the last several weeks.

Assignment volume in some areas shows a sharp drop of -40%. Assignment volume drops this year has been sharper and steeper than in recent years. Fewer assignments leave fewer assurances and opportunities to come in loaded. The sharp drop in repossession assignment volume right as the fuel prices spiked is a combination not many forecasted.

With these rising costs, agents need to be smarter on the numbers, and approach clients with solid facts. Our vendor reps have bosses that also press them for better numbers, and reduced expenses. This industry has been squeezed dry and needs to show facts to keep us sustainable.

Thank you to the lenders that have taken a proactive approach to fuel surcharges, and increased mileage rates.

James Waldron

CEO of 1st Adjusters, Inc.