Are you wondering what the future holds for the trucking industry? If YES, here is what the future holds and the 10 latest trends and facts to note in the industry.
The United States trucking industry remains one of the biggest revenue streams in the nation’s economy and it is responsible for transporting 70 percent of all goods in the U.S. In 2019, the industry’s total revenue reached $791.7 billion.
Aside from the transportation of goods, the trucking industry employs millions of workers, making up about six percent of the nation’s workforce. Note that businesses of all sizes depend on the trucking industry to maintain fast delivery times and deliver products safely all over the nation.
The trucking industry handles much more cargo than trains, ships, or planes: and without trucks, goods could never travel from rail yards, ports, and airports to their final destinations. If the trucking industry stopped rolling, the U.S. economy would grind to a halt.
Without the trucking industry, the United States would not be the same, as it is an essential industry that helps keep the country’s economy afloat. Since the trucking and freight industry is such a profitable source of income for the nation’s economy, a lot of businesses rely on it for their everyday operation.
The industry represents more than half of the nation’s freight bill, and without it, the economy would suffer. For-hire carriers and private carriers make up most of the nation’s trucking companies.
However, there are several important expenses that affect the profitability of companies in this industry. Labor costs have a considerable impact on earnings. Trucking companies need a deep roster of qualified drivers and freight handlers.
The supply of available drivers often tends to be slim, resulting in intense competition for qualified talent. Companies need to offer competitive wages and benefits to attract the best employees.
Fuel is indeed another expense that is expected to be managed carefully. Lengthy trips, heavy loads, and large engines keep tractor-trailer fuel consumption high. Note that most of the cost of diesel fuel is passed on to customers through surcharges.
However, if fuel prices rise quickly, there may be a lag in recouping all of the related outlays, therefore hurting a trucker’s short-term profitability. Most companies prefer to rely on surcharges rather than long-term fuel-contract hedging.
Latest Trends in the United States Trucking Industry
Within the past few years, the trucking industry has witnessed enormous changes in terms of the manner in which they operate and the kind of trucks that are making their way to the market space. In the United States alone, the industry had witnessed ups and downs which have impacted the overall production and development within this space.
There have been various things that have impacted the manner the industry has functioned, and there have been numerous elements that have changed the way work is received within this industry. Howbeit, here are the 10 latest trends to be wary of in this industry.
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Rising Fuel Costs
Over the years, fuel costs have steadily increased because of the limited nature of this resource, which always impacts the trucking industry. Fuel has always been one of the primary factors when accounting for the expenses that trucking companies have to incur, and the growing costs of fuel have always been a matter of concern for companies operating within this industry.
However, the solutions present for this are far more than what the industry had in the past. Currently, trucking companies can choose to go in for alternative fuel trucks or even electric trucks to cut costs.
According to experts, one of the more beneficial developments that the industry is likely to experience in 2023 is the growth of urbanization. Within the past few years, most of the country has experienced wide-scale development, with most rural areas being converted into urban landscapes.
This entails that it is easier for trucks to be able to traverse through parts of the country that they weren’t able to traverse through before. It also means that the trucking industry can widen its scope and reach and offer its services to a much larger customer base, thereby helping them generate significantly more business in the process.
Have it in mind that most of the rural areas in the country are likely to have access to all the necessities that urban cities depend on, making it possible for companies within this industry to expand their business even further.
Within the past few months, a good number of large and small trucking companies have closed their doors for business due to harsh market conditions prevalent within this industry. Presently, at least three thousand truckers are unemployed due to the closing down of these companies, leading to a growing number of unemployed people. One of the reasons for this is because of the shortage of movement of goods.
Note that retail companies are moving fewer goods from one place to another, causing many trucking companies to lose out because of lack of work.
Also note that this has resulted in them going under, causing a drop in profitability within this industry. The trend is not likely to change in the coming year unless there is a large spike in the retail industry and a significant increase in freight flow.
Incorporation of Data Analytics
Data Analytics is a very crucial tool that businesses worldwide are eager to leverage and has helped boost the overall impact that businesses have. A good number of companies in the trucking industry have already realized the benefit of incorporating data analytics into their work, and more companies are likely to follow in their footsteps in the coming year.
in 2023, data analytics will be applied to the work that corporate spaces do and the actual vehicles that are on the road. Most vehicles are being developed with technology that can send information to a source regarding the route and operations of the vehicle.
Also, note that this technology can help the trucking industry identify the areas that need development and help them understand the areas that they can improve on to make their operations more efficient.
Improvement Of Technology
Technology has ignited widespread improvements to a number of industries, and the trucking industry is not exempt from this. Right from the corporate offices of trucking companies to the very trucks themselves, technology has been improving.
Corporate offices are now employing a number of software programs to help make their operations more efficient and streamlined. Also, trucks that are being used are now being fitted with far better technology than before, and more trucks are beginning to incorporate ‘smart’ technology to improve the functionality of the vehicle.
Note that the concept of ‘tracking an order’ is also something that has caused many trucking companies to have to set up technology that helps them keep track of the goods that are being carried about, and also because they have to convey this information to the customers buying the goods.
Influence of E-commerce
Within the past few years, the e-commerce industry has grown enormously, and we currently live in a world where people prefer to shop online than in-store. The wide variety available online and the fast fashion that comes with it have made this industry bloom and have helped it become one of the most successful industries today.
It is important to note that the e-commerce industry cannot function without the help of the trucking industry. This industry depends on truckers to get their goods from one place to another, which entails that improvements in the e-commerce industry will lead to improvements within the trucking industry.
Changes in Pricing
Note that the pricing that truckers currently operate at is considered to be incredibly low, so much so that truckers earn far less than the average American. During 2019, the pricing that truckers worked with experienced a massive decline owing to the shortage of jobs.
Trucking companies started to charge less for fear of not being able to get work at all. in 2023, the pricing of trucking companies will have to change, either for the better or worse.
In the United States, if the market continues to decline, trucking companies will have to lower their prices even further. If the industry experiences positive growth, the prices can rise back up to what they were before the decline. Either way, there is no argument that there are going to be massive changes to the pricing when it comes to the trucking services that companies offer.
Higher Number of Mergers
While a good number of companies within this industry are going under due to the harsh market conditions, many companies are choosing to go down the alternative route and merge with other companies.
Some trucking companies are eager to move in this direction if the market doesn’t improve and if trucking companies don’t have any other alternative to turn to. In terms of mergers, there are two main routes that trucking companies are likely to divulge into.
The first one is to merge with an existing trucking company to be able to pool resources together and withstand the market. Note that this allows companies to continue their operations and maybe even expand to newer territories.
The second route that trucking companies can take is to merge with a company of a different sector to expand the range of services they can provide. Indeed, this would then help them stay afloat until the market comes to a more favorable point.
Shift In Production Locations
Within the past few years, the production locations for some of the most popular trucking companies have remained constant. Companies are beginning to look at newer locations to be able to conduct their production operations and to be able to meet the demand for trucks that currently exist.
- For Dry Vans, Texas, Illinois and Ohio stand as some of the locations that companies are likely to shift to.
- For Reefers, California and Illinois are the preferred locations.
- Flatbed vehicles are primarily being produced in the state of Texas and Pennsylvania and are likely to continue there through 2022.
Note that the trend of shifting to a new location is not exclusive to the trucking industry and is something that is being witnessed across the entire transportation and freight industry.
A Market Flip
Although the trucking industry might not be in the best market situation currently, there are numerous experts who are optimistic about the future and all that it is likely to bring. Owing to the decline that the industry experienced during 2019, many expect that the industry is likely to turn around and experience a gradual increase as a result of the new developments that are coming to this industry.
According to experts, a market flip is expected to emerge in the coming years and is something that can truly help the entire industry and one factor that can help save the several companies that are likely to go under unless the current conditions within the market improve.
Basic Facts about the United States Trucking Industry
For anyone who wants to be familiar with the ins and outs of the trucking industry, being familiar with the basic facts and present statistical data behind it is incredibly important. Here are 10 must-know facts regarding the trucking industry and its developments over the past year.
- Highest GDP in The World: The United States presently maintains its number one spot when it comes to GDP from the trucking industry. The GDP of this industry is higher than that of 150 nations in the entire world.
- The Job Percentage: Note that the trucking industry takes up a notable chunk of the US employee market, with more than 5.8% of jobs in the country being related to the trucking industry.
- Job Demand: There is an ever-growing demand for truck drivers, and experts believe that the trucking industry needs to hire at least 900,000 more people to meet the growing demand for truck drivers.
- Annual Income: Even with the large demand for truck drivers, the annual income of those working in this position is significantly less compared to the annual income of most Americans.
- Miles per Year: Truck drivers put in countless hours into their work, and the average truck driver logs in more than 100,000 miles every single year.
- Biggest Employer: Walmart presently stands as a company that has the most number of hired truckers, standing at 8,600.
- Total Weight Carried: In the United States, trucks carried approximately 10.8 billion tons of goods across the country.
- Preferred Form of Transportation: Close to 70% of the country’s goods is carried around by trucks from one state to the other.
- Job Diversity: The trucking industry has an enormous amount of diversity, with more than 40% of the jobs being held by people belonging to minorities.
- Grocery Store Dependence: Grocery stores are incredibly dependent on truck drivers to carry their goods, and most grocery stores would run out within three days if truck drivers stopped delivering their goods.
Although the trucking industry has gone through major shifts in recent years, it still remains one of the nation’s most profitable sectors. This industry is best suited to nimble investors, able to differentiate market bottoms and peaks. At the bottom of the business cycle, truckers’ price-earnings ratios will reach historic highs owing to sharply lower share earnings.
Those buying at the bottom often enjoy price gains during long, multi-year recoveries. It is true that most of these equities pay dividends, but the average yield is below that of all dividend-paying stocks reviewed by experts. Conservative income-oriented investors would do better elsewhere.