2018-2028: Forecast for the US Trucking industry
At present, the trucking industry is saddled with problems, a fact that many are already aware of: Fewer drivers, more accidents, rising insurance costs, narrowing margins, to state a few. On the bright side though, online shopping, and technology is taking this industry to greater heights.
Technology is expected to bring efficiencies that will cut costs, reduce violations, eliminate brokers, improve driver retention among other things. Ecommerce is expected to reduce average trip length, establisher tighter deadlines, for starters.
Additionally, there are a few not so intuitive changes that the next decade will bring out. Let's look at the top 10 trends that will define the next decade of the US trucking industry.
Brokers’ role to decline
As of 2016, there were about 13,000 freight brokers in this country, who acted as intermediaries between shippers and carriers. Brokers typically take a 15-20% commission (over $300) on each load, and collectively do $150 billion annual revenue for booking and managing loads. This is the most fragmented part of the trucking industry with the top 20 brokers accounting for less than 4% of total revenue.
In addition to taking a chunk of earnings from the carriers, brokers are known to lower the load price, cancel loads in the last minute, and are known to not provide full information about the loads. These unpredictabilities and costs have been hurting carriers and drivers alike.
With sufficient advancements technology, it is now possible for companies to work without involving middlemen. In the coming decade, this trend is only expected to continue.
Good drivers cost more and it becomes possible to afford them when brokerage is taken out of the equation.
Carriers will be broker-owned.
A full-range of transportation services makes a carrier an attractive one. With their roles now in jeopardy, brokers are coming in to own carriers themselves. With better financial strength, knowledge of the nation-wide freight forwarder systems, brokers are taking the logical and way-out to emerge as carriers.
Though the paperwork of permits and certificates needed for Motor Carriers is voluminous, the consolidation of responsibilities means less litigation, better service, and huge profits. The future will see giant-broker trucking companies.
Average trip-length will reduce
Back in 2000, big box retailers worked out of a handful of distribution centers. But by 2017 each of them had dozens of DCs all over the country. Online shopping drove this tred and big box retailers followed, said Bob Costello, chief economist for the American Trucking Associations. This trend is only expected to increase as retail firms use their hub and spoke model to improve time of delivery for online customers.
Expect a growth of 21%
The USA truck industry impacts every business in the country, and that is why it is in a fast growth stage. Innovations and improvements are bringing with themselves a new technology that will help transport loads without the need of brokers. The next decade or so will see a demand for short-trip loads and better pay-load prices.
For the coming decade, several publications including the TruckersReport predict that that good logistic strategies, planning, and incorporating new technology will lead to more productivity and growth in the industry.
Truck-Driver shortage to continue
One of the main reasons for driver shortages are the new rules and regulations. A large majority of them are approaching retirement, and regulation of driver-hours means they have to deliver the same quantities in fewer hours.
The truck driver retention trend shows a need for the hiring of 100,000 truck drivers to replace the drivers that are retiring. Small and medium trucking companies will see larger companies poaching their drivers, by offering better wages, working conditions, and bonuses.
A modification of immigration policy will be required to fill the shortages of skilled drivers . Women truck drivers who form only 6% of the workforce are being encouraged to make good use of the shortfall, and their numbers will increase. Adequate truck driver training with an increase in employee benefits and better employee relations can help curb the shortage.
The mandate for ELD will be implemented
This mandate will be the most significant change to happen and requires substantial business modifications. According to this, the trucking companies can save $1 billion annually by using the devices recommended which propose to make life easier by using the system to fill records and maintain log books in real-time. The government is also recommending these devices in order to increase road safety, ensure driver-hours are maintained, track and monitor drivers, loads and provide a communicative platform for drivers to improve their lot.
Inter-company mergers will continue
Trucking companies are facing the painful truth that if they are not big enough to get profitable deals and rates, they may not be in business for long. The new ELD mandate makes it harder for trucking firms to dodge federal limits on the hours drivers can work and will likely cut into productivity. That would pressure already razor-thin margins at smaller trucking firms, fueling consolidation.
Insurance rates will come down
In the last decade, the total insurance costs have hit the sky. It is expected that the market will see competition among insurers and prices will go down to 30% of the existing costs. This reduction will help the smaller fleet owners most as they struggle for their survival.
Profits will rise
Increasing profits is something the trucking industry was waiting for. Better time management, the advent of technological improvements, lean giant trucking companies, reduction of insurance rates, brokerages being cut-out, good time management practices and a host of evolving change management initiatives in the trucking industry will ensure that the company’s profits will rise by about 20%.
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