The annual projection of the state of the freight economy released this year shows the trucking industry is expected to have an increased growth rate over the next decade as the country’s economy and population continue to expand. ATA Chief Economist, Bob Costello says, “our annual Freight Forecast is a valuable look at where we are headed so leaders in business and government can make important decisions about investments and policy.”
Our economy just came down from a high in 2018 after being lucrative in transporting goods. Manufacturers were making more goods, the housing market started to boom again, and people were spending money. The most recent years have proven growth within the industry representing a 5.4% increase in 2018, and the industry projects its revenues will increase by 53.8% to $1.601 trillion over the next decade. In 2019, the economy has started to experience a decline, which is an indicator that there are improvements that can be made to assure that these goals and productivity are met in the next decade.
The main delivery system for delivering goods is by using trucks, but a shortage of drivers is causing conflict within the industry. Being the main and literal driving force behind the industry, having the means and ability to deliver all of the goods is pertinent for their very success. While there may be a shortage of drivers operating trucks, there are also many other factors that could be affecting rates within the industry.
The following should be considered:
Reduce the miles driven with empty trailers: an estimation from reports about trucking mileage is that empty trailers are transported for almost 65 billion miles annually. If a truck is not full, they will often charge more money for space on the truck, but there are times when drivers aren’t even notified in advance of deliveries that weren’t planned out properly.
Decrease the delays at shipping docks: more than 60% of drivers recorded that the wait time at the shipping docks can be three or more hours of idling. The industry requires that a driver wait no more than two hours because this is the time that a driver isn’t paid for, and it affects the number of hours they are permitted to drive on a daily basis.
Coordination of broker shipments: there are freight brokers who arrange shipments with the truck drivers, but this first requires a broker to win the freight on the truck. After this, the driver of the truck is located and then the rates and pickup have to be agreed upon. This process overall can take hours, so being efficient with the time it takes is crucial.
There are also quite a few variables that are affecting the trucking industry currently. First, are the Chinese tariffs that were implemented over the past few months. “There are two things that are working that makes me feel this problem is going to go away,” said Economist, Noel Perry. “First off, demand for manufactured goods in China has slowed. So, they’re looking to make stuff for somebody. The other thing is that, of course, they send a lot more to us than we send to them. And therefore, if both sides put up the same level of tariffs, it hurts them a lot more than it would hurt us. So maybe the Chinese leaders have decided they should compromise.”
It is also expected that in 2019 the driver’s pay will increase for truck drivers to keep satisfied. All the while, trucking companies are also offering hefty sign-on bonuses in expectation of the industry’s growth. “2019 looks to be an OK year, but people will feel in our business that it is not a good year because they’re used to the wonderful things that happened in 2017 and especially 2018,” remarked Perry. Maybe it won’t be as wonderfully lucrative as last year, but FTR Vice President of Commercial Vehicles, Don Ake said, “the industry is still looking good going into 2019.”
Not only are trucking companies used to delivering goods to a retail location, but they are also bringing materials and products to disaster relief areas, such as the California forest fires and the East Coast hurricanes. As retail grows and more people purchase online, most deliveries are going across the country. The convenience of online shopping makes deliveries more frequent and will continue to grow over the next decade.
This year has generated 11,700 jobs so far, but truckers still are feeling anxious about this next year and whether they will be able to alleviate their recession fears.
Seidl of Cowen wrote to investors in May, "the death of freight has been greatly exaggerated." Seidl said in his note that "the tremendous strength in the freight market in the first half of 2018" just makes 2019 look really bad. So all-in-all, it still looks like the industry will continue to experience growth.
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