The trucking industry is incredibly vital to the national economy, carrying around 60% of the trade goods. Compared to the past few years, 2018 for the trucking industry was considered the best year in modern times as per the ATA American Trucking Trends 2019 report. The year had witnessed a massive rise in freight volume, strong customer demand and spending, new technological advancements, and the overall industry revenue up around USD 96 billion from the preceding year.
However, this year the world has witnessed an overnight change in diverse industrial sectors due to the novel coronavirus pandemic. The year 2020 has indeed been a frantic and bumpy period, especially for the trucking industry. According to the research study, the 2021 vision is a transitional year for the trucking industry.
Brief Overview of the Trucking Industry
The trucking industry is a cyclical sector comprised of companies that provide shipping services mostly for commercial businesses using tractor-trailers. Although the year 2018 proved to be the best year for the trucking sector, the market condition started to deteriorate in the third quarter of 2018, leaving behind some large shoes to fill.
Unfortunately, 2019 could not meet the mark, with freight rates falling by 27 percent as per Camino Financial. As a result, many trucking companies had to shut down their business.
“According to the FMCSA and FTR Transportation Intelligence, by September 2019, around 13,482 carriers and 34,906 tractors were removed from the truckload capacity market.”
Later in the following months, distress post-haste started increasing, including the largest bankruptcy in truckload carrier history. Beginning in 2017 and lasting through 2019, the trucking industry as a whole saw a massive boom in the numbers, which statistically would mean we were already preparing for a drawback in 2020.
However, the year 2020 had a different narrative for diverse industry sectors, full of unexpected twists and turns. The advent of the Covid-19 pandemic brought the entire world to a standstill, affecting the personal and professional presence worldwide. Every industry felt the reverberations in one way or another and the trucking sector was not exempt.
In the second quarter of 2020, moderate retail inventories and a robust spot market have improved expectations as the freight market tightens. According to the researched analyst, retailers’ sales that support freight demand strength are foreseen to surge in the second half of 2020, while nonessential freight demand continues to improve. Even though 2020 anticipated a soft year in the industry, the Covid-19 pandemic has only exasperated it. According to the Coyote report for 2020–2023, the world has already experienced the market floor at the beginning of May. Although it is impossible for the industry to recover overnight, the industry still sees the average trends as anticipated as, just nine to twelve months later than expected.
So what’s next? How will 2021 treat the trucking industry amidst this pandemic?
According to the ACT’s latest release of the North American Commercial Vehicle Outlook, 2021 is foreseen to be a transition year as markets recover from the negative impact of Covid-19 into a meaningful and positive trend going into a better state in 2022. A commercial rebound in 2021 is likely to occur due to the combination of a structurally sound economy, placed before the coronavirus clearing the entire country. As a result, extensive government support and a great deal of pent-up demand for all types of products and services appear to be a recipe for the economy to rebound, as per the industry experts.
Further, according to the research report, the year 2021 for carriers will have the upper hand on pricing, given that the current conditions and demand will likely tighten up in the first quarter of the year. The truckers who consistently use preferred third-party carriers are likely to benefit in the long run. They can leverage current market conditions for multi-year contracts rather than bidding out freight every time.
Five Sustainability Trends That Surface Trucking Industry in 2021
With the trucking industry streamlining its operations to become safer and more profitable, numerous elements have been altered over the last few months.
1. Structure of Payment
In the year 2019, there was a shortage of jobs in the trucking industry, which resulted in structuring the payment method currently operated by the trucking industry. It is far less than what the average American earns. According to industry experts, the payment structure is foreseen to rise if the sector experiences positive growth. However, the pricing will appear to remain low if the industry does not undergo substantial change.
2. Alternative of Fuel Trucks
Fuel costs have impacted the number of expenses that trucking companies have to incur. Due to this, the resource’s limited nature and fuel cost association, becoming a source of concern for companies operating within the trucking industry.
In today’s era, funds play a vital role in every sector, including the trucking industry. To save money that they would have to spend on fuel daily, most of the trucking companies have opted for alternative energy such as electric trucks. Apart from proving to be cost-effective, these trucks also make the industry more sustainable.
3. Electronic Logging Device (ELD)
Earlier, to keep track of the driving hours, mileage covered, data about location, and fuel consumption update, truck drivers had to maintain the bills and recorded detailed data in logbooks. Today, with the advancement of technology, several industry sectors, including the trucking industry, have witnessed a change in their working structure. The transportation industry streamlines its operations by employing software and hardware programs to become more efficient.
“Electronic Logging Device or ELD is a smart technology that allows fleet managers to monitor the carriers easily.”
Tracking the driving hours to fuel consumption and guiding them with the right route helps the fleet managers keep an eye on the truck driver. Over and above, it has also improved the trucking company’s productivity and profitability, as data gathering has now become more manageable. The advent of this technology has undoubtedly improved the way the trucking industry used to function earlier. Therefore, if you run a trucking company, ensure that you get the best ELD solutions in Canada for your fleet.
4. Urbanization
In this modernized world, where technology plays a vital role in almost every sector, the trucking industry is nowhere behind. It will soon cross the rural areas that are moderately converting into urban landscapes. As a result, urbanization will make the trucking industry more lucrative and trigger an increase in the industry’s investors.
5. Use of Data Analytics
Data analytics is an essential tool used to optimize businesses for growth in any part of the world. Today, big data and data analytics has been integrated into trucking companies to help them identify areas to improve.
Market Turnover
Although the trucking industry’s current situation might not be in the best market condition due to the commence of the covid-19 pandemic, some experts are enthusiastic and optimistic about 2021. It is due to the downward trend endured by the trucking industry in 2019. As a result, many believe that the industry is likely to turn around and withstand a gradual increase in its new developments. According to the research study, the turnover of the transportation market is expected to emerge in 2021. It can genuinely help the entire industry and one factor that can help save several companies that are likely to go under unless the market’s current conditions improve.
Hence, the arrival of the latest upgraded technologies has made the journal of fleet owners and trucking industries more manageable and accurate. The industry now experiences a lot of transformation with such trends reformed the entire trucking industry.
This article first appeared on the VegitOne Blog at https://www.vegitone.com/face-of-trucking-industry
