With 2018 coming to a close, many industry professionals are looking back on their year to help them prepare for 2019. Utilizing old data trends so they can better forecast things like cost, supply, expenses, and overall growth. While it is hard to predict all trends come the new year, we have highlighted the top trends in trucking to watch out and prepare for once 2019 arrives.
1) Capacity Crunch
The trucking industry is experiencing a low truck supply but a high demand for freight. One of the main reasons why this is happening is the driver shortage. The ever looming issue in trucking that seems to constantly be talked about, yet it's only gotten worse.
Each year, the older drivers are retiring and there are very few younger drivers left to take their place.
This is mostly due to the difficulty of the occupation. This shortage of drivers means that there will be few trucks on the road transporting freight. Consequently, this will worsen the economy and other industries who need their goods or services transported by truck.
It is like a fall from a high altitude – the trucking industry is pulling down the rest of the industries along with it. Due to almost all industries having products they need moved or delivered, it effects an extremely wide range of businesses.
2) Rising Rates
There were rates rising in 2018 and they will continue to rise in 2019 as well. The rates go straight proportionally with the capacity crunch. As the freight demand rises the rates rise as well but mostly in correlation with the supply fall.
To help simplify, there are 2 types of rates in the trucking industry we are focused on: spot market rates and contract rates. The spot rates are those that are quoted on the spot and are typically done for freight that is ready to move.
On the other hand, the contract rates are those that are locked in with a carrier via contract with the shipper and are usually based on a year-long estimate of freight volume.
It is predicted that the rates will stabilize at some point, but as long as capacity is tight, the rates will continue to rise. The increased rates is one of the biggest known reasons as to why the trucking industry is transitioning from highway transport to rail freight.
This is one of the most crucial transportation industry trends that in the near future can bring transition and encourage the shippers to depend on an intermodal process to help decrease rate issues.
3) New Technology
Each year there are new technologies breaking into the world of trucks. There are companies which are launching apps that ease the job of the trucking industry and drivers as well.
The shippers are embracing any solution that will provide them with an ease of the job. Carriers are also embracing the platforms which offer them a higher and a faster payment methods.
Another big area for potential growth is the autonomous vehicle. There are companies which use technology to create electric semi-trucks, which are utilized by some businesses. Generally these trucks usually have 500 mile range, which isn't a lot in terms of trucking. But this is just the start of an alternative fuel revolution.
While autonomous vehicles are still just in the experimental phase, there is no doubt that this technology will hit the market sooner than later. With full autonomy, operating costs would decline by about 40 percent. That would save U.S. for-hire trucking companies $85 billion to $125 billion within 10 to 20 years of full autonomous adoption. When autonomy does break into the trucking industry the landscape of how trucking in conducted will be altered forever.
4) AORBD to ELD
Most of the time getting new technology or solutions is a decision made by colleagues within the organization. But sometimes technology if forced upon companies due to changing laws and regulations. The switch from AOBRD to ELD is a prime example of that. When 2019 hits many trucking companies are going to be making the switch from AOBRD to ELD, if they haven't already.
The push from the FMCSA to make the switch is due to the accuracy, efficiency, and overall easier to use technology. With so many variables in the trucking industry costing time and money. This is one "forced" solution that will benefit companies and their supply chain, once they understand the positive potential of ELD's.
Finding friction within any industries supply chain can be problematic. Friction can create long lead times, bottle necking and make it difficult to forecast future events. ELD's can help to identify these inefficiencies within the supply chain, so you can take the necessary steps to negate them.
5) Increase in Fuel Cost
With fuel prices soaring, the entire transportation industry is constantly facing challenges and the trucking industry is no exception. Fuel has always been one of the biggest expenses in the trucking business as most of the truck engines are made to run on diesel, which is a relatively expensive fuel.
The diesel price will surely continue to rise in 2019 as well. Increase in fuel cost will make truck owners opt for alternative fuel trucks and autonomous or electric trucks. With these rising fuel costs comes an even harder push to get autonomous vehicles road ready.
Using alternative fuel allows carriers to stretch their costs over more mileage. The company owners need to maintain a balance between the rising fuel cost with other expenses to yield the maximum profit. It hard to find this balance at times, but being prepared for rising fuel prices is the best way to counteract them.
6) Taxes on the Rise
The trucking industry will be affected immensely in the future due to the rise in tax. There are fuel tax, road tax, federal excise tax etc., associated with this industry. You should try to find effective ways to increase your profitability in trucking, which enables you to keep up the rising taxes.
You can do things like
- Utilize alternative fuel
- Create efficiencies in your supply chain
- Use ELD's to get precise data on trucks (miles driven, fuel usage, maintenance)
- Forecast costs using last years data
There are various ways to have the maximum benefit of available tax savings. Make sure you are filing your taxes appropriately and timely. Hire a professional who can help you be aware of the exemptions, credits, and deductions you may receive. Prepare yourself for the constant fluctuation in tax and take necessary actions in order to run your trucking business smoothly.
Needless to say, all of the above-mentioned is a combination of interrelated trucking industry trends you must watch for in 2019. To manage success and thrive in the rapidly growing trucking industry, you need to implement new strategies to enhance your efficiency and mobility. Being proactive to an ever changing market will ensure your future success.