The commercial trucking industry is emerging from one of the most challenging times it has faced in generations. However, to quote the popular song of the 70s, many analysts are saying to truckers, “You ain’t seen nothing yet!”
The Times Are a Changing
Yet another song, this one by Bob Dylan, gives us a hint that this year and the coming decade will bring more transformational changes. The trucking industry in the United States is already one of the largest employers and one of the biggest contributors to GDP at more than $790 billion. However, these changes are part of why it stands to become an even more important player in the U.S. economy.
Many different factors are coming into play to drive these changes. It is worth taking a moment to examine a few of the reasons the trucking industry you will see in five years will look much different:
Higher Fuel Costs. One of the biggest factors that affect the trucking industry relates to fuel as a direct operating cost. The last few years have provided something of a respite from the rapid rises of the past two decades. The projections are that fuel costs will again start to rise in 2021. This will, in turn, increase the push for alternative energy sources and more efficient engines. The economics behind this dynamic will see more new fuel-efficient designs, new engines, and a new generation of trucks on the roads.
Shifting Logistics Landscapes. Several factors are combining to break up the traditional locations of production centers and distribution routes. Enhanced data analytics, automated warehouses, e-commerce operations, and greater emphasis on rapid delivery of all types of items are just a few of these factors. Corporations and transportation managers are rethinking the old models and responding with a rapid shift in the types and lengths of service offerings, shipping routes, and transportation corridors.
Industry Consolidation. The factors already discussed, as well as several others, are driving a new wave of industry consolidation. The pandemic created brutal market conditions that brought about many industry bankruptcies from small mom and pops to some of the largest carriers. Another side of this industry reshaping is seen in the number of mergers and buyouts. Trucking companies are merging among themselves, and also with other sectors, to vary their product and service offerings.
The rapid shifts in the retail industry are also driving this consolidation. While there are differing opinions about what the retail shakeout will ultimately mean, there is no question consumer buying habits are changing how retailers purchase their inventory and where they ship it.
Technology. The role of technology is transforming trucking from the top down and from the inside out. The driver who can remember “paper logs” is already a minority, and the role of electronics makes the cab a different environment today. From the use of GPS to dash cams to electronic monitoring of all types, the driving environment today is increasingly digitally driven. While this transition makes the roads safer and more efficient, it also affects the human side of the trucker’s work life. These trends will not only accelerate, but they will also become more pervasive. Of course, the most transformative of these technological innovations is the self-driving truck that will become a reality in some form by the end of the decade.
Industry Economics. The most difficult aspect of forecasting the trucking industry is the way these varied factors will work together to change the basic economics of the trucking industry. Most forecasters see coming out of this difficult period with a rapidly rising demand for more trucking capacity and more truckers. Those factors usually generate a rise in prices paid for transportation and increase the bargaining power of the commercial trucker.
This year, and those coming, will see a changing trucking industry. The net consensus seems to indicate new opportunities and new rewards for those companies and drivers who position themselves to take advantage of these trends.