The trucking industry is constantly seeing changes as the season change, the economy slows down and the trade war with China continues. The freight industry has seen softness over the first half of the year. As reported by the U.S the Bureau of Transportation Statistics, freight transportation fell 0.1% in June from revised May, falling for the second consecutive month.
A recent report from DAT.com, year to date, load-to-truck ratio were notably stronger later in the month of August, opposite of trucking industry trends we saw in the first half of 2019. Also, fuel prices are down 0.7 percent year to date, decreasing the operating cost for carriers.
Trucking Trends to Watch
The freight market experienced softness in the first half of 2019. This means an imbalance between supply and demand in the trucking industry. According to Tim Denoyer, the vice president of ACT Research, the freight recession is limited to the spot market. The American Trucking Association released a forecast for the freight industry, predicting strong growth of 25.6 percent between 2019 – 2030. Trucking tonnage, a key indicator of freight demand continues to grow.
The report also notes trucking and total rail transportation will lose relative market share, even as revenues and tonnage grows. On the other hand, intermodal rail, air and domestic waterborne transportation will show modest growth and pipeline transportation will experience explosive growth – surging 17.1% in tonnage and 8.6% in revenue over the next decade.
Spot Market Volume and Rates
After seeing a large increase last year, the spot market has seen a downfall. It is usual for spot market rates to dip as the season changes but the global economy is also headed into a possible recession. According to the transportation industry data firm, Broughton Capital LLC., approximately 640 carriers went out of business in the first half of 2019. As the spot market continues to soften, fleets that operate in that market have fallen. This means those who operate mainly in that market face growing risk.
What does this mean for the trucking industry?
The shortage of truck drivers continues to be a concern to fleet owners. The forecast through 2024 show growth for freight companies. But in order to meet the nation’s freight demand, ATA report says the trucking industry will need to hire 1.1 million new drivers over the next decade – an average of 110,000 per year. This is to replace retiring drivers and keep up with growth in the economy.
With an increase in national freight demand, carriers will need all available funds to keep their routes going as smoothly as possible. That is where freight factoring for trucking comes in. Factoring provides truckers with working capital instead of waiting to get paid.
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