As vital as the trucking industry is for the United States, handling almost 70% of the total freight that passes through the U.S., it’s facing some dark times. With increasing regulatory pressure and the CSA coming into effect, truck driver turnover is now higher than ever. With an incredibly short retention span for drivers, the industry is facing increasing costs in a less than desireable marketplace.
In 2015, the US trucking market showed a slight dip when compared with previous years. SJ Consulting’s top 50 trucking firms only managed to show a 3.1% increase in revenue, compared to the nearly triple 9.1% increase seen in 2014. 2015 has, in fact, marked the slowest year-over-year increase since the recession in 2009.
Reasons for the Drop
There are a number of reasons that are slowing the growth of the trucking industries. Low cost fuel, for example, might sound like a good problem to have as it lowers operating expenses, however it also lowers fuel surcharges. Combined with a weak demand, it makes for considerably weaker growth potential. The Journal of Commerce notes that the average price per gallon of diesel fuel has dropped about 97 cents over the course of 2015, approximately 30% in total by the end of the year. Because of the lowered fuel surcharges, most carriers saw decreased revenue. However, the flipside to the low fuel costs is that many carriers so improved profitability which helped them stay afloat amid the weak demand.
The Era of Mergers and Acquisitions
With freight demand dropping across the board for global trade, the market place became somewhat of a wellspring for M&As. Larger carriers began to gobble up smaller carriers in the hopes of strengthening their resources in order to weather the coming storm. XPO Logistics, for example, has made their way to the top 50 after taking in Con-Way and French logistics firm Norbert Dentressangle. However, XPO wasn’t the only carrier part of the feeding frenzy as many other companies merged and combined their assets to form a larger, more cohesive unit.
What does this mean for Shippers?
As you can see, the logistics market is in a somewhat erratic condition right now, with a good number of things in a state of flux. As a shipper, especially those that are trying to cut costs, the US trucking industry is becoming even harder to navigate. Because of this, many shippers are looking towards brokers to help connect them with the trucking company that best fits their needs, while other shippers are looking to 3PLs to help them shore up and optimize their supply chain, determining the best modes of transportation for their business.
BlueGrace is one such 3PL that offers unique transportation management and optimization solutions. Our web-based system allows shippers to customize it to fit their particular needs whether it is just the look or the functionality. In addition, our customers can determine and book the best mode of transportation, carrier and rate by utilizing the system and have complete visibility of shipments along with access to important documents such as bills of lading, proof of delivery and weight and inspection documents.
To find out more, check out our website or contact one of our industry experts. We simplify the complex.