The trucking industry is pushing forward and evolving. With the economy improving by the day and demand for trucks growing, the industry seems to be off to a great start in 2018. Who is looking to buy and lease trucks and trailers? What are some of the more common trends in the industry? What should I know about the trucking industry that I don’t know already?
We will cover all of that in this research report.
With an ever-changing industry, it is imperative to not only know what is happening now but what will happen soon due to the quick-changing pace. What is not changing is how central and pivotal trucking is to the US economy. This industry quite literally drives the economy by moving 10.5 billion tons of freight each year, and according to the American Trucking Association (ATA), this should not expect any slowing down.
The ATA has projected that goods hauled by trucks are supposed to grow by three percent for the next five years, starting in 2018 and stretching to 2023. This growth is reflective of the LTL freight and truckload, with trucks remaining as the prominent freight carrier. Some of the possible reasons for this are due to the growth of the population and economy. With both LTL and truckload freight trending higher, the industry is by no means struggling to find business.
However, as good as it is that the trucking industry is rolling in terms of business, it also has some downsides. Averitt Express conducts an annual survey every year, and they found that the main obstacle the industry will face this year is truck capacity. This was stated in an articled posted by Fleet Owner:
“Based on a poll of 1,600 shippers across a wide variety of industries in late 2017, Averitt’s State of The North American Supply Chain survey found that nearly one in five respondents experienced capacity issues last year – with capacity issues nearly doubling in comparison to 2016.”
The truck capacity issue is mainly caused by three factors: the ELD mandate, the truck driver shortage and the growth in manufacturing. With 76% of the people that responded to the survey stating that they expect their shipment volumes to increase this year, companies are opening their options to air and rail. Just in November 2017, there was a year-over-year increase record set with a 28% increase in air cargo transportation compared to the same year in 2016.
Fuel Prices Going Up
One trend that truckers will not be excited to hear is that fuel prices are projected to increase in the next two years. GasBuddy believes we will see the highest gas prices since 2014. They are anticipating an increase of $0.19 per gallon, which would be an extra $133 per year for the average American household. Imagine how much that will be for a trucker. A gallon of gas is expected to average $2.57 per gallon while Diesel will be averaging $2.70 per gallon in 2018.
Now how much money is this? 2018 is going to be higher than 2017, and 2017 was remembered for the wrong reasons with gas prices. GasBuddy’s report stated that “Compared to 2016, motorists will be shelling out $62 billion more during the year, enough to buy a fleet of 670 Boeing 737s.” The main cause is mostly due to the Organization of the Petroleum Exporting Countries cutting their oil production in November 2016. Although this is rough news, most of the country will see a $2 per gallon average throughout the year.
Revenue going up
Along with the demand for trucks, the industry will be growing alongside that demand. Although the revenue in the trucking industry could be negatively affected due to changes in hours that truckers can drive and rising fuel costs, the overall revenue in the industry will increase.
In 2017, revenue was projected to reach $719 billion, and that number is supposed to reach a mind-boggling amount in 2028. According to Trucks.com, the trucking industry is projected to bring in $1.25 trillion! Selling trucks will be consistent as well. Class 8 truck sales are projected to grow from 186,003 in 2017 to 257,567 in 2028, a 38 percent increase.
Who’s buying trucks?
When discussing who buys the most semi trucks, the major corporations are the ones that seem to dominate that category. Trucking firms this past October ordered 35,000 class 8 trucks, a 167 percent increase from the year before. Companies that move goods, organizations looking to resell semi trucks and corporations that need to move their own goods are the main truck sale demographic.
What is interesting is what is happening to the demographic in the industry among truckers themselves. What has largely been dominated by Caucasian males, the industry is becoming more diverse. Although caucasian males still make up 73 percent of the trucking demographic with less than 5 percent being women, there is a trend of a more diverse group completing driving programs.
Currently, Hispanic and African American individuals make up 12 percent of the trucking demographic. However, 51 percent of drivers completing driving programs were caucasian, which is a 3 percent decrease from 2009-2012. African American individuals made up 28 percent, Hispanics 12 percent and women 8 percent.
Truckers are mostly in their mid-40s, but students in driving programs on average are around 10 years younger than the average trucker’s age with 14 percent of those students being women.
We now know that we have a better grasp on where the industry is currently and where we are headed. Although some of these trends and statistics may change, we know that the importance trucking brings to America will not. We want to wish you good luck in the coming year, and hope we can all help the industry continue to move in the right direction.