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The trucking industry in the United States hauls the
country’s economy by transporting huge quantities of materials (raw and finished
ones) from manufacturing plants to retail distribution centers.
Trucking logistics enhance trucking operations and deliver service efficiency and business
profitability by identifying the most efficient routes for the fleet, the optimum types of
fuel for fleet, and enabling drivers to use better communication between themselves and
their handlers.
With a market
value of 791.7 billion U.S. dollars in 2019, trucking oversees a significant
portion of freight movements in America.
The industry is a honeycomb to foreign direct investment which grew by $1.5 billion
in 2018, not to mention the United States Business Logistics Costs jumped to $1.6
trillion in 2018.
According to
the report, the United States freight and logistics market will witness a
compound annual growth rate of ~3.2% between 2020-2025.
With the economic condition of America growing at an
annual rate of 6.7 percent in the second quarter of 2021, the economic growth of the
logistics industry is projected to pull upward, along with the fact that there has been a
growth of container volumes of the ports in the United States in the first half of
2019.
The U.S. trucking industry, in 2006 employed 1.8 million drivers of heavy trucks. According
to the
statistics, the industry employed over 1.5 million people in 2018.
This report of the
U.S. Bureau Of labor Statistics gives a detailed understanding of the status
of employment in transportation and warehousing.
The long-haul trucking industry in America is expected to have very few available new hires,
as a large percentage of truck drivers are aging and are about to retire. Back in 2005, the
sector (long-haul trucking industry), the number of truck drivers fell short of 20,000 and
increased to 38,000 by 2014.
As a matter of fact, the long-haul trucking industry has earned notoriety for higher
employee turnover rates, meaning for every 100 new employees hired,
136 quit their jobs.
The trucking industry in the United States is competitive because of numerous operators in
the market, including some of the privately held carriers and companies outside the
industry, like air-transporters.
Under such a competitive environment, when customers have numerous alternative shippers, the
trucking companies are leaving no stone unturned in cultivating ties with customers by
serving them with excellent service to generate repeat business.
The fleet is in dire need of upgrades to keep maintenance costs in control, considering older
vehicles depend on more maintenance.
Moreover, the U.S. environmental standards command trucking companies to ensure that their
vehicles are in good working condition and more efficient. Companies have to follow
appropriate fleet sizes based on the prevailing economic situation of the country.
For example, when the economic situation is in a downward spiral, truckers cut short on the
number of vehicles in operations to avoid exceeding the holding capacity.
Seasonal factors affect the trucking and logistics industry, like the demand of their fleet
increasing in the calendar fourth quarter, when retailers update their inventory stock for
the major holiday shopping season.
LTL (less than load) freight companies experience higher demand in the middle of the
year than truckload operators, considering the transportation of homogenous goods is less
compared to a full truckload.
Both truckload and LTL players experience a slowdown in their business during the first
quarter of the year because of weather-related disruptions during this period.
The trucking and logistics industry is best suited to the nimble investors who can discern
ups and falls of the market.
One of the challenges the trucking industry faces is a shortage
of qualified drivers, as the Covid-19 pandemic has worsened the condition of
recruitment and retention of truck drivers.
It appears the pandemic’s influences will equate to an ongoing shortage of truck drivers
throughout upcoming years.
In addition, the pandemic has also pushed major carriers away from some of their core
customers, due to the changes in ROI demands and the price. These types of changes carry a
strong butterfly effect upsetting the already brittle supply chains in the country.
The good thing about the American transportation system is that it is notably adaptable.
Regardless of the situation, the industry has never slowed down its freight when it needed
to be moved. However, within the past seven years, the market pricing has been thrown in
disarray, as ports and rail train speeds run slow, resulting in a compromised system.
Moreover, importers and intermodal shippers also turn their attention to the truck.
According to
a Bloomberg report, the pandemic-induced crisis has forced the trucking industry to
bring in drivers from abroad.
Moreover, the financial strain caused by prolonged restrictions due to lockdown measures in
the aftermath of the pandemic has forced some companies to temporarily furlough employees or
cut short labor in line with revenue losses. On the other hand, the pandemic has also
increased the reliability of qualified drivers, as companies tend to retain
drivers .
Apart from driver shortage, the trucking industry is also marred
with issues like safety, increasing insurance costs, truck parking, and driver
retention.
The Trucking & Logistics industry in the United States consists of companies that move
people, products, and other goods across the country to different locations.
Under the industry, there are some of the most specific subsectors, such as
logistics services, air, and express delivery services, freight rail, maritime, and
trucking which form an integral part of transportation and logistics.
According to the
U.S. Bureau of Labor Statistics, there are more than 1.7 million
heavy-duty and tractor-trailer truck driving jobs in the United States.
While a large number of American blue-collar jobs have been on a downswing after the
pandemic, the truck driving jobs, on the other hand, grew confidently in numbers.
One of the reasons for this upswing is that the trucking industry is immune to automation
and offshoring, meaning technological advancement can’t affect the trucking industry's
employment any time soon.
Just as robots are yet to learn how to drive and park a rig, interstate truck driving can’t
be outsourced to China and other countries. This fact underlines the colossal value of the
trucking industry based on its robust influence in terms of contributing to the country’s
six percent of entire workforce strength.
The trucking industry in the United States is a powerful force today that directly influences
the political and economic geography of the nation. Throughout the years the industry has
been a necessity that is needed in nearly every tangible market.
It has gone through years of evolution before finally becoming the nation’s one of the most
dominant sectors that hauled nearly 72.5% of all freight equating to 11.84 billion tons
in 2019, making it a $791.7 billion industry representing 80.4% of America’s
freight bill.
Back in the era when automobiles were not invented, most freight was handled by train or
horse-drawn vehicles. Before the 19th century, trains were used to transport most of the
freight overland.
Though the locomotives were highly efficient in transporting large amounts of freight, there
was a problem of broad reachability, as the trains could only transport the freight to
centralized urban centers for distribution carried out by a means of horse-drawn transport.
Ten years later from the time when Winton Motor Carriage Company built one of the
first trailer trucks for moving cars from its factory, Fruehauf Trailer
Corporation came up with semi-trailer trucks which mostly served short-haul urban
routes.
At the beginning of 1910, technological advancement brought forth the contemporary trucking
industry with emerging gasoline-powered internal combustion engines and the development of
the tractor/semi-trailer combination, including the improvement of transmission and a
shift in preference from chain drivers to gear drivers.
These novelties helped shipping by truck gain popularity. By the end of 1914, more than
100,000 trucks were hitting the roads in the U.S. However, the use of trucks was limited to
mostly urban areas, considering the poor condition of the rural roads, tires of the trucks,
and a max speed of just 24 km/h.
The use and development of trucks rose dramatically during World War 1 (1914-1918)
as an efficient alternative to the congested railroads of the busy war years. During the
years, Roy Chapin
experimented with long-distance truck shipments. After the development of pneumatic tires
supporting heavier loads, trucks were able to drive at higher speeds. White, and
Mack, were two of the truck manufacturers that emerged during the busy war
years.
By 1920, more than a million trucks are hitting American roads.
The trucking industry started to witness a visible growth when the condition of rural roads
improved, and diesel engines (nearly 40% more efficient than gasoline engines) started to
become a norm, along with modernizing truck and trailer sizes and improvement in fifth wheel
coupling systems. All States in the country had their respective truck weight limitation
laws in effect.
The trucking industry held its foothold during the 1950s and 1960s when it witnessed
rapid infrastructural development of the Interstate Highway System and a broad
network of freeways that provided seamless connectivity to prime cities across the
continent.
The industry went through several enforcements of presidential and agency-based laws and
regulations. By 2006, over 26 million trucks were driving on American roads
transporting over 10 billion short tons (9.1 billion long tons) and projecting around
70% of the total volume of freight.
In the United States, all aspects of the trucking industry are regulated by two agencies,
the U.S. Department of Transportation, and the Federal Motor Carrier Safety
Administration (FMCSA).
There are different sets of rules for truck drivers concerning the number of daily and
weekly driving hours, the roads and highways they may drive upon, and a legal definition of
alcohol intoxication.
According to the Federal Highway
Administration , the permissible level of driving under the influence of alcohol is
0.04 percent as the blood alcohol concentration (BAC) level for CMV (commercial
motor vehicle) drivers, while BAC level for non-CMV drivers is set between 0.08 and 0.10
percent.
Rules and regulations regarding speed
limits for truck drivers vary in different States.
The definition of CMV set by FMCSA is a single or combination of vehicle (truck and trailer)
weighing 10,001 pounds or more and is qualified to transport hazardous materials marked
under the hazardous materials regulations.
The law enforcement authority has also set forth rules for length, width, and weight limits
for CMV vehicles for interstate commercial traffic. In this context, a truck driver is
someone employed to operate a CMV.
The truck drivers in the country usually spend 10-14 hours per day in driving, while
long-haul drivers spend weeks away from home.
The condition of truck drivers in the industry is dangerous, say they are five times more
likely to die on the
job than the average workers.
The truck drivers are often exposed to risk-prone lifestyles due to unhygienic eating, lack
of exercise, and injuries sustained at work.
The Covid-19 pandemic has resulted in devastating impacts on virtually all the industry
sectors operating in the United States. It has scrambled customer demand and portrayed a
complicated picture of the growth of the industry in the country.
This coronavirus pandemic has pressured trucking and logistics companies to keep their core
transportation system functional with a skeleton workforce. Another impact of the pandemic
is a sudden shortfall in sources of revenue or the finances of various transport operators
in the country.
One of the worst impacts of the pandemic on the trucking industry is the terrible shortage
of truck drivers, and if the report is to be believed, the shortage of truck drivers will
further deepen by 2026.
There has been a chronic lack of truck drivers in the country over the last many years, but
the pandemic has catapulted the situation of driver shortage to a crisis level, which
consequently has scaled up the demand for shipped goods, among many unpleasant upshots due
to shortage of truckers across the country, according to the
Bloomberg report.
Once the pandemic-induced lockdown measures are lifted, the trucking industry will have to
plan for the future, ensuring that all the transportation network is ready for a return to
normal operations.
The pandemic has also presented a bleak scenario to the truckers who fear being stranded
across state lines, as they
face plummeting pay, and are at higher risk of exposure to the viral
disease.
A precarious scenario such as this has understandably made the survival of truck drivers in
the U.S. difficult, given the current circumstances of the trucking industry under
pandemics.
To manage survival in the Covid-19 crisis, the trucking and logistics industry players must
plan some key steps, including determining cost and revenue implications of low ridership,
building a large pool of qualified workers, and creating contingency plans for how to resume
transportation service and handle the surge in demand.
Class 8 trucks are responsible for transporting 70% of all American
freight.
Advancement in technology has benefited several industries in the United States, including
the trucking industry from its corporate offices to the very truck itself.
As the American Journal of Transportation analyzes, the trucking industry is adopting
technological trends to become effective and efficient operators.
From cloud computing and blockchain technology to self-driving trucks and digital payment,
trucking companies are adopting cutting-edge technological trends to streamline their
business operations.
For example, data sharing technology is helping trucking sectors to keep track of driver and
vehicle progress remotely, along with other behaviors, like mileage and distance
routes.
The technology is helping the industry with traffic coordination in which communicating and
accessing fleet information remotely allows companies and drivers to improve the delivery
times.
Lastly, online technology has disrupted the trucking job market with real-time job boards
for drivers to apply for open roles seamlessly.
Some of the most famous trucking companies in the United States are considering newer
locations for conducting production operations and fulfilling the ongoing demand for trucks
in the country.
Texas, Illinois, and Ohio are preferred locations for Dry Vans, while
California and Illinois are the best choices for Reefers.
Texas and Pennsylvania are the production locations for flatbed vehicles
. These locations will rule the roost through 2022.
The trend to shift to a new production location is not a new phenomenon for the trucking
industry. It is something that the entire transportation and freight industry has been
following.
The Bureau of Labor Statistics has reported that the trucking industry has lost 6% of
its pre-pandemic
labor force of 1.52 million workers.
Most large and small trucking companies have suspended their business, given the unbearable
market conditions within the industry, rendering at least 3000 truckers unemployed, causing
a growing number of unemployed people in the country.
The report by the American Trucking Associations indicates a hiring and retention
crisis in the trucking industry.
One of the issues attributed to the problem of job loss of truck drivers is the median
income of $47,130 per year that is underwhelming, considering the amount of time they
are on the clock and the enormity of stress in the job.
There is also a dilemma of hiring younger interstate drivers, due to the risk factors of
inexperience that can lead to more accident prone possibilities.
Even though the market situation for the trucking and logistics industry is less than
enthusiastic, the industry experts are optimistic for the revival of the industry in
2022.
Experts believe that the industry will turn around and witness gradual growth as a result of
new developments upcoming.
Experts are hopeful about a market flip to emerge in 2022 for the trucking industry. One
reason attributed to such hopefulness is the increasing influence of the e-commerce industry
over the past few years.
Since truckers are an indispensable part of the e-commerce industry for safe transportation
of their goods from one place to another, the boom in the industry will lead to growth
within the trucking industry in 2022.
The expected growth in the industry will also influence the pricing model for truckers,
which is incredibly low at present.
A trucking franchise can be a good first start option for a new entrepreneur /trucking
company to allow a more successful entrance to the market. .
Since the trucking industry is a larger type of business, it requires larger resources,
knowledge, and support. As a result, a franchise can open a gateway to a lucrative trucking
business opportunity.
The American Trucking Association reports that freight transportation is an industry value
worth around $600 billion a year.
The fastest-growing segment within this gigantic industry is the shipping and freight
solutions and the management of supply chains and to help handle business efficiently
without having the expense of the fleet of trucks and warehouses. This means leveraging on
the franchise business model to start your own trucking business can be lucrative for you in
the future.
American Trucking Associations (ATA) is the largest and most comprehensive trade
association of 50 affiliated state associations in the United States. It is an 86-year old
federation representing sectors, including LTL, truckload, agriculture, livestock, auto
haulers, and large motor carriers to small mom-and-pop operations. ATA is the voice of the
nation’s trucking industry serving with the mission to advocate and communicate efforts
intended to make safety and profitability for its customers better.
Trucking industry defense association (TIDA) is a non-profit association. Founded in
1993, its members contribute knowledge and resources to the defense of the trucking
industry. The association is a favorite for more than 1600 motor carriers, defense
attorneys, trucking insurers, and claims serving companies. The association is responsible
for downsizing the cost of claims and lawsuits against the trucking industry. Members of
this association represent the industry’s interests and share their knowledge in defending
the trucking industry in needs, such as property damage, personal injury, cargo claims, and
worker’s compensation.
Owner-operator independent drivers association (OOIDA) was founded in 1973 as the
international trade association. It represents the interests of professional truckers and
independent owner-operators on the issues that affect them. With more than 150,000 members
in all 50 states and Canada, the association is the strong voice for more than 240,000
individual heavy-duty trucks and small truck fleets, representing their interests in more
powerful ways.
National association of small trucking companies (NASTC) came into existence in 1989
and it represents more than 10,000-member trucking companies by helping them control costs
through managed purchasing, consultation, and advocacy. The mission of the association is to
help member companies thrive in the competitive industry with a substantial amount of
bottom-line dollars.
National association of independent truckers (NAIT) came into existence in 1981 to
represent the interests of independent contractor small-business owners in the trucking
industry. Since its inception, the association has cultivated long-term partnerships with
providers dedicated to the industry. The association helps its members to stay up-to-date on
the latest industry and association developments, along with its programs and services meant
for members.
Women in trucking association (WIT) came into existence in 1981 to represent the
interests of independent contractor small-business owners in the trucking industry. Since
its inception, the association has cultivated long-term partnerships with providers
dedicated to the industry. The association helps its members to stay up-to-date on the
latest industry and association developments, along with its programs and services meant for
members.
James E.
Casey was born on March 29, 1888, in Pick Handle Gulch near Candelaria,
Nevada. He was the founder of today’s one of the most respected and recognized companies, United
Parcel Service (formerly the American Messenger Company) – a
multinational shipping & receiving and supply chain management company headquartered
in Sandy Springs, Georgia, U.S.
James and his friend Claude Ryan built the American Messenger Company in 1907, with
just two bicycles and $100 in capital, in a six-foot by seven-foot basement office below a
Seattle saloon. During the initial humble beginnings, they hired six boys responsible for
delivering telegrams and other messages all over Seattle, on foot, bicycle, or
motorcycle.
Their company was facing tough competition from nine competing messenger services that were
already there in booming Seattle. However, Casey and his team kept their relentless pursuit
of business success.
Later, the American Messenger Company merged with Evert McCabe's Motorcycle Messengers
in 1913 and was renamed Merchants Parcel Delivery. Soon the services of the company
expanded beyond Seattle, and it was rebranded as the United Parcel Service
(UPS).
The trademark brown delivery vehicles of the UPS became so popular that it stood for
security, trustworthiness, and efficiency in service delivery. The motto
“best service and lowest rates” was the hallmark business message of the
company.
Casey was a vehement supporter of employee enhancement programs, becoming the first
businessman in America who had launched a profit-sharing plan dedicated to employees.
Casey sought ways to support those people who didn’t have a family life and so, he created
Casey Family Programs in 1966 for the children, providing stability and an opportunity for
growth to responsible adulthood.
Casey passed away on June 06, 1983, leaving behind three legacies - UPS, the Annie E.
Casey Foundation, and Casey Family Programs. He is a member of the U.S.
Department of Labor Hall of Fame
(since 2002).
Considering more than 70% of all domestic freight tonnage is hauled by trucks, the
trucking industry can be a difficult business to break into. Moreover, there are certain
challenges in the industry, such as tight profit margins, and 80% market
saturation is caused by small trucking businesses.
Besides, there is a narrowed survival rate in the industry, say only 15%
of new trucking companies manage to keep their businesses alive into their second
year in business.
If these stats discourage you from starting a new trucking business, just remember that
financing a trucking business is a surefire way to crush over these pesky speed
bumps.
There are different types of truck finance options available for you in the market that you
can choose to put your trucking & logistics business in the fast lane, or options to start a
new business that may cost you in the ballpark of between $10,000 and
$20,000.
The trucking business loan comes handy to bankroll all types of expenses for your small
trucking businesses. A positive option is having lenders in the market who won’t subject
your loan candidacy to a stringent review of your credit score. You will get the required
working capital easily to run a successful commercial trucking business.
Since many financing options are available in the market, choosing the one best suited to
your business need is often a cumbersome exercise. The job of finding a business loan
becomes harder for the borrower with a poor credit score.
Traditional lenders often shy away from such lenders and also hesitate considering the loan
candidacy of newly established companies, or applicants whose credit score is below the
review criteria, according to their terms and conditions.
Under such circumstances, your loan application for trucking business finance may not be
considered, or if approved, you will receive the funds after several weeks and then be
required to pay off that finance for years.
Therefore, the first rule of thumb is understanding the fine prints of the application
requirements and being armed with proper documentation.
Consider a lender that is willing to help guide you through a simple application process and
ensure that the decision to secure a loan is done faster. Choose a lender that doesn’t
reject a borrower’s loan candidacy based on poor credit scores or the unhealthy financial
condition of a business or any factor that may pronounce rejection of your loan candidacy.
The most important thing to understand is the purpose for which you wish to take a loan and
whether that financing fits into your business plan and future goals. Trucking business
financing should be time-bound and manageable, not long-term debt.
The mission of Small Business Administration (SBA) Loans is to assist small business
companies and entrepreneurs across the U.S. and address their business concerns, along with
boosting the overall economy of the country.
It offers several loan programs for trucking companies under flexible rates and
terms.
Since SBA loans are government-backed, trucking business companies can opt for one of the
suitable loan options provided by the agency to purchase equipment, expand the business and
use the loan as working capital to meet other business needs.
The amount of SBA loans to receive depends on varying factors defined under its terms & rates.
Equipment financing is a viable financial solution to purchase expensive equipment for the
trucking business. Whether you want to purchase a new or used truck or different types of
long-lasting physical assets necessary for your business, this financing option can solve
your needs.
It allows you to break down the cost of expensive equipment into a supportable payment
option that you can manage.
It involves a set number of scheduled payments made to the lender to offset the expensive
purchase or get working capital. Use the loan to buy a new piece of equipment, or for
working capital.
Fund your business expenses or address unforeseeable emergencies, or buy equipment. The loan
you get has a fixed credit limit, allowing you to make multiple draws as needed within the
credit limit.
It offers a revolving line of credit to fund emergency-induced needs in your trucking
business. Commitment to paying down credit cards each month will improve your credit score
as well.
This loan type involves selling your unpaid invoice to your lender for a discount. The
balance you receive is the rebated amount lent by your lender from the payment made by the
customer.
Because of problems associated with loan acquisition for trucking business loans from the
lenders with strict eligibility criteria, most borrowers turn to alternative lenders,
someone with relatively more flexible funding criteria.
In regard to trucking business loans, Funderial has been an excellent resource for
lending. Since 2010, this BBB Accredited Business remains a leader in the lending market
assisting over $1 billion dollars in lending to small to midsize businesses providing them
with flexible lending /repayment options specific to their needs.
For trucking businesses to run successfully, timely financial assistance is one of the most
important things to manage cash flow, cover daily operational expenses, including but
limited to equipment expenses, including new equipment upgrades, maintaining older
equipment, expanding the business development marketing/advertising, refinancing existing
debts, payroll, etc.
This is where loan companies like Funderial come into the picture, extending a broad
variety of loan options for small and medium-sized businesses, at attractive terms through
in-house financing models, as well as the offer of trusted lending partners across the
United States.
To help you operate your business and maintain its sustainable growth, we have a host of
unique financing options at affordable rates and easy terms, with instant approval timespan,
and quick turn around funding.
We are fully aware of the dire financial need a business owner experiences. In critical
times like pandemic-ravaged economy forcing small businesses to shut down their operations
due to lack of funding, our well-timed funding assistance can help your business survive and
thrive.