Market Update: How the Transportation Industry Starts the Year


Last year turned out to be a great year for transportation. Rates stayed fairly even despite predictions that they would rise, trucking companies were able to make significant profits for the first time in years, and capacity was loose enough to meet demand.

There are numerous predictions of what will happen in 2016, but it may be more useful to take a look at where the industry is at this point in time. Below are several trends occurring within the transportation industry that is shaping the way it operates and will continue to influence the industry this year.

Trucking Regulations and the Economy

The trucking industry faces new, debated regulations. Due to the fragile state of the economy and the importance of over-the-road trucking, new regulations have the potential to worsen problems in transportation and ultimately harm the economy. HOS rules, CSA scores, and the ELD mandate are among the most controversial regulations and have the most potential for harm. Read more here.

Big Data is More Important than Ever

Businesses have been collecting and analyzing data for years, but it’s becoming more important every year. A TMS is fundamental for insight and is necessary to be competitive in today’s world. Surprisingly, only 35% of companies use a TMS. The other 65% of businesses are missing out on a huge opportunity to enhance operations. Big data has radical potential, but software like a TMS makes it easy to begin data mining in a practical and profitable way. Read more here.

Preferred Shipper Phenomenon

The driver shortage is slowly getting worse. The transportation industry is expected to be short 74,000 drivers in 2016. Consequently, truck capacity becomes a rare commodity. Carriers are becoming more selective with the freight they haul so they can ensure the few drivers they can hire and retain are happy. Shippers will have to compete with one another to keep their freight moving regularly and at a reasonable price. Shippers who are chosen by carriers, or ‘preferred shippers’, will pay less for transportation and receive better service. Read more here.

Trucking Companies Begin to Prepare for Disruptive Technologies

3D printing is advancing every day and is not far away from being ready for widespread use. This will drastically alter trucking routes. Shipments of product components (i.e. parts of a car), a foundation of the trucking industry, will be nearly eliminated. Products will be made much closer to their point of sale, eliminating the need for cross country trips. On top of this, nearshoring will redirect truck traffic south to north, as opposed to west to east, as manufacturers move to Mexico and South America. Truck trips will be shorter and less frequent, and the need for some services, such as the long-haul trucker, will be eliminated. Carriers are trying to understand what ways their company will be impacted by 3D printing, and how the industries they serve will be impacted, in order to prepare for industry disruption.

Transportation Costs Are Rising

The cost of shipping remained relatively stable for most of 2015, but rates are rising, with the implementation of annual GRIs and fuel surcharge adjustments. Despite the low price of diesel, carriers are raising rates to compensate for all the lost revenue they’ve experienced in the past. Read more here.

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