While mainstream news outlets keep posting headlines about a possible recession, the struggle of small businesses, the price of diesel, and other doom-and-gloom topics, the view within the trucking industry is very different. Many trucking companies and owner-operators are kicking off Q1 2023 with a hopeful – if not optimistic – outlook, given the evidence. We have your antidote to the headlines you may have been reading for the last month or so.
1. There is going to be a recession
We have been hearing that a recession is right around the corner for a while now. There might be a recession, but it will probably not look like the typical recessions the United States has experienced, such as in 2007 and the aftershock of Reaganomics. Unemployment has been at record lows and production is up. On the other side of the coin, prices are up for everything from groceries to diesel fuel. Yet the price increases are not just in the United States. That issue is worldwide due to international conflicts and countries restricting supplies to Europe and the US.
The big mitigating factor in all of this is that the economy in the United States relies on trucking, and if there has been any single industry that has pulled the country out of economic setbacks, from the COVID-19 pandemic to the Great Recession, it has been trucking. The demand placed on the trucking industry to move goods and raw materials will keep the economy on track, even if there is a lot of turbulence in the near future.
2. Small trucking companies may face challenges
While prices at the pump for personal vehicles have dropped considerably since last June, diesel prices have not. Analysts have stated that while larger carriers can absorb the cost, smaller carriers are bearing the brunt of fuel expenses. This may be true, considering fuel is one of the biggest costs for trucking companies, and takes up a much larger portion of revenue for smaller carriers. That said, the demand for smaller trucking companies has been on the rise over the past few years. With the rise of e-commerce and the pandemic all but transforming B2B and B2C purchases, small trucking companies are able to reach those customers that are outside of the radius of large carriers. Additionally, small trucking companies are able to provide the critical last-mile service that people and businesses have demanded for the past few years.
3. Trucking is not like what it was a few years ago
For the most part, trucking is more like it was a few years ago than it has been for the past couple of years. Data indicates that what the experts are calling a “slow down” is really the trucking industry getting back to pre-pandemic normalcy. The manufacturing sector produces nearly 60% of the mileage for the trucking industry, and that is up just over 4.6% year-over-year and is approaching the peak it reached in 2018. The wholesale sector is up 10% from where it was in 2019. Yet the market seems slower because supply chains are not as strained as they were during 2020 and 2021. With the CHIPS Act, manufacturing for electronics will also increase, lowering the strain and reliance on import shipments. The profitability in the trucking industry has hit near-record numbers, but the cost of fuel and general wage increases have caused that number to level off or dip slightly. Overall, the trucking industry is healthy, even without the high demand created by the COVID-19 pandemic.
4. The driver gap continues to grow
The lack of drivers will always be a hot-button issue in the trucking industry. Some say that as long as there is demand – and there is – then there will always be jobs to fill. The “silver wave” is sweeping the trucking industry right now, with a large number of career drivers hitting their retirement years. With the influx of people in their late-teens and early-20s who are actively seeking careers in trucking because it suits their life goals, carriers are repositioning their recruitment methods to appeal to a younger, more tech-savvy audience.
Single Point Capital offers a wide range of services to trucking companies of all types nationwide, from start-up programs to help owner-operators get their new trucking companies off the ground to dispatching services, steep discounts with our fuel program, and of course, our comprehensive freight factoring services. Contact Single Point Capital today to get started!