The COVID-19 pandemic has disrupted everything from the way we talk with people to the way we do business. As the trucking industry continues to maintain supply lines throughout the United States – and exceed revenue averages compared to other industries – some analysts are raising concerns that the pandemic is creating an artificial bubble that could burst and set the trucking industry back in a big way. But is this there any truth to the hype?
Real Trucking Bubbles
Within the past four years, the trucking industry has experienced at least one major bubble. In 2018, the trucking industry was experiencing high capacity demands from shippers and brokers alike. In the second half of that year, threats of impending tariffs sent shockwaves through the economy. In a mad rush to get overseas shipments, businesses in every industry called upon fleets and owner-operators to move products. The revenue generated in the last two quarters of 2018 allowed the trucking industry to make plans for growth, to purchase more vehicles, and to tap into new markets.
When we entered 2019, there was no follow-through on the threat of tariffs. American businesses with overseas operations relocated to countries that weren’t the target of tariffs to protect themselves against future legislation. Shippers and brokers breathed a sigh of relief and gained more control in pricing. The trucking industry quickly snapped back to its pre-2018 status, as revenue slipped. The plans for growth were halted, because the artificial trucking bubble caused by a tariff scare had burst.
The Pandemic Trucking Bubble
The COVID-19 pandemic forced businesses to take transactions online. Consumers embraced e-commerce as a safe alternative while most of the country was in lockdown. Between essential supply chains and the rise in LTL rates due to e-commerce, the trucking industry is experiencing an upward revenue trend in revenue. However, this is not a trucking bubble. Bubbles are artificially induced, and the pandemic has simply forced every sector to adapt and find new ways to continue commerce. Until there is a vaccine or the United States is able to flatten the curve, the trucking industry will continue to change to ensure supply chains – and by extension, the nation’s economy – can persevere.
At Single Point Capital, we provide freight factoring to boost cash flow for trucking companies of every size so they can access revenue from receivables faster and continue operations. Contact our offices today to learn more about our freight factoring services.