The start of 2022 was a barrage of information about the trucking industry. Headlines were filled with news about looming inflation, trucker shortages, supply chain issues, wildly fluctuating gas prices, and cash flow problems. Despite headlines that often seemed to contradict each other, the current state of the trucking industry is not as muddled as people think.
Trucker Shortages and Supply Chain Issues
Trucker shortages have been an ongoing issue for at least the past five years. Some analysts point to trucker shortages as a sign that demand is high, giving the trucking industry the upper hand when negotiating rates. Others point to the fact that even in 2019 when there was a slump in the industry from the big tariff scare that was never realized, there were still driver shortages. In 2022, we have all seen the towering containers and mounting shipments at docks which are placing a major strain on the trucking industry to get goods and raw materials to their destinations. Programs like the Safe Driver Apprenticeship Pilot Program, part of the latest infrastructure package, are allowing 18-year-olds to transport shipments across state lines. Additionally, workers from current jobs and previously furloughed employees in other industries are gravitating to the trucking industry for new careers, especially since some carriers have instituted major wage increases. Ultimately, this points to 2022 being the time for entrepreneurs to launch their own trucking companies to create new jobs and provide delivery to areas that larger fleets cannot reach. Moving forward, LTL shipments from e-commerce, as well as last-mile delivery will play major roles for trucking companies for years to come.
Wildly Fluctuating Fuel Prices
Fuel prices have been on a roller coaster for over two years now. From extreme winter weather conditions in Texas forcing refineries to close to hurricanes knocking out petroleum lines along the Gulf Coast, fuel prices have been a roller coaster for the past two years. When prices plummeted in 2020, more refineries in the Middle East closed, which further contributed to inconsistent prices around the world. Cyberattacks against pipelines in the United States led to long-term price gouging, even though the issue was resolved quickly. The trucking industry has had to eat costs at the pump, which has eaten into revenue for both owner-operators and fleets of every size. Legislation is still pending regarding the switch to electric vehicles, but the mandate will come in 2025 at the earliest. In the meantime, the trucking industry is using reputable fuel discount programs to save at the pump and on wholesale purchases.
Cash Flow Problems
One of the biggest problems in the trucking industry is cash flow. Demand is high right now to move shipments, which is generating a lot of revenue for owner-operators and fleets. However, trucking receivables follow payment schedules of 30 to 90 days. That means a good portion of revenue is tied up in unpaid invoices at any given time, often for a month or longer. During the long waiting period, owner-operators and trucking companies still have to cover wages, fuel expenses, equipment maintenance, insurance, and all other financial obligations. To resolve long waiting periods between customer payments, the trucking industry uses freight factoring. The freight factoring process is very simple and fast. Trucking invoices are submitted to a freight factoring company, such as Single Point Capital, and the unpaid invoices are turned into cash. The funds are then made available very quickly. In the case of Single Point Capital, we are committed to turning invoices into cash within a single day. Freight factoring frees up capital, boosts cash flow, and allows trucking companies to build up finances to cover expenses, hire more drivers, launch marketing campaigns, purchase fuel, or anything else needed to keep operations moving.
Your One-Stop-Shop for All Your Trucking Needs
At Single Point Capital, we provide a wide range of solutions for truckers and owners operators. In addition to comprehensive freight factoring services, we also offer a fuel discount program, a start-up program to help people launch new trucking companies, insurance assistance, and much more. Let Single Point Capital put your trucking business in the fast lane by contacting our offices today.