Trucking Industry Finds Solutions to Ongoing Challenges

For the past few years, the trucking industry has faced major challenges ranging from driver shortages to fuel, capital, insurance, and more. Considering the US economy relies so heavily on the trucking industry in every facet of business and even at the consumer level, finding solid solutions to mitigate or resolve issues is crucial to ongoing success.

The Truck Driver Shortage

The American Trucking Association that at the current rate, the gap in the driver talent pool could grow to upwards of 160,000 by the turn of the decade. To put things into perspective, that projected number is more than double the current shortage of 78,000 drivers. The downward pressure on the trucking industry is coming from a couple of directions. First, roughly one-third of the drivers in the trucking industry are edging towards retirement. Additionally, increased regulatory guidelines have been deterring people from entering the trucking industry, or culling them from the existing driver pool. The Drug and Alcohol Clearinghouse has been flagging drivers for substance abuse and preventing them from returning to the industry. This has raised further complications in states that have legalized marijuana, because THC stays in the system long after the effects have worn off – this is deterring new people from entering the workforce, whether they currently use cannabis products or have used them in the past. That said, the trucking industry is tapping into new demographics to bolster their numbers. More women, minorities, and young people are getting their Class A and Class B licenses. In part, the new influx of drivers is due to the Infrastructure Investment and Jobs Act, as well as the Safe Driver Apprenticeship Pilot Program.

Fuel Prices

In 2022, the ATRI showed that fuel cost per mile jumped by over 35% year-over-year. Last summer, fuel prices spiked to record levels, with the reported causes being international conflicts, sanctions, and lower production levels than in previous years. It was only in the first half of 2023 that sources reported big fuel providers were keeping prices high to increase overall profits, at the expense of the trucking industry, and gouging was not just happening at the pump, but further up the line. The US Energy Information Administration shows the diesel fuel will continue to decrease in price this year and into 2024, possibly reaching $3.70 per gallon. According to the survey released by the ATRI, people think there should be federal action to correct the fuel supply and pricing, while others are in favor of cutting the diesel leash entirely and pivoting to alternatives like electric vehicles.

Capital and Cash Flow

Trucking rates have been in a constant state of flux, and while major news outlets have backed off from using the word “recession” in every other headline, it still remains a concern. Back in February, Forbes published an article on ways the trucking industry could combat rate deflation, pointing to dedicated capacity as a possible means to improve revenue. In many cases, revenue is still tied up in unpaid invoices from customers going back 30, 60, or even 90 days. Trucking companies and owner-operators need to get accelerate cash flow to cover expenses and build up capital to weather a possible downturn, or to jump on growth opportunities if there is an economic upswing. To resolve these issues, the trucking industry uses freight bill factoring. Freight bill factoring turns unpaid receivables into cash quickly, so carriers and owner-operators can boost cash flow and build up capital while getting immediate access to revenue.

Insurance Premiums

Insurance still remains a sticking point with the trucking industry. Insurance providers keep raising their rates, even if there is an accident and the driver is not found to be at fault. Basic coverage for new trucking companies can be cost-prohibitive, and even prevent small fleets from getting on the road. To solve this challenge, Single Point Capital offers an insurance down payment program, where we will cover up to 50% of the initial down payment for clients who use our factoring services. The remaining balance is then spread out over the course of weeks, and is repaid from a portion of the invoices we factor, so trucking companies do not experience any strains on cash flow.

There are a variety of challenges facing the trucking industry, but there are also solutions that can be tailored to the needs of owner-operators and fleets of every size. If you need factoring, fuel discounts, insurance assistance, dispatching, or anything else, reach out to the team at Single Point Capital today.