Trucking Wins over Rail to Solve Supply Chain Issues

Supply chain bottlenecks are coming to a head in the United States. Shipments are stacking up in our major ports, yet moving those products to their destinations is a big struggle. In the past, supply chains relied on a combination of rail and trucking to move shipments across the country. In 2022, the inefficiencies of the rail system are very noticeable, and they have given the trucking industry a significant edge in overcoming supply chain issues.

The Import Surge

Rail carriers and trucking companies shared the responsibility of hauling goods from major ports to destinations throughout the company. However, in the middle of 2021, supply chains ground to a halt. There were a number of reasons given by analysts, but the main thrust seemed to be a surge in imports. Shipping containers were piled high in major cities, such as Chicago, Los Angeles, and New York City. To make matters worse, the congestion caused by the large influx of containers caused a tremendous slow-down in loading and unloading both trains and trucks. Shippers saw a decrease in productivity by about 30%, and rail freight was experiencing record bottlenecks.

Railways Vs. Highways

In the second half of 2021, rail carriers were restricting certain types of cargo. The idea was to streamline their own logistics to clear out shipments quickly to make room for the others. Shippers, with customers who needed their goods and raw materials, were becoming frustrated with rail freight. As a response, shippers started to rely more heavily on the trucking industry and were willing to absorb the cost to expedite shipments that were sitting around. The trucking industry has been pushing itself to the limit since because they have more flexibility than rail carriers. While rail can move a high volume of goods and materials, trucking companies are simply more agile and efficient. Truckers can get to specific destinations throughout the country. Trains can only get to major cities, and even then, their shipments still need to be loaded onto trucks. Trains really cannot make the critical “last mile.”

Revenue Increases for the Trucking Industry

As mentioned earlier, shipping customers switched from rail to trucking carriers to move goods. The high demand for hauling shipments and making a dent in the backlog at the major ports has given trucking companies an advantage when negotiating rates. From large carriers to local trucking companies, revenue has been increasing and there is no shortage of demand from shippers. While the bottlenecks in supply chains are resulting in higher prices for consumers and other businesses, the trucking industry is pulling ahead of rail and showing that they can help overcome the obstacles that trains could not.

Trucking Carriers and Cash Flow Bottlenecks

Supply chains are not the only aspect of the freight industry experiencing bottlenecks. Despite higher shipping rates and increased revenue, carriers are still waiting on payments from shippers, brokers, and other customers. Freight bills have staggered payment schedules of 30, 60, and even 90 days. Trucking companies cannot wait indefinitely, especially now. They need to purchase fuel, maintain vehicles, hire more truckers, and do everything they can to help resolve our supply chain issues and move our economy forward – and that means they need access to the revenue that is locked behind staggered payment schedules.

Accelerating Cash Flow for Trucking Companies

The fast way to free up capital from unpaid receivables is to use freight bill factoring. Instead of waiting on customers to pay their invoices, freight bill factoring turns those unpaid receivables into cash. Single Point Capital specializes in freight bill factoring and we make funds available to our customers within a single day. Freight bill factoring accelerates cash flow so trucking companies and owner-operators can get fast access to the revenue they need to cover expenses and keep things moving. Additionally, the faster revenue stream allows our clients to build up reserves so they can hire additional drivers, take on larger customers, and position themselves for growth.

Single Point Capital is a leader in factoring services for the trucking industry. In addition to factoring invoices within a single day, we also provide our clients with a suite of tools to manage their receivables and payments. To get started, contact the team at Single Point Capital today.