Current Freight and Shipping Industry TrendsAlex Milzer
The trucking industry has seen immense growth due to the increased demand for goods and products in recent decades. Regardless of whether you are a driver, technician, broker, or business owner, it’s imperative you are well informed of the current industry trends. Staying ahead of these changes will ensure your company can adapt and thrive going forward. This article delves into the recent changes and statistics in the trucking and freight industries.
Unprecedented Increase In Parcel Deliveries
The explosion of e-commerce and online shopping has produced a monumental shift in consumer behavior, thus authoring a permanent demand for freight carriers. As consumers continue to click and purchase, parcel volume is projected to reach over 220 billion by 2026 worldwide – a 14.8% compounded annual growth rate, as reported by Packola. Furthermore, in light of Covid, online retail sales in the U.S. increased by 105 billion in 2020, clearly indicating contactless purchasing is a new norm. With this paradigm shift in purchasing habits, freight demands continue to roll at an unprecedented velocity.
Spot Rates Hit All-Time Highs
A spot rate is a price to haul freight over a short distance, typically less than 100 miles. Short-term, transactional freight pricing represents an accurate portrayal of carrier supply and shipper demands, influenced by truck availability, fuel prices, tolls, and other factors. As of July 2021, national reefer spot rates hit an all-time high of $3.99 per mile, and van spot rates reached $3.35 per mile, as reported by Freight Waves. Spot freight offers a lucrative alternative to contract rates for trucks specializing in one-off shipments, non-standard load requirements, and unexpected deliveries. We don’t see this trend stopping anytime soon.
High Fuel Prices Remain Constant
Current diesel fuel prices have averaged $3.508 in the past month (September 2021), which is over a dollar more than this time last year. In July 2008, diesel peaked at an all-time high at $4.85 per gallon, jarring the supply chain and negatively impacting consumer spending due to higher prices on goods. Diesel rates always follow the cost of crude oil, and due to lagging imports and refinery complications, prices have consistently remained high over the past six months. Natural fluctuations occur in all commodity markets, but the pandemic creates uncertainty about when prices will steadily drop. Sure, seasonality in distillate fuel and heating oil will temporarily fluctuate; nevertheless, the economy will inevitably suffer if diesel remains high.
Drivers Shortages Tell A Story About Younger Generations
Currently, there are approximately 60,000 trucks in the U.S. without drivers. Commercial truck driver shortages provide valuable insights into the trends of the freight industry. One alarming statistic stands out. The average age of a truck driver is over 45 years old, which means younger drivers are not replacing them. The blue-collar drought is a trend across nearly all industries. Younger workers prefer white-collar jobs, and with a retiring baby boomer generation, who will replace them? One hypothesis lends a hand to why freight companies fail to attract new, young talent, despite dramatic increases in trucker wages. A healthy work/life balance seems to be more important to younger generations than ever before, which is indicated in rising local, short-haul freight positions and uber drivers.
The Role of Artificial Intelligence (AI) in Trucking
With the introduction of new technologies, the trucking industry is expected to experience a paradigm shift in how it conducts business. Self-driving, also known as autonomous trucks, is among the most innovative advancements that will lead to more efficient transport and combat labor shortages. Additionally, artificial intelligence optimizes ordering and tracking, which aims to avoid costly mistakes for carriers. Lastly, artificial intelligence can assist with routing and traffic predictions, helping to mitigate delays or other factors causing a driver to be late or overworked. AI has already made its way into some of the biggest logistic and shipping companies in the nation, including UPS.