Trucking Industry Holds Great Promise and Poses Great Challenges for Smaller Operators
Back in the 1970s, there was an inescapable popular saying you could find plastered all over t-shirts, posters, bumper stickers and even as part of a Billboard chart-topping song. “Keep on Truckin’!” The saying certainly reflected the times. Truckers were greatly admired. They were seen as a hard-working, independent breed ready for endless adventure on the wide-open highways of America. What little boy didn’t want to be like Burt Reynolds or Jerry Reed in one of the greatest all-time trucker movies, “Smoky and the Bandit”?
Fast-forward 40 years and little has changed. Trucking remains as popular as ever in the public lore. For those who like the solitude and the call of the road, there’s no better time to drive a big rig. If you’re one of those people who has always dreamed of “putting the hammer down,” this may be an opportune time for you to fulfill that desire with your own small trucking firm. Or then again, it may not be, depending on which side of the wheel you sit.
The good? According to the American Trucking Associations (ATA), trucking is high-balling it towards the greatest era in its storied history. ATA president and CEO Bill Graves says he “see(s) no scenario, no outcome on the horizon that is anything but great for this industry.” The ATA is robustly predicting overall industry revenue will jump 72 percent by 2022 and tonnage moved will climb nearly 24 percent in that same timeframe. Truckload volume, meanwhile, will grow 3.5% a year through 2019.
February 2016 saw an all-time high in trucking tonnage hauled, the ATA has reported. Other market research studies have indicated that higher demand and ever-rising shipments could create a capacity crunch down the road. This crunch could pave the way for those wanting to enter the industry. Indeed, one report trumpeted that small independent trucking firms are among the nation’s fastest growing small businesses.
Sounds great, right? Throttle down and take your foot off the accelerator for a second. Before you shift into high gear, lasso up some friends and start your own convoy down the Interstate in search of trucking riches, a few other important things need to be considered.
First off, the trucking industry is undergoing a number of regulatory changes. The new regulations may put a brake on trucking’s headlong rush towards a new golden age. These include stricter limits on the number of hours a driver may be behind the wheel per day and per week. A number of governmental entities are also considering more and stricter health exams for commercial drivers, who have to sit for long periods, making them more susceptible to health problems.
So not only can drivers be behind the wheel for a shorter time, reducing productivity and profits (both for the company and the driver), but there are fewer drivers than ever. A massive driver shortage has stymied practically all haulers big and small, with rapid turnover rates common as drivers continually jump for more lucrative offers from the competition. Not enough new drivers are entering the industry and today’s current drivers are rapidly aging, creating even greater shortages. Industry watchers speculate trucking firms will have to hire 89,000 new drivers every year just to keep pace. That means wages are rising to entice people into the cab. That’s great news for drivers, but not so welcome for company owners trying to fulfill more and more orders.
Finally, new technology is having a big impact on trucking. Companies slow to embrace new technologies are finding they are increasingly less efficient and are becoming roadkill for faster, more nimble haulers who swallow them in a convoy of mergers and acquisitions.
So as you can see, the road ahead for the trucking industry has some great opportunities in terms of increasing demand for service, but there are also several potholes to dodge in terms of finding and keeping drivers. If you’re a small business entrepreneur looking for a new challenge, trucking could prove to be a lucrative path to prosperity, provided you have a firm grip on the wheel, gear your expectations accordingly and map out your route with care.
Sr. Vice President of Operations at Charter Capital, a leading invoice factoring company for small to mid-sized businesses. Headquartered in Houston, Texas, Charter Capital provides accounts receivable financing and asset-based lending for major industries including freight and transportation, consulting firms, service providers, staffing firms, distributors and manufacturers, an oil and gas service companies.