After a 2018 that saw record-setting levels of freight-hauling demand and driver pay as tonnage levels reached a 20-year high, the trucking industry is expected to remain strong in 2019 but undergo a bit of a cool-down, economists say.
For the economy and the trucking industry, 2018 was spectacular. The U.S. Gross Domestic Product expanded at a 3.5% rate in the third quarter, and the December jobs report from the Bureau of Labor Statistics showed the economy added a robust 312,000 positions. American Trucking Associations reported that, through November, the total freight hauled by for-hire truck drivers was 7.2% more than the first 11 months of 2017.
With the economy on a healthy upswing, the need for transportation of goods is at an all-time high because with this, factories are producing more, the construction industry is building more houses faster and people are spending more money. All of this creates more freight demand. In regard to economic growth this is great news and with ecommerce businesses continually opening, the manufacturing industry is booming. However, with the trucking industry being the primary source for delivery of goods, the truck driver shortage poses the risk for other issues.
In an effort to retain current truck drivers and attract new drivers, carriers have increased wages, which apparently made a difference. During the last half of 2018, the churn rate decreased as more drivers made the decision to stay with their current carriers. In addition to pay increases for existing drivers, new drivers are enticed by attractive salaries and hefty sign-on bonuses. Even so, the need for new drivers is critical. Job recruiters are working hard, ramping up their efforts to hire on additional drivers for the job vacancies. They are taking the initiative to market to new demographics including military and females, in order to fill the gap. Also, fleet carriers are pressuring insurance companies to lower their rates for new drivers, and lobbyists are pushing to have the driving age for commercial vehicles lowered to 18.
Let’s not forget about the consumers who are also buying more often. The convenience of online shopping makes it easy to purchase more items without the hassle of picking them up. Again, those deliveries are made possible through the trucking industry; a major player in the status of the economy. Trucking companies routinely measure the percentage of time their trucks are being used for hauls. Many are experiencing a 99% utilization rate, meaning that in order to keep up with delivery demands, practically every truck is being used consistently.
As with anything, change comes with pros and cons and the accelerated growth in the trucking industry is no different. From the economy boost and the trucker shortage to the shipping and freight rate increases and the revenue growth, overall it appears that the pros outweigh the cons for 2019.