The ever-growing world of e-commerce has helped numerous industries. With so many Americans buying goods from online sources the trucking and warehousing industries are growing fast. Trucking companies have been adding to their payroll quickly and have seen the fastest 12 month pace since 2015. According to figures from the Labor Department, the trucking industry has added 5,700 jobs in August of 2018 to keep up with the e-commerce and freight boom. A total of 30,600 trucking jobs have been added since August of last year. Andrew Chamberlain, chief economist for the recruiting site Glassdoor, said "The growth of e-commerce is making transportation and warehousing the new retail." The wages and benefits for these workers have also risen. Delivery driver's pay is up 10.2%, material handlers in warehouses wages up 9.3% and the truck driver’s wages up 9.1%. Most trucking companies are also increasing their sign-on bonuses and health benefit options.
What experts say is ahead for the trucking industry
The trucking industry has seen an uptick in volume and demand over the past year. Fleets have been buying trucks and hiring drivers at a steady rate but there are people in the industry that are unsure of how long the good times will last. Two of these people made remarks on this topic at the National Lease meeting. Among the concerns raised by Steve Tam, VP of ACT Research, were traffic and trade tensions with China, rising inflation and interest rates, coupled with stagnating wages. Many of these fears could be caused by the economy slowing down in the coming years. Tam acknowledged the good near-term condition for the trucking industry but warned that conditions will move "from great to good" and that private fleets are expanding to reduce their spot market exposure.
US Trade Conflicts weigh on robust growth in third quarter
With the upcoming congressional elections, many politicians on both sides have had things to say about the economy and the perceived growth the country has seen. From July-September the GDP grew at a rate of 3.5% down from the 4.2% growth in the preceding quarter. President Trump and his administration tout their actions of deregulation and tax reform has caused the growth in the economy. Many economists warn the trade war with China will slow the economy down. They point toward the soybean exports for the US falling sharply as Chinese importers grew their stockpiles ahead of the July tariffs by Beijing to counteract the American tariffs imposed by Donald Trump. Because of this back and forth trade war total US exports fell 3.5% and imports rose by 9.1%. American businesses also spent less money on building new offices or factories with investment in structures fell 7.9%.
Truckers, Law Enforcement seek stronger relationships on common ground
On many issues, trucking companies and law enforcement have a collective interest, including highway safety, security and human trafficking. The relationship between law enforcement and truckers has always been strained as many truckers feel that officers slow down their progress and spend too much time worrying about truckers and not about the safety of everyone on the road. Officers have long felt that truckers are unsafe on the highways, and claim that many truckers knowingly carry human trafficking victims or drugs across borders. The executive director of the Commercial Vehicle Safety Alliance, Collin Mooney, says his association has been sharing information with the American Truckers Association and has rolled out three courses to educate truckers about roadside inspections by law enforcement officers. These courses ensure truckers know what is required of them and their trucks to pass a safety inspection and what type of goods are allowed to be carried.
REGULATORY ENVIRONMENT UPDATE
Trucking to turn more to alternative fuels, Experts say
Sale of natural gas semi-trucks has been on the rise across the country. As more government regulations tighten the restrictions on older trucks many companies are buying up the new more environmentally friendly trucks. To help ease the pain of buying a large fleet of expensive, new trucks, the government is giving incentives to those who buy now. The state of California is expected to increase its voucher amount to $45,000 for new purchases of alternative fuel engines. Joe Lyou, CEO of the coalition for clean air, stated that the new Cummins Westport ISX12N natural gas engine is 90% cleaner than the EPA's 2010 engine emission standards and adding that is has been shown to be 99% cleaner than the EPA standard. Many worry about how to fill up when traveling across the country but natural gas trucks have over 1,000 fueling stations nationwide. This number far exceeds the amount of electric or hydrogen fuel cell fill up points. With more emission standards taking effect in 2021, 2024, and 2027 we will continue to see more and more alternative fueled trucks on the road.
Trucking companies have benefited greatly from the robust growth in the US economy. Consumers are buying more and more through online shopping mediums and this greatly increases the demand for freight transportation. Because of this large demand for their services; trucking companies have been able to raise prices because of their tight capacity in their warehouses. The largest trucking company in the US, Knight-Swift Transportation Holdings, INC. has stated their revenue per loaded mile was up 19.9% in the September quarter from the same period in 2017. Revenue was up 31% and the operating profit skyrocketed from $8.6 million to $56.5 million. Even looking at the overall outlook across the trucking industry it has risen almost 10% from this time in 2017. This number comes from the Cass Truckload Linehaul Index which measures per-mile pricing for truckload carriers. Some trucking companies have begun passing along their rising revenues to their drivers. Increasing driver pay and recruiting costs is seen as a vital key to staying relevant in this industry. These higher shipping costs are affecting retailers and manufacturers who are forced to pay the higher prices to deliver their goods. Companies such as Hershey Co, Nestle, Caterpillar Inc. and others are saying that they are raising prices to their customers to help offset the increased freight expenses. Jon Moeller, chief financial officer at Proctor & Gamble Co. said, "Trucking costs will likely be up 25% or more versus last year's inflated levels."