Despite the predicted slowdown of the U.S. economic growth in the first half of 2019, over half (52%) of transportation businesses report they are growing and 1 in 3 expect to continue growing their revenue by 11-25% in the next two years.
That was part of the Bibby Financial Services seminar March 28 at the 48th annual Mid-America Trucking Show in Louisville, KY. The information was presented by Mary Ann Hudson, executive vice president of Bibby Transportation Finance, which surveyed 250 trucking businesses with between 1 and 100 trucks, from Jan. 1 to Feb. 28.
The five trends are:
- Optimistic about growth, with 38% expecting to continue growing at +11-25%.
- The driver shortage, with 64% of carriers preoccupied with finding good drivers, and many are increasing pay and benefits.
- Intensifying competition driving low prices, with 66% reporting they’ve lost a contract in the past year to a competitor offering prices so low that they are unprofitable.
- Take it or leave it, with 37% reporting they feel they must accept contracts “as is” or lose business.
- Cutting cost with technology, with 1 in 3 businesses planning to invest in predictive maintenance over the next 12-24 months to cut costs.
In a written report made available by the company, Hudson detailed the findings.
“The driver shortage continues to challenge capacity. Consumers are spending more as retailers pay higher prices for delivery. There just aren’t enough trucks to keep America’s goods moving.
“While that’s not new, it’s intensified by the fact that more than a third of businesses say drivers have quit unexpectedly in the past year, with 42% of them citing a loss of revenue of over $10K when a driver leaves. This leaves trucking businesses counting every penny. 68% confirm that increasing costs are their number one challenge—insurance, maintenance and fuel expenses top the list.
“While many small fleet owners go into business dreaming of growing their fleet, very few make it past the 5th truck [ATA, American Trucking Trends 2018], and 66% of respondents say they’re losing contracts to competitors charging unsustainable prices.
“Many trucking companies feel that they cannot influence the terms and conditions of the contracts/loads they take or they’ll lose business. Unfortunately, this can have an adverse effect on the business with 1 in 3 reporting that they’ve had to pay penalties as a result.
“Trucking companies are also looking to control costs through technology. Nearly half say ELD is the technology that will have the biggest impact in the next three years and listed predicative maintenance as the number one technology to invest in over the next two years.
“Though the transportation industry still faces some of the same challenges as in recent years, the overall outlook is steady for this in-demand industry.”