As the new year approaches, it’s time to take stock of 2019 and set goals for 2020. To that end, the trucking industry experienced a variety of challenges in 2019.
We’re here to break them down and highlight ways to improve efficiencies for the new year.
We’re here to help you set goals!
Challenges of The Trucking Industry in 2019
2019 was a tough year for the trucking industry. Due to financial hardships, 795 trucking firms went bankrupt. But what exactly caused these onerous market conditions?
An Oversupply of Trucks
After 2018’s booming business, many trucking firms optimistically expanded their fleets. In fact, there was a record number of trucks ordered in 2018. To their new owners’ dismay, 2019 had slower economic growth than anticipated.
As the 2019 market cooled, it left an expensive oversupply of trucks in its wake. Here are some notable truck supply statistics:
Truck registrations increased by 30% in the first half of 2019, as compared to 2018.
Midway through 2019, truckload volumes were 4% lower than in 2018.
There are currently 75,000 unneeded tractors on the market.
Even with so many firms going under this year, few of them owned more than 50 trucks. These bankruptcies won’t solve the overcapacity problem on their own. Fortunately, it’s predicted that the oversupply will balance out within the next 6 months or so, according to Werner CEO Derek Leathers.
A Shortage of Drivers
In addition to having expensive, oversized fleets, trucking companies felt the pressure of the current driver shortage. This shortage has been compounding in severity for the past 15 years. There are a few reasons for this.
Firstly, trucking has historically drawn a limited demographic. Only 6.6% of drivers are women. Additionally, you must be 21 to get hired, barring a younger demographic that could better handle time away from home. For people with families, this is a major deterrent.
The shortage is amplified by the fact that the current truck driver pool is aging. The average driver age is 46. In 2020, the market needs 110,000 new drivers in order to ease the shortage. Of this figure, 54% will be required just to replace retirees.
How to Fix The Driver Shortage
Some ways to reduce the shortage include:
Lowering the driving age to 18.
Increasing pay and improving benefits.
Offering drivers more time at home.
Utilizing semi-autonomous trucks.
Rebranding the image of truck drivers.
Improving Efficiencies With Technology in 2020
In 2020, the trucking industry will experience more efficiency brought forth by the adoption of new technologies. These innovations will increase productivity, improve decision-making, and reduce the cost of running a business.
Let’s examine the most notable trucking technologies of 2020.
Cloud-Based Applications
Cloud-based business applications automate a plethora of burdensome, manual tasks. In turn, they increase efficiency, decrease errors, and enhance productivity. For example, bar-code scanning applications can streamline inventory management, saving time and money for everyone involved.
Artificial Intelligence
Artificial Intelligence (AI) is finding its way into a wide range of industries. The trucking industry is no exception. While fully-autonomous vehicles won’t be ready for decades, AI still has many uses within the trucking industry.
AI works by analyzing data points with more efficiency than a human could. Combined with machine learning, AI trains itself to improve over time.
Here are some beneficial applications of AI in the trucking industry:
Analyzing driver behavior to improve quality hires
Optimizing for effective preventative maintenance, reducing accidents
Pinpointing the cause of collisions to improve driver training
Determining optimized route and fleet mix for greatest efficiency
Avoiding human bias when employing new drivers, reducing the driver shortage
Blockchain
Blockchain is another flexible technology that has positive implications for the trucking industry. It was popularized by BitCoin and other cryptocurrencies, but it’s applications are much broader than that.
For example, it could be transformative in matching shippers and carriers, reducing the problematic fragmentation seen in the industry. It can also improve freight transparency, which shippers are demanding increasingly these days.
The Blockchain in Transport Alliance is exploring how blockchain can tackle tricky trucking problems that are hindering the industry. However, for it to truly work in trucking, it needs to be adopted by the majority of the market and must employ data entry standardization.
ELD Mandate
2020 marks the year that electronic logging devices (ELDs) will be congressionally mandated. Up until mid-December 2019, drivers could get away with automatic onboard recording devices (AOBRDs). However, this is no longer the case.
ELDs ensure that drivers keep within the limits for safety purposes. ELD technology also promotes efficiency by reducing logging paperwork. It shares the real-time driver status, allowing dispatchers to plan loads appropriately.
As we enter the new year, the trucking industry will continue to evolve. While tariffs, the economy, and stricter regulations are all facets of the trucking climate, there’s one thing in carriers’ direct control: adopting new technologies.
In order to bounce back from the challenges of 2019, trucking companies should focus on implementing technologies that will impact their efficiency and reduce the cost of running a business.
If you are a trucking owner and want to learn more about how Trucking Proud Insurance Agency (TPIA) is leading innovation in this space, please contact jamie@truckingproudins.com. If you are an insurance broker interested to learn more about joining the TPIA team to leverage these unique tools, please contact team@truckingproudins.com.
Sources:
The Wall Street Journal. Trucker Celadon Group Files for Bankruptcy. https://www.wsj.com/articles/trucker-celadon-group-files-for-bankruptcy-11575885873
JOC.com. Not enough trucks leaving market to dent oversupply. https://www.joc.com/trucking-logistics/truckload-freight/not-enough-trucks-leaving-market-dent-oversupply_20190808.html
Freight Waves. Why 2019 has been the worst year for trucking operators. https://www.freightwaves.com/news/why-2019-has-been-the-worst-year-for-trucking-operators
Commercial Carrier Journal. 2020 projected to be ‘a tough year’ for trucking. https://www.ccjdigital.com/2020-trucking-industry-forecast/
American Trucking Association. Truck Driver Shortage Analysis 2019. https://www.trucking.org/ATA%20Docs/News%20and%20Information/Reports%20Trends%20and%20Statistics/ATAs%20Driver%20Shortage%20Report%202019%20with%20cover.pdf
TechCruch. Blockchain will work in trucking -- but only if these three things happen. https://techcrunch.com/2018/03/02/blockchain-will-work-in-trucking-but-only-if-these-three-things-happen/
