Transportation Business: Perspectives
Over the past two years, various market sectors have undergone tremendous changes. The freight market has not escaped this fate either. What grand changes have taken place in this area? We are trying to determine what prospects await the transport industry: recession or, conversely, growth? To do this we need to analyze the current trends that will affect your business until the end of this year.
Is the transportation business on the decline?
Transportation company owners are well aware that low demand for trucking services is normal during certain seasons. During one year, demand rises and falls. In this regard, the 12 months of the year are conventionally divided into 4 seasons.
The period from January to March is a “slow season”. New Year holidays make themselves felt, and weather conditions for shipment are not the most favorable. Because of the bad weather conditions, shipments arrive much later than expected. People are aware of these nuances and, for the most part, postpone sending shipments until spring or summer. Transportation companies use this time to rest.
But there is no need to worry about this. In April, the “fast season” will begin, the weather will improve and the demand for services will increase. But the peak of the truckers’ work will be from August to October. Until the end of December, the services of transport companies will be in high demand. It should be understood that in early 2023, demand will drop, but this is quite expected and is due to seasonality, not low demand in the market.
Shortage of truck drivers
You’ve probably heard about the desperate shortage of truck drivers? The industry has been experiencing this problem since 2021. The American Trucking Association has shared statistics and said they need 80,000 drivers to operate satisfactorily. If the situation doesn’t get better, that number will rise to 150,000 by 2030.
What are the reasons for the shortage of drivers? First, the industry statistically does not attract women: the vast majority of drivers are men of age. Second, young people are not interested in the profession because they don’t want to drive off-road and spend weeks and months away from home.
During the pandemic, the industry suffered the most. There were great difficulties with recruitment and training.
The cost of oil
Of course, everyone has long been aware that the cost of fuel will rise again this year. Truckers will suffer from this, first of all. On the one hand, the demand for Internet goods has increased, and, accordingly, there is almost always a demand for the services of transport companies. On the other hand companies have to impose a fuel surcharge on clients – otherwise they will remain without earnings. Considering the fact that prices are rising again as a result of inflation, the whole industry may have problems.
Can we count on the growth of cargo transportation in 2022?
Experts believe that even with the current problems, business will grow right up to the end of the year. Forecasts in the U.S. are very optimistic: experts expect revenue to rise by 60-70%. It will only affect freight traffic. Rail freight, in turn, will lose its demand.
Using data analytics and digitalization, shippers will be able to solve all current problems. One of the main problems right now is shipping containers and communication failures. Experts are working on these issues by implementing new tools.
Driver training continues as usual. The influx of new employees will solve a large part of the problems. Experts are also betting on new “smart” trucks equipped with tracking functions: they will help solve problems in logistics.
The government is investing the necessary finances in the trucking industry, as well as allocating funds for road repairs. This will facilitate the work of truckers and allow them to optimize route routes.