It’s May. Happy belated Mother’s Day to the moms out there, Happy Victoria Day to our Canadian friends and Happy Memorial Day, coming soon in the US. May means that we are approaching the halfway point for 2022, so a good time to check in and explore trends in transport ~ what we are seeing and what we are predicting for the remainder of the year and beyond.
Transportation forms an integral part of our country, our economy, and for many, our livelihood. Many hard-working individuals, and the companies for whom they work, provide the backbone for American commerce. How do the current fuel prices impact business? As we navigate the COVID variants and the aftermath, how is the demand for goods and services delivered directly to the home changing and evolving?
Let’s explore a few trends that we see unfolding in 2022 and how they are affecting the transportation industry.
1. Fuel Costs
Unless you have an all-electric car, you probably have been to the gas pumps and have seen how the rising cost per gallon is affecting your overall fuel costs. For large passenger trucks and SUVs, it can take more than $150 to fill up. You can do the math and imagine what it takes to fill a large commercial truck. As any carrier knows, fuel costs have always been a major percentage of their operating expenses. Now those costs have nearly doubled.
The volatility in fuel costs causes challenges in maintaining reasonable profitability for carriers. The fluctuations in market prices of fuel are causing some transportation companies to layoff drivers, explore ways of becoming more efficient, and giving everyone a reason to look toward alternative fuel options.
Trucks powered by alternative fuels are a growing trend that has seen serious investments by large fleets. Today’s biggest alternative fuel contender is natural gas. The two most popular alternatives are liquid natural gas (LNG) and compressed natural gas (CNG). CNG has the biggest opportunity to become a well-supported diesel alternative. For local transport, electric or hybrid engines present a viable solution.
Many companies are also looking to become increasingly green, not only to support the health of air and planet, but also as a means of saving money. The more miles you run, the more fuel you will burn. At a certain mileage level, the ROI benefits of moving to an alternative energy source are greater, and carriers can recover the additional cost of purchasing an alternative fuel vehicle more quickly. With the increasing cost of fuel and no immediate relief in sight, we see a strong draw towards alternative fuels for remainder of this year and beyond.
According to our industry professionals, the demand for trucking services isn’t slowing down nor is it predicted to decline anytime soon. In fact, we’re likely to see quite the opposite. As a result of the pandemic, Americans have adopted new ways of shopping, working, educating, and doing business… a lot of it now online. To support our new normal, we order more goods online and the demand for goods is passing the demand to the transportation industry.
These increased supply demands are causing price increases for goods across the board. Companies are looking at new production locations to help meet demand and keep prices at bay. This relocation trend is not limited to manufacturing but can be seen across the entire transportation and logistics industry!
Even with transportation demands rising, not every trucking company could capitalize on this trend. Many companies went out of business, were purchased, or merged with other firms in order to stay afloat. Inability to adapt to the changing economy, poor management, and other operating inefficiencies were cited as some of the major contributing factors. Companies that were agile and embraced the new reality are flourishing. When consolidation occurs, systems undergo review and the resulting merger often produces a stronger, more efficient presence in the transportation industry. The use of technology in many areas is facilitating those efficiencies.
4. Embracing Technology
Yes, technology provides the key to survival in this new age of everything online. Truck drivers have already been required to move away from paper logs, opening the door for more extensive use of new tracking and routing capabilities of electronic systems. Safety and maintenance features are also on the rise. As companies get smarter about how they use, maintain, and manage their fleets, the benefits of technology become even more evident. The more investment in the technology, the more it continues to evolve. We predict an increase in smarter solutions in the future, taking more burden off the fleet managers, HR managers, and safety managers and placing more emphasis on technology for efficiency.
It has never been more important to be part of a team of highly professional industry experts to stay abreast of news, regulations, technology, and trends. We invite you to join us as a member of our North American Transportation Services Association (NATSA) to explore the benefits of a collaborative environment of learning, sharing, and influencing the transportation industry. Join our organization and help us amplify a voice that has been and continues to shape the industry.