An improving U.S. economy, substantial surge in manufactured and retail goods, and a sharp rebound in a number of end markets are expected to fuel growth of the transportation sector. Of the various means of the U.S. transport, trucking is the largest one, servicing 70% of freight tonnage.
Momentum to Continue
The U.S. trucking industry has witnessed gradual improvement in 2017. As the U.S. economy continues to grow, demand for carriage is also increasing and the momentum is expected to continue in the long-term. The trucking industry is the lifeblood of the economy and an integral part of the manufacturing, transportation and warehousing industries.
In ATA Freight Transportation Forecast 2017, ATA (American Trucking Associations) has projected freight volumes to grow 2.8% in 2017. Thereafter, from 2018 – 2023, the freight volume growth rate will be 3.4% per annum. For 2017, ATA has estimated that 15.18 billion tons of freight will be moved by all modes. The figure will rise 36.6% to 20.73 billion tons in 2028. Trucking revenues will likely grow 5.4% annually between 2018 and 2023 and are expected to reach $1 trillion by 2024.
Truck transport is a “derived demand” industry, which means demand for truckers depends on the demand for the products that trucks haul. Therefore, trucking serves as a barometer of the U.S. economy. Trucking industry will remain the dominant means of domestic freight and its share in the U.S. transportation sector is likely to remain not less than 67% by 2028.
Low Fuel Prices
Declining oil prices is a major boon for many truckers. Fuel cost accounts for a considerable portion of expenses of trucking companies. Lower oil prices have reduced their operating expenditure, thereby giving the bottom line a boost. With declining trucking cost, business enterprises are increasingly opting for this mode for shipment their products instead of railways and other means of transportations.
While a few trucking companies hedge their fuel needs and impose fuel surcharge to customers, this is not the scenario industry-wide. There are many trucking companies which are positioned to gain from the fall in fuel prices.
