Marketing Trends

Marketing Trends

The United States Trucking Industry

Trucking market structure aligns with multiple other modes of transport. Truckload carriers compete with the railroads, barge lines, air, LTL, intermodal and express services for market share. Full truckload handles about 70% of the U.S. domestic transportation volume. The flexibility of truckload delivery insures that this mode will flourish along with positive economic trends. No major changes are anticipated in market share of truck versus alternative modes of transport. The amount of freight may soften due to an economic down turn but the division of freight by mode should remain around 70% in the favor of motor carriers.

This is a tough market for new trucking companies to enter the world of transportation. Decreased equipment demands based on slower economic conditions are not conducive for market entry. Freight volumes have seen a 5% year over year reduction since the end of 2006. The trend in downward demand is expected to carry through the end of 2008. Increases in power unit, trailer and fuel cost make entry prohibitive for those carriers without a solid core customer base and financial sustainability. Until demand outruns supply expect more carrier failures and no new entries into the trucking market.

Due to the downward trend in domestic freight volumes and the lack of adjustments to equipment availability price is taking a major hit. Carriers are unable to ask for price to off-set escalations in fuel and equipment cost because of a soft truckload market. Customers are asking for lower truckload rates. Core carriers are being asked to lock in lower rates and are subject to freight auctions to leverage every penny possible out of the customer’s freight expense. Until the carrier industry right-sizes equipment availability and shrinks supply analysis believe pricing is to continue to be soft. Analysis predicts that prices will continue to soften during 2008, with a reasonable chance for a price...