The Changing Trucking Industry

August 8, 2023

The Current State of Trucking: Navigating Change and Seizing Opportunity

The trucking industry is the backbone of our supply chain. Ground transportation accounts for over 70% of all freight in the United States.

However, the trucking industry faces massive changes and disruptions shaping its future. That’s putting it mildly. Claudia Sahm, a former Federal Reserve economist, stated the nature of today’s economy as follows: “The world is upside down and backwards, it doesn’t make sense.”

Take the turmoil and demise of Yellow This 99-year-old company shut down operations on July 31, 2023, in preparation for filing for Chapter 11 bankruptcy.

This blog post will cover the trucking industry's trends, hurdles, and tangible benefits. It will provide you with insights and tips to help your organization adapt and thrive.

The Rise of E-Commerce

The explosive growth of e-commerce is dramatically affecting transportation and logistics. More consumers are shopping online and expecting fast, low-cost delivery.

The demand for small, frequent, just-in-time deliveries is skyrocketing. This is increasing demand for trucking services but also requiring changes to routes, volumes, and equipment. So, the transition to E-Commerce introduces disruption into your supply chain.

While providing growth opportunities for trucking companies, this trend also poses challenges. Companies that provide long-haul transport services need to modify trucks for last-mile delivery. Fewer pallets and less-than-truckload shipments impact routing and load efficiency.

The added volatility in volumes and destinations makes planning and asset utilization more difficult. Businesses must meet e-commerce delivery demands while controlling costs efficiently. This may require dynamic routing, smaller vehicles, and technology to improve asset utilization. And not to overlook cost, your firm must also devise pricing strategies to cover higher costs.

Another breaking trend creating disruption affecting trucking is self-driving technology.

Autonomous Trucking

Self-driving truck technology has the potential to revolutionize the industry. Businesses that embrace this trend early can significantly improve safety, efficiency, and capacity.

Studies show autonomous trucks can operate more safely than human drivers. They have faster reaction times, never get distracted, and don't get tired. A KPMG report estimates that self-driving trucks could reduce truck-related accidents by 90%. This would save thousands of lives and millions in costs for trucking firms.

Autonomous trucks also enable savings through better fuel efficiency, optimized routing, and platooning. Platooning trucks reduces wind resistance and may improve fuel economy by over 10%. And autonomous trucks allow for more extended driving periods, increasing asset utilization.

That’s all good news.

However, significant obstacles remain before self-driving trucks become mainstream. The technology is still developing and faces concerns about security and cyber threats. Remedying this issue requires significant investments in R&D. So cost is a relevant factor in implementation.

And there’s yet another obstacle to overcome.

Your company must comply with legal and regulatory hurdles. Examples include safety standards, liabilities, and employment. Businesses should track developments closely and run pilot projects. Beyond that, businesses must be ready to integrate this technology when it matures.

Being proactive is now a necessity.

Electrification of Fleets

Complementing autonomous vehicles is the growing trend of vehicle electrification.

Many trucking companies are adopting electric trucks to reduce fuel costs and meet sustainability goals. Major manufacturers like Daimler, Volvo, and Tesla are rolling out electric models. And Reuters reports that the charging infrastructure is expanding.

Key benefits of electric fleets include:

  • Lower operating costs, with electricity being cheaper than diesel.
  • Reduced emissions, supporting environmental objectives.
  • Enhanced driver experience with smoother, quieter trucks.
  • Lower maintenance, with fewer parts and fluids to service.

As with self-driving trucks, the higher upfront costs can deter adoption. And range limitations may restrict suitable routes. Charging logistics presents challenges, too—long charging times can reduce asset utilization.

Fleet managers must determine if electric trucks make economic sense for their specific use cases and routes. They must also budget for charging infrastructure and plan for optimal charging schedules.

That said, you don’t have to make a wholesale transition to electrification at the outset.

Implementing a mixed fleet with electric and diesel trucks can enable a gradual, cost-effective transition. Logistics leaders should stay updated on battery improvements. More efficient batteries may increase range and charging speed.

In assessing trucking’s current state, we can’t ignore its persistent driver shortage.

Improving Driver Recruiting and Retention

It’s well-known that the driver shortage remains one of the toughest challenges. The American Trucking Association estimates the current driver shortage exceeds 80,000 and could reach 160,000 by 2030.

This shortage reduces capacity in the trucking network and makes it harder to meet growing demands. Clearly, the remedy lies in attracting and keeping more drivers.

To attract and retain more drivers, companies should focus on:

  • Increasing compensation and benefits to be more competitive.
  • Offering better work/life balance through more flexible routing and scheduling.
  • Providing newer, more comfortable equipment to improve the job experience.
  • Implementing recognition and incentive programs to boost engagement.
  • Leveraging social media and alumni networks to recruit new drivers.
  • Using technology like fleet management apps to simplify paperwork and administrative tasks.

The tight labor pool requires logistics firms to treat drivers like customers. Enhancing driver experience, compensation, and work-life balance is critical to overcoming the shortage.

Besides electric and self-driving vehicles, technology offers opportunities through advanced analytics. Advanced data and analytics have the potential to be a game-changer.

Leveraging Data and Analytics

Data and analytics present tremendous opportunities to improve efficiency, safety, and decision-making. Trucking companies should invest in collecting and analyzing data across the enterprise.

Areas to focus on include:

  • Telematics and sensors in trucks to optimize routing, maintenance, and fuel economy.
  • Cameras to track driver safety and exonerate firms from false claims.
  • ELD systems and logistics apps to improve compliance and transparency.
  • Analytics to enhance asset utilization, model demand, and optimize loads.
  • Predictive analytics to identify risks and take proactive measures to avoid disruptions.

However, like the other trends, there are obstacles to overcome. For example, leveraging data raises concerns around privacy, cybersecurity, and information governance. You must set clear data policies and controls.

But in the long term, the benefits outweigh the risks. Implementing new technology requires upfront training and change management. That means upfront investment. Data and analytics can drive significant improvements and competitive advantage.

Key Takeaways and Recommendations

The trucking industry is facing significant disruptions. They include technology trends, customer demands, and labor shortages.

To thrive, logistics businesses must take proactive measures, including:

  • Piloting emerging technologies like self-driving trucks and electrification.
  • Optimizing networks and assets for e-commerce delivery.
  • Improving driver recruitment, retention, and experience.
  • Implementing data initiatives to drive efficiency and decision-making.
  • Watching for regulatory changes that may affect operations.
  • Evaluating partnerships to access needed capabilities.

These all serve to improve decision making, customer service, while optimizing operations and marketing. Although disruptions pose challenges, they also create opportunities for innovative, forward-looking companies. If you make strategic investments today, you can benefit from emerging trends and build a competitive advantage.

Moving Forward

Though the road ahead has bumps, the trucking industry and its customers can look to the

future with optimism.

At American Global Logistics, we strive every day to navigate industry disruptions. We do that in two ways. First, we work to anticipate and avoid disruptions. Second, we seek clear-cut opportunities that will benefit you. 

AGL’s two-fold approach helps us to optimize availability, cost, and responsiveness for our customers. That enhances their agility, adaptability, and competitiveness.

The trucking industry is changing. The need to adapt is more critical than ever. Only the most competitive companies will survive.

Contact us if you would like to adapt and thrive in today’s uncertain world. 

Why not partner with AGL?

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