(Newswire.net — April 9, 2019) — The only time most people think about long haul truckers is when they encounter big 18-wheelers on the highway. What most people don’t realize, though, is that the trucking business, officially known as the logistics and transportation industry, plays a major role in our nation’s economy, and without it the products you’re used to buying at your local grocery store or discount store — everything from produce to hardware to cleaning products — would be much more expensive, or might not be available at all.
The trucking industry is largely responsible for the health of America’s retail business sector, making it an important indicator of the wellbeing of the nation’s overall economy. In fact, nearly 70 percent of the domestic products we buy in the United States are shipped to retail locations by truck. If the logistics and transportation industry is healthy and turning a profit, there’s a good chance that most other businesses are, too.
Whether you’re the owner of a small business, an executive in the financial industry, or just want to keep a close eye on your retirement accounts, it’s a smart idea to pay close attention to the health of the nation’s trucking industry.
Addressing the Challenges of a Shrinking Labor Market
The logistics and transportation industry is currently going strong. It has been experiencing annual increases in revenue over the past several years, but it’s also facing some challenges, particularly where the labor market is concerned. As it is in some other non-professional class industries in the United States, the trucking industry’s existing workforce is getting older, and there is a shortage of new drivers in training to replace those who are retiring.
The trucking industry’s ability to attract, train and retain truck drivers will be a major factor in whether or not the industry continues to grow and keep pace with consumer demands and the overall economy. To address the issue, companies in the trucking industry are taking advantage of new technology to help make their routes more efficient so they can rely on fewer drivers.
Some companies are also thinking outside the box when it comes to attracting and keeping new drivers. Some have made their routes shorter so that their employees can spend fewer days on the road and more days with their families. This trend has been especially popular with younger drivers.
Another approach is for companies to be proactive about increasing their workforce. Some have established driver-training programs at high schools and community colleges. Women are being actively recruited by the industry. There are also training programs to help single mothers and other traditionally low income workers who might have previously worked at minimum wage jobs train to become long haul truckers. Some companies are also purchasing newer, more comfortable trucks, or upgrading older ones, to make driving them more attractive.
Trucking Company Mergers
As has happened in many industries in recent years, over the last decade or so there has been a trend toward mergers and acquisitions in the logistics and transportation industry. In order to increase their labor pool, trucking routes, and their overall efficiency and profitability, many larger U.S. trucking firms are acquiring medium-size and small firms across the country. While this might be beneficial for consumers, keeping the flow of goods to the retail sector fluid and prices stable, there is a potential for the trend to have a negative effect on the economy in the long term as smaller local businesses that have been around for decades, and are anchors in local economies, disappear.
Mergers can also sometimes mean lower wages and less attractive benefits packages for workers, which can lead many of them to find work in other industries. What might seem to be a solution to a large trucking company’s challenges can sometimes backfire and have the effect of weakening the industry overall.
Changes in Trucking Industry Financial Models
Rather than waiting 30 days to get paid on an invoice after making a delivery, many trucking companies are now using a financial model known as “factoring.” A service offered by many companies, such as TBS Factoring, factoring allows trucking companies to sell their invoices at a slight discount so they can get immediate cash to pay for fuel and repairs and take care of payroll costs, ultimately allowing them to hire more drivers and take on more routes. Factoring allows for a freer flow of consumer goods, which is a boon to the trucking industry and to the economy overall. Changes in the factoring industry should also be watched closely as indicators of economic health.