Intro to Trucking: An In-Depth Look into the Trucking Industry
From medicine to manufacturing and food to waste removal, the trucking industry is involved in a big chunk of the United States economy. Most people don’t realize just how necessary trucking is to their daily lives, and why truck drivers and trucking businesses are the lifeblood of the country. This article aims to remedy that.
To understand the importance of trucking, we need to take a look at the trucking industry as a whole. In this overview, we’re going to talk all about the trucking industry, its history, its importance, its current status quo, and the challenges trucking companies have in their day-to-day operations.
The History of Trucking in the United States
The trucking industry has had a significant effect on both the economic and political history of the country in the 20th century. But just like every industry, it has its humble beginnings.
Late 19th to Early 20th Century
In the 19th century, goods were transported all along the United States through steam locomotive trains to major locations, and via horse-drawn wagons within them along cobble and dirt roads before the paving came in the late 1800s.
It was also in the late 1800s that motorized wagons came into fashion, and by 1895, inventor Karl Benz designed the first truck with an internal combustion engine. By 1912, there were only some ten thousand trucks in the U.S. focused on local deliveries in large metropolitan areas.
The World Wars
Trucks did not see prominent use in the country until the First World War, then equipped with electric lights to enable traveling at nighttime, by then gained more favor over railroads for superior timing and coverage despite the latter being less expensive. Trucks also benefited from the recent $75 million investment on paved roads.
During the two World Wars, trucks were used extensively to move equipment, supplies, and troops. During World War I, trucks were used for many purposes including hauling artillery shells, transporting soldiers, and transporting food to the front lines. The use of trucks during World War II was even more extensive with over 500,000 trucks being used by the military during the conflict.
Post-War America to Late 20th Century
Post-war America saw many innovations in truck design such as cab-over-engine designs as well as more power-efficient engines which allowed for better fuel economy. In addition, large companies like Mack Trucks began advertising their products through popular magazines like Popular Science which helped spread awareness about trucking among Americans who had never seen one before.
The 1950s saw continued technological improvements including air brakes which allowed trucks to stop faster than ever before which led to greater safety for both drivers and pedestrians alike. Post-war America also saw increased usage of interstate highways across the country which made long distance travel easier than ever before through a network of highways connecting major cities across America . Innovations in refrigeration and air conditioning also allowed truck drivers to travel longer distances while staying comfortable.
By the latter portion of the 20th Century, the trucking industry has grown in prominence as big-box stores have flourished.
How Much is the Trucking Industry Worth?
Seeing its growth throughout the years, there’s no denying how trucking has ingrained itself to the U.S. economy, and even the world.
The Federal Highway Administration (FHWA) estimates that interstate trucks haul more than 7 billion tons of freight each year, representing approximately 70 percent of all freight tonnage transported in the United States.
The FHWA also reports that the size of the trucking industry was approximately $700 billion in 2008, with Fleet Owner Magazine valuing it at $676 billion in 2015. In 2019, Cloud Trucks reports that trucking amounted to a gross freight revenue of $791.7 billion, representing 80.4% of the U.S. freight cost in 2019.
Another way we can estimate the value generated by an industry is to take a peek into how many people the said industry employs. Learning more about how much these employees earn per hour on average allows us to calculate their annual wages, with the product multiplied by the total number of employees for a good estimate of the annual earnings for all those employed in the industry.
According to the American Trucking Association, there were 7.65 million people employed throughout the country working jobs related to the trucking industry in 2020, excluding the self-employed. 3.36 million of these are truck drivers employed in 2020, a noticeable decrease of 6.8% 2019’s 3.6 million drivers (from the year’s 7.95 million in the trucking industry altogether).
In 2020, the American Trucking Association reports that 80.4% percent of the nation’s freight bill comes from trucking, amounting to $732.3 billion.
While seeing a recent decline, there’s no denying the fact that trucking has a major impact on the country’s economy.
Why the Trucking Industry is the Backbone of the Economy
We know its history, we know how much it's worth, but just how important is the trucking industry, and why is it a complete necessity to keep it running?
The Importance of Trucking in the United States
The trucking industry is the backbone of the economy. It's a fact that most people don't realize. But it's true.
The trucking industry transports 70% of all consumer goods in the United States. That means that if you're shopping at a local store, there's a good chance that your items were delivered to you by truck.
If we take this idea even further, it becomes clear how important trucks are to our economy. Should all the trucks in the country stop, industries essential to daily life will be drastically affected in a day.
Within 24 hours of the trucking industry getting disrupted, hospitals will begin to experience a shortage in their medical supplies. Package deliveries and the postal service will stop, and gas shortages will begin across the country, leading to more problems starting with long lines at the pump.
The trucking industry is vital to the economy, with trucks transporting raw materials from forests and quarries to manufacturing centers. The finished product is then transported by truck to its final destination or a distribution center.
Approximately $700 billion worth of goods are transported through the U.S. trucking industry every year, with more than 8 million people employed between the U.S. and Canada, making its health crucial to the economy.
In the global context, more than 80% of all products shipped around the world each year, amounting to $10 trillion worth of goods, are transported by trucks each year.
If the necessity of moving important day-to-day products doesn’t spell out the necessity of the industry to you, then surely these numbers will.
Why You Should Get in the Trucking Business
We’ve seen that the trucking industry has a history of being volatile, but nonetheless, it is a certain staple of the economy. Trucking can be a great career, whether as a driver or owner-operator, especially when you’ve found your footing and the market is in full swing.
Here are a few reasons why you should start your own trucking business, or consider investing in it:
The trucking business is lucrative with a lot of opportunities
Most people who end up starting their own trucking business started out as a company driver, and comparatively, you have the potential to make more than you would have driving for someone else.
There’s no limit to how much you can earn as an owner-operator and it largely depends on your business model. But considering that demand is abundant for general box freights, there are a lot of opportunities for you to profit.
Other than that, there are many different types of trucks available in today’s market, each with their own pros and cons, own goods that they can transport, and distance coverage of whether they’re limited to local or interstate transportation.
For the first 6 months you will be limited to freight goods, and freight brokers can be a great help to helping you find your footing (and, of course, consistent freight.) These brokers work with a multitude of shippers to give you goods to transport as a new business. Learning how to find these freight brokers is crucial to your business.
As time progresses with you continuing your operations in your federal authority, you will begin to receive more freight. But even as a new entity, the help of a freight broker will be instrumental in getting consistent goods and, by extension, consistent income.
The trucking business has a low entry barrier
Most people are under the impression that starting a trucking business requires you to have a truck and trailer, but in fact you can do so using someone else’s truck and trailer, who will be known as an owner-operator, and you can register their truck under your authority.
In addition, starting a trucking business can be quite low, though the fees may vary depending on the state. This is comprised of different fees and filings that you have to pay for the launch of your business, which are:
USDOT Number
Operating Authority
Heavy Vehicle Use Tax
International Registration Plan (IRP)
International Fuel Tax Agreement (IFTA)
BOC-3 Filing
Insurance
Of course, Insurance can be hefty but as an annual cost it’s not as required to kick your business off. The price will shoot up if you want to purchase trucks and trailers yourself, but without the equipment, you can start a trucking business for around a minimum of $6,000.
You can visit this article for a detailed breakdown of the capital required.
The trucking business is safe in a recession
While the trucking industry is not impervious to the effects of economic decline, it is relatively secure in recessions.
A business survives and thrives on demand. When there’s a demand, businesses supply goods or services to meet it. Even in recessions, there’s never a loss of demand for particular goods. And because businesses want to supply these goods, there’s always a demand for ways to transport them.
There is no doubt about it–people need trucks to run. This makes trucking companies a safe investment or business to begin, and makes truck driving a useful skill to have.
The Current State of the Trucking Industry
The world was struck hard by the COVID-19 pandemic, and the trucking industry coming out of a decline in 2019 didn’t come out unscathed.
Nevertheless, there is a lot of projected growth in the years to come, in both revenue and innovation, especially throughout 2022. Here are some of the latest developments, and things to expect:
Industry-Wide Growth
In 2022, the trucking industry is expected to continue its growth, with freight tonnage increasing up to 24% by the end of the year as reported in the U.S. Freight Transportation Forecast to 2022 by the American Trucking Association.
Along with the growing market for online food deliveries (projected to reach a hefty $33.7 billion by 2026), there’s a lot of evidence for positive movement in numbers for the trucking industry in the foreseeable future.
While this means ongoing stability and growth for logistics companies, this can also pose some challenges–with the rise of demand, there is a need to cater to it by having to expand services.
Growing Fuel Costs
Fuel costs have been at an all-time high for the past decade. Fuel has increased in price by over 60% since 2014, making it a significant expense for trucking companies and their drivers. Shippers also don't benefit from lower fuel prices because increased shipping rates ultimately pass those expenses onto their customers.
To keep up with increasing costs without risking bankruptcy or falling behind on payments, many trucking companies are looking into alternative transportation methods like electric trucks or smaller ones requiring less fuel per load.
This, however, means new investments on part of the trucking companies, which often can go beyond their budget. It does however look like the transition to electric power is inevitable, marking a significant change down the line.
Real-Time Tracking Technology
The trucking industry has seen a lot of changes in recent years, and the future is looking bright for transportation companies willing to adapt. Real-time tracking technology has been around for decades, but it's only recently become more common.
With real-time tracking technology, shipments can be closely followed throughout their transportation journey. This creates streamlined routing (which reduces fuel costs), greater transparency into where your cargo is at all times, and better management of your drivers' schedules so that they don't have to work too many hours without rest breaks or wait too long before their next job assignment comes in.
AI and advanced analytics tools like InnoPortal can also be used with this type of tracking system; these tools help companies collect data about how well individual drivers do on certain routes or during specific times of the day so they can learn what works best for everyone involved—including customers who want their deliveries made quickly and safely!
Artificial Intelligence and machine learning also pose the opportunity for proactive fleet and supply chain management through predictive analytics.
We’re only scratching the surface for what is possible with AI, and it looks like trucking will greatly benefit from its growth.
Driver Shortages
The trucking industry’s growth spells out a rise in demand for transportation services, and while this means more opportunities, there is a significant shortage in manpower to accommodate them.
The American Trucking Association reports an approximate shortage of 80,000 drivers that will only increase as time goes on.
This is the result of several factors, including an aging workforce and increased truck safety regulations. Drivers are also experiencing more demands on their time as they have to take care of more duties than they did in the past due to stricter laws regarding hours-of-service rules and limits on how many hours drivers can be on duty.
Trucking companies are looking for ways to attract more drivers, including offering pay incentives and signing bonuses or new-hire training programs. They have also begun targeting new demographics, like increasing efforts to add to the 7% of women drivers in the history of the trucking industry.
Influence of E-Commerce
Analysts predict that the total sales generated by e-commerce companies in 2023 will be higher than $740 billion (in the U.S. alone).
This means you can expect a significant increase in demand for shipping services over the next decade as shoppers increasingly turn away from brick-and-mortar stores to shop online instead. While this trend has some downsides, it will bring great opportunity for anyone involved with domestic transportation services!
It's shaping the trucking industry in more ways than one, not just because it demands that goods be transported faster but also because shippers and carriers alike want to reduce costs.
Urbanization and Infrastructure
The growth of e-commerce and the trucking industry is also driving the need for more infrastructure improvements.
As urbanization increases, so does the number of deliveries needed to support it. While these delivery services will be welcome in most cities and towns, some areas are at risk of losing their economic vitality as they become overwhelmed with trucks on their roads.
As of now, improvements to infrastructure are not keeping up with the decline of the National Highway System in the U.S. Out of the four million miles of roadways in the country, a whopping 43% are in a poor or mediocre condition. 42% of the 617,000 bridges in the country are also over 5 decades old, with about 17% of these bridges being structurally deficient and over 46,000 of these bridges are structurally deficient.
Traffic congestion is also worsening because of this, causing a massive loss of hours in productivity and billions of dollars in operational costs due to freight bottlenecks. What’s worse is the environmental effect–all those trucks sitting in traffic contribute 67 million metric tons of CO2 in the atmosphere.
To combat this problem, trucking companies must adapt their business models by changing how they plan routes and manage costs. They can also develop new technology that helps them navigate traffic jams or find alternate routes when necessary.
Why Work With Innovative Logistics Group?
Innovative Logistics Group has a single motto: “One Company, One Solution.”
Our business is dedicated to providing a holistic range of services to help different trucking companies with different issues, having helped thousands of businesses of all sizes with our multitude of resources and mentorships.
Here are some of what we can offer:
Truck Financing and Working Capital
Warranty Service and Roadside Assistance
Driver Recruitment Service
Online Driver Qualification File Management
Fuel Card Subscription
Truck Insurance
Trucking Virtual Assistant Service
Fleet Management
Invoice Factoring
Mentorships focused on Trucking Businesses and Dispatching,
And many more!
Innovative Logistics Group can be your mentor, your investor, your guide, your assistant, and the overall help your business needs.
One Company, One Solution.
Enlist the help of Innovative Logistics Group today, and make the growth of your trucking business inevitable. Contact us!
