You’ve outlined your business plan for starting a trucking company, and you’re ready to get the wheels turning. You may have assumed there would be some speed bumps along the way, but the more you look into it, the more you’ll realize that getting into gear can be more complicated than you imagined. Trucking industry issues are inevitable.
Don’t hit on the brakes too hard though! The trucking industry has a lot to offer if you’re ready and willing to put your focus into doing it right. That’s what we’re here to help you out with.
Buckle up and start your engines, ladies and gentlemen. We take you on a tour of the top 5 trucking industry challenges, just below.
Is now a good time to start a trucking business?
In case you’re still considering whether or not to start a trucking business, we’ve gathered together a number of good reasons that show why you should embark on this exciting journey.
As the President and CEO of the American Trucking Associations, Chris Spear, put it, “trucking is literally the driving force behind our great economy.” And he’s not exaggerating either. There is impressive data that illustrates how important the trucking industry is to the overall functioning of the economy.
What’s the trucking industry outlook for 2019?
Here are some transportation trends to consider:
- 70% of all domestic freight – tipping the scales at nearly 11 billion tons – is moved by trucks
- More than $700 billion in annual revenue is generated by the trucking industry
- Over 7.5 million people have jobs related to trucking, including 3.5 million truck drivers
- Roughly 15.5 million trucks operate within the states
- Trucking accounts for nearly 70% of trade between the U.S. and Mexico (and nearly 60% of trade with Canada)
- More than 90% of trucking businesses are considered small companies, with fewer than 6 trucks
Clearly the trucking industry has a lot to offer, and there’s still enough for you to claim your slice of the pie. But even with all of the opportunities at hand, there are a number of potholes you’ll want to steer clear of. Below we cover critical issues in the trucking industry.
What are the challenges facing the trucking industry?
Trucking industry challenges range far and wide, and there’s no telling when you’ll be faced with a dead-end.
But don’t stall now – we’re here to help you navigate away from getting stuck in those jams.
Here are the most critical issues in the trucking industry today:
1. Truck driver shortages
One of the biggest obstacles facing trucking companies all across the country is the shortage of truck drivers. According to the ATA, the trucking industry is short on drivers by an estimated 63,000 positions. And, despite a 15% increase in the median salary for truck drivers over the past six years, the demand for more drivers hasn’t been met.
That shortage is expected to grow bigger because older drivers simply aren’t being replaced by younger generations – in fact, the average trucker age is 49 years. That’s concerning news when you consider that Bob Costello, senior VP at the ATA, estimates the annualized turnover rate at 94%. So, not only are there not enough truck drivers, but only about 6% stay in their position every year.
Pro-tip: The DRIVE-Safe Act is a piece of proposed legislation aimed at making it easier for young drivers (18-21 years of age) to get truck-driver certification. The legislation is up for review again in 2019, so contact your local congressperson and express your support.
2. Changing trucking regulations
The laws and regulations affecting the trucking industry are subject to constant review and revision. Pair that together with the fact that different states have different regulations, and the task of operating ‘by the books’ becomes that much more difficult.
Recent changes in trucking regulations:
- Electronic logging requirements – according to the FMCSA, electronic logging devices are “intended to help create a safer work environment for drivers, and make it easier and faster to accurately track, manage, and share records of duty status (RODS) data.”
- Hours of service issues – the FMCSA has proposed lengthening shifts, changing rules regarding breaks, and reassessing how involuntary breaks (like those for bad weather) should affect the shift length
- Minimum wage changes – vary state by state
- Drug & alcohol sobriety tests – updates to drug & alcohol testing definitely aren’t something to be angry about, because the roads need to be safe for everyone; but there’s still a cost for those tests, and it comes at the expense of the trucking company
Pro-tip: These are just a few examples, so always be sure to stay updated on laws and regulations outlined by the FMCSA but also by the state you operate in.
3. Deteriorating infrastructure
This issue is, unfortunately, nothing new in the trucking industry. According to the chairman and CEO of XPO Logistics, Brad Jacobs, the U.S. infrastructure problem is widespread, including “crumbling bridges, roads, and tunnels”. In reference to the funding proposed by the Trump administration, Jacobs said that it’s about 25 years late.
Having a safe and reliable infrastructure is crucial when it comes to operating a successful trucking company. That’s why there is a proposed infrastructure spending plan. But those improvements don’t come without a cost; there are rumblings about increased gas prices, which means increased prices passed onto customers.
Pro-tip: The best route of action is often to contact your state’s Department of Transportation to report infrastructural problems you encounter on the road. Better yet, reach out to your state’s representative and express your concern with the state of the infrastructure.
4. Safety concerns
There’s no shortage of unforeseeable trucking issues in 2019. As difficult as it may be to prepare for the unknown, that’s exactly what trucking businesses need to do in order to make the grade.
What are trucking safety concerns?
- Inclement weather – even with weather reports, you can never be completely sure.
- Fatigue – lack of rest, highway hypnosis, and demanding work schedules can result in tired drivers.
- Distractions – smartphones, GPS alerts, traffic accidents, other drivers, and multitasking in general can be huge hazards.
Pro-tip: Drivers need to constantly stay aware of their speed, stopping distance, and weather conditions. Sometimes pulling over and waiting out a snowstorm is the right decision. Also, regular breaks are a necessity, not an option.
5. Variable costs
While a lot of the expenses associated with running a trucking company are more-or-less steady and consistent, there are also quite a few variable costs.
What are the variable costs in the trucking industry?
- Fuel – costs can vary significantly from state-to-state, and make up about 20% of total operating costs on average.
- Maintenance/repairs – regularly scheduled maintenance is a must in the trucking industry, and costs can vary. But, even with normal maintenance, things can go wrong and you may be faced with the sudden need to make repairs.
- Tolls – once again, costs for tolls will vary state-by-state. This isn’t something that you can set a firm budget for.
- Lodging – even for drivers who have spacious truck cabins, sleeping in a real bed is important to avoid fatigue. The charges at different lodges can often be similar but aren’t set in stone.
Pro-tip: To cover variable costs consider opening a business credit card, which will allow you to withdraw funds on an as-needed basis.
Financing a trucking business
Without proper guidance, the cost of running a trucking business can get out of hand. The initial cost to start a trucking company alone ranges between $10,000 and $20,000. Fortunately, out of all the trucking issues in 2019, financing is one that has a fairly easy solution. Taking a truck loan is a practical solution to many of the critical issues in the trucking industry.
Of course, the type of business will affect the kind of industry loans a business needs, as well as the specific circumstances that business finds itself in. Be sure to weigh your options carefully in order to choose the right funding solution for your business.
So what’s the best way to find tailored financing that suits your trucking business? With so many lending products and business financing companies to choose from, it can get tricky. And that’s where Become comes in to help…
By applying for a business loan through Become, you are provided with tailored guidance on how to improve your trucking business’s funding chances. Advanced algorithms will also work to match you with the lending solution that best meets your financial profile and needs! Better yet, you can get your funds in as little as three hours!
Business loans for trucking companies include:
- Startup business loan
- Business line of credit
- Equipment finance
- Unsecured business loan
- SBA loan
- Merchant cash advance
How to use trucking business loans?
- Getting licenses and permits
- Leasing or purchasing of equipment
- Maintenance and repairs
- Expanding the business
- Establishing a base of operations
Time for a pit stop
Trucking industry issues driving you up the wall? With all of the information provided above, there’s no need to worry about trucking industry challenges anymore. You’ve now got a clearer understanding of transportation trends and how to make them work to your advantage.
The reality is that trucking issues in 2019 may change as the year moves forward. So although the trucking industry lookout for 2019 is optimistic, trucking industry challenges can be hiding around any corner. So, it’s important to review transportation trends from time to time to stay up to date.
We hope you find this information helpful. Please let us know if there are any questions you feel were left unanswered.