Trends for 2016
By: Phil Sneed
With the holidays firmly in the rearview mirror, the trucking industry can focus on the next year, which represents new opportunities for further growth.
Some trends relate to the expected increase in business, while others may be in the form of regulations and new technology. More opportunities in different industries have a direct impact on trucking, and for the better.
Expect freight demand to increase
Freight demand is expected to increase due in part to emerging technologies. According to Fleet Owner, John Larkin, the managing director and head of transportation capital markets research at Stifel Financial Corp., said 3-D printing is expected to keep growing. As a result, more production should come back to the U.S., and with that increase freight demand.
"Freight demand is expected to increase due in part to emerging technologies."
3-D printing in particular can be both a positive and negative trend. In early 2015, the Commercial Transportation Trends study cited the manufacturing process as a threat to trucking due to the possibility of 3-D printing lowering manufacturing costs. As a result, some products with high shipping costs, such as footwear and electronics, are cheaper to transport. However, 3-D printing may even create new transportation lanes as some companies look to simplify manufacturing processes.
Other factors, according to Larkin, will result in higher freight demands.
"The U.S. is gaining a competitive advantage as labor costs outside of [America] rise faster than costs in the U.S. are rising," said Larkin.
Supply chain shortening
The trucking industry is a hotbed for new technology. New federal regulations will mandate use of electronic log devices, starting in a few years, and semi-trailers are becoming more fuel efficient.
Due to labor costs converging around the world, and because of new, quicker manufacturing processes, the supply chain may start to shorten. It won't occur overnight, but the industry should start to expect long supply chains to fall out of favor.
It's important to keep in mind that a new year represents both positive and negative trends to allow the industry to properly prepare and respond to any challenges. Industry analyst Adrian Gonzalez said at a conference that, when it comes to a shortening supply chain, for-carrier executives should worry about a popular ride-sharing application.
"The reality is that there are different models evolving in terms of how to get product from Point A to Point B, beyond the traditional roads and the companies that you represent," said Gonzales at the McLeod Software 2015 Users' Conference, according to Fleet Owner.
Moving forward, retailers and others are going to ask themselves what the most cost effective, yet least expensive shipping option is. For the supply chain and freight deliveries, their role is also dependent on globalization, including trade and tax policies.
"The sooner ELDs are installed, the better."
For fleets to stay ahead of the competition, 2016 is the year to have the right resources in place, such as performing network analysis.
Prepare for new rules
In the middle of December 2015, the Federal Motor Carrier Safety Administration unveiled its final ruling regarding electronic logging devices. The industry has two years to implement ELDs inside the cabin, and the sooner they're installed, the better.
Any procrastination may result in a few issues with implementation and adoption. Furthermore, the two years can be used to find ELDs that are reliable, but also cost effective. This stems from the final ruling stating that devices must meet certain requirements, such as being tamper-proof in addition to displaying certain information.
More trends are bound to present themselves as the days go by. Some represent short-term opportunities and challenges, whereas others may be more long term, but equally important.