Trucking in 2020 and Beyond
At the time of this writing, the year 2020 is still in its infancy. After the tumultuous time of change for the trucking industry in both 2018 and 2019, it is time to make sense of the industry’s health to see if there’s any trends that need addressing.
Trucking Isn’t Going Away
Amongst the news of self driving vehicles, a shortage of drivers to hire, tariffs, and more, some may worry that trucking as a whole is doomed. The truth is the world economy depends too much on moving goods from point A to point B to let the trucking industry die. “If 10% of the freight wasn’t moving, we would have the worst recession that we’ve had since 1933,” said Kenny Veith, president of ACT Research, a leader in researching market trends for commercial vehicle industries.
Clearly, the trucking industry even in its absolute worst years has been better than Veith’s hypothetical scenario. Barring an absolute catastrophe such as a world war or a pandemic wiping out 90% of the human population, trucking is not going anywhere soon.
Rates Should Rise
All prices follow the basic laws of supply and demand. When it comes to trucking rates, it’s based on the supply of truckers meeting the demand of the amount of freight shipped. In 2019 24,000 trucks were put out of business, meaning that companies that need freight moved will need to compete with each other more strongly, raising the raise of rates.
Truck Production Should Stall
Those 24,000 big rigs taken off the road last year were not simply destroyed, new owners may very well put them back on the road. With more used trucks on the market, truck manufacturers will have to compete with their own product more than ever to sell more trucks. After all, why would a shrew or struggling businessman purchase a new truck when they can purchase an almost new truck for a 20% discount?
Certainly, new trucks will still sell, but Kenworth, Peterbilt, and other truck makers are bound to feel the squeeze in 2020.
Up to Trump
Since 2016 and the election of the 45th president, a lot has changed in the world of trucking. Tax cuts have increased profits, ELDs have become completely mandatory, and a strained US-China relationship has reduced freight headed both ways.
The president, either directly or indirectly, has had a hand in making all three of these happen. The Department of Transportation is a part of the executive branch of government, and is ultimately the final word on its policies and regulations. If Trump wanted to, he could tell Secretary Elaine Chao to cease all Hours of Service regulations immediately, freeing commercial drivers to drive up to 24 hours a day.
This scenario is unlikely, but it does show the power of the office. With the 2020 election fast approaching, it is possible that Trump will throw the trucking industry another bone in order to motivate truckers to vote for him. Likewise, he could start an embargo with China and stop all imports from the United States’ greatest supplier, but that would very well cost him his chance at reelection.
Trump is a businessman at heart, so chances are he will work to make business easier rather than harder, but the presidency has a large influence on the trucking industry no matter who is in the Oval Office.
Drones Are a Non-issue…
People love to rattle on about how drones are the future of delivery, but that industry needs a lot more ironing out before it can hold a candle to the tried and true 18-wheeler. It was only in late 2019 that UPS was able to secure certification for operating a drone airline.
Even if UPS were able to get their entire drone delivery system set up in under a year, there are many nuances such as how far a drone can travel, the weight and size of goods shipped, and regulations regarding airspace.
Even in the best case scenario for drones and the worst case for trucks, where by the end of 2020 we have thousands of drones buzzing in the air on deliveries across the entire country, drones will be unable to carry heavier items that need hauling, such as bulldozers and bulk grain.
Perhaps one day drones will overtake semi-trucks as the main method of hauling freight across states will happen, but not in 2020.
…As Are Self-driving Trucks
Susan Carpenter of Trucks.com said in 2017 that self-driving trucks could be on highways in three to four years. Self-driving big rigs have been used in rare instances, but they have not made massive enough strives in the last half-decade to justify worry.
Even if all the planets were to align and all trucks currently on the road became fully automated, they would all still require a person at the helm in order to manage those once-in-100,000-mile instances, such as a massive bridge collapse or flooding. It will be even longer still before those rare scenarios are ironed out, and as such machines will not be fully replaced for a very long time.
Natural Gas Is Bound to Grow
As trucking companies find ways to reduce costs to increase profit margins, one underutilized source of savings has been natural gas fuel. While diesel increased in price from July to October 2019, compressed and liquified natural gas decreased in price over the same period. With CNG and LNG both being cheaper per gallon while providing comparable MPG, as well as there being over 1,000 stations across the United States, it is only a matter of time before more trucking companies adopt natural gas trucks as they expand or replace their fleet. This will cause a feedback loop of more stations and more trucks.
Saying there will be more natural gas semis on the road at the end of 2020 than the end of 2019 is not a groundbreaking prediction, but it is a safe one.
Truckers Will Get Older, but not by Much
While there have been some years where the median truck driver age has gone down, the general trend has been for it to rise. From 2011 to 2018, the Bureau of Labor Statistics has estimated the median age to have gone up from 46.1 to 46.9. It stands to reason that the average age is likely to go up another tenth this year, especially as retirement age slowly moves back across the United States. This is nothing to worry about; a rate of a year per decade is not an industry changer.
Conclusion
The more crazy a prediction of change in the trucking industry, the less likely it is to become true. Will the median age of truckers rise this year? Almost certainly. Will the DOT make use of diesel engines illegal across the United States? Almost certainly not. Using trends from previous years, analysts try to guide decisions going into the future. Will 2020 be a better year for trucking than 2019 was? Nobody can truly know for sure until the year is over, as hindsight is…20/20.
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