The Future of Freight: 2020 Trucking Industry Forecasts
As we watch 2019 fade away in the rear-view mirror, it’s time to start planning for the year to come. The LTL industry is poised for a lot of change in 2020, with looming effects of ongoing tariffs and the shift to the ELD mandate leading the pack of factors to contend with.
As with any forecast, it’s important to stay on top of your trucking industry news throughout 2020 and beyond to understand what comes to fruition and what pivots occur instead. For now, though, here are some initial 2020 trucking industry predictions to prepare you for the year ahead.
Trade War = Possible Freight Recession
First, the bad news: This past year saw the beginnings of a standoff on trade between the U.S. and China, with each country imposing tariffs on and limiting its purchasing from the other. This has led to the beginnings of an economic downturn, as U.S. manufacturers have more product than they can usually sell overseas… which also translates to limited need for trucking companies to ship those goods.
According to ACT Research president Kenny Vieth, the industrial recession that’s already beginning throughout the U.S. is sure to have a major effect on freight and LTL industry trends. “Freight recovery is dependent on the speed at which equipment supply and freight demand are brought back in line,” Veith said. So until manufacturing reaches a semblance of equilibrium, expect the shipping industry to slow even further.
More Opportunities in Construction
Thankfully, with every cloud comes a silver lining. Despite the downturn in industrial manufacturing, building construction continues to grow. According to PGT Trucking CEO Pat Gallagher, “We’re seeing the construction business booming . . . Everywhere you go in major cities you see cranes.”
If this trend holds steady, carriers could potentially offset losses from hauling HHG and other tariff-affected goods by finding opportunities for truck drivers to support construction efforts. These opportunities could widen even further should the federal government prioritize infrastructure reform, which would open up a plethora of job sites and require truckers to deliver the necessary materials.
Mandatory ELD Compliance
In 2020, the use of FMCSA-approved electronic logging devices (ELDs) must comply with the specifications laid out in the 2012 MAP-21 Congressional bill that did away with the familiar paper logbooks the trucking industry had previously used. Carriers had until December 2017 to install and implement ELDs into their record processes. But if your company had a different electronic logging system—specifically, automatic on-board recording devices (AOBRDs)—at the time, you got a pass until December 2019 to update your hardware, rules, and processes to be in compliance with those rewritten for MAP-21.
As of next month, that pass is null and void; all grandfathered on-board electronic logging systems must be switched for ELD-compliant devices. This also includes smartphones and tablets, which must be hardwired to the truck’s engine.
If your company has already put measures in place to comply with the ELD mandate, 2020 won’t bring any changes to your logging processes. If not, expect to learn a new logging system early in the new year, including how to record, edit, certify, and transfer your logs.
Larger Reliance on Blockchain
While it’s not a new technology, blockchain is poised to make its biggest impact yet on LTL industry trends in 2020. After initial set-up and implementation costs, digital documentation saves on supply chain costs in a big way. Encryption and security measures provide detailed breadcrumbs that are difficult to misplace and manipulate, and the digital nature of blockchain tracking provides all involved parties with the visibility to maintain oversight on each piece of freight, from shipment to delivery.
It’s likely that more and more companies will come online with blockchain technology in 2020, to stay relevant and competitive with other carriers who have already done so. You may find yours. year.
Rising Truckload Rates
In 2018, the oversupply of available trucks led to carriers offering extremely competitive (read: super low) rates to shippers to earn their business, leading to profitable conditions for shippers throughout the year and into 2019. Throughout this last year, the scales have balanced into equilibrium—and now as we shift into 2020, the pendulum seems to be swinging even further.
According to an analysis by Coyote Logistics, the shipping industry can expect to see higher rates overall, and particularly rise in the prevalence of spot rates over contract rates. DAT Solutions predicts a 2% and 5% increase in contract and spot rates, respectively—meaning you should prepare for a budget increase to ship the same amount of freight in the coming year.
To ensure you receive the most competitive LTL shipping rates throughout 2020, partner with an established freight broker company—like Flock Freight. We negotiate rates typically reserved only for larger companies in the trucking industry and pass them on to our Flock of small to medium-sized businesses. The Flock Network consists of vetted and trusted carriers who work with us to offer efficient, cost-effective freight shipping without any surprises.
The trucking industry in 2020 may be unpredictable, but your bottom line doesn’t have to be. Get a quote and join the Flock today.