Around 88,000 trucking companies ceased operations in 2023, and that trend didn’t slow down in 2024. In just the first two quarters, almost 10,000 carriers shut down. An overabundance of competition and rising fuel prices played a role in these closures.
As 2024 winds down, what should trucking business owners keep in mind? What freight industry trends does TBS predict to play an important role in the transportation industry for 2025?
Advancing Technology
Technology keeps advancing, and 2025 is going to see the increased use of autonomous trucks. While some are hesitant to embrace this type of technology, it has a profound effect on safety and efficiency.
Where there are driver shortages, existing drivers often drive to the maximum limits. They’re tired and frustrated by the lack of coverage. Autonomous trucks help. They can handle driving some routes, and they do so without getting tired or sick, so your drivers aren’t overworked or forced to haul a load while sick.
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Additional technology that increases efficiency and delivery times also helps you shine. Real-time load tracking ensures you know exactly where a shipment is at any given time. If your customers want to know when to have someone at the loading dock, you can give them a solid timeline.
Continued Growth of E-Commerce
E-commerce exploded during the pandemic. It also helped people realize that shopping online and having items delivered to their homes is a major timesaver. With the increased interest in e-commerce, last-mile deliveries are booming.
A last-mile delivery is one where a major hauler gets items to a certain point, and then another company takes over that last mile. FedEx and UPS are examples. Some companies are testing the use of drones for urban areas. It keeps your drivers out of congested cities and helps ensure that your drivers quickly get to the next job.
There is talk that the president-elect plans to ease the goal of shifting to electric semis, so this could ease the burden some trucking companies feel when it comes to purchasing or leasing new trucks. Tesla is one of the first companies set to release an electric truck, however. Given Elon Musk’s new role in the government, it’s hard to tell if that will happen.
Musk and Trump both talk about ending subsidies for EV purchases, and Musk posted on X that he supports that as it will help Tesla. Without government subsidies, some companies will be unable to go into full production, whereas Tesla claims to be ready for mass production starting in 2026.
Production Declines
Many mixed messages are coming from different departments when it comes to production. For example, the USDA predicts that beef production will decline in 2025, largely due to the refusal to accept beef from other countries where certain parasites are prevalent.
Deloitte also reports that manufacturing is likely to continue a decline in 2025. High interest rates play a part in this. While the Federal Reserve started lowering the prime rate, rates for credit cards and business loans are still higher than people feel is affordable. Plus, raw materials are expensive and expected to keep increasing. The third problem manufacturing companies face is the difficulty of finding workers. Getting people in the door is hard enough, but getting them through training and retaining their talent is difficult.
With a new presidency about to enter, there has been a lot of talk about deporting illegal immigrants. Some of these immigrants hold jobs that Americans won’t fill due to work conditions or low pay. This could impact the manufacturing section even more. While agriculture and construction are the leading industries hiring illegal immigrants, manufacturing comes in at fifth place with an estimated 5.7% of all workers being illegal immigrants.
There is good news, however. One of President Biden’s biggest achievements was spearheading funding for the infrastructure. Part of that was to help manufacturers upgrade their equipment to more efficient machines and technology. The record for building new or upgrading existing manufacturing plants was broken in June 2024 when construction spending hit $238 billion. Not only does that allow for faster production, but it also created around 27,000 new jobs. If jobs start filling up, production rates could skyrocket.
Level Spot Rate Growth
Spot rate growth has been slowly rising, but inventories and manufacturing still need time to catch up. Fuel costs have increased over the years, so even with the minimal spot rate growth, more money is being spent on fuel. The other cost eating into potential profits despite increasing spot rates is trucking insurance.
Per Barnard Donegan Insurance, premiums increased by over 12% between 2023 and 2024. Keeping insurance and fuel costs down is essential if you want to balance the sluggish spot rate increases.
Weather-Related Disruptions
It was a banner year for weather events in 2024. While it would be nice to shift to a bit more normalcy, weather patterns continue to change. Counting just blizzards and hurricanes, the NOAA reports there were 449 events in 2023. So far in 2024, the U.S. has seen 348 events, including devastating floods across several states tied to some of the year’s hurricanes.
When these weather events close roads and bridges, it disrupts delivery times. That gets costly. For the first quarter of 2025, predictions are that temperatures will be colder than average in the Northwest. It’s predicted to be warmer than average in southern states. With colder-than-average weather, the chance for snow increases, especially if there’s more rain than normal. The current Tropic Storm Risk for 2025 predicts seven hurricanes and three of them are predicted to be major storms.
Prepare Now
What can you do to prepare for a new year? Start by making sure you have a competitive benefit package. You may not be able to offer the same high wage as the competition, but an offer with health, life, dental, and disability insurance makes a big difference. Allowing drivers to bring a spouse or partner on long-haul trips can be equally attractive.
Make sure you have your trucks and trailers inspected and maintained properly. Before your drivers leave your lot, brakes, lights, wipers, tires, and other core components must be checked to ensure they’re working properly and in good condition.
Predictions are just that – predictions. It’s impossible to know exactly what will happen in 2025. However, you can take steps to protect yourself from any hurdles the trucking industry faces.
TBS offers comprehensive freight factoring services at extremely low factoring rates. The freight industry is our specialty, and we offer valuable services that help lower your business expenses and ensure you get paid quickly. It’s so much easier to keep a strong cash flow throughout the year when you’re getting paid on time and have impressive fuel and insurance discounts to help you stay competitive. Contact us today.