As consumers return to spending, demand for long-distance freight will recover
Los Angeles, CA (PRWEB) November 02, 2012
During the recession, the Long-Distance Freight Trucking industry toughed through difficult operating conditions and weak demand. The decline in consumer spending drastically reduced the amount of freight that needed to be transported, causing industry revenue to fall 18.5% in 2009 alone. Meanwhile, declines across the manufacturing sector and volatile crude oil prices have further pressured the industry's financial performance during the past five years. According to IBISWorld industry analyst Lauren Setar, “due to the rising diesel prices, operators have had to increase fuel surcharges to mitigate the prices' effects on profit and to boost revenue.” Despite these obstacles, the industry has returned to growth since 2010. Revenue is expected to increase 2.0% during 2012, as a modest increase in disposable income boosts consumer spending and supports demand for long-distance freight. Largely as a result of the steep decline in 2009, however, IBISWorld estimates that industry revenue has decreased at an annualized rate of 1.0% to $155.4 billion in the five years to 2012.
This industry has a low concentration, with nonemploying operators accounting for overwhelming majority of all firms. Even the industry’s largest players, including J.B. Hunt Transportation Services and YRC Worldwide Inc., only contribute a relatively small percentage of industry revenue. Due to this fragmentation, the Long-Distance Freight Trucking industry is characterized by intense price competition and low profit margins. In 2012, profit is estimated to represent 4.9% of industry revenue, down from 9.1% in 2007, because many companies have lowered prices to attract business. “Since the industry has a large number of participants, companies are forced to offer competitive wages and benefits to draw in and retain the best employees,” says Setar. In the five years to 2012, IBISWorld estimates that wages have increased at an average of 1.5% annually to $48.5 billion.
During the five years to 2017, IBISWorld projects that industry revenue will grow at a healthy pace, facilitated by improvements in consumer spending and steady demand for the shipment of goods to and from trading ports. The majority of this growth, however, will be recovery, since the industry is not expected to surpass prerecession revenue levels until 2015. And, while trucking will continue to be the most widely used mode of freight transportation, the industry will face increased competition from the Rail Transportation industry (IBISWorld report 48211) due to fluctuations in fuel prices and greater consumer concern for environmental sustainability. For more information, visit IBISWorld’s Long-Distance Freight Trucking in the US industry report page.
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IBISWorld industry Report Key Topics
Long-distance freight-trucking operators handle various commodities, generally palletized and transported in containers or van trailers. Establishments typically provide trucking between metropolitan areas that cross the borders of North American countries. The industry includes establishments operating as truckload or less-than-truckload (LTL) carriers.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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