Los Angeles, CA (PRWEB) May 10, 2012
Local freight trucking has not fared well in the five years to 2012, as all industry services have declined. Slow manufacturing production and retail spending reduced demand for the industry during the recession, according to IBISWorld industry analyst Lauren Setar. Declining demand caused greater price competition among operators, which limited profit margins. Additionally, soaring diesel costs dramatically reduced 2008 profitability, though many industry operators implemented fuel surcharges. These surcharges increase revenue, but are not sustainable. The industry performed poorly in 2009 when revenue declined 20.5%. Weak operating conditions caused many firms to record losses in 2008 and 2009, forcing some operators out of the industry. Furthermore, a drastic reduction in diesel prices in 2009 caused revenue from fuel surcharges, which are tacked on when diesel prices are high, to decrease during the year. Since then, revenue has increased along with fuel prices, but demand remains relatively weak. Consequently, revenue is expected to fall at an average annual rate of 3.3% to $32.4 billion during the five years to 2012. In 2012, IBISWorld expects that recovering demand and increased shipping volumes will cause industry revenue to grow by 2.0%.
Nonemployers comprise about 87.5% of firms in the Local Freight Trucking industry. Barriers to entry are very low, allowing for many small operators and, therefore, increased competition in the industry. These small firms, which generate 38.2% of revenue, were especially susceptible to the decline in demand, Setar said. In the five years to 2012, the number of companies is expected to decline by 3.2% annually to 187,247. Similarly, reduced demand has also caused industry employment to fall 3.4% annually during the same time.
Conditions are projected to improve slightly through 2017. As the economy recovers, the industry is expected to grow along with disposable income and, therefore, demand from manufacturing and retail spending. Additionally, diesel prices will cause growth in the five years to 2017 as companies heighten fuel surcharges to offset costs, though profit will eventually diminish. In the five years to 2017, IBISWorld projects that industry revenue will increase.
For more information, visit IBISWorld’s Local Freight Trucking in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in this industry provide general freight trucking over short distances. General freight companies handle a variety of commodities, which are generally palletized and transported in a container or van trailer. Local general freight trucking companies usually provide trucking within a metropolitan area that may cross state lines, and the trips are generally same-day return.
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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