A jump in car sales and construction activity will support demand for freight trucking
Los Angeles, CA (PRWEB) August 05, 2012
The Local Specialized Freight Trucking industry is less sensitive to adverse market conditions than other trucking industries. For example, a slump in construction curtailed demand for dump trucks, and the dramatic decline in automotive sales caused demand for automotive carriers to plunge. However, according to IBISWorld industry analyst Lauren Setar, “the majority of demand for specialized freight trucking comes from the transportation of food, beverage and pharmaceutical products, mitigating declines for many operators.” As a result, IBISWorld expects revenue in the Local Specialized Freight Trucking industry to contract at an average annual rate of just 1.0% in the five years to 2012 to total $35.7 billion.
During the mid-2000s, industry revenue grew as a result of strong demand from food, petroleum and chemical wholesalers. Furthermore, growth in the construction sector increased demand for industry-related freight services. However, total freight transportation and trucking activity declined beginning in the second half of 2008 through 2009. Rising fuel prices further hampered industry performance, causing industry costs to spike in 2008. “As a result, says Setar, “profit margins declined, despite the efforts of operators to pass a portion of these costs on to clients.” Nevertheless, local specialized freight trucking is more profitable than the broader trucking sector due to the unique equipment it requires, such as refrigerated rigs and automobile carriers.
The Local Specialized Freight Trucking industry has a low level of market share concentration. In the five years to 2012, the industry has experienced a period of consolidation, largely due to increased costs and a fall in demand. The number of firms operating in the industry has declined marginally. Many of the players that have left the industry have been small firms and non-employers, which are more susceptible to pitfalls in market performance. Non-employers generate only a fraction of industry revenue, despite accounting for more than one-third of industry operators. Over the short-term, companies will face increasing pressure from high levels of competition from the large number of industry participants and increasing demands from consumers in relation to additional services, timeliness and pricing. The number of enterprises is forecast to increase only marginally over the next five years. During this time, firms in related trucking industries will enter the industry to capitalize on better profitability as less-efficient operators struggle under slowing demand. Market power is expected to be more concentrated with the largest players becoming more dominant.
In 2012, revenue and profit margins are expected to rise as the economy continues to recover, boosted by an increase in construction activity and car sales. Profitability is also expected to increase. Over the next five years, revenue will likely continue improving as the economy returns to growth. Rising consumer sentiment will cause consumers to spend more and boost demand for freight trucking.
For more information, visit IBISWorld’s Local Specialized Freight Trucking in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in this industry provide specialized road transportation for cargo using trucks and trailers. Local trucking establishments provide trucking within metropolitan areas that may cross state lines and trips are mostly same-day return. Specialized freight transportation is the movement of cargo that requires specialized equipment for transportation because of its size, weight and shape.
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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