Low barriers to entry and weakened demand have intensified price competition.
New York, NY (PRWEB) February 28, 2014
The Long-Distance Freight Trucking industry hit some speed bumps over the past five years as it slowly recovered from the recession. Industry players use trucks to transport freight along long distance routes between regions in Canada and across the United States border. “In 2009, the recession caused industrial, retail and trade activity to plunge,” according to IBISWorld Industry Analyst Maksim Soshkin. Consequently, the need to move goods between manufacturers, retailers and borders declined, leading to lower freight volumes and demand for industry services. Even when the economy began to recover, its slow pace (especially in recent years) and subpar industrial output caused demand for industry services to remain relatively weak. Therefore, in the five years to 2014, industry revenue is expected to climb at an annualized 0.8% to $19.1 billion, with a 1.4% jump in 2014.
The industry has also come under pressure from stronger internal and external competition. Low barriers to entry and weakened demand have intensified price-competition, especially among smaller carriers. Moreover, rail has become an attractive alternative to trucking because its efficiency, compared with trucking, increases when fuel prices go up, as they have in recent years. Nevertheless, demand for industry services has been strong enough to increase industry profitability over the past five years. Moreover, the industry has benefited from trends like just-in-time (JIT) inventory management. “In JIT inventory management, manufacturers only purchase materials and inputs needed right away instead of purchasing ancillary goods, which must be kept in storage,” says Soshkin. This process has strengthened demand for industry services.
In the next five years, the industry's growth is forecast to strengthen and escalate. Although increased trade, manufacturing and retail activity will stimulate growth, competition from other modes of transportation will continue curb industry revenue. As fuel prices increase, customers may be inclined to switch to more fuel-efficient methods of shipping goods, intensifying competition. Industry operators might also find it difficult to deal with a growing labour shortage. Often difficult working conditions, relatively low pay and an aging workforce are all projected to put pressure on carriers' ability to fill job openings, a trend that is anticipated to increase wages.
For more information, visit IBISWorld’s Long-Distance Freight Trucking in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry provides long-distance general freight trucking between metropolitan areas. The industry provides truckload services as well as less-than-truckload services. This does not include the movement of specialized freight.
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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