Increased freight volumes and international trade will spur steady industry growth.
New York, NY (PRWEB) June 21, 2014
Over the past five years, the Local Freight Trucking industry has had a bumpy recovery. Industry players use trucks to transport general freight along short-distance routes, such as in metropolitan areas and within provinces. “During the recession, declining retail, industrial and trade activity drastically reduced the need to transport goods, thereby reducing demand for industry services,” according to IBISWorld Industry Analyst Maksim Soshkin. After the recession, the economy started to grow and demand for industry services from the manufacturing and retail markets increased. However, economic growth has been slow, causing demand for industry services to remain lacklustre. Consequently, industry revenue growth has been marginal, with most of the industry's performance based off an exceptionally low 2009 recessionary starting base. In the five years to 2014, industry revenue is expected to climb at an average annual rate of 2.8% to $8.8 billion, with a 2.0% jump in 2014.
As a result of lacklustre demand, competition among industry operators has intensified. In particular, small owner-operator companies have come under increased pressure as low barriers to entry ensured that the number of competitors remained high. “Moreover, the fragmented composition of the industry has forced most industry operators to be price takers, which reduced their ability to charge higher rates,” says Soshkin. Nonetheless, demand for industry services has grown enough to increase industry profitability over the past five years. Lastly, the industry has benefited from logistics trends like just-in-time (JIT) inventory management. In JIT inventory management, manufacturers and retailers only purchase materials, goods and inputs needed at the moment, instead of purchasing goods for later use that must be kept in storage. As a result, goods had to be transported more often, resulting in more demand for industry services.
Over the five years to 2019, industry revenue is forecast to climb. A stronger economy is anticipated to continue increasing retail, industrial and trade activity, which will drive demand for industry services. Moreover, the industry is expected to benefit from continued proliferation of JIT inventory management and logistics and trucking outsourcing. However, high fuel prices and more stringent regulations are projected to put pressure on operators.
For more information, visit IBISWorld’s Local Freight Trucking in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry provides local general freight trucking within a metropolitan area and its hinterland.
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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