Fuel costs make up a large expense for industry operators
New York, NY (PRWEB) August 20, 2014
The Long-Distance Refrigerated Trucking industry has experienced solid gains over the past five years, which have helped offset the decline it faced during the recession due to contractions in general manufacturing production and personal consumption. Operators in the industry move a large volume and variety of climate-sensitive products across many markets; therefore, demand has fluctuated, primarily with regard to demand from frozen food wholesaling, fruit and vegetable wholesaling and meat, beef and poultry processing. According to IBISWorld Industry Analyst Edward Rivera, “Although revenue from some markets remained relatively stable, recovering consumer spending greatly benefited other sources of revenue (e.g. total trade, as companies in the industry move goods destined for trade).” Overall, revenue has improved in the subsequent years to 2009 with the strengthening economy. Consequently, in the five years to 2014, IBISWorld estimates that industry revenue will increase at an average annual rate of 4.9% to $7.4 billion. Revenue is expected to increase just 1.7% in 2014 as demand from some downstream markets experiences a slight dip.
Fuel costs make up a large expense for long-distance refrigerated trucking companies. Many operators in the industry use fuel surcharges to counterbalance increases in fuel costs. Surcharge costs increased for operators over the past five years; however, this did very little for profit because fuel input costs also increased, offsetting most of the revenue gains. As such, rising fuel prices have increased revenue volatility in the past five years. IBISWorld estimates that profit margins have increased over the past five years to make up about 5.1% of revenue in 2014, in large part due to renewed demand.
In the five years to 2019, the industry is expected to continue benefiting from the recovering economy, with higher volumes of temperature-sensitive goods needing to be transported. Traded goods and demand for meat, beef and poultry processing are forecast to increase. During this time, IBISWorld projects that industry revenue will increase. Growth, however, will likely be hampered by mounting competition and regulations. The Federal Motor Carrier Safety Administration's hours of service driver requirements will increase on-duty non-driving time and will result with higher wage costs. “Competition from rail transportation and recent infrastructure improvements in that industry will put pressure on industry operators in the next five years,” says Rivera.
For more information, visit IBISWorld’s Long-Distance Refrigerated Trucking in the US industry report page.
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IBISWorld industry Report Key Topics
Enterprises in the Long-Distance Refrigerated Trucking industry provide long-distance refrigerated trucking services, moving climate-sensitive products ranging from meat and poultry to pharmaceuticals and cosmetics, among other goods. Goods are typically transported from manufacturers to wholesalers and retailers throughout the country. This industry excludes any regional transportation services that can be completed in under a day.
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