Low barriers to entry and weakened demand have intensified price competition
New York, NY (PRWEB) April 29, 2015
The Long-Distance Freight Trucking industry hit some speed bumps during 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 the United States border. As the economy recovered, industrial, retail and trade activity climbed. Consequently, the need to move goods between manufacturers, retailers and borders increased, leading to higher freight volumes and demand for industry services. However, 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 2015, industry revenue is expected to climb.
According to IBISWorld Industry Analyst Maksim Soshkin, “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 of its efficiency, compared with trucking. 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 such as 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. This process has strengthened demand for industry services.
In the next five years, industry growth is forecast to strengthen. Although increased trade, manufacturing and retail activity will stimulate growth, competition from other modes of transportation will continue to curb industry revenue. Industry operators might also find it difficult to deal with a growing labour shortage. “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,” says Soshkin. However, at the same time, operators should benefit from recently declining fuel prices, which should help increase profit.
For more information, visit IBISWorld’s Long-Distance Freight Trucking in Canada industry report page.
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IBISWorld industry Report Key Topics
The Long-Distance Freight Trucking
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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