The U.S. freight industry keeps growing strong. According to the American Trucking Association (ATA), the trucking industry’s revenues increased from $700.1 billion in 2017 to $796.7 billion in 2018. Throughout 2019 freight demand has continued to rise.
Closely tied to that is the freight broker industry which has also kept pace with the demand for more trucking services. Over the course of the last 5 years, freight brokers have increased steadily, with about 1,000 new brokers registering yearly.
It is expected that both of these industries will keep growing and expanding over the next decade, though they are also facing several serious challenges.
Keep reading below for an overview of the upcoming trends and hurdles to the freight industry and the freight broker industry!
The U.S. Freight Industry in 2019
According to ATA’s yearly data compendium, last year trucks moved about 71.4% of America’s tonnage freight. About 6% of all full-time jobs in the country are trucking-related, with almost 7.8 million people being employed in the industry in 2018.
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Yet, the freight industry also faces various challenges, such as high turnover rates, a possible shortage of drivers, as well as struggles with adequate pay.
For example, the ATA states that at the end of 2018, the industry was short by 60,000 drivers to meet the national demands for freight services. Moreover, the ATA expects the driver shortage to increase over the next years and warns that by 2028 the industry may be short by 160,000 drivers.
But the claim about an actual shortage existing is being disputed by various sides. Both a report by the U.S. Bureau of Labor Statistics (BLS) and an analysis by Business Insider claim the trucking market does not display signs of working differently than any other blue-collar labor market. The real culprits for high turnover, they say, are low salaries and long hours.
When it comes to determining the amount of pay received by drivers, there are differences too throughout the freight industry. Truckers in some private fleets, such as Walmart’s, make as much as $88,000 a year, and a survey by the ATA found that the median income of a truckload driver working a national, irregular route was above $53,000. On the other hand, according to the BLS, the median yearly income for truckers is closer to about $43,000.
With all of the above in mind, it seems that trucking will continue to be the biggest mover of the freight industry across the country. As demand increases, carriers will need to step up to resolve any possible labor shortages and pay gaps that make the job unstable or undesirable.
Freight Brokers On the Rise
Of course, improvements and growth in the freight industry also directly influence the freight broker market.
According to data provided by My Carrier Resources, the total amount of registered and active freight brokers has increased from 13,565 in January 2014 to a total of 20,681 by July 2019. Average monthly broker registrations with the FMCSA have also increased during these years, with about 240 new brokers registering on average in 2014, and about 400 by mid-2019.
Respectively, since 2000, third-party logistics providers (3PLs) and freight brokerages have come to handle about 23% of all freight in the country which adds up to a five-fold increase in share.
While this signals a stable freight industry market, traditional brokers also face several challenges they will need to meet if they are to retain their positions.
For one, the “Uberization” of freight remains a very real possibility, even though it may not be as dramatic as initially expected. Along with Amazon’s entry in the brokerage space, traditional brokers are pushed to adopt more digital solutions in order to manage freight efficiently.
At the same time, many brokers are also struggling with shipper reluctance to work with them and smaller carriers and resorting to them only for surge capacity. This lack of integration between shippers, brokers, and smaller carriers is also one of the reasons for the ongoing capacity crunch.Listen to “The State of Freight Trucking with Craig Fuller, CEO FreightWaves” on Spreaker.
Finally, compliance remains a central issue for brokers. For example, the FMCSA recently began publicly red flagging brokers as an attempt to crack down on fraudulent actors. Unfortunately, a broker whose freight broker surety bond or insurance is about to expire is also in danger of being red-flagged and must be mindful of that possibility.
What other trends and challenges lie ahead for the freight industry and brokers, in your opinion? Let us know in the comments!