Every industry is affected by the economy, but nowhere is this truer than the trucking and shipping industry. The highs and lows of the economy have direct correlations to the number of shipments processed, docked, warehoused, and trucked from every location.
Whether you’re on the sending or receiving end of a shipment, it’s important to pay attention to these shifts in the economy so you understand how it could impact your business.
The aspects of shipping that are most likely to change during economic highs and lows are the volume of loads on the road and the employment needs of trucking companies.
The Volume of Loads
When the economy is booming, in-store and online orders increase, and distributors and stores need more inventory to stock their shelves.
As more orders are placed, local freight companies move more inventory through their warehouses, which can influence the costs of warehousing services. At the same time, trucking companies can make more frequent shipments because there is so much need to meet orders. This can occasionally decrease shipping times for customers.
Economic shifts also affect the way shipments are sent.
When the economy is slowing down, it isn’t uncommon to see shipments getting heavier, more compact, and single trucks pulling two trailers at a time. This helps control fuel costs and the number of drivers needed. Companies require less-frequent trips to deliver inventory since it isn’t moving off the shelves as quickly. No one wants to sell less product, but reducing the volume of loads can be beneficial during slower times.
Another factor in shipment loads is the price of fuel, which is one of the biggest costs for shipping companies.
When prices are lower, it certainly helps with the margins, but it also means more trucking companies are staying in business. As fuel prices increase, it becomes harder for companies that are barely making it keep going.
Shipping prices charged to customers must increase or else shipping services must increase their handling portion to cover the increased costs.
Another benefit of an upswing in the economy is that there is a growing need for more truck drivers to help move all the inventory at a faster pace.
However, this can also be a hard time to find drivers because the economy (and therefore the job market) is doing well with fewer people out of work. Pay for truckers usually increases and signing bonuses are offered to help attract people willing to drive.
When the economy is down, the job market is usually taking a hit. People are unemployed and there are more people who want to drive for trucking companies.
The job is long, but it is a good, steady income if you can get the work.
The problem for drivers comes when there is more competition to drive routes. Many drivers are considered independent contractors, even within a company, so not everyone will get the jobs that they want.
Drivers aren’t the only positions in the trucking industry, either. Some jobs include dispatchers, customer service agents, recruiters, billing and warehouse staff. With fewer orders from companies and inventory moving through warehouses, there are fewer positions available within the industry overall.
Monitoring the Economy
One sign that is often used to gauge the state of a healthy economy is the number of trucks that are on the roads each day.
This is because they represent an obvious connection to how much people are buying and selling and otherwise keeping the money flowing.
Shipping services are still affected by the ups and downs that naturally come with the markets. But one thing is sure; trucking companies are here to stay.