Long Distance General Freight Trucking

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 36,300 long distance general freight trucking companies in the US provide truckload (TL) and less-than-truckload (LTL) transportation services between cities and across the country. TL trucks carry a load for a single customer, transporting the load directly to its destination. LTL trucks carry goods for more than one customer and make multiple stops to drop-off and pick-up freight. These trucking firms transport a wide variety of goods and may also provide services such as warehousing, packaging, and customs brokering for international transport. Long distance trips typically exceed 250 miles.

Volatility of Fuel Costs

Fuel consumption is a major expense for trucking companies, with nine miles to the gallon of diesel considered a good MPG range.

Rising Need for Drivers

Because of truck drivers’ difficult lifestyle and time spent away from home, many companies have trouble finding and retaining qualified long-haul drivers.

Industry size & Structure

A typical long distance general freight trucking company operates out of a single location, employs 23-24 workers, and generates about $5 million annually.

    • The long distance general freight trucking industry consists of about 36,300 companies, which employ about 754,000 workers and generate about $162 billion annually.
    • The truckload (TL) segment of the industry accounts for 88% of firms and 71% of industry revenue. The less than truckload (LTL) segment accounts for 12% of firms and 29% of industry revenue.
    • The TL segment is fragmented with the 20 largest firms representing 30% of the segment’s revenue. The LTL segment is concentrated with the 20 largest firms representing 77% of the segment’s revenue.
    • Large companies include Schneider, Old Dominion, YRC Freight, Swift Transportation, JB Hunt, and Werner Enterprises.
                                  Industry Forecast
                                  Long Distance General Freight Trucking Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Coronavirus Update

                                  May 16, 2022 - Lockdowns In China Will Affect Entire Supply Chain
                                  • Supply chain experts say that China’s strict Covid-control policy could cause renewed supply-chain disruptions in the US as shuttered factories there cause orders to back up. The effects of lockdowns in southern Chinese megacity Shenzhen — home to the nation’s most-important port after Shanghai — will affect the Los Angeles-area sea-cargo hubs, the busiest container gateway in the US, according to Noel Hacegaba, of the Port of Long Beach. Backups building at other ports in China may be indicate what's to come at Shenzhen, according to Alex Charvalias, of maritime-analytics firm MarineTraffic. The number of container vessels waiting to berth in the eastern city of Qingdao climbed to 22 from 9 in one week, he said, and the queue is also growing at the biggest port in Shanghai, he said. This will affect the US in the next month or so, because fewer vessels will leave for the West Coast, he added.
                                  • Some trucking industry stakeholders say that the shortage of truck drivers would intensify if trucking firms require drivers to be vaccinated against COVID-19. The driver turnover rate was 91% in 2019, according to The New York Times. Plenty of people have the commercial driver’s licenses needed to operate trucks, said Michael Belzer, a Wayne State University economist who has studied the industry for 30 years. “None of them will work for these wages,” he added. Studies even show that their pay, when adjusted for inflation, has declined markedly since the 1970s.
                                  • FTR Transportation Intelligence expects slower growth of freight volumes in 2022 and easing trucking capacity utilization. Freight rate growth in 2022 is expected to moderate but remain at elevated levels. Headwinds for 2022 include reduced consumer spending due to inflation, the dwindling effect of pandemic-related stimulus, and continued driver shortages.
                                  • US trucking firms are increasing pay to attract drivers as the US economy gains steam and demand for freight keeps rising, according to FreightWaves. While the wage increases have helped maintain fleet sizes, the lack of drivers has stifled fleets’ ability to grow organically. The US infrastructure law signed by President Biden in mid-November 2021 includes a pilot program that would allow 18-20- year-olds to drive tractor-trailers across state lines. According to the American Trucking Association, the trucking industry is about 80,000 drivers short – up nearly 20,000 compared to before the pandemic began. The National Transportation Institute estimates that, on average, carriers increased driver wages by 8% in 2021.
                                  • Trucking firms may be under increasing pressure from customers to require their employees to be vaccinated. Tyson Foods requires all of its US workers to get vaccinated, including 1,300 drivers for its private delivery fleet. Industry watchers suggest more shippers, especially of food-grade freight, may begin pressuring trucking companies to have vaccinated drivers. More than one-third of US employers plan to move forward with their vaccine mandates despite the Supreme Court decision to overturn the Biden Administration’s vaccine-or-test mandate for firms with 100 or more employees, according to a January survey by Gartner.
                                  • Merger and acquisitions (M&A) activity increased in the second half of 2021 after a major slowdown that began in 2020, according to Transport Topics. Surging trucking demand has driven up sales and profitability for many trucking firms, which has helped push valuations higher and increased some fleet owners’ incentives to sell. While some firms are looking for bolt-on acquisitions to enhance their fleets, others may be looking to sell amid concerns about changes to the US tax code. Firms that struggled before the pandemic may have gotten a boost from the increase in trucking demand and now see an opportunity to cash out near the top of the market. Many industry watchers expect the conditions that drove M&A activity in 2021 to carry over into 2022. Private fleets, such as those operated by retailers and wholesalers, may look to M&A as a way to expand capacity amid a tight transportation market that is not expected to loosen soon.
                                  • The US Federal Motor Carrier Safety Administration (FMCSA) has extended several COVID-19 emergency waivers and declarations to provide regulatory relief to trucking firms and their drivers during the pandemic. The waivers and declarations originally put in place early in the pandemic and last extended in August 2021 offer leeway on service hours, license renewal, and medical examination requirements. The waivers and declarations only apply to truck drivers hauling freight related to pandemic relief, including vaccines and other COVID-19 prevention medical supplies, sanitation and PPE supplies, emergency-related building supplies, groceries, paper goods, fuel, and livestock and feed. The latest extension of the waivers and declarations is set to remain at least through the end of May 2022.
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