Transportation < Expense Reduction Analysts

The shut-down of trucking giant Celadon 1 in December is just one instance of bankruptcy and other financial woes, causing challenges for the transportation industry as a whole. 2019 was a tough year for trucking and other transportation providers, but we hope that learnings from those hurdles can inform some smart business practices in a new year. Here are three trends that experts say to watch for in 2020. 

Past bankruptcies affect capacity and rates

As we mentioned, 2019 was not an easy year for trucking, and that’s following a capacity crunch in 2018. Though that crunch has lessened, experts warn that 2020 is unlikely to be a smooth year for the industry. 

Approximately 6,000 unemployed drivers are due to closures. Freight and equipment supply-demand must be brought back into line if the industry is to even out. There have also been several new regulations, such as changes to HOS regulations and full compliance with the Drug and Alcohol Clearinghouse. These changes could affect capacity and rates over the coming quarters. 

Increasing technology needs

Industry leaders are always looking for ways to make trucking smarter, cheaper, and more manageable. Though the transportation industry has not always adopted technology as quickly as some sectors, things like document imaging, full load visibility tracking, and relying on different apps are helping them to catch up. 

AI is beginning to play a role in conducting business in transportation, as well. Artificial Intelligence offers several benefits to the overall supply chain, and trucking companies are finding that it can help to lower costs and eliminate inefficiencies (for example, promoting empty mile reduction). Companies might use AI to observe and map patterns, as well as to predict situations using tools like predictive maintenance. 

Also, predictive analytics – which uses historical and transactional data to identify patterns, risks, and opportunities – have been found beneficial when making decisions. Anticipatory planning practices are gaining traction, with a study by the Council of Supply Chain Management Professionals 2 showing that 93% of shippers and 98% of third-party logistics firms believe that data-driven decision making is crucial to their supply chain activities. 

Over the coming year, expect an uptick in trucking companies taking on these new technologies leading to eventual industry-wide technology adoption. 

Expect more tariff tensions

The impact of U.S. tariffs on global shipping was a consistent and controversial topic last year. Many shippers scrambled to beat the 10% tariff on $200 billion of Chinese imports 3 that went into effect earlier this year. The conversations will continue throughout 2020 and many companies will begin to feel the impacts in a wide range of areas. You can expect this area to affect everything from overall supply chains to company investments in new equipment, to the total amount of freight movement this year. Some trucking industry experts predict tension and even volatility around these issues, but only time will tell.

1 ‘I Have No Idea How I’m Getting Home’: Truckers Struggle After Celadon Bankruptcy by Alexandria Burris
2 How Big Data & Analytics Are Changing the Logistics Sector by Mona Lebied
3 Q&A: Economist Talks Tariff Effects on Trucking, Rail and Shipping by Greg Miller