2023 Trucking Industry Overlook
If you’re in the trucking industry, you’re interested in learning what the trucking business will look like in 2023. After all, the last few years have been anything but calm. The cyclical nature of the economy is nothing new to those in the trucking industry.
Usually, while making economic predictions, one looks for a wide range of national and international data on the rate of interest, creditworthiness, etc. A recession is expected to occur in 2023, according to the general consensus in the prognosis.
Impact of High Costs and Labor Issues on the Trucking Industry
The trucking industry has been impacted by high fuel and equipment costs, labor issues, shipping costs, inflation, recession worries, and other economic variables as we enter what is often a slow period for imports and consumer trends at the beginning of the year. Carriers may be worried about a drop in pricing for the first quarter as a result of an excess of capacity built up from 2021 because of these persistent challenges.
According to the recently released Annual Report for 2022, trucks continue to be the most relied-upon form of freight transportation in the U.S., transporting more than $13.1 trillion worth of cargo in 12.5 billion tons.
According to Dean Croke, lead analyst at DAT Freight & Analytics, this year we will see a lot more regularity in the industry or a lot more seasonality. We observed very little seasonality in the trucking industry from the start of the epidemic to the end of 2022.
There were some indications of seasonality, thus there was a little increase in rates during the spring building phase, but the full peak season never occurred. Although increased interest rates and speculation that we may be in a recession are the main economic factors at the moment, he believes seasonality will start to show up this year. He also noted that the sector may have already experienced a freight downturn of sorts.
Despite Croke and the experts at DAT predicting that the first quarter of 2023 will be particularly difficult for the trucking industry due to declining consumer demand and reduced import volumes, most carriers are operating above break even.
Pricing and Benefits of Infrastructure Improvements
According to DAT’s 2023 Freight Focus market report, prices for a long-haul small-fleet carrier or owner-operator are now between $1.70 per mile and $2.05 per mile, depending on experience levels, investment levels, and insurance rates.
Additionally, there may be benefits to look forward to as a result of this year’s planned improvements in infrastructure expenditure. President Biden’s infrastructure law’s bridge investment program’s first batch of big bridge projects funds was announced by the Federal Highway Administration of the U.S. Department of Transportation on January 4.
With roughly $40 billion invested over five years to assist in the repair or construction of 10 of the most economically beneficial bridges in the country together with hundreds of bridges around the nation, this initiative is one component of the administration’s development of highway bridges.
Trucking Industry’s high operating costs
Commercial trucking businesses have been seeing these trends for over two years, according to BTS’s annual transportation statistics report. Prices for water, rail, and truck transportation services all reached record highs in 2021, indicating an increase in the expenses firms must bear to provide these services.
According to the analysis, rail (4.9%) and water (7.5%) had the highest price increases for transportation services between 2020 and 2021.
At 8.2% year on year in September, inflation remained consistently high. It marginally decreased in October. The cost of diesel also decreased in the late summer but remained above $5 per gallon all through the fall. In November, the Fed increased interest rates for the sixth time in a row, with the fourth increase being 0.75%. This means that a recession of some kind will occur in 2023.
Due to high gasoline costs and supply chain challenges that raised the price of used vehicles, the transportation industry’s contribution also hit a high of 58.6% in June 2021. These factors are anticipated to lessen in 2023.