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How E-Commerce Is A Boon To The Trucking Industry

The fact is, if something needs to get somewhere, it’s likely going to be transported by a truck driver at some point during the journey. Even so, as the Great Recession taught us, no industry is immune from the fallout of an economic collapse, including trucking.

And yet the days of worrying about a collapse in trucking are long passed us. Even as the economy improves, trucking has one industry in particular to thank for ensuring it has a bright and prosperous future: E-commerce.

Trucking’s Headwinds

While the concept of e-commerce is nothing new, the industry potential provided by its rise is nothing short of astonishing. Smart trucking companies realize that e-commerce is the next area of big growth, especially as the economy trudges along at a moderate rate, at best.

E-commerce comes along at a perfect time. Trucking faces weakness in a number of sectors, not the least of which being manufacturing.

Manufacturing continues to take it on the chin, with report after report showing continued weakness in the sector. Another area of concern lies in energy prices. Trucking companies running oil field operations have been especially hit by the plunge in the price of a barrel of crude oil.

Finally, excess capacity in the marketplace has dragged intermodal business down from its 2014 multi-year highs. This has resulted in lower rates and less freight demand.

And although the nation’s economic situation is by no means bad, this recovery is one of the longer ones in U.S. history. Still, the pace of growth is somewhat anemic. In the final quarter of last year, U.S. GDP grew at a paltry one percent, down from two in the previous quarter.

Thank You, E-commerce

Then, along comes e-commerce. This bright spot in the economy generated a whopping $341.7 billion in sales last year, a 14.6 percent increase over the year before. When you compare that with total retail sales growth, which bumped up a meager 1.4% over the same period, and the proof is in the numbers.

While traditional retail sales are improving at a modest pace, e-commerce is increasing a lot, and trucking companies are banking on it for future profits. One such example lies in the demand for heavy goods. Internet purchases are driving consumer spending for big-ticket items. One major carrier has seen 60 new contracts worth $118 million in annual sales roll in as a result of the growth in high-dollar internet purchases.

E-commerce has its tentacles in almost every aspect of the trucking business. It drives supply chain business, last-mile business, and LTL businesses as well. Fortunately, these are all positive and beneficial developments.

One of the nation’s largest transport groups has seen its cost for purchased transportation and rented equipment rise by almost thirty percent year-over-year, mainly due to jumps in e-commerce ordering.

A large fleet in Canada is using e-commerce sails to pad its bottom line as the energy sector falls out. As energy and manufacturing both cede ground, e-commerce is set to fill the void.

At the same time, big-name retailers are starting to up their internet game. They understand that if they don’t adapt to the changes demanded in the digital age, their time as viable businesses may run short.

This paradigm is especially clear when you look at the massive build outs of so-called “big box” warehouses. The Wall Street Journal reports that over 74 million square feet of additional warehouse space is set to be complete this year in order to help fill the massive amounts of customer orders internet companies are wading through.

With the kinds of money we’re seeing invested in the infrastructure to support increasing e-commerce sales, it’s a pretty solid bet trucking companies will feel pretty good about e-commerce for a long time to come. As industries shift to market demands, it looks like e-commerce and trucking will be fast friends for a long time.

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