Why 2019 Was Not A Good Year For Trucking Companies

Trucking companies including those offering trucking in Cambridge are essential to the economy because of the work opportunities that they provide. Trucks transport a huge percentage of domestic shipments. Without trucks, it would be difficult to send goods to their proper destination.

In 2017 and 2018, trucking companies found plenty of opportunities in freight and decided to expand their operations. Unfortunately, the pool for opportunities dried up and 2019 became an uncomfortable period of contraction. Operating ratios for dry van carriers in the Truckload Carriers Association Truckload Indexes program averaged more than 100% since the start of the year because of contracting growth.

There has been a lot of debate in media and Twitter regarding the state of the trucking market but while others have talked about how strong the trucking business is it seems that the market is turning for the better based on volume data from the market.

Operating ratio is a measure of operational efficiency. The formula operating costs/operating revenue means that 100 OR is every dollar from revenue. However, 100% goes to funding the costs of doing business and leaves almost nothing to pay for debts or investments. In trucking there are other operating costs like the wages of drivers, back office support and maintenance costs.

In 2019, the issue for carriers was more about oversupply than lack of demand. As carriers saw their margins expanding in 2018, they started to invest in more fleets. There were a record number of orders for class 8 trucks. However, the market started to cool. Daily truckload volumes averaged roughly 3% from March through July 2018. The brutal hit came in May and June.

The trucking industry is extremely competitive. There are low barriers to enter the industry. On the other hand, small carriers have lower overhead costs and can easily reduce their rates unlike the large carriers.

Meanwhile, transporting oversized goods is no longer a problem because there are companies offering trucking in Cambridge with a full line of specially-engineered equipment to handle even the bulkiest loads from coast to coast in North America. Heavy equipment which is too tall to fit in other transport options can be efficiently transported.