The transformations in the transportation and logistics industry are widespread, and they continue to create far-reaching impact for all parties involved in moving products from one location to the next. Among licensed freight brokers, carriers, shippers, and customers, new trends for 2018 and beyond are of particular importance. Growth in the transportation industry, shifts toward technology use, updated regulations, and new challenges are all on the docket.
Here’s what freight brokers and carriers need to know about the changing landscape of the business to best prepare for success in the future.
According to the most recent reports published by Business Wire, the freight brokerage market alone is predicted to grow by 4.33% between 2018 and 2022. Several factors are impacting the impressive growth rate of the industry, including an increased need for efficient logistics and transportation services among domestic customers. Additionally, growing demand for import and export services from around the world will have a positive effect on freight brokers and carriers ready to take on new business.
While growth is beneficial on the surface, it also means that competition may increase over time. Many in the transportation industry recognize the call for more brokers and carriers, and the potential for generating sustainable profits for several years to come. Those already in the industry can take advantage of current customer relationships, updated technology tools, and competitive pricing to stay ahead of the competition as it rolls in.
Shifts in Technology Reliance
Advances in technology has paved the way for more efficient operations, sales, marketing, and management of companies throughout nearly all verticals. The transportation industry, while slow to adopt these changes, is now embracing technology for its own business growth and development. Throughout 2018 and the next several years to come, freight brokers and carriers are slated to embrace the tech transformation en masse.
Part of this shift is predicated on the fact that several forms of technology innovations are reaching the transportation industry. From autonomous trucking to robust software solutions for business management, scheduling, and marketing, both freight brokers and carriers are positioned well to benefit from advanced in technology. More importantly, transportation professionals must recognize the heavier reliance on these tools and systems if they want to be successful.
Within transportation, regulation has always been a crucial aspect of the business for both freight brokers and carriers alike. There are mandates for licensing requirements and reporting, as well as bond minimums and in some states, insurance guidelines to follow. While these are all standard components of doing business, shifts in the regulatory landscape are taking place on a grand scale. One of the more notable changes in recent months was the ELD mandate, requiring certain motor vehicle operators to use electronic logging devices. While beneficial, this mandate has presented some challenges to carriers from a capital expense perspective.
In addition to the ELD mandate, changes relating to business tax laws were headline-worthy in the start of 2018. The advantage of tax reduction opportunities for carriers and freight brokers means the capital spent on updated regulations may ultimately be a wash; however, many transportation professionals and businesses are concerned about the future of tax reform for the years ahead. Only time will tell if the tax law changes are advantageous for the long run or a short-lived bump in profitability.
The wave of transformation sweeping over transportation industry participants is equally promising and challenging. Both freight brokers and carriers need to recognize what trends are driving the market forward, and which have the potential to cause disruption. Understanding these shifts allows freight brokers and carriers to implement the best-fit solutions to keep up with the times, both now and in the future.
Guest post by Eric Weisbrot
Eric Weisbrot is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry under several different roles within the company, he is also a contributing author to the surety bond blog.