Now that 2021 is here, the trucking industry is kicking off the new year with a very positive view of the look ahead. The forecast is not fireworks and roses, but compared to the last two years, and certainly compared to the economic hit the United States took during the COVID-19 pandemic, the trucking industry is coming out on top.
The Spot Market Continues to Surge
In the last quarter of 2020, the trucking industry saw a huge increase in the spot market. Rates were rising, and the tremendous growth in e-commerce helped to drive demand. Those spikes continued into 2021, and while overall freight demand is lower than the pre-pandemic forecast of the previous year, total truck loads are expected to bounce back by at least five percent this year.
Trucking Startups Experience Growth
Small fleets and owner-operators experienced an upward trajectory that is continuing into 2021. There were a number of factors contributing to this growth. First, the Drug and Alcohol Clearinghouse sidelined roughly 40,000 drivers, leaving small fleets and independent truckers to fill in the gaps. Second, the pandemic shifted consumer purchases to both e-commerce and local markets. Smaller trucking fleets and independent truckers were able to give “last mile” service, and deliver outside of the radius of larger fleets. Expect this upward trend to continue for at least the first half of 2021.
Demand for New Equipment is Up from Last Year
The trucking industry has done well enough in 2020, and the forecast for 2021 is positive, so fleets are ordering new equipment. Unlike 2019 and 2020, new equipment purchases are based on steady economic recovery, as opposed to the artificial demand created in previous years due to threats of tariffs. Unfortunately, equipment and parts manufacturers are backlogged due a decreased workforce, so trucking companies will have to get their orders in early.
Keeping up the Momentum in 2021
In order to stay on this upward track, trucking companies and independent owner-operators need working capital to maintain and grow their operations. Some trucking companies might lag behind the curve, because cash flow is dependent on staggered payments from customers. Others are using freight factoring to convert unpaid invoices to cash. At Single Point Capital, we are a national leader in factoring services for the trucking industry. To improve cash flow and roll out plans for growth without delays, contact Single Point Capital today.