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Is eCommerce a friend or a foe for the trucking industry?
The pandemic brought everyone indoors and closer to their phones. Consumers have gotten used to trying out everything from the comfort of their couches and the trend of using eCommerce websites for everything from groceries to electronics looks set to linger.
The market is changing at an explosive pace. Delivery times are getting shorter, premium services are being offered and in lockstep with this, the trucking industry is changing too. Some of the changes are for the better and some for not-so-great aspects.
How has eCommerce changed the trucking industry?
The choices are widening and the shopping industry has shrunk down to our cell phones in the present day. Consumers are looking for everything online, be it for the ease of choosing from millions of options or getting faster delivery timelines. Whatever be the case, eCommerce is thriving.
So how does the trucking industry get impacted by just some transactions online?
Let’s take a look.
eCommerce giants and other online stores are constructing warehouses in different parts of the country for faster deliveries. Trucks are a major part of this fulfillment cycle and trucking services are in high demand. Over the last couple of years, the demand for goods surged and so did shipping volumes as well as rates. In fact, the global eCommerce logistics market grew by nearly 20% in 2021. As the eCommerce market looks set to hit the statistically significant $ 1 trillion mark, the party looks set to continue. The rising demand reflects in the rates too. By some estimates, truckload contract rates could go up by 13% for the year. Tight capacity and driver shortages (more about that later) are causing high single-digit or even double-digit rises in rates in many places. So, eCommerce has been great for the trucking industry in tough times. But what about the future?
As delivery timelines compress further, it’s likely a shift may occur in the kind of trucking services required. Whereas earlier much of the freight was delivered over longer distances, a portion of that traffic is likely to shift to shorter haul rides. This could also impact the strategy of the eCommerce giants with the scale and resources. They may want to take greater control over the last mile delivery and look to build their own fleets with their own drivers, taking a bite out of the trucking pie.
Let’s look at some things that have changed in the trucking world due to the influence of eCommerce.
Driver shortage or better to say, shortage of good and trained drivers is the biggest problem the industry has to confront. By various estimates, the industry is short of anything from 80,000 to 300,000 drivers now. The gap is likely to widen as older drivers retire. It’s also becoming harder to hire from non-traditional demographics like younger people, minorities, and women. So, how to keep the eCommerce show on the road with fewer drivers?
With the eCommerce industry changing the ways and concept of shipping and delivery, more drivers are entering the busy streets with heavy trucks. This has raised some questions about safety and distracted drivers. Reaching the right location via GPS and coordinating with the consumer are some of the concerns that have increased the risk of accidents. Not to forget parking issues that have become a major concern in recent times.
Changing driver motivations
The HoS mandate allows drivers to be on the road for a certain amount of time only. The rules largely impact long-haul drivers. On the other hand, such regulations are less intrusive for short-haul drivers.
As times change, the motivations of drivers are changing too. Some long-haul drivers want to try short-haul deliveries, considering how they are allowed to work more, while staying near their houses. This may exacerbate the scarcity in the availability of long-haul drivers, impacted in some ways by the eCommerce industry.
Increase in pay
eCommerce companies are hiring more truckers as they take control of deliveries. Giants like Walmart are entering the job market and disrupting conditions. Reports suggest that Walmart is offering drivers $ 110,000 median pay per annum, over twice as much as the $ 47130 for the rest of the industry today.
So, is eCommerce a friend or a foe for the trucking industry? Like all good debates, the answer must be “It depends.” That said, there’s no denying that the sector has been changed irreversibly by eCommerce.