[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]”Smaller players in the brokerage space will begin to get squeezed out by strict regulations and competitors”[/pullquote]
My smart, good looking friends at Carrier Direct are at it again with a great report on OTR trends.
The report is titled “What Has Happened So Far in 2013, What’s on the Horizon and Who May End Up On Top This Year”
Carrier Direct is a unique company that helps carriers optimize their assets and helps 3PLs develop capabilities and strategic partnerships. Carrier Direct has offices in Chicago, IL and Scottsdale, AZ.
The report chronicles a number of OTR trends (over the road trends) and the top 5 are summarized below. To get the full impact, download the full report – it’s free! Also visit the Carrier Direct website – carrierdirect.co
5 OTR Trends
- GDP growth and limited new Class 8 truck purchases will push pricing power back in the favor of carriers, with large and mid-size carriers dominating many of the smaller carriers. With a predicted growth of 2.25% to 2.5% in the US economy and an expanding manufacturing PMI, the US is on track for growth. In addition, there has been a net increase in truck orders for the years, driven primarily by mid-size carriers, as large-size carriers are maintaining fleet sizes as planned and small-size carriers are spending more on maintenance. Overall, more power is expected to flow back to the carriers in 2013.
- Re-Shoring/Nearshoring and changes in global demand will begin to move OTR freight patterns and density from certain entry points into the U.S. to other key corridors. Many companies are considering moving manufacturing back to the US, with largest opportunity in “right to work” states and states with capacity providers. Since there should be an available labor pool, the biggest difficulty will be in finding quality manufacturing sites. The workforce is expected to be highly automated. Nearshoring is also expected to occur, as less-specialized manufacturing is likely to end up in Mexican and South American manufacturing sites. Freight patterns are expected to flow more upwards through Texas from Mexico and Atlantic-Coast ports servicing South America (e.g., Port of Charleston).
- Giants from overseas – particularly from the EU – will look to the U.S. to carve out more market share in the asset and non-asset space as other economies remain challenging. There was a drop in investment in the mid- and late-2000’s due to the failures of large companies (e.g., DHL, Schenker). Currently, poor economic performance in OECD, BRIC countries, and the African market is resulting in heightened investment in the US market.
- Interline partnerships between super-regional and regional carriers, as well as new entrants in the asset-light space will bring more competition to national carriers across the country. The number of interline agreements are increasing, enabled by better technology connectivity, with many agreements expected to result in M&A. The number of asset-light carriers is also increasing, with heavier technology investment simulating the experience of traditional carriers, lowering switching costs.
- Smaller players in the brokerage space will begin to get squeezed out by strict regulations and competitors that can be more effective providing transactional services. Smaller brokerages are beginning to feel more pressure, as larger competitors are getting even bigger and impending regulatory changes could make the business environment more difficult. Acquiring a decent TMS platform can cost upwards of $30K in setup fees, with monthly licensing fees for use, which is putting technology out of reach for smaller players. Smaller players are expected to leave the market or join up as franchises or agents with larger market.