The year 2020 changed many industries worldwide, and the trucking industry wasn’t spared. The economic outlook for truck owners and operators depends on the trajectory of the pandemic, but there are some trends in the industry that can help you plan for the future ahead. If you own or operate a trucking company in Minnesota, here’s what you can expect in 2021.
Reduced truckload capacity
There’s a major commercial driver shortage due to both the pandemic and the Drug & Alcohol Clearinghouse. In fact, there are nearly 200,000 fewer drivers starting 2021 when compared to the previous year. There’s been a major reduction in new driver training because of the pandemic, but also as a result of stimulus efforts made by the federal government. Many trucking industry experts predict that more government stimulus dollars will keep more drivers from starting or coming back to a career in trucking. Expect more driver pay increases to lure qualified drivers to come back to work. In the meantime, you can also expect decreased truckload capacity due to the labor shortage.
Cooling economic growth
Wall Street and consumers alike are spearheading the 2021 economic recovery, but the ongoing impact of the pandemic is cooling the recovery slightly. As a trucking professional, you’ll likely see increased demand for freight services due to inventory replenishment needs. The 2020 holiday season was a strong one, and there is great demand on the trucking industry to move consumer goods where they need to go. Expect the second half of the year to be even more prosperous for the economy, as the COVID-19 vaccine continues to change the game in terms of economic recovery.
Increased government spending
New government administrations in 2021 are set to increase government spending in the forms of additional unemployment assistance and stimulus dollars. This spending should stimulate consumption and increase demand for freight, but it’s also an incentive to keep qualified drivers away from work. As an owner of a trucking company in Minnesota, be aware that your cost of labor could go up as a result of these policy changes.
Increased contract rates
You can expect contract rates to increase between 8 and 15 percent in 2021 as a result of fewer freight drivers on the road combined with increased demand and reduced capacity. Spot rates are also averaging well over what they were just one year ago as shippers are struggling to find available capacity. You’ll need to negotiate with customers who are struggling to get their loads picked up—they need to get their freight moved, but the shortage of drivers is making it difficult. Overall, it could lead to a great increase in your bottom line, since demand for freight service is expected to remain high.
It’s important to be aware of trends in the industry when you operate a trucking company in Minnesota. You’ll be able to maximize your profits and plan accordingly for the future. Contact K-Way Express, Inc. to learn more about what you can expect for the year ahead.