Research from ATRI finds E-Commerce Impacts on The Trucking Industry

by:

Automotive

The development of e-commerce has been challenging conventional business trends in every commercial space for almost two decades now. What started out as a transformation of the communications industry has now worked its way into every business sector on the globe. We are now at a point in time where an industry that does not embrace e-commerce is setting itself up for failure. 

New research carried out by the American Trucking Research Institute, ATRI, released in February 2019, into the impact of e-commerce on the American trucking industry, has created quite a buzz with its findings. While the study focuses on the American market, the results have major implications and learning points for the industry worldwide.

About ATRI

The American Trucking Research Institute, ATRI, has been in existence since the mid-1950s and has had a significant impact in shaping the global trucking industry. By learning from the comprehensive research carried out by ATRI on a wide range of challenges in the industry, trucking companies all over the world have been able to improve the efficiency of their trucking operations.

From its base in Arlington, Virginia, this not-for-profit organization has been focused on several research areas with an aim of improving the trucking industry such as Congestion and Mobility, Safety and Security, Economic Analysis as well as Technology and Operations among others.

ATRI’s research on emerging trends and the impact of e-commerce and omnichannel retailing on the trucking industry has revealed several challenges as well as opportunities that can help trucking companies, which are willing to adapt, to stay in business for several years to come. In business, survival for the fittest often means survival for the most adaptive. Here are a few key findings that were highlighted in ATRI’s research.

Dynamic Increase in E-commerce Sales

Since the onset of online sales and the popularization of the internet in the 90s, e-commerce has been on the rise. In the US alone, e-commerce sales have risen by about 3,000% from less than 1% in 1999 to more than 9% in 2017.

Retail companies are focusing more on developing their online sales platforms because of transformations in consumer trends. More consumers are shopping online because of its convenience and the wide variety of options it offers. As a result, the annual e-commerce growth rate over the past five years has been between 13% and 16% while conventional retail sales growth rate has been limited to at 1% to 5%.

Shrinking the Last Mile

With the growth of e-commerce and internet access, there has been an increased demand for the fast delivery of products with many consumers requesting less than ‘two-day’ shipping. This has required retailers to be more flexible in their interaction with consumers and led to the decentralization of distribution networks so that the inventory can be closer to the consumers.

In 2017, 73% of the industrial real estate market was owed to the development of ‘Last Mile Fulfillment Centres’ in the US further shrinking the last mile between consumers and retailers. This improved access to market has dynamically transformed the supply chain logistics and had a major impact on the trucking industry.

Implications for the Trucking Industry

The increase in e-commerce sales and shrinking of the last mile have major implications on the trucking industry which has traditionally generated most of its revenue from long haul interstate transportation of goods from manufacturers to department stores.

The decentralization of distribution networks with the aim of shrinking the last mile and bringing the inventory closer to the consumer has collectively led to a significant reduction of long haul trucking services and an interesting rise in demand for intrastate and local haul services. This is evidenced by a 7.8% increase in the registrations for single-unit trucks compared to a 4.4% increase in the registration of the larger combination trucks between 2007 and 2016.

The report indicated that about 2,130 department stores stopped their operations between2015 and 2017 and 385,000 workers in the sector lost their jobs. At the same time, there was a notable rise of about 1,937 more courier services and over 85,000 new jobs were created in the sector.

The shift in traffic from long haul trucking services to intra-regional and last-mile truck trips has seen the average length of haul decreased by 37% since 2,000. This has changed the face of the trucking industry making it more attractive to drivers who were not interested in committing to the long distance trips.

Shorter trips also reduce the wear and tear of the truck reducing the frequency of maintenance costs and demand for truck spare parts. The rise in demand for shorter trips also creates a great opportunity for younger drivers under 21 years of age to build up their trucking experience as they wait to qualify for long haul commercial Driving License.

Read Also:

Leave a Reply

Your email address will not be published. Required fields are marked *