MOTOR CARRIERS

Motor Carriers

Motor Carriers

Introduction

Many industries rely on the trucking industry to operate. Retail stores need merchandise to be delivered, hospitals need supplies, manufacturers need supplies, and grocery stores need food delivered. The list goes on. As long as there is opportunity for growth in the economy, there is opportunity for growth in the trucking industry. Whether this growth can translate to attractive profits depends on many factors. The following paragraphs discuss some of these factors to analyze whether the trucking industry is conducive for attractive profits. Currently, the slow growth of the economy reflects on the trucking industry.

Although the potential for increased demand over the long term is great, the current economic situation places trucking companies under more intense competitive pressures from rivals. There is very low switching cost for consumers in this industry making rivalry even more intense due to consumer bargaining power. The trucking industry is characterized by high competition that is well above average. Barriers to entry into the industry are few, and the industry is fragmented with many small owner-operators. To complicate matters worse, there is also intense competition from the railway industry in the long-haul sector (Bardi, Coyle, Gibson & Novack, 2010).

Discussion

Service characteristics, Cost structure, Rules and Guidelines and competition

Traffic Congestion

Increasing population presents a challenge on the roadways. The U.S. transportation infrastructure capacity has not kept pace with the growth in the transportation demands. If this trend continues, traffic congestion may prove to be a growing problem to the trucking industry.

Besides the obvious radio communication between truckers, there are other ways that the industry has responded to increasing traffic congestion. There are services available for trucking companies that track traffic patterns around the country and use that information to provide more efficient route planning (Blower, 2008). Not only do they use trends in traffic, they also provide real-time traffic monitoring and can divert truckers around areas of traffic congestion. If a company wishes to operate at a lower cost, they may simply choose to plan routes to where metropolitan areas are travelled during off-peak hours.

Fuel prices

It is no mystery that fuel prices are on the rise. Every industry is affected by energy and fuel costs; especially the trucking industry. This translates into higher prices on goods due to the added cost of transporting those goods. If a trucking company can figure out a way to operate a more fuel-efficient fleet, they will gain a competitive advantage over other trucking companies. Trucking companies may consider purchasing trucks with more fuel efficient engines. Another alternative may be increasing the size of their trailers to ship more goods in the same truck.

Environmental Initiatives

In addition to the obvious pressure of fuel costs, social and governmental pressures also drive change in the trucking industry. With greater attention from environmentalist groups and increasing oversight by the Environmental Protection Agency, it is in the best interest of the trucking industry to be more environmentally friendly.

Security

Since the terrorist attacks of 2001 there has been an increasing amount of attention regarding ...