Keeping pace with the transportation sector is integral to helping all of us at RPS protect those that make up this dynamic industry. There are several current trends of which to be aware that are shaping the future of transportation:
Automation: Driver shortages and capacity constraints are driving deep investments in technology and automation, such as load matching, robotics, artificial intelligence, machine learning, APIs, and self-driving vehicles.
Taxes and Legislation: The recently passed U.S. tax bill could be a big win for transportation companies, potentially leading to pay increases and capital expenditures as they work to improve their fleets and increase their capacities. Additionally, proposed infrastructure spending if passed by Congress could address critical deficiencies in the U.S. transportation network. Mark Zandi, chief economist at Moody’s Analytics, said he expects the tax cut to boost business investment growth from about 4% to 6% over the next couple of years. This would be great for trucking, according to Freight Waves, “with flatbeds hauling more heavy industrial machinery, and a pick-up in manufacturing production increasing in demand for dry van capacity all over the country.”
Blockchain in Trucking: Blockchain could become one of the latest trends in transportation. It can be used, for example, to ensure the accuracy of performance history records. When a truck gets sold for the second time, potential customers may have questions about how this vehicle was previously used. Since blockchain transactions are immutable and transparent, all parties involved in a transaction can be assured that the information about the truck is trustworthy. Another example could involve capacity monitoring. The cost of transportation depends on the cargo volume. The use of Internet-of-Things (IoT) sensors can help determine the amount of space a particular cargo occupies. This data can be used to calculate the shipment cost. Storing this information into a blockchain-based system signed with a smart contract will allow self-executing payments based on the amount of space taken by the freight.
E-Commerce & Last-Minute Delivery: The Amazon effect has consumers wanting fast home delivery of their goods. This has produced the establishment of a significant amount of fulfillment centers to service the e-commerce customer. Significant growth in parcel/small package last-mile volume leaving fulfillment centers to go to residences and parcel lockers for pick-up is expected.
More M&As: Mergers and acquisitions are expected to continue in certain sectors of the trucking industry. With interest rates low and the supply of drivers tight, carriers will look to gain market share and drivers via acquisition. Additionally, for companies trying to gain an entry into the last-mile delivery business, a purchase is a good way to learn the business and gain expertise. Even for companies in the last-mile business, an acquisition can extend their geographical footprint.
RPS specializes in providing insurance for the transportation industry and is committed to keeping our pulse on trends and other issues important to this market. For more information about our portfolio of insurance products, please contact us.