How fleet factoring can unlock an EDGE over trucking competitors

The American economy has maintained its resiliency despite the disruptions caused by the COVID-19 pandemic, increasing geopolitical tensions, and most recently, the debt ceiling crisis. Despite its resiliency, some warnings of a recession continue to loom. In a shaky start, the U.S. economy grew at an annual rate of 1.1% throughout early 2023, signaling a slow in consumer spending and a reduction in business inventories. Moreover, freight demand has slowed as businesses mitigate their overstocked inventories resulting from the pivot of consumer spending toward services rather than goods. The trucking industry is now in its “bottoming phase,” meaning there is decreased demand, increased de-stocking, and lower freight shipping rates. Conditions will continue to decline, yet the worst is likely behind us and some freight companies expect a rebound prior to the upcoming peak shipping season in the fall.

The trucking industry can persevere in these economic conditions due to its strategic importance, as according to the American Trucking Association (ATA), trucks move 72.2% of the total American freight tonnage shipped domestically. In addition, trucking industry revenues have reached $875.5 billion in a 2021 ATA benchmark, which is an increase over past years. Overall freight tonnage, which in 2021 stood at 10.93 billion tons, is expected to grow to 20.6 billion tons by 2030. In addition, freight industry revenues are projected to grow by 53.8% to reach $1.601 trillion over the decade. However, trucking’s share of that overall freight tonnage will experience a slight dip from 71.1% to 68.8%, with its tonnage growing to 14.2 billion tons by 2030.

The trucking industry was recognized during COVID as essential to keeping the American economy moving

“The trucking workforce has always been essential, but the COVID-19 global pandemic greatly underscored that fact. Essential workers, like truck drivers, kept America moving forward even as the nation hunkered down to ensure that communities across the country had access to critical goods like food, medicine, fuel, and toilet paper.” — ATA President and CEO Chris Spear

The trucking industry is essential to the very facets of our nation and world. WEX believes that truck drivers are everyday heroes for the high-impact work they do to drive our world’s economies and daily lives, especially in times of critical need.

How factoring can help alleviate driver shortage pressure on trucking companies

Unfortunately, the driver shortage rages on, putting severe pressure on the trucking industry as it continues to experience steady growth. The ATA reported that the driver shortage rose to a historic high of 80,000 drivers in 2021, and is expected to grow to 160,000 drivers by 2030. Moreover, the ATA advises that the industry hire roughly 1.2 million new drivers over the decade to keep up with growing demand — it is an issue requiring attention from fleets across the nation. Competition for drivers is leading trucking companies to try to gain their own fleet edge wherever possible to attract and keep drivers, following retention strategies that focus on fostering community within a fleet. Small companies are challenged with financing, but with help from leading fleet factoring solutions such as WEX Capital, they can find the solutions they need to gain an edge over competitors. While that edge may include considerable pay increases and robust benefits packages, it also includes tangible tools, from complex telematics to mobile apps and fleet cards. WEX offers several over-the-road (OTR) fleet fuel cards, all of which can integrate the WEX Capital factoring solution. These cards give companies an edge over the competition with offerings from both EFS and Fleet One. Let us have a look at the bigger picture and put the need for acclaimed products like the WEX Capital factoring solution into context.

Trends in revenue, employment, and freight moved

In March 2023, Mr. Spear urged Congress to help in developing and retaining a larger driver workforce to meet growing demands, especially since the trucking industry is expected to move an additional 2.4 billion tons of freight over the coming decade. With this growth, it is critical that motor carriers continue to provide safe, reliable, and efficient service so that businesses throughout the supply chain can maintain lean inventories and grow our economy. Mr. Spear describes trucking as the “dynamic linchpin of the U.S. economy,” reiterating that trends in the trucking industry influence business in almost every sector.

The ATA’s latest data and trends speak of immense growth in the trucking industry:

1. Trucks moved 10.93 billion tons of freight in 2021, 72.2% of all domestic freight tonnage
2. The trucking industry generated $875.5 billion in annual revenue in 2021, 80.8% of the nation’s freight bill
3. The industry moved 82.7% of all surface trade between the U.S. and Mexico in 2021, and 66.1% of all surface trade between the U.S. and Canada
4. Roughly 7.99 million people were employed in jobs related to trucking activity in 2021, up 340,000 people from the previous year
5. Nearly 3.49 million of those employees were drivers, with 46.1% identifying as minorities and 7.9% identifying as women

Fleet factoring can contribute to the overall success of a trucking company

As with any business today, success is not based on a single tool or even a few. Business strategies are smart, comprehensive, and include a variety of systems, software, and tools to help with profitability as well as ways to minimize expenses and maximize productivity. Because fuel is the second-highest expense in operations behind depreciation, fleets have made it a priority to focus on controlling those costs.

Fleet startups are particularly cautious, and many are turning to fleet factoring for help in accessing cash flow along with guidance on more efficient strategies. Those strategies always include the efficiencies provided in the company’s fleet card, and in many cases that card is the Fleet One EDGE. It is called the EDGE for a reason — here is why.

The Fleet One EDGE Card advantage:

• Fuel discounts at over 2,200 locations, with average savings of 15¢ per gallon
• No fuel transaction fees at 4,000+ in-network sites
• Accepted at over 12,000 truck stops nationwide
• Discounts on major tire brands – average per tire savings over $100 off MSRP
• Additional savings on wireless plans, equipment, maintenance, parts, hotels, and much more
• Credit to fund your operations — and the financing solutions to help you grow
• Spending controls put guardrails on purchasing to prevent misuse and fraud — and automatically give you valuable data and reports

As a new owner-operator in the OTR trucking industry, your immediate goals are likely operational stability (including receiving and making various kinds of business payments), revenue growth, and avoiding disruption to your business. By implementing factoring strategies and by harnessing the power of the Fleet One EDGE card, companies are meeting those goals faster than ever. The EDGE card provides the credit to fund operations and financing solutions to help a startup grow. The EDGE card can help control costs, monitor and manage driver behavior, and mitigate fraudulent purchases.

Major industries such as agriculture, produce, pharmaceuticals, and lumber all rely on trucking to maintain supply chains, and as noted earlier, trucking is a true pillar to the success of the American economy. So, although economic conditions for the industry are not favorable at the moment, remember that partners like WEX are here to support trucking companies with finance opportunities and the much sought-after edge over the competition, the Fleet One EDGE Card.

All fleet cards are not the same, and different types of fuel cards suit the needs of different kinds and sizes of businesses. View WEX’s fleet card comparison chart to see which fleet fuel card is right for you. We speak the language of owner-operators and are here to serve your specific needs, offering expert solutions to simplify the business of running a business. To learn more about WEX, a dynamic and nimble global organization, please visit our About WEX page.

Editorial note: This article was originally published on February 15, 2019, and has been updated for this publication. 

Resources:
Harvard Business Review
Washington Post
Wall Street Journal
ACT Research
American Trucking Association
Cloud Trucks
Transport Topics News