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The rapid growth of e-commerce impacts trucking and how the industry operates today. Over the last few decades, e-commerce has taken over the way consumers are spending and shopping. The convenience of online is changing the way the world functions. This growth has presented both challenges and opportunities for the trucking and freight industry as the industry must adapt to the new climate of the world.
How is the Growth of E-Commerce Impacting Trucking?
E-Commerce Growth
Just decades ago, brick-and-mortar stores were the only way consumers could shop. Today, technology has changed that through e-commerce. E-commerce, also known as electric commerce, is a commercial transaction conducted electronically on the internet. This is both the buying and selling of goods or services online. The internet has changed e-commerce and trucking.
The extinction of physical retail stores is no longer a myth. With the growth of e-commerce, traditional retailers have been forced to close thousands of brick-and-mortar stores across the United States. The growth of e-commerce has forced the trucking industry to alter the playbooks as consumers desire more shopping and faster shipping options.
A study done by the American Transportation Research Institute highlighted how the growth of e-commerce has impacted the trucking industry. Some highlights from ATRI’s report include:
- From 1999-2017, e-commerce sales increased from less than one percent of total U.S. retail sales to more than nine percent. This is a 3,000 percent increase in e-commerce sales.
- The growth rate for e-commerce spending has ranged from 13 to 16 percent annually over the past five years, beating the one to five percent annual growth in traditional retail sales observed during the same time period.
- The use of single-unit trucks, trucks without a detachable trailer has increased by 7.8 percent between 2007 and 2016 compared to 4.4 percent growth in combination truck registrations.
- There were 2,130 fewer department stores in operation in 2017 than there were in 2015.
- There were over 16,000 new non-store retail establishments in 2017 compared to 2001.
- The largest class of distribution centers has doubled in size over the past ten years. “Last Mile Fulfillment Centers” represented 73 percent of the industrial real estate market in 2017.
E-Commerce and the Trucking Industry
The rise of e-commerce has affected trucking in both negative and positive ways. Although every method of transportation moves freight, the trucking industry is the main form. The growth of e-commerce has reshaped the trucking industry through ways products are packaged, shipped and delivered.
As more retailers promise fast delivery, e-commerce companies like Amazon are finding new, innovative ways to get shipments to consumers faster than ever through building warehouses and fulfillment centers in urban areas. The increase in retailers who promise faster shipments has impacted how the truck industry operates. Some of the top issues the trucking industry is faced with such as driver shortage and retention rates, driver health and wellness and hours-of-service are directly affected by the growth of e-commerce.
Speedier Shipping Times
The trucking industry provides a critical linkage for retailers to consumers. Consumers are now expecting products to be readily available for purchase with fast shipping and with little-to-no extra cost. The pressure of shorter delivery times has also placed pressure on e-commerce truckers.
E-commerce has changed the job description for truckers. As more retailers promise fast delivery with the help of fulfillment centers, and more consumers expect it, intra-regional and last-mile truck trips increase. E-commerce truckers are finding ways to adapt to these demands. This means since truck drivers are operating in smaller regions rather than over the road (OTR), these truck drivers have ample home time. Longer inter-regional or national haul jobs are now being replaced by shorter pickup-and-deliver jobs. ATRI reports show the average trip length of truckers has decreased by 37 percent, declining continuously since 2000.
Driver Shortage and Retention
Driver shortage and retention are at the top of the list for trucking industry problems. As e-commerce grows, so does the demand for short-haul truck drivers. The US Department of Transportation projects that by 2040, US annual freight volume will increase by 45 percent to 29 billion tons, most of that volume being hauled by trucks. Over 51,000 drivers will be needed to meet that kind of demand.
The growth of e-commerce has presented both challenges and benefits for the trucking industry. In the US, drivers must be 21 or older to complete cross-state trips, which means the high number of local e-commerce deliveries provides more job opportunities for this demographic. Short-haul drives open new opportunities to attract younger drivers and lower driver turnover rates as drivers desire a more stable work schedule. On the opposite side, e-commerce growth could worsen the shortage of long-haul drivers.
Hours of Service Regulations (HOS)
The federal HOS regulations govern the maximum amount of time a truck driver can work before being required to take some mandatory time off. HOS regulations include drive time, time spent on the clock and break times. E-commerce has impacted trucking as it relates to HOS regulations.
One of the biggest concerns held by truck drivers is the federal HOS regulations. For over-the-road drivers, more frequent truck trips and tighter delivery windows force drivers to run up against the HOS regulations. However, e-commerce truck drivers who participate in short-haul the exemption of some of these regulations.
With the increase of e-commerce, more truck drivers are shifting to locally operating positions which allows them to work under more flexible rules. Under HOS regulations truck drivers are not required to log their hours if they drive under a 100 air-mile radius of the normal work reporting location, return to the work location and are released within 12 consecutive hours and follow all other HOS regulations.
While e-commerce retailers are pushing faster delivery windows, many of the top issues concerning the trucking industry are positively impacted by the growth of e-commerce. Local hauling offers more job opportunities for younger drivers and increases driver retention, as short-haul trips are more sought after. Also, these short-haul trips also allow truck drivers to operate under more flexible HOS regulations.
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