Competitive Forces

Long-haul trucking is a high volume low profit margin industry. It’s very Homogenous as 90% of the more than 400,000 business are owner operators. The top 4 Business hold less than 7% market share and account for less than 150,000 trucks. Within the long haul industry there is different types of freight hauling. Van freight, Refrigerated freight and Flatbed freight being the most basic and various branches of specialization stemming from that base. Our concentration will be on the unspecialized flatbed analysis of the industry as that will be the primary operation of ProAm Logistics and NST. Flatbed freight accounts for 24% of all freight moved in the USA.

Economic Forces 

Costs of living expenses are primarily fuel and food costs that are directly attributed to the performance indicators of key economic drivers like disposable income. (Statistics)  The United States Unemployment is marginal holding at under 5%. On average the national outlook is good for the US consumer to continue spending trends.  Consumer spending is expected to continue with compound growth of 3.06% over the next five years (IBISWORLD).

With falling oil prices and low diesel prices at the pump have resulted in transporting freight via trucking is more affordable then in the past 3-4 years. This is an accumulation of forces driving the market, low fuel prices and slowing demand from industry such as oil and gas production will be meet with rises in consumer consumption as the costs decrease and consumer demand for consumable goods increase.

IBIS has a positive outlook for the Oil and Gas Industry also in almost all of the reports IBIS indicates growth in all associated markets around the Long Haul or regional Haul trucking environment.

 Political Forces

Chinas global effect can be felt in any business at any level. Because of these factors are playing so heavily on trade and how trade transpires in the USA. Understanding the global picture has to include the influence of China.

Trade regulations are low between China and The United States however, with the construction of the disputed Spratly Islands in the South China Sea Military tensions are high between the countries. American interests point out that China needs the resource rich South China Sea. In August of 2014, U.S. Secretary of State John Kerry proposed that all countries with competing claims halt any provocative actions, such as land reclamation, but China rejected the suggestion and said the tensions were being overblown. (USA Today)

Other considerations will be the major concerns that have risen for U.S. stakeholders in China’s network of industrial policies seeking to promote and protect domestic sectors/firms. The government maybe inflating currency to an unstable state that could undermine the country’s future economic growth, this mixed with obligations in the World Trade Organization (WTO). This may lead to failure of faith in the currency market, which may limit the appreciation of the dollar. These factors may make China’s exports less globally competitive.

Upcoming presidential elections are/will be a factor for foreign trade.  Sudden shifts of political ideology in the White House could cause markets to stall while historically campaign years have brought favorable returns for US investors.

Technological Forces

As of 2011 The Department of transportation has been implementing several rules with regards to tracking and monitoring Truck operations with GPS and electronic log books meant to keep drivers within compliance. These types of technology will increase in the trucking industry as regulators look for ways to make the industry and the highway safer.

Legal and Regulatory Forces

Some of the following was excerpted from IBIS*

*Worker regulations

Hours-of-service rules for the long-distance trucking industry have also been imposed, along with heavy penalties for violations. These rules, which limit the number of hours a truck driver can be behind the wheel, are meant to improve highway safety. The laws have become increasingly stringent, as lawmakers grow more concerned with highway deaths. The previous rules allowed 10 hours of driving time within a 15-hour on-duty period after 8 hours off. The new rule permits 11 hours of driving out of a 14-hour on-duty period, following 10 consecutive hours off. Drivers are also limited to 60 hours on duty over seven consecutive days, or 70 hours over eight consecutive days. A new cycle may begin after a driver has been off duty for at least 34 consecutive hours. Since the introduction of the hours of service rules, shippers have been actively streamlining processes at their facilities to avoid delays that would increase shipping costs.

For shippers, much of the added cost will stem from changes in the calculation of drivers’ working hours. Under the old rules, time spent waiting had been considered off-duty. However, the new hours-of-service clock does not stop once it is started, with every hour spent waiting to load and unload, counting against a driver’s daily limit. Consequently, any holdup can run out a driver’s time clock and leave a shipment stranded. This scenario is mostly applicable to full truckloads where there is no consolidation activity involved.

*Environmental regulations

Since February 2005, trucks in California have been required to limit engine idling time to a maximum of five consecutive minutes to limit emissions. These regulations apply to diesel-powered commercial vehicles that weigh more than 10,000 pounds. The law has an exception for idling during resting or sleeping in a sleeper berth more than 100 feet from homes and schools.

In 2007, the US Environmental Protection Agency introduced new regulations designed to cut diesel fuel pollution by 95.0%. Industry operators have had to change engines to meet cleaner standards by reducing the amount of sulfur in the refining process of diesel fuel. The cleaner-burning, lower-sulfur diesel fuel is estimated to have increased fuel costs between four and seven cents per gallon.

Storm-water discharge permits are required at terminals where truck washing is offered. These permits range from $1,500 to $5,000 per facility. New federal rules are expected to ban the discharge of water from vehicle-maintenance facilities into septic tanks and other wells, affecting trucking facilities in areas without public utility access.

Federal regulations

The Federal Motor Carrier Safety Administration issued a final rule in August 2007, setting fees for the United Carrier Registration (UCR). The UCR registers vehicle operators and collects fees from interstate motor carriers. Most states require interstate carriers to register with that state and pay a registration fee where it operates in that state. Rather than requiring an interstate motor carrier to register in each state it operates, a carrier must instead register through the UCR if the states in which it operates also participate in the UCR. As a result, state registration fees will come from UCR registration fees. One important change from the old system is that under the UCR, private carriers and for-hire carriers must pay the registration fee. The fees vary with the number of vehicles registered within an enterprise.

Sociocultural Forces

To date there are several advocacy groups MADD, CRASH and a host of others that continue to pursue harsher regulations on the industry. The Trucking Industry does fight back with campaigns sponsored by AMA (American Truckers Association). OIDA Owner Operators and Independent Drivers Association.