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Arnold & Itkin LLP Truck Accident Blog2018JanuaryTruck Industry Consolidation Is Coming

Truck Industry Consolidation Is Coming

The trucking industry has been the lifeblood of America for decades; however, trucking businesses are bleeding out. Nothing has changed in America’s dependency on the trucking industry. Instead, the problem stems from increased overhead and a decrease in available workers.

Smaller Truck Companies Are Having a Hard Time Staying on Track

2018 is going to be a rough year for smaller trucking companies who are trying to tap into bigger operations. The trucking business is suffering from an employment shortage that has been hemorrhaging the system for more than a decade. The average age of a truck driver in the United States is 55 years old. This means older drivers are retiring and younger drivers are not taking those jobs. With the current age median, the problem will continue to grow in the next few years.

This shortage hurts all truck companies, but it hits smaller companies hardest. Newer companies cannot afford to lose out on workers; however, they may not have the money they need to pay workers on time. This is a cyclical problem, as less workers means less revenue, which translates to not being able to pay current workers their dues.

The other problem pressing on independent shipping companies is the new EPA bill that disallows the max production of gliders. Gliders are trucks that utilize old engines with new cabs and transmissions. Gliders can be purchased on the market for 25% less than a new truck; they also cost less to run and maintain. With the new EPA ban that took effect in 2018, independent companies may not be able to purchase gliders, and their overhead will increase significantly.

Buyouts & Consolidation May Be the Answer

As companies are fighting to hire employees and get their shipments out, the reality of the market is bleak. The EPA regulation may be overturned, but while it stands, it poses a serious threat to independent shipping companies. The workforce problem may be fixed with increased advertising for available trucking positions, but if the problem has been ongoing for longer than a decade, advertising has most likely fallen flat in the past.

For these reasons, truck companies may choose to band together to form bigger companies. With more revenue, these companies can buy new trucks and pay current employees better wages. Additionally, marketing new drivers will be easier with bigger companies who have recognizable names.

Truck Company Consolidation Could Change Road Safety

There are a number of things that would change if smaller truck companies partnered with each other and became bigger corporations. Some of these changes are directly tied to road safety.

Here are some questions that truck company consolidation poses to issues of safety:

  • Do smaller truck companies pose more of a hazard to other motorists than larger companies?
  • If not, will consolidated truck companies be able to appropriately handle the safety of a larger fleet?
  • If companies consolidate due to poor management practices, will this poor performance translate into bad managerial decisions on a larger scale, thus causing more truck accidents?
  • Will smaller companies try to make it on their own when they should consolidate?
  • If so, will they be willing to overwork drivers and cut corners to meet business demands?
  • Will larger companies hire unqualified drivers for the sake of outperforming new competition?

Regardless of the answer to these questions, some companies will chase after profits—and put their interests first before they think about how their actions will affect the safety of other drivers.

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