Downturn For the Logistics Industry
Thanks to a laundry list of challenges, the trucking industry limped through a major slump in 2016. What factors contributed to shrinking numbers in truckloads and volume, and what does the upcoming year have in store?
Recent Woes of the Trucking Industry
The post-recession period was kind to logistics as increases in disposable income, factory production and cross-border commerce resulted in a steady recovery. But over the last 18 months, declining demand for services has turned normal seasonal patterns into a wildly fluctuating landscape.
Experts point to a nearly perfect storm of adverse conditions affecting the trucking industry:
- Gross domestic product growth topped out at barely one percent, even lower than the already anemic two percent post-recession recovery rate.
- Labor conflicts at West Coast ports created a bottleneck that ultimately resulted in excess inventory.
- Sinking crude oil prices caused a double whammy on industrial production and shipping volumes.
- In the wake of the recession, many consumers chose to increase savings rather than spending.
Can Logistics Rebound in 2017?
Research company IBISWorld paints a more encouraging picture for 2017, forecasting a 2.4 percent uptick in domestic trucking sales. Much of the optimism arises from companies increasingly implementing just-in-time inventory management, ordering materials more frequently to cut back on storage costs.
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