As we put 2022 in our rearview mirror, we are looking ahead to the challenges facing the trucking industry as we head into 2023. The past few years have had unique challenges, and 2023 is setting up to have several challenges as well. Although, with challenges also come opportunity. With that, here are a few things we see as challenges facing the trucking industry in 2023.
The uncertain economy and increasing costs
The record inflation and extremely high fuel and other costs of 2022 are sure to follow us into 2023. The good news is fuel prices have been falling and are lower than they were at this time last year, and hopefully, inflation will follow. Unfortunately, a recession in 2023 is still possible. However, the economic experts at Morgan Stanley and Goldman Sachs don’t expect we will experience a recession in 2023.
With the economic uncertainty and increasing costs, getting paid quickly and not having to wait for payment to help cover your expenses is crucial. In fact, factoring companies can help by paying you for every load you haul within hours.
Broker and shipper fraud
We have found that in times of economic uncertainty, there is an increase in fraudulent activity within the trucking industry. It is essential to stay vigilant; if something looks or sounds too good to be true, it probably is. Notably, one thing we have seen in the past few weeks that we expect to continue into 2023 is broker and shipper fraud. We have seen issues with people doing very good impersonations of reputable brokers and shippers. This can lead to carriers not getting paid for the loads they haul. Particularly in times like this, it is crucial to have a partner, such as a factoring company. A good factoring company can help you navigate these challenging situations and help mitigate your risks. For example, they will conduct credit checks on your brokers and shippers and maintain databases of those that have had issues in the past.
Finding good loads
2022 saw rates drop, and expenses increase, making finding good paying loads often challenging, and we expect that will continue into 2023. Carriers can do a few things to help find and secure good loads. For example, filling out numerous carrier packets and building a strong network with a variety of customers. Additionally, knowing how much the load will pay you even with ever-changing costs and always negotiating. For more tips, check out our post on finding and securing good truckloads.
Finding affordable insurance
According to the American Transportation Research Institute’s Analysis of the Operating Costs of Trucking, insurance costs fall in the top five biggest expenses for trucking companies.
Carriers have seen an increase in insurance costs for several years, and with prices rising on everything in recent months, it looks like this will continue in 2023. The ATRI noted there are measures that carriers can take to try and lower their costs. For example, carriers successfully reduced insurance costs by taking on increased direct risk.
Trucking companies are not unfamiliar with dealing with labor shortages as it has been a long-standing problem. According to the American Trucking Association’s Chief Economist Bob Costello, we will end 2022 with a shortage of 78,000, down from 80,000 in 2021. However, it is the second-highest level that anyone has seen previously. With an older workforce and fewer younger drivers taking their places, this appears to be a challenge that is not easily solved.
Extreme weather events
Every year it becomes more and more common for frequent extreme weather events to occur in the US. Given this pattern, it seems that we can expect the same from 2023. In particular major snowstorms, hurricanes, tornados, and floods cause problems for the trucking industry. The most significant challenge for the trucking industry is its effects on infrastructure.
No one wants to haul a load and have to wait 30-45 or more days for payment or not get paid at all. In an uncertain economy like we have experienced in 2022 that is sure to continue into 2023, getting paid is sure to continue to be a concern for many carriers. One way to help assure you will get paid is to conduct credit checks on all your brokers and shippers. This gives you a picture of how long they have taken to pay others before you. If you work with a factoring company, they will conduct credit checks for you. Some, such as Tetra Capital, will even do it for no additional cost.
A new year offers many challenges and many opportunities. If there is anything that Tetra Capital can do to help you and your business face the challenges of 2023 and beyond, give us a call at (801) 676-0182.