The trucking industry is a volatile business that functions on the cycle of supply and demand. And within this cycle, the seasons play a critical role, impacting trucking companies, fleet owners and truck drivers.
The Trucking Cycle: Seasons Expected Throughout the Year
Throughout the year, trucking seasons change according to a simple concept studied in Economics 101: demand and supply. When there is a high demand of products during the ‘peak season,’ truckers are observed to spend most of their time on the road. Contrastingly, there are reasons when demand falls and the need to be driving throughout the day also declines.
If you’re new to the trucking industry, evident seasonal patterns can be slightly tricky to understand. However, after spending one year on the job, you will begin to realize how demand alters the amount of time you spend on the road. Having less freight or too much freight in specific seasons is an industry norm, and such factors vary on what your company requires as part of their primary service.
Let’s take a look at the seasonal ups and downs of the trucking industry and how the cycle fluctuates throughout the year:
1. January – March: Quiet Home Time
It’s the start of the new year but also a slow start for a trucker in the business. The holiday season has just ended and the trucking industry remains rather quiet.
Customers are finalizing sales for the rest of the year and carriers are in search of work after a busy season prior.
As a truck driver, this season is possibly an extended break – an opportunity to spend time at home or take a vacation before business kickstarts. It’s not that there will be no miles to cover. Those miles will just be lower than other seasons. Financially, you will notice a decrease in salary since you are covering shorter distances. However, it is usually not a significant amount and can easily breakeven right after the peak season. During the quiet season, fleet owners usually rotate their drivers throughout the cycle to accommodate everyone for equal amounts of distances covered.
2. April – June: Business as Usual
Spring is now in full swing, which means summer load volumes are increasing as the warm weather approaches. Company owners are moving their products around relative to the season and fleet owners are now systemizing a process for drivers to find work easily. As this season prolongs, company owners start to feel their demand increasing and carrier availability decreasing.
As a truck driver, you will be carrying regular freight volumes while still getting some time to spend at home. Financially, pay checks will be balanced and you will notice a series of regular paydays throughout the season.
3. July – September: Overloading Begins
Also called ‘The Peak Season,’ this season is when company sales increase drastically. Demand orders increase, and shipping volume and fleet owners respond by increasing the number of trucks and miles driven.
According to an analysis conducted on peak freight season, sometimes the demand becomes so high that there is no sufficient supply available to meet the number of orders placed. Increasing demand also results in scarce container capacity and an overall plummeting of the company’s supply-chain process.
In this season, company owners rush to get their products sold throughout their stores and demand for freight increases. During this time, carriers are back on standard routes, but shipping volumes remain high throughout the season.
The trucking industry is busy and everyone is making money as the holidays come closer. As a truck driver, this is the time when you earn enough cash to get you going through the quiet season.
4. October – December: Overloaded Holidays
Undoubtedly, the holiday season is the busiest of all. Company owners push to get last-minute orders in and surge their sale numbers for high profits. Carriers are also in search of high-paying loads that would act as a bonus on their holiday season pay checks.
As a truck driver, you are going to sacrifice home time and observe a 10 to 20 percent mile increase during these months. Mentally, such a surge in time dedicated is exhausting, but it will create a significant impact on your income.
Towards the end of this season, carriers and truck drivers begin to take time off to spend time with family. The year comes to an end and the trucking cycle restarts as before.
Budgeting in Seasonal Trucking
During peak seasons, when demands are at their peak and fleet owners cannot provide sufficient amount of drivers, prices for truck and capacity owners rise. Contrastingly, when supply surpasses the amount of demand available, prices decrease.
Since the trucking industry is so volatile, the key here is to prepare budgets accordingly. According to Dane Watts, Account Executive at Apex Capital Corp, “If I had a trucking company, I would want to know my breakeven and my target rate-per-mile. I would create a budget with my monthly expenses, plus my estimated one-time expenses. I would then divide my monthly and one-time expenses by the total number of miles I can drive in a month. This is my breakeven per-mile rate that I need to stay in business. Then I’d add my desired monthly profits and my desired monthly savings to the monthly estimated expense and divide that by the number of miles I can drive each month. That’s my target per-mile rate.”
Even with an extensive budget plan presented by Watts, unexpected turmoil is bound to occur. Some examples include weather conditions such as a hurricane or a tornado, and even a pandemic similar to COVID-19. In such cases, demand for food and basic medical necessities increases, while demand for other luxury items decreases. Sudden shifts in demand indicate the supply to shift accordingly, impacting company owners and fleet suppliers as well.
Realistic Trends in the Trucking Industry
As we surpass the first sixth months of 2020, it is important to understand many other factors that contribute to the seasonal business of the trucking industry. In 2018, economic policies such as a lower corporate tax rate allowed investment to kick off and hire an increased amount of freight-volume in the United States.
The year 2019 comprised of regulations directed towards the driver; flexibilities on the time utilized on their 30-minute rest breaks and how they divided time in the sleeper berth. Furthermore, safety was enhanced, encouraging drivers to register in a federal Drug and Alcohol Clearinghouse – database of drivers who fail or cheat on their drug tests. However, freight volume diminished compared to a productive year prior due to sensitivity in foreign relations and decreased US manufacturing.
As we enter 2020 with the hit of the pandemic, we hope the nuances of the trucking industry with stability, provision and emerging technologies will help balance all the shakers throughout each season.
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