Tariffs Threaten to Slow Trucking Industry Growth

Last year saw major growth in the trucking industry. Agreements with shippers gave trucking companies more leverage, and demand for capacity trucks for large shipments provided revenue for many fleets to act on plans for growth in 2019.

However, the looming tariffs on countries that provide a large number of imported goods may threaten industry growth in the first half of the year.

Tariffs Created a Bubble

When potential tariffs were first announced, businesses across all industries accelerated their timelines to get raw materials and products ahead of the tariff schedule. The products slated for the holiday season were received and shipped to their destinations between June and August of last year. The last quarter of 2018 saw shippers making a big push to get products delivered for spring of 2019. This created a revenue bubble as carriers met the demands of shippers. The revenue gained allowed trucking companies to increase recruiting efforts and place orders for new equipment to maintain momentum into 2019 and beyond.

Potential Growth Slowing Down

With tariffs becoming a reality, the revenue bubble is shrinking. Growth plans may end up as an overall negative, unless trade negotiations are delayed or reversed. The momentum gained by the trucking industry last year could potentially slow to a fraction of what it was, placing yet another hurdle in the overall economic growth of the country.

Outstanding Receivables

The big push in 2018 left trucking companies with a sizable amount of outstanding receivables. Many are still waiting on staggered payment schedules from their clients. Whether growth slows this year or momentum keeps going, trucking companies need a healthy cash flow to survive and meet the demands of shippers. Instead of waiting for payments, trucking companies are using freight load factoring. Factoring allows trucking companies to sidestep staggered payment schedules and convert unpaid receivables to cash within 24 hours. This boosts cash flow and ensures trucking companies have working capital regardless of how tariffs impact the economy. Freight load factoring is also a debt-free solution that allows trucking companies to avoid taking out loans for capital.

Express Freight Finance is an industry leader in freight load factoring. Our factoring services can be set up quickly so you can get fast access to revenue instead of waiting on your customers. Contact our team today to get started.