While essential supply chains are the domain on Class-8 vehicles, trucking companies are realizing the need for medium-duty vehicles to stay competitive and relevant. While medium-duty vehicles may not have the capacity of larger trucks, their role is just as crucial, especially as the current pandemic has enabled large market shifts.
E-Commerce Has Taken the Lead
The trucking industry experienced a growing demand from e-commerce shipments, though the spikes have typically occurred during the holiday season. Once the COVID-19 pandemic hit, businesses shifted their presence from brick-and-mortar establishments to online stores to meet the change in consumer attitudes. Throughout 2020, e-commerce has been running high, to the point that major retailers are closing their physical locations on Thanksgiving Day. This is a major shift that could have huge repercussions for trucking companies that are not ready to adapt, and medium-duty vehicles play a big part in long-term success.
Contraction and Medium-Duty Vehicles
E-commerce has caused certain supply chains to contract, because truckers aren’t hauling full loads of clothing, electronics, and similar consumer goods. This means that if some trucking fleets do not adapt, their operations could end up running inefficiently, as large trucks carry less-than-capacity loads across the country. Shipping prices could dip lower than operating costs, and disrupt cash flow. With the rise of e-commerce, customers are expecting last mile delivery, which would also be inefficient for fleets with large trucks. Switching to medium-duty vehicles allows trucking companies to kill two birds with one stone. Medium-duty vehicles can, proportionally speaking, carry fuller loads for their size and service areas that fall outside of main trucking routes. This gives them the ability to provide the last-mile service that customers demand without having to do endless hand-offs between different shipping companies. This gives trucking companies an opportunity to get additional revenue by adding medium-sized vehicles. Smaller vehicles also come in electric and hybrid variants, which can cut expenses in the long run.
Making a Smooth Transition
In order to make revenue gains with medium-sized vehicles, trucking companies need to make that first investment, which requires capital. Making an abrupt shift while waiting for revenue from clients and brokers can place a strain on cash flow. To ensure a smooth transition, trucking companies use freight load factoring to turn outstanding receivables to immediate cash. At Express Freight Finance, we offer comprehensive freight load factoring nationwide, so trucking companies can build up capital reserves without loans and supplement their fleets with medium-duty vehicles. Contact our offices today to get started.