Impact of eCommerce on Trucking Industry

Strong Tie Insurance December 3, 2019 Commercial Truck Insurance

Over the last twenty years, eCommerce has seen a tremendous uptick. What once made up about one percent of retail sales across the US is now over nine percent. While this increase has made life easier for the general consumer, it’s also impacted the trucking industry.

Some might suggest that eCommerce is a good thing for truckers, while others have seen negative impacts. It’s also easy to overlook changes to subsidiary industries. Commercial truck insurance carries, maintenance providers, and other companies are directly related to and must adapt to the same changes found in the trucking industry. 

Here are some of the top things to consider when looking at how eCommerce is impacting the trucking industry.

What is eCommerce?

To understand the impact of eCommerce, it’s probably best to understand exactly what this growing phenomenon is. Generally speaking, eCommerce is a retail or business transaction that takes place online. Companies can exist entirely online or can have both a presence in the online and physical world.

Amazon might be one of the best examples of an eCommerce store that exists only online. While you can find almost anything for sale on its website, Amazon does not have a physical store. You can’t stop by and browse the Amazon store in-person. Wal-Mart, on the other hand, has physical stores all over the world, but still sells items on their website.

A Change in Distribution

While there is still a need for cargo to be hauled cross-country, there is a growing need for more local deliveries. Because consumers are placing a higher value on delivery speed, companies are forced to reimagine their distribution plans. This has resulted in more distribution hubs in cities close to significant populations while still having access to necessary transportation options: ports, interstates, rail, airports, and more.

Read More: Starting a Small Trucking Business: Requirements and Insurance

Non-Driving Jobs

The development of more distribution hubs means new jobs are being created to support those networks. Logistical administration and staffing of these hubs are one of the first steps. Beyond that, new warehouses, gas stations, restaurants, truck insurance carriers, and more are created in these areas. It’s easy to overlook, but a variety of non-driving jobs are both directly and indirectly related to the eCommerce boom.

Goodbye Old Jobs

While plenty of new jobs are being created to support ever-changing distribution networks, eCommerce has also hurt some jobs. Physical stores that aren’t able to keep up with their eCommerce competition may find a lack of work.

Consider a community bookstore. Years ago, this might be where people spent time and purchased all of their media publications. That same store now struggles to keep up with Amazon’s wide inventory and pricing. People might still visit the store, but more so for the environment and not to make purchases. Even if a few people still grab a coffee in the bookstore’s café or buy something to support their local shop, the store eventually finds it impossible to survive and ultimately closes.

Now imagine that same scenario, but with a company more substantial than a local bookstore.  Since eCommerce shops don’t have the same costs associated with a brick and mortar location, they can often offer the same products as a physical store, but at a lower price, even when taking into account shipping fees.

eCommerce stores can also reach a larger audience, employee workers from around the world, and use other tactics to keep their prices low. This means better deals and service for consumers. but could cost companies that can’t compete.

Truckers Wanted

Beyond support positions, there is also a need for new drivers. Surveys by the American Transportation Research Institute have consistently shown a driver shortage. With the increase of hubs, there is a decrease in distance cargo has to travel. These shorter distance routes are appealing to many truckers who don’t want to spend all of their time on the road.

Many companies are using shorter delivery routes as a training ground for new, younger drivers. This helps get younger people into the field without overwhelming them right off the bat. As they grow more confident on the road, they can take longer assignments.

The shorter routes have also helped keep drivers on the road. Trucking has been known to have a high turnover rate for years. Providing truckers the opportunity to spend more time at home with family and friends has made a massive impact in keeping people on the payroll.

The downside, however, is that the draw to shorter routes may take away from those willing to do the necessary long drives many truckers are used to. Some see a long-term problem with retention.

No Parking

More distribution hubs and warehouses might lead to shorter deliveries, but it also leads to more trucks. With potentially more big rigs on the road, parking is a potential issue for concern. Local pick-up and delivery drivers face problems with loading and unloading zones not being big enough in size or number.

Many cities weren’t designed for an increased number of commercial trucks cruising the streets. Existing distribution hubs may not have been built to handle the larger volume of vehicles, so despite the increase in hubs, delivery delays are still inevitable.

Read More: How to Protect Your Trucking Business From Lost and Damaged Cargo

Pick Up the Pace

With companies like Amazon offering Amazon Prime or other expedited shipping options, companies are pressured to have items available now. This is extremely convenient for consumers who don’t like to wait for their items. Logistically, this can cause some problems. For example, companies might be forced to store similar items in different warehouses across the country. This additional space can cost more than keeping everything in one place.

Another issue with promises of fast shipping is the pressure it puts on drivers. Truck drivers may feel pressure from above or have incentives to move quicker than what is safe. Instead of taking a much-needed break for a nap, meal, or to stretch their legs, truckers might be encouraged to push through and make the delivery ASAP.

That means truckers are more likely to eat in their cabs, push through their tiredness, or engage in other behaviors known to increase the likelihood of an accident.

Ever-changing World

Since eCommerce isn’t going away, many industries have had to adapt to take advantage. Since products need to be moved from manufacturers to consumers, the trucking industry isn’t going anywhere. It will, however, need to continue to adapt to meet the needs of businesses and customers.

In some areas, these changes are a good thing that lower costs and bring new life into the industry. On the other side, change can be difficult, expensive, and can leave behind those who can’t keep up.

 

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