Expected Trends in Transportation

Third-party logistics (3PL) firms keep reshaping the market. Fuel prices have fallen sharply, and the driver shortage is worsening monthly. Despite this, expect transportation costs to increase.

Rising Transportation Costs

Shipping costs will continue rising in the near future. Carriers have long grappled with high fuel expenses and thin profit margins. Even though diesel prices are currently lower, carriers must raise rates to recover ongoing losses caused by shifting industry conditions. Transportation costs will remain a primary concern in the years ahead. Carriers, shippers, and 3PLs alike are seeking smarter, more efficient ways to reduce expenses while still meeting rising customer expectations.

Regulations Will Hurt Trucking Productivity

The trucking industry faces many strict rules that reduce productivity, with more rules proposed. A national drug-testing database and hair tests are controversial. Unions say hair tests are unreliable and would cause more drivers to fail—J.B. Hunt’s failure rate rose from 1% to 15% after adding hair tests. Other rules—electronic logs, emissions limits, and environmental rules—also add pressure. The biggest complaint is the hours-of-service rule, which forces drivers who work 70 hours a week to take 34 hours off, including two full nights. Safety groups support it, but many drivers say it’s too strict and hurts productivity. It could cut output 3–4% and raise shipping costs if enforced.

Driver Shortage Will Get Worse

Driver shortages will worsen, causing steep transport cost increases. More drivers will retire or quit. Hair-follicle drug testing could push out additional, younger drivers. ATA CEO Bill Graves says the problem isn’t just numbers—many applicants also fail to meet basic standards.

A recent ATA study found 88% of carriers say most applicants aren’t qualified. Many carriers are hiring lower-quality drivers, yet driver numbers remain critically low. This shortage raises shipping costs because shippers must pay more to secure limited capacity.

Driver Pay Will Increase

Truck driver pay has risen gradually. The average yearly pay for over-the-road (OTR) drivers is $51,000; for private-fleet drivers it's $73,000. More experience brings higher pay. Carriers must raise wages because drivers are in short supply.

Also, driver turnover has consistently been above 90 percent for the past 15 years, until 2015, when the turnover rate was around 87 percent. Even if turnover levels drop, they are still abnormally high. It takes money to recruit and retain drivers. Driver pay is now 34 percent of a carrier’s total operating costs – the main reason shippers can expect higher transport rates.

Truck Capacity Will Reach Its Threshold

Fewer drivers and more freight will push truck capacity to its limit. Recent extra capacity kept rates low, but now shippers worry about finding trucks. Shippers are improving operations to become preferred partners. Carriers, facing tight capacity and higher costs, will raise rates and pick customers. With trucks fully booked, carriers need smooth operations to avoid service issues and will favor shippers who prevent delays.

Increased Freight Tonnage and E-Commerce Activity

Since the 2008 recession, industry has led a slow recovery instead of consumers. Economists disagree on details but agree industry activity will drop and recovery needs consumer spending. Since 2008 consumers spent little, but low fuel prices and more jobs are raising confidence and purchases. Online shopping keeps growing, straining carriers and helping push FedEx and UPS to raise LTL and parcel rates. Complex e-commerce logistics also makes reliable service harder and raises prices.

Closer Industry Collaboration

Third-party logistics (3PL) firms will remain a common choice for managing transport. Even though a study found a 3.5% drop in shipper satisfaction, many companies plan to switch 3PLs rather than bring logistics in-house. Industries like pharmaceuticals and food and beverage are relying more on 3PLs after successful past partnerships. Overall, companies will seek closer collaboration with 3PLs. Barry Blake, VP of Research at SCM World, says using a single provider helps some companies achieve better long-term results without frequent retendering.

Shippers prefer a single 3PL because it learns their business, builds tailored solutions, and gives detailed data about their logistics and supply chain. Outsourcing success requires time and experience with a shipper’s processes and industry, so a long-term commitment is needed. Greater collaboration is expected as shippers prepare for rising shipping costs.

3PLS Will Cut Transportation Costs

Rising transport costs and more industry collaboration mean 3PLs will help shippers cut expenses. 3PLs provide reliable capacity, use better technology, and analyze supply-chain data through a centralized TMS that clarifies logistics. Cloud-based TMS options make this affordable for small and mid-size businesses. With growing emphasis on transportation analytics, 3PLs’ tools and expertise give shippers a competitive edge—focused on lowering transport costs.