The global trucking industry is at a structural crossroads. A recent analyst note from PitchBook identifies a powerful confluence of factors - from technology requirements to shifting trade dynamics - that are fundamentally altering how carriers in the US compete.
vWork CEO Roy Moody has reviewed these US market signals and believes they put up some very interesting flags for our region in terms of its future direction. Here are five key takeaways from the analysis and what they mean for fleets in ANZ through the lens of vWork.
1. Fragmentation and the necessity of scale
The US trucking market remains deeply defined by structural fragmentation, with more than 90% of carriers operating 10 or fewer trucks. However, this is being met by a new reality where survival is "increasingly scale dependent".
The report highlights: "Scaling advantages in purchasing, technology adoption, and compliance are becoming more decisive," which is "creating fertile ground for PE roll-ups and strategic acquisitions".
According to the Australasian Fleet Management Association report in 2018 out of 419,000 fleets, 400,000 had less than 20 vehicles - and we suspect there would be quite a long tail on that as well. Achieving a sustainable RoI is going to be increasingly important - no matter what size fleet you have. How you can look at doing that is covered by some further insights to follow.
2. The technology margin and the performance gap
According to the report, a striking trend in recent earnings is that technology is decoupling profitability from freight demand. Even when demand is soft, major players like J.B. Hunt, XPO and C.H. Robinson Worldwide are seeing margin gains.
The analysis shows that "digital tools, automation, and network optimization are boosting profitability even amid muted freight demand - highlighting a widening performance gap between tech-enabled carriers and smaller competitors".
We believe ANZ operators are better placed to bridge this gap thanks to the wider availability of more affordable tools - like vWork - to help fleets handle their data.
3. Technology as a baseline requirement
The report notes a fundamental shift in customer expectations. As shippers increasingly demand real-time data, guaranteed service levels and transparent pricing, "technology has shifted from a competitive differentiator to a baseline requirement". Carriers that cannot invest in these systems face a "widening performance gap".
We are absolutely seeing this mirrored in the ANZ market. It doesn’t matter if you are delivering a tonne of gravel, a load of timber, a washing machine or groceries - customers have far higher expectations than they did even three years ago.
Getting the right goods, are delivered to the right place, in the right condition - and being able to prove that - remains critical. But it’s not enough. Your customers expect you to be using a system that notifies everyone involved in the delivery chain, providing real time updates. From order to invoice that sense of absolute transparency is now a standard part of the "best delivery experience".
4. Mitigating labor and cost pressures
Labour is a massive cost driver in the US with the report citing it often represents 35% to 45% of operating expenses. Restrictive policies and driver shortages are putting immense pressure on smaller fleets that lack the "wage flexibility, training infrastructure, and recruiting reach of larger firms". In the US large carriers are also better placed to use technology to "reduce empty miles" and "improve driver productivity".
We are working hard to help ANZ fleets fight these cost pressures by making existing drivers more productive .vWork’s route optimization can save around 20% in fuel consumption while improving asset utilization. By minimizing empty trips and automating the "last mile" challenges, we allow your drivers to focus on delivery rather than administration.
5. Profitable integration and consolidation
According to PitchPoint, the current economic climate in the US is encouraging network optimization through acquisitions. Technology enables these scalable models because: "National carriers can integrate newly acquired fleets more seamlessly, using unified data systems to optimize routing, harmonize pricing, and monitor performance across thousands of assets".
To some degree this also holds true for the ANZ market. If your strategy involves growth through acquisition, you want to be able to bring the newly acquired vehicles and drivers into your ecosystem as quickly as possible. It means you need to be using solutions that are easy to integrate, quick for drivers to learn and can adapt to a variety of different models or customer needs as you move forward.
Positioning for the future
The US market has generally acted as a bellwether for what is to come. As technology and AI continue to reshape freight flows, the most resilient ANZ fleets will be those that embrace digital scale today to go faster, get better RoI and be more resilient to market conditions.
Growth by acquisition is likely to be something we see more of and being prepared for that - whether you are the acquirer or being acquired - with robust digital systems in place can only be to your advantage.
To learn how vWork can help your fleet close the performance gap, just reach out. If you’d like to read the full Pitchpoint article - you can check it out here.
