Is e-commerce going to do away with the trucking industry?

For decades, the United States has depended on the trucking industry to transport goods across the nation. Commercial trucks have been an efficient and effective way to get goods from their point of origin to retail shelves. However, e-commerce sales have been steadily rising since 2000.

In 2000, e-commerce sales totaled 0.08 percent of the total retail sales for that year. In the first quarter of 2020, e-commerce sales had risen to 11.5 percent of the total retail sales in the United States. COVID-19 may have driven those percentages up much higher.

According to Census Bureau data, retail e-commerce sales for the second quarter of 2020 increased by 31.8 percent from the first quarter of 2020. The second quarter e-commerce estimate increased by 44.5 percent from the second quarter of 2019. 

The global pandemic may be a factor in the sharp increase in e-commerce sales. Many people ordered necessities online instead of going out. However, that is only one factor in the rise of e-commerce.

The impact of e-commerce has been substantial. Online shopping has become popular because it is convenient. It also provides for greater competition, which provides more choices and lower prices for consumers.

With the increased use of smartphones and tablets, an individual can shop from anywhere. E-commerce is no longer limited to your computer at home.

However, the growth of the e-commerce industry also impacts other areas. For example, the increase in online sales impacts the delivery methods used to deliver those goods. The e-commerce supply chain is vastly different from the supply chain at your retailer. 

Transportation industries, including the trucking industry, have been affected by the change in how we shop. How will the current trend in e-commerce impact the trucking industry now and in the future?

Demand For Increased Shipping Speed

Many online retailers promise next day delivery or two-day delivery. The demand for increases in shipping speed is fueled by huge online competitors, such as Amazon. Other retailers must promise same day or next day delivery to compete.

Amazon and other retailers use their own trucks and drivers as part of their e-commerce supply chain. Trucking companies are forced to promise faster delivery times to remain in the supply chain for online sales.

However, compressed delivery windows and faster turnaround times may result in trucking accidents and liabilities

The pressure on trucking companies and truck drivers to deliver goods can lead to fatigued driving. Truck drivers and trucking companies may ignore hours of service regulations to increase shipping speeds to remain competitive. 

Lowered Shipping Costs

In addition to the speed of delivery, the shipping costs are another significant factor that influences a consumer’s decision to purchase a product. Therefore, many retailers offer free shipping on most items or free shipping with a minimum purchase. 

However, the retailer still pays shipping costs. Therefore, the retailer searches for the lowest shipping cost. Smaller trucking companies may not be able to compete with larger shippers in the e-commerce supply chain, such as FedEx, Amazon, and United Parcel Service. 

Lowered shipping costs could drive many smaller trucking companies out of business. 

Development of Fulfillment Centers and Warehouses

The development of fulfillment centers and warehouses allow large online retailers to offer same day and next day shipping. The centers are strategically located in areas so that the retailer can get the product to the consumer quickly.

Fulfillment centers and warehouses impact the trucking industry in a couple of ways. Many truck drivers may prefer short hauls because they are home more often. There is no need to spend a week on the road driving several thousand miles.

However, these centers could result in a shortage of long-haul truck drivers. A shortage of truck drivers can lead to problems in both the e-commerce supply chain and the conventional retail supply chain. Fewer drivers mean longer delivery times for all parties within a given supply chain.

Technology and Efficiency Innovation

Over the past few years, several advances in technology have helped the commercial truck industry become more efficient. By becoming more efficient, a trucking company can compete more effectively with other companies and large online retailer fleets.

Dynamic routing helps reduce unnecessary miles between points. Safety technology, such as driver assist, collision mitigation, and forward-looking camera systems, help truck drivers avoid truck accidents. Truck accidents are a high cost for many truck companies and retailers. 

Electronic logging devices now required on most commercial trucks help prevent some trucking companies and truck drivers from exceeding legal driving hours. Exceeding those hours was one way some companies tried to edge out their competition by promising quicker delivery dates for goods.

Availability of Trucking Jobs

If the demand for e-commerce continues, there could be an increase in the number of available truck driver jobs. Large retailers may increase their fleet, but they may also contract more of their business to truck companies as they seek efficient ways to manage their e-commerce supply chain.

The growing demand for local truck driver jobs and intrastate jobs due in part to e-commerce means more time spent at home for truck drivers. The decline in the length of trips due to e-commerce could mean the drivers spend more time out of the truck, which can have positive health benefits over driving eight to ten hours a day for years.

However, if driver shortages continue, there could be an increased risk to the health and wellness of truck drivers, which could lead to an increased risk of injuries. Compliance with safety regulations is crucial for driver wellbeing. 

Infrastructure and Vehicle Stress

The fast turnaround times and the increase in online ordering could result in a higher number of trucks on urban roads. An increase in the number of truck trips to deliver goods can increase congestion in already heavy traffic areas. 

The increased number of trips by heavy trucks can damage some roads and bridges that were not designed for large vehicles. This issue could create stress on the infrastructure of specific areas.

Damaged roads can also impact the safety of vehicles. The increased congestion combined with the vehicle-stress from an inadequate infrastructure could result in commercial truck brake failure

The E-Commerce Supply Chain May Benefit the Truck Industry

There are pros and cons for the truck industry if e-commerce continues to increase. 

However, the structure of the industry may change. There may be more companies that specialize in local deliveries to take advantage of fulfillment centers. More research and data are required to determine the long-term effects of e-commerce on the trucking industry.