Next five years will be better for tanker and refrigerated trucking industry
New York, New York — Volatile gas prices and a slow recovery from the recent recession are just some of the factors that have caused the tank and refrigerated trucking industry to experience a decline in revenues.
A new report authored by Nick Petrillo and published by IBISWorld, entitled Tank and Refrigeration Trucking in Canada, finds the industry at the tail end of a recovery cycle. According to the research company, since 2009, “total industry revenue declined at an average rate of 3.8% to $9.5 billion over the five-year period, with some industry firms consolidating operations to regain a portion of the industry’s slim profit margins.”
But the report finds the news is not all bad. IBISWorld predicts a growth in revenues next year. In 2015, it expects revenues to rebound 3.2%, and looking further out, the forecast is also positive, as industry revenue is expected to grow “steadily in the five years to 2019. Over the five-year period, IBISWorld projects that industry revenue will increase at an annualized rate of 2.2% to $10.6 billion,” mainly due to higher volumes of freight being moved during that time period.
And it won’t just be revenues that will be up. Profits are also likely to rise from “4.6% of revenue in 2014 to 5.1% of the total of revenue in 2019.” This increase in percentage resulted companies being leaner as a result of cost-cutting measures implemented to deal with the recession. Now IBISWorld says these streamlined enterprises will attempt to offer more value-added services including logistics, geolocation tracking, and freight-forwarding services.
Just as companies suffered economic pressures between 2009 and 2014, so did the people employed in the industry. The report finds that “[t]otal wages…declined each year over the past five years, declining at an annualized rate of 3.8% from 2009 to 2014, further evidence of the industry’s intensifying price-competition”—price-competition that has played a significant part in the recent drivers strikes and protests at Port Metro Vancouver.
But just as companies are expecting the next half-decade to be improvement over the previous one, employees and owner/operators should experience slightly better economic times as “industry wages are estimated to increase at an annualized rate of 2.1% to $2.5 billion over the five years to 2019.”
IBISWorld notes that volatility in fuel prices (in particular a 30.6% spike in 2011) make it difficult for refrigerated and tanker trucking companies that “seek to charge competitive rates to customers, but must also charge rates high enough to cover a substantial portion of the fuel costs incurred through shipping operations,” but adds that over the next five years, the level of volatility should decrease. The report states “the world price of crude oil is expected to stabilize, increasing slowly at an average rate of 0.2%, while total retail sales are expected to increase at a strong 3.8% annual rate over the five years to 2019. Industry operators will likely continue to levy fuel surcharges to recover a portion of profit margins lost from changes in the price of diesel fuel. This will generate additional revenue, although price competition among firms will continue to restrict the additional revenue generated from surcharges.”
Although IBISWorld found there was a tiny bit of consolidation in the market over the past five years, the industry has yet to be dominated by any major players. According to its figures, TransForce Inc. has 5.7% of the market share, followed by TransX Group of Companies with an estimated 1.8% and Mullen Group with less than 1% of the market.
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Need ideas for starting my own tanker business
do not go in the shipper just want cheap rates.