Millennial consumers who shop online and expect their purchased orders to be delivered promptly will ensure “multiple years of tremendous growth,” for trucking carriers involved in e-commerce, according to a panel at the CCJ Market Movers event at the Great American Trucking Show in Dallas.
CCJ magazine reports the panel was comprised of Montreal’s TransForce Chairman and CEO Alain Bedard, Covenant Transportation Group President David Parker and moderated by Avondale Partners’ Donald Broughton and CNBC business reporter Morgan Brennan.
What was referred to as the “Amazon effect” has driven U.S. e-commerce up 15 percent annually, compared to a mere 2 percent for traditional retail.
“There is a long runway,” says Parker, “with a lot of room to grow.”
“Based on everything we know, to use a baseball analogy, we think e-commerce is at first base.”
Bedard, whose company purchased next-day parcel deliverer Dynamex, says TransForce saw its e-commerce business grow tremendously in the last five years.
“This is just the beginning,” Bedard says. “E-commerce has changed the way people do business and that’s going to continue.”
The shift toward e-commerce has affected a lot of brick-and-mortar stores, who are finding it harder to compete with their Internet upstarts. In response, traditional retailers are too changing their business model to accommodate online buyers. “Wal-Mart is not going to sit on the sidelines and let Amazon take it all,” says Parker. “They want to make sure they stay in the game.”
Meanwhile, the loss of those storefronts is being made up through the use of online shopping and promises of inexpensive, or oftentimes free, shipping. “There is one dynamic that we are keeping an eye on and that’s stock levels of inventory,” Parker says, explaining that companies will be forced to keep high stock levels to ensure that they aren’t out of products.
The panelists also discussed another so-called “disruptor”, which is the supposed ‘Uberization’ of the trucking industry.
Both agreed that much of the talk about the trucking industry being turned upside down by Uber-like services, the way the cab industry has been affected, is overblown. For one thing, says Parker, trucking has been “uberized” for some time.
“At the end of day, you’re posting trucks and looking for freight or posting freight and looking for trucks, whether through our brokerage or Truckstop.com,” he says. The biggest issue with Uber-like apps is safety, he says. Traditional brokers must make sure truckers have a good safety rating and the proper insurance. With Uber, “that hasn’t been thought through,” he says.
Bedard agreed that trucking cannot be easily compared to taxis because of the regulatory barriers to entry and operating costs involved. “Trucking is lean and mean but also very capital intensive,” compared to the Uber model of a driver and a personal car, he says.
“They are good in a short radius of 3-5 miles. But they cannot compete with a trucking company.”