January 26, 2022No Comments

Inflation 2022: What would it mean for trucking?


Consistent delays in getting items from producers to consumers are driving up the cost of pretty much everything from cars to groceries. In the year to December, the price of used vehicles and trucks increased by 37.3 %, while the cost of food increased by 6.3 percent. Inflation rose 7% over the past year, the highest since 1982.

Meanwhile, the Omicron variant put millions of Americans on sick leave, including warehouse workers and industry professionals. The high consumer demand also added to a hike in prices and shipping costs.

The price hike is even infiltrating places not directly affected by the pandemic, leading to concern.

The Federal Reserve has indicated that they intend to raise interest rates many times this year to temper demand. Also, to prevent the price spikes seen during the pandemic from becoming a permanent economy feature. Officials from the FED said the Central Bank is shifting towards "Inflation Fighting Mode," hoping that prices gains will slow down. 

However, we are already seeing the highest, fastest inflation growth in decades. Suppose the driver shortage persists, no matter the number of imported goods. In that case, they still won't reach the consumers, and prices and inflation will continue to rage. According to the American Trucking Association, Truck Drivers move roughly 72 % of all goods that the nation consumes.

Even after President Biden opened the ports to work 24/7 and unpack the surplus of containers lingering around, little changed in the current situation. The question remains, who delivers those goods to the Americans?'

What will inflation mean for trucking?

Costs of equipment will climb significantly. Because of rising timber, aluminum, steel, and polyethylene costs, it's around an $8,000 to $9,000 increase on what used to be a $30,000 trailer. Thus recent equipment orders are declining – not because OEMs are out of stock, but because they are repricing backlog, and fleets can only afford fewer cars.

In terms of operations, driver and staffing costs will continue to climb. 

While the Trucking Industry has experienced relatively high freight rates during the pandemic, that only feeds the inflation beast. Consuming a more significant percentage of consumer income drives up company expenditures.

Currently, the market allows carriers to recoup their losses; therefore, margins increase. However, keep in mind that inflation emphasizes long-term growth. Driver costs, equipment prices, insurance costs, travel, and meal costs may reduce your budget's purchasing power in the long run.

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January 26, 2022No Comments

Inflation 2022: What would it mean for trucking?

However, we are already seeing the highest, fastest inflation growth in decades. If the driver shortage persists, no matter the number of imported goods, they still won’t reach the consumers, and prices and inflation will continue to rage.

Written by Eric P

Consistent delays in getting items from producers to consumers are driving up the cost of pretty much everything from cars to groceries. In the year to December, the price of used vehicles and trucks increased by 37.3 %, while the cost of food increased by 6.3 percent. Inflation rose 7% over the past year, the highest since 1982.

Meanwhile, the Omicron variant put millions of Americans on sick leave, including warehouse workers and industry professionals. The high consumer demand also added to a hike in prices and shipping costs.

The price hike is even infiltrating places not directly affected by the pandemic, leading to concern.

The Federal Reserve has indicated that they intend to raise interest rates many times this year to temper demand. Also, to prevent the price spikes seen during the pandemic from becoming a permanent economy feature. Officials from the FED said the Central Bank is shifting towards "Inflation Fighting Mode," hoping that prices gains will slow down. 

However, we are already seeing the highest, fastest inflation growth in decades. Suppose the driver shortage persists, no matter the number of imported goods. In that case, they still won't reach the consumers, and prices and inflation will continue to rage. According to the American Trucking Association, Truck Drivers move roughly 72 % of all goods that the nation consumes.

Even after President Biden opened the ports to work 24/7 and unpack the surplus of containers lingering around, little changed in the current situation. The question remains, who delivers those goods to the Americans?'

What will inflation mean for trucking?

Costs of equipment will climb significantly. Because of rising timber, aluminum, steel, and polyethylene costs, it's around an $8,000 to $9,000 increase on what used to be a $30,000 trailer. Thus recent equipment orders are declining – not because OEMs are out of stock, but because they are repricing backlog, and fleets can only afford fewer cars.

In terms of operations, driver and staffing costs will continue to climb. 

While the Trucking Industry has experienced relatively high freight rates during the pandemic, that only feeds the inflation beast. Consuming a more significant percentage of consumer income drives up company expenditures.

Currently, the market allows carriers to recoup their losses; therefore, margins increase. However, keep in mind that inflation emphasizes long-term growth. Driver costs, equipment prices, insurance costs, travel, and meal costs may reduce your budget's purchasing power in the long run.



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