With the growth of e-commerce and supply chain demands, the trucking industry has seen continuous expansion in recent years. However, there are still many profitable opportunities for investors in this field. Trucking companies are essential for transporting retail and wholesale goods across the country. The industry is largely fragmented with 97% of trucking companies operating 20 or fewer trucks. This provides ample room for consolidation and economies of scale. There are also technology enhancements like digital freight matching platforms and autonomous trucking that could boost efficiency. Investors should analyze leading trucking firms, emerging startups and ancillary technology providers. Debt financing, equipment leasing and M&A are viable approaches.
trucking industryseeing steady growth for years driven by ecommerce and infrastructure demands
The trucking industry in the United States generates over $700 billion in annual revenue and employs around 7 million people. The sector has seen consistent growth above GDP over the past decade. This is driven by the expansion of e-commerce and the resultant need to transport higher volumes of consumer goods and packages. Brick-and-mortar retailers are also heavily reliant on trucking for restocking inventory and enabling just-in-time delivery models. Trucking accounts for over 70% of all freight movement in America by value. The U.S. is continuing major investments in roads, highways and port infrastructure which benefits trucking companies. The recent bipartisan infrastructure bill allocated $110 billion for funding these types of transportation projects over 5 years. With steady GDP growth projected and no signs of e-commerce abating, the needs of the trucking industry will continue expanding.
trucking sector remainsfragmented providing m&a opportunities for investors
Despite the size and impact of the trucking industry, it remains largely fragmented. The top 10 trucking companies control less than 20% market share in aggregate. The other 80%+ of the market consists of smaller operators. In fact, over 90% of trucking firms operate 6 or fewer trucks and 97% operate 20 or less trucks. This creates substantial room for consolidation through mergers & acquisitions. Larger trucking companies can gain economies of scale and synergies by acquiring smaller competitors and expanding their fleet. There are roll-up investment funds dedicated to aggregating trucking firms and selling them for a profit. Major players are also acquiring others to offer more comprehensive logistics services beyond just over-the-road trucking. Investors can provide capital to enable this M&A activity in return for an equity stake or by financing trucking equipment.
The trucking industry will continue seeing growth for years driven by ecommerce and infrastructure investment. Consolidation opportunities exist for investors along with emerging technology plays.