TRENDS: Auto Shipping Forecast
Get the latest mobility updates
TRENDS: Auto Shipping Forecast
In addition to shipping household goods, many relocating employees need to ship a vehicle to their new location. In the US contiguous states, autos are typically shipped via transit trucks, which makes the industry susceptible to economic shifts, such as higher gas prices. Relocation Management Companies, like NuCompass, work directly with vetted auto shippers at contracted rates and are able to protect corporate clients and their transferees from many of these rate increases.
A Look Back
The past five years have seen varied conditions for the auto shipping industry. As a result of COVID, the auto shipping industry’s volume was down about 20% of its usual activity. However, activity steadily increased in late 2022, and has continued to progress into the new year. Truck and driver shortages continued to be an issue, and pricing was volatile, despite improvements in the fourth quarter of 2022.
Over the next three years, the auto shipping industry expects to see a focus on shortage improvements, electronic logs, environmental initiatives, and disruptors in freight technology:
- Shortage improvements. The current state of the market is in a capacity crunch. In the auto shipping sector, this means that there is a shortage of trucks or ships available to move vehicles. This is expected to improve as new car purchases are forecasted to plateau as a result of rising interest rates on vehicles, despite disposable income growth. Lesser demand for new car transports will improve transport shortages for relocation services.
- Electronic logs. Last year, a law was passed by the Federal Government that required electronic logging devices for all shipment drivers. These are devices that log the hours spent on the road to reduce fatigue-related travel accidents, but do not allow a driver to extend their driving times. This is beneficial for safety, but it is expected to cause additional delays in delivery times.
- Environmental initiatives. The industry expects new laws over the next few years on vehicle emission regulations. This will likely cause a push for clean-running vehicles and directly impact investors in the industry; however, it should eventually lead to lower fuel costs and better rates for clients.
- Disruptors in freight technology. While it sounds negative, disruptors in technology are a good thing. These disruptors lead to technological advancements that improve the functionality of the industry. One area that is expected to improve is the ability to track shipments more accurately in real time, which will lead to a better shipping experience for transferees.
While the current standing of the auto shipping sector continues to see volatile pricing and transport shortages, these are anticipated to improve over the next few years. Shipping costs are expected to stabilize as the economy recovers, but this may not be seen until 2024. In the end, the reduction in truck shortages and stabilization of prices should lead to cost improvements and experience improvements for transferees over the next three years.