Production companies of small or medium size often find it difficult to set up distribution. The supply and demand for transportation services vary all the time, which of course affects the cost of doing business. Over the years, countless articles were written on the importance of freight transportation. Advice for small business owners routinely includes tips on transport logistics and outsourcing.
Why is freight transportation important, then? Let’s look at the situation a little more closely.
A freight-based economy
Traditionally, freight services have been vitally important for the US economy. Demand for goods has grown steadily over time, and producers needed to find ways to meet it. Those unable to get their products to their customers on time simply went out of business.
In time, the freight industry developed to increase the reach of businesses big and small. Freight transporters could ensure a steady supply of products to consumers, and they were richly rewarded for it. Even as America’s production capacity began to dwindle, the importance of freight transportation did not vanish entirely! The scale of it, however, simply had to change.
“There are hundreds of examples of transportation service businesses that have gone belly up or essentially been break even for decades. It’s not easy to be profitable when substantial capital investment in transportation is needed to operate a service.”
— Gabe Klein, Forbes
The importance of freight industry scaled down
Over time, freight transport has increased in number but decreased in size. This made them more flexible and responsive to changes in the transport supply/demand dynamic. Last year, the top 50 freight carriers (truckload and LTL alike) had to adapt to a relatively sudden drop from record-breaking profits and tonnage. Most of the major players have managed it admirably, with only a few exceptions here and there.
And on the micro-level, there has been a preponderance of independent operators offering freight transportation services. It’s not an easy field to get into, but if you secure the initial investments, there’s plenty of money to be made. Smaller freight outfits look for a niche, catering to companies that aren’t seeing their needs met in the broader market. The bulk transportation of goods isn’t typically a personalized experience, but a personal touch can help build customer relationships. Many independent freight transporters only provide part of the transport service, pitching in where major players find it impractical to get involved.
“Quality freight service providers will focus on minimizing the instances of cargo handling. This will not only keep the freight secure. It will minimize the risk of loss or damage via fire or theft.”
Keeping up with freight shipping
Freight transportation should be an interesting field to watch in the coming years. We’ll try to keep up with the developments in the business and keep you regularly updated.
For more information on freight transportation and forwarding, check out some of the other articles on our blog!
Stay safe, and happy shipping!