As 2023 ends, what are the predictions for the new year? What trends are coming, and what’s going to happen with freight factoring and the trucking industry in 2024? Look back at some of the big issues in 2023 and what’s expected in the months to come. By knowing what to expect, you remain competitive.
Experts Expect a Halt in Prime Rate Increases
On March 17, 2022, the Fed’s prime rate started increasing. Every month or two, the rate increased by 0.25% to 0.75%. The largest jump took place in 2022 when the rate went from 5.5% in July to 6.25% in September and another 0.75% jump happened in November. The rate peaked in July 2023 at 8.5% and has held steady.
The good news is Federal Reserve officials stated they think three rate cuts will happen in 2024. The cuts should bring the federal rate back down to the 5% area. This is great news for any trucking company that’s been dealing with higher interest rates on business loans and credit cards.
Fuel Rates Are Dropping
For Thanksgiving week, prices of both diesel and gasoline dropped. The average price of diesel was at $4.254, down from $5.255 a year earlier. Regular unleaded was $3.443, down from $3.742 a year earlier.
In the past few months, crude oil’s price per barrel reached $85 per barrel in October and dropped to $74 recently. If that trend continues, prices should stay at these lower levels. The Energy Information Administration predicts prices will drop by around 11% during 2024, going down to around $3.36 per gallon for regular unleaded.
Advancements in Technology
AI is gaining ground and getting a lot of attention. Some feel it’s a risky form of technology that could end up costing people’s jobs and taking away the human touch and emotional aspect. However, it’s hard to deny that AI can process and analyze data much faster and more accurately than humans. AI isn’t prone to human error, and for that, the use of AI is beneficial.
In the realm of freight factoring, AI can process bills of lading, generate invoices, and submit payments in seconds. With AI managing some of the financial aspects, owner-operators and trucking company owners get paid faster than ever. If AI is helping process bank transfers and direct deposits, you get the money that’s owed as quickly as a few hours after you finish the job. Payments received the same day are a game changer!
Another benefit of AI in the trucking industry is the benefit of having real-time tracking and route planning information. The second a traffic accident happens, your drivers could get notifications directing them to take an alternate route and avoid getting caught in the traffic jam that’s happening just a few miles ahead. While that type of service is available, it relies on reports from drivers, and those drivers need to stop driving before they make the report. If the GPS systems and cameras in cars could start reporting issues, reports would be instantaneous.
You’ve heard about self-driving vehicles. With AI and automation, trucks could pull over and park safely on their own if a driver falls asleep. While it’s not something you want to happen, the Truck Safety Coalition reports that 65% of drivers admit they’ve driven while feeling drowsy, and close to 50% report having fallen asleep at the wheel. AI and automation could end any risk of a crash.
Regulatory Changes Coming in 2024
One of the biggest changes coming in 2024 is something the FMCSA introduced in their Drug and Alcohol Clearinghouse. Any driver marked “prohibited” will lose commercial driving privileges in his or her state until taking the appropriate steps to complete a “return-to-duty” process that includes:
Selecting a DOT-Qualified Substance Abuse Professional.
Attending the evaluation and following the recommended treatment and education program.
Returning for an assessment from the Substance Abuse Professional to determine if you successfully completed the program.
Pass a Return-to-Duty Exam
After successful completion of the exam, drivers are subject to six random follow-up tests over 12 months. Your drug or alcohol violation remains on your Clearinghouse record for five years or the completion of these six random tests.
Emissions standards continue to tighten and a shift towards electric vehicles is underway. While manufacturers of heavy trucks and trailers have more time, it is still something to start considering. Government incentives aim to make hybrid, EV, and other low-emission engines a requirement in future car and truck purchases.
In 2023, the FMCSA dropped annual Unified Carrier Registration fees by a little more than 30%. The FMCSA announced another 9% fee reduction for 2024. Fees in 2024 are:
- $37 for a fleet of 0 to 2
- $111 for a fleet of 3 to 5
- $221 for a fleet of 6 to 20
- $769 for a fleet of 21 to 100
- $3,670 for a fleet of 101 to 1,000
- $35,836 for fleets of 1,001 or more
Some changes are still pending. One of them requires all commercial trucks to have a Unique Electronic Identification technology that makes it easier for safety enforcement personnel to connect to a wireless system within a truck to look up that ID and check for issues. Experts expected a decision in November, but it’s still pending near the end of 2023.
The FMCAS also introduced a Speed Limiter Proposal that would limit heavy trucks to speeds no greater than 68 mph on highways. This met with much backlash, so the exact number was removed and this proposal is still pending.
Load-to-Truck Ratios Are Unbalanced
At the Domestic Supply Chain Summit, one concern was that the load-to-truck ratio was at 3:1, but the average ratio was 4:1 during 2023. Consumers faced higher interest rates, increased prices, and instability in some job markets, but that didn’t slow online shopping.
In 2022, Pew Research reported e-commerce sales totaled $548.7 billion. In 2023, e-commerce reached $793.7 billion in just the first three quarters. Online purchases haven’t slowed down, and all of those purchases have to be transported from manufacturers to warehouses and warehouses to homes or businesses.
When there are more loads than trucks, competition with brokers is fierce, and truck drivers are in high demand and can advocate for higher rates. It also puts brokers in a competition that can drive them out of business, which is alarming for a trucking company owner who is waiting for an invoice to get paid. Freight factoring is a huge help for getting paid in this situation.
Use Freight Factoring to Your Company’s Benefit
Freight factoring arrangements help protect you against brokers that do shut down unexpectedly. With the right factoring arrangement, you have a form of insurance that protects you from lack of payment for the work you completed.
Saint John Capital is a leader in freight factoring arrangements that offer tremendous benefits to new and established trucking companies. We provide the lowest freight factoring rates and several other services that help you grow and run your trucking company.
We’re experts in the trucking industry with close to 30 years, specifically in the trucking industry. Talk to the freight factoring specialists at Saint John Capital about the benefits of freight factoring and other services like load finding, free business credit checks, same-day payments, and low-interest business lines of credit.
