Freight Flows Adapt to Industrial Migration

It’s no surprise that an increase in population affects freight flow. But, did you know that migration to the south, southwest and mountain states is expected to rise? According to a recent article by FleetOwner®, these states have adopted more business-friendly taxes and practices. Aside from migrating retirees and millennials, this is one of the major reasons for the influx of population in these areas.

A study done by Area Development just last year shows that the top five states to do business in—from most to least desirable—are: Georgia, South Carolina, Texas, Tennessee, and Louisiana. The survey was conducted based on various criteria, including cooperative and responsive state government, workforce development programs, competitive labor environment, regulatory environment, and a statewide approach to economic development.

Another analysis conducted by United Van Lines found that not only has there been an inflow in western and southern states, but that northeast states continue to experience a moving deficit, meaning that more people are leaving than entering. More specifically, the research stated that the moving trends for top destinations in the west—from highest to lowest influx—are: Oregon, Idaho, Washington, Nevada, and Arizona. Southern states saw approximately 53 percent inbound growth, while places like California, New Mexico and Delaware remained balanced.

States that continue to increase taxes and regulations are either losing people, or growing significantly slower than states that are more conducive to businesses. For example, a recent article by the Northwest Herald confirmed that Chicago has experienced the biggest dip in population for various reasons, two of the major ones being historical mismanagement of funds and lack of business-friendly laws. So, how does this dip in population in Chicago and other cities affect freight flow?

Noted by FleetOwner Magazine, John Larkin, Managing Director and Head of Transportation Capital Markets Research at Stifel Financial Corp., said that migration of consumption and production will continue to reshape transportation and distribution patterns, which are likely to lead to shifts in freight lane balance and equipment availability. Carriers that are not watching and adapting to these changes could experience loss in profitability.

Migration patterns must be considered for 2017 freight strategies. Although many companies likely have efficient fleet management in place, what happens when the landscape changes or business demands shift? Distribution patterns will be altered in order to keep up with these changing demands.

However, according to an article from I.D. Systems, some carriers are not adapting quickly enough to these changes because they are not able to handle the adjustments that need to be made when it comes to equipment utilization, lane balancing and pricing. In addition, manufacturers hauling certain goods out of specific areas need to be aware of these trends in order to maintain the elements that drive profitability for both the company and the drivers.

Difficult as it may be to adopt new practices in the midst of changing migration patterns, there are steps that business owners can take to be proactive and adjust to the trends accordingly. For example, companies should use tools that help to provide real-time visibility such as transportation management software (TMS) and tracking devices. It’s no easy feat, but changes have to be made in order to compete and thrive in the trucking industry.