Many of us are happily looking forward to the end of 2020. After all, it hasn't felt like much of a party. From COVID-19 to social unrest and the deaths of public figures like Alex Trebek, we're all looking to a brighter and better year in 2021.
When we consider the upcoming new year from the perspective of business, however, there are some factors we must bear in mind. Particularly when it comes to what to expect from the auto transport industry in 2021.
From the global pandemic's continuing impact on moving patterns to the rise in online car buying, here's what you need to know.
How Does the Auto Transport Business Work?
The auto transport business is a multi-pronged industry that brings in millions of dollars each year. Between the direct car carrier market, auto shipping brokers, and lead aggregators, the industry is highly competitive and highly rewarding to those businesses that go above and beyond for their customer bases.
From A economy auto transporters to luxury car shipping specialists that use closed car haulers, the industry is full of companies trying to earn your dollar one way or another.
And if you’re looking for guidance on how to start a car transport business right now, just know that you’ve got a lot of work and research ahead of you.
How Do I Start a Car Transport Business?
In the current pandemic-altered landscape, starting a car transport business is tricky. Shipping costs are skyrocketing, customer bases are shifting, and delays in multiple shipping arenas are the norm.
Before you start looking for the ins and outs of how to start a car transport business (from licensing to hiring and everything in between), you need to verse yourself in the goings-on of the industry as a whole. Without a working understanding of the car shipping industry and extenuating factors that will have a huge impact on your new vehicle transport business, you're likely to struggle to gain traction in your particular market.
So, let’s start by looking at the car transport industry as a whole and what you’re getting yourself into when starting your own business.
State of the Car Transport Industry
In 2022, three types of car transport companies predominated. They included lead aggregators, brokers, and carriers.
Websites designed to look trustworthy to customers, lead aggregates do little more than gather customer information. Then, they sell this data to a variety of different transportation brokers who use it to call customers with shipping quotes.
Brokers are considered the middlemen of the industry. Ninety-five percent of companies on the internet are considered brokers.
They don't ship cars, though. Instead, they bring in carriers to handle the hauling work. For many customers, brokers prove an excellent communication resource.
Finally, there are the carriers you see on interstate highways hauling between eight to ten vehicles. They may employ single drivers or teams that switch off. They transport cars via open and enclosed carriers and work with brokers to fill their trailers.
A Multi-Million Dollar Industry
Carriers get regulated by the United States Department of Transportation (US DOT) and the Federal Motor Carrier Administration (FMCAS). They must maintain up-to-date registration, which is verifiable by searching each carrier's US DOT and FMCAS numbers.
In 2020, the car transport market in the United States was valued at $95 million. It's expected to skyrocket to $151.6 million by the end of 2026. No wonder there's so much competition! That's a mighty big pie.
That said, the largely unregulated industry has attracted some companies with less than reputable practices. Some of these companies have even given the industry a bad reputation. Despite these bad apples, many other companies go the extra mile to keep consumers happy.
Today, the industry employs more than 57,000 individuals who fill a wide variety of roles, from dispatchers and customer service representatives to drivers. Open carriers account for approximately 82 percent of auto transport haulers.
Industry Trends to Know About
As the economy fluctuates and technology evolves further, the auto transport industry will continue to see specific trends.
What are these trends? They include:
Capacity crunch
Environmental initiatives
Freight technology disruptors
Electronic logging devices mandate
How could each of these trends continue to impact the industry? Let's take a closer look.
Capacity Crunch
What's capacity crunch? This auto transport industry jargon refers to the diminishing capacity for shipping.
Why has this happened? Because there's a lack of people entering the freight industry. When people leave or retire from auto hauling, there isn't a replacement waiting in line. When these jobs don't get filled, this results in a decreased capacity to ship vehicles.
In the auto transport industry's context, this trend was a significant issue by 2019 due to a stellar American economy and low unemployment rates. With more job choices available, workers proved less interested in going into the freight industry.
To predict how capacity crunch will impact the industry moving forward, we would need a crystal ball giving us insights into the future of the American economy. But if it recovers from the pandemic and performs as strongly as in 2019, capacity crunch could again be an issue.
We'll also have to see how automated technology, like driverless vehicles, could help alleviate problems associated with a capacity crunch. If these technologies get adopted by the freight industry, it could have a major impact.
Although predicting the future ultimately proves impossible, there is one takeaway from all of this. Auto transport brokers will continue to prove vital to the industry.
How? By coordinating car shipments between car carrier networks and customers for enhanced efficiency. Keeping carrier numbers down means keeping prices lower, too.
Freight Technology Disruptors
What about technology disruptors? These refer to innovations in a market that disrupts the current way of doing things. In the freight industry, tracking apps have become increasingly popular, marking one of these technologies.
Why are tracking apps so popular? Because they increase customer satisfaction, leading to a significant increase in the volume of business a company receives. More frequent business means the ability to lower freight and auto transportation industry rates.
Environmental Initiatives
Another area that could significantly impact the auto transportation industry moving forward deals with environmental initiatives. Over the past few years, we've witnessed a significant push to cut emissions related to the transportation industry.
How will these efforts lead to new trends in the auto transport industry? We anticipate more low-emission, clean-running trucks on the road in the years to come.
Learning to anticipate and respond rapidly to these changes will help freight and auto shipping companies moving forward. Although this approach will mean greater investment up front, it could help lower prices over the long haul as these trucks run more efficiently.
Electronic Logging Devices Mandate
What do you need to know about the electronic logging devices mandate? This governmental regulation came into full effect in 2019 after getting grandfathered in. It requires all auto carriers to install devices that automatically track a drivers' hours worked and driven.
The device ensures drivers don't do too many hours on the road at a time. After all, the longer the haul, the more likely an accident will occur. What impacts will this tracking have on different companies?
It comes with the potential of slight price increases. After all, the duration of a car shipment will get extended. Because drivers can no longer work an extra hour here or there, it now takes longer to complete each trip.
The result? Increased labor costs.
COVID-19's Impact on the Auto Transport Industry
At this point, you may have questions about how the global pandemic has and continues to impact the auto transport industry. After all, the virus has directly and indirectly affected every aspect of American life and its economy.
The pandemic has resulted in many consequences for the car transport industry, some good and some bad. Of course, this topic remains a rapidly evolving area. From day-to-day and state-to-state, regulations that impact the industry continue to change.
The virus has impacted the industry and its employees. Here are a few things that researchers have learned so far about the economy and the pandemic.
How COVID-19 Has Impacted Drivers in the Industry
Among the best resources for drivers is accurate, up-to-date information. Current research doesn't point to any negligible increases in the virus's spread due to the movement of drivers in the auto transport industry. This news is good for many different reasons.
After all, the transportation industry is considered an essential sector. In other words, carriers have continued to operate while other businesses have been forced to shelter in place. Drivers must also remember that they may be traveling through regions of the country with increased infection numbers.
That means a higher risk of exposure, so they need to be educated on the best way to deal with these scenarios. What can drivers do to stay safe on the job?
They should avoid face-to-face interactions wherever possible. That said, pickup and delivery transactions require customer interactions. But drivers can stay safe by taking extra precautions.
They should practice social distancing as well as regularly sanitizing surfaces and washing their hands. What if a driver starts to feel sick? If they present any symptoms of coronavirus or feel ill, they should immediately seek medical attention.
For drivers most vulnerable to the virus, they may need to temporarily suspend transporting vehicles as a preventative measure.
COVID-19 and the Domestic Shipping Industry
How has the coronavirus impacted the domestic shipping industry? When it comes to auto transport carriers, they may need to deviate from the status quo. For example, during pickup and delivery, they should explore new ways to minimize contact.
Some auto transporters have also found it more challenging to get assistance, equipment, and other basics they need while on the road. This fact even goes for basics such as lodging and a hot meal on the road.
For these reasons, scrupulously planning routes is more important than ever. Companies should call ahead to ensure they'll have the resources they need available to their drivers.
Carriers also need to take into consideration decreased traffic on the road. Travel times have dropped significantly, even in major cities. Fewer people are on the road, permitting auto transport drivers to circumvent some of the traffic they used to contend with.
Gas prices have also dropped considerably as well as prices for lodging. All of these factors should be considered by carriers.
Overseas Shipments and COVID-19
Since the virus first appeared, numerous travel restrictions have been put into place worldwide. Many have since been lifted only to be re-instated in recent months.
How have these restrictions impacted the freight industry? Ports have remained open to most overseas shipments, including those of automobiles.
That said, carriers landing vehicles from destinations with high COVID numbers should exercise extra caution. These locations include Italy, Iran, China, and more.
Drivers should wipe down all surfaces thoroughly. They should wear face masks and disposable gloves, and they should always wash their hands thoroughly after pickup.
Economic Impacts of COVID-19
We've already touched briefly on some of the economic impacts of the virus when discussing capacity crunch. But we need to explore this topic more thoroughly.
The virus led to plummeting stock market figures and unemployment rates. And the present economic state continues to look uncertain, especially in the wake of so many other uncertainties in the US.
Fortunately, the news isn't all terrible for the auto transport industry. For example, when college campuses shut down, carriers saw a massive swell in bookings from college students flying back home. After all, virus breakouts in college towns proved high.
There was also a massive uptick in the number of individuals leaving behind urban cities for second homes in more rural areas. For example, countless retirees from places like New York left earlier than usual to head to second homes in Florida.
That said, there's also been a more significant number of these so-called snowbirds who are foregoing the risks associated with airplane travel by driving themselves.
Here are some more interesting statistics about the moving industry in 2020. Or learn about the top nine cities that people are moving to right now.
What's the bottom line? Companies in the auto carrier industry must remain agile. Here are a few more things to keep in mind.
More Economic Considerations
How many new opportunities have been afforded to carriers as a result of the pandemic? The answer to this question is debatable. While more people are moving around, many are making the pragmatic choice of driving themselves to avoid exposure to the virus.
Besides the anomalies discussed above, the overall industry has seen a slowing in car shipping demand. Some carriers have resorted to accepting rates well below what they usually charge to stay afloat.
Some companies have even struggled to stay in business. Even with unusually low fuel costs, the number of automobiles getting shipped sits roughly 75 percent lower than in 2019. There's a caveat to all of this, though.
Auto transport shipments aren't down by 75 percent. Why? Because the oversupply of carriers devours the undersupply of vehicles available.
The result? It looks like there's greater demand for carriers than there is. Nevertheless, the hard truth of the current industry is that few carriers are turning a profit.
Every company is involved in cutting its losses to stay in business. After all, if they stop running altogether, their fixed costs will put them out of business. So, it makes sense to keep operating every day, even at a loss.
Here are a few things you should know about cross-country car shipping.
Predicting the Continued Impacts of COVID-19
How will the pandemic impact the auto industry over the long haul? That's hard to tell. But there are a few trends that we think will continue for the medium distance future. These include suppression in the number of cars getting transported.
As carriers continue to compete for the bookings that are coming in, car shipping prices will continue to stay artificially low. Some experts believe these rates could even dip lower.
On top of this, car sales have remained low in 2020. Between the slow economy and gridlock of Congress, which locked up much-needed assistance for business owners, it's been a difficult year.
How long will these trends continue into 2021? It's anybody's guess. For these reasons, carriers should continue tightening their waistbands and working closely with brokers to facilitate the most efficient shipments possible.
Trends in Car Ownership
Besides the many changes listed above, the auto industry has also seen a remarkable shift in how people buy cars. After all, the last handful of years has witnessed plenty of innovations and changes in the automotive industry.
Many months of social distancing have led to an evolution in consumer behaviors. These behaviors have most definitely impacted the transportation industry.
Automotive manufacturers must position themselves for economic recovery. To do this, they'll need to adapt to shorter planning cycles and faster overall industry cycles. They must also prioritize those strategies best aligned with where the industry is headed.
For starters, the pandemic has led people to appreciate automobiles once more. Before 2020, many consumers appeared to be moving away from ownership of individual vehicles. But car shares and car subscriptions are hardly conducive to "staying in your bubble."
As public transportation and ride-sharing have dropped off in popularity, people have started using their cars more. The same goes for those travelers who are eschewing plane rides for a safer means of transportation. Ninety-three percent of consumers report driving more now.
What's more, 20 percent of consumers who don't currently own cars are considering vehicle purchases. These automobiles must get moved, and the auto transport industry will be there and ready to mobilize.
Trends in Online Car Buying
Where are car shoppers looking when it comes to new purchases? Like other retail industry sectors, the majority of consumers are turning to the internet for purchases. After all, walking car dealerships and face-to-face interactions look risky these days.
The online car buying and car selling uptick in 2020 mean more work for auto transport companies. After all, consumers are more interested in finding great deals than purchasing cars they can pick up close to home.
Online car auction companies such as ACV Auctions have developed their loadboard and transport teams.
What does this mean for auto transport companies? Expect competition to existing loadboards such as Central Dispatch, America's largest auto transportation marketplace.
Companies wishing to gain an edge despite these challenges must adapt. They must forge collaborations and relationships with some of these new online car auction companies. It also means ensuring superior customer service throughout the hauling experience.
Industry Trends: The Takeaway
What's the takeaway when it comes to shipping cars in 2021? Companies in the auto transport industry must remain agile and innovative in capturing new bookings and more business. This approach will involve forging relationships with online car sellers and adapting services in new ways.
Capacity crunch will continue to present problems for the industry as more drivers age out. But there will be more potential for finding new employees due to higher unemployment rates, a result of the pandemic.
Fortunately, the car transportation industry has remained an essential business. As a result, it hasn't faced any of the lockdowns that have dramatically impacted other business owners. But this also means drivers must take care when traveling their routes.
They need to stay up-to-date on the latest information about the virus coming from different parts of the country. They also need to take extra precautions when it comes to international freight pickups.
At the same time, these companies must continue to adhere to restrictions and regulations associated with the electronic logging devices mandate. And they'll need to stay creative and innovative when it comes to adapting to increasing environmental regulation of the transportation industry.
How do businesses in the industry stay afloat during this difficult time? Focusing on superior customer service remains a vital aspect of moving forward. That means offering new technology such as tracking apps wherever possible.
It's also vital that companies continue to work on improving the efficiency of their transportation services. Brokers must work closely with carriers to ensure trucks go out with full trailer loads.
The Nexus Difference
Nexus Auto Transport offers the cheapest automobile shipping quotes on the market. They also remain committed to providing customers with the best possible service experience possible. For this reason, they offer free, anonymous shipping quotes instantaneously on their website.
They provide various service needs, whether customers need an open carrier, enclosed carrier, or expedited services. Their economy shipping option offers the most affordable car shipping option and remains among their most popular services.
Besides affordable rates, they never require upfront payments from customers. Nexus understands how the auto transport process works. They also realize that it can be stressful for first-time customers and provide customer representatives to make the process streamlined and easy.
Customers First
When it comes to how to transport a car today, turn to the experts at Nexus Auto Transport. They go the extra mile, providing customers with their drivers' cell phone numbers. That way, you can stay up-to-date with what's happening with your auto transport service at all times.
Are you interested in finding out more about car transportation options? Check out our list of seven secrets to help you find a reliable car transport company.
