Transportation and logistics are among the most competitive yet lucrative industries in the U.S. For instance, in 2018 alone, the total business logistics costs amounted to $1.6 trillion, representing about 8% of the national gross domestic product (GDP), according to the U.S. Department of Commerce. However, the ongoing COVID-19 pandemic has greatly impacted the U.S. transportation industry. More specifically, pandemic-containment measures such as lockdown and self-isolation requirements limited the movement of people. In turn, this led to the grounding of most means of transport.
Those who decided to venture into home deliveries and the transport of essential services continued to do well even amid the COVID-19 recession. “At PMC, we have seen a large increase in submissions for both FedEx and Amazon DSP delivery companies across the country,” says Joe Bukovsky, PMC VP and Head of Transportation. “In addition, current businesses in this industry have often seen their payrolls grow considerably as Americans increased their online purchases.”
Read on to find out more about the expected growth of the transportation industry in 2021.
Growth of Transportation Industry May Slow Down
Data from the U.S. Bureau of Transport Statistics (BTS) shows that the sharp decline in passenger travels caused a corresponding 15% increase in unemployment in the transit and passenger transport industry. This and the general economic recession caused a great decline in demand for goods and services; which meant that most delivery services were halted. Even so, unemployment insurance claims and government unemployment benefits caused an increase in purchases in the last quarter of 2020. In December 2020 alone, the U.S. government disbursed at least $6 billion worth of unemployment benefits to its citizens, as reported by Statista. Relief programs are expected to decline in 2021 as a result. Buying may drop as a result, affecting transit, delivery, and the transportation industry at large. This means that it may take some time before the growth of the transportation industry goes up again.
Markets May Stabilize over Time
Generally speaking, 2020 was a year of survival in the face of a tough economic situation. Businesses that were not forced to close, including those in the transport sector, largely focused on staying operational rather than growth. However, businesses may find hope with the newly signed COVID-19 relief bill, which according to the Brookings Institution, aims at helping Americans get through the tough economic times. The funding may help stabilize markets and increase growth in the transportation sector. “The Bus and Limo industry, especially, is in great need of this relief as their industry has been largely sidelined for over a year as travel, tourism, and the entertainment industries grinded to a halt,” says Bukovsky. Specific to the transportation industry’s growth is the major role likely to play in facilitating the movement of the vaccine to different parts of the U.S. and even abroad. With the pandemic remaining a threat, experts expect most Americans to continue shopping online, enabling delivery services to remain operational in 2021.
Private Transportation Industry May Expand
Due to the social distancing policies, more Americans now prefer private transport since the onset of the pandemic. To put this in perspective, the sale of bikes and accessories increased by a whopping 75% in 2020, as reported by the NPD Group. While the purchase of bikes may be for safety or recreational purposes for some people, others enjoy the convenience and low cost that comes with private means. More people may embrace such means of transport, leading to significant growth in the private transport industry.
As the industry continues to evolve, one thing will remain constant. Companies with employees in the trucking and transportation industry will need Workers’ Compensation insurance to protect their business interests. With experts on-call to help independent insurance agents stay competitive, we provide specialty programs in Transportation and more. Find out how PMC can help your trucking and transportation clients while you expand your book of business.