The Impact of Inflation and Interest Rates for Transportation

It’s no secret that the transportation industry is always changing and evolving. So what’s the one constant? The need for vehicles to deliver goods and supplies will never go away. This summer, fleet flexibility and quick adaptability can open new doors to navigate inflation and rising rate challenges. 

As our Q3 Commercial Vehicle Rental Guide touched on, truckers can expect a rise in equipment costs, maintenance, and, as we’ve already seen at the pumps – gas prices. A big contrast to the unprecedented boom we saw last year to combat supply chain difficulties during the pandemic. 

As the economy shows some signs of slowing in the coming months, it’s important to note that consumer spending is still above pre-pandemic levels. The thing to consider moving forward is where and when the shifts in surge will be. As inflation and higher interest rates affect demand across specific industries, remember that obstacles can be turned into opportunity.

What Does Inflation Mean for the Trucking Industry?

Inflation has many effects on the overall economy and across many industries. It causes shifts in the consumption of products and services, which affects supply and demand. To provide some context, it has been reported that inflation rose to 9.1% in June, the highest rate in more than 40 years.

So how do we anticipate it to impact the trucking industry? The following are just a few examples of what to expect in the coming months with these new inflation highs:

• Increases in truck driver wages. Hourly rates for drivers could see an increase to help with the cost of rising prices. To keep logistic operations running smoothly, companies must find ways to compensate drivers well.
• Increased cost of freight. Rising energy costs lead to higher shipping rates which increases the prices of consumer goods. Manufacturing of new products may slow down, but businesses will have to factor in freight costs to move the influx of inventory expected in the coming months.‍
• Equipment costs will rise. A trailer that cost $30,000 a few years back now goes for about 30% more. Businesses are mitigating those expenses by turning to a beneficial commercial vehicle sharing alternative like COOP to find extra capacity or create new revenue from idle equipment.

Don’t Forget About Interest Rates

Because of the inflationary trends we’ve seen across the U.S., this is where interest rates factor into the equation. As mentioned above, regarding the highest inflation the U.S. has seen in many years, we will likely see a Fed interest rate hike.

Here are some points on how these increases will influence truck purchasing in the near future:

• Rising interest rates will result in higher loan costs when purchasing commercial vehicles.
• Businesses might move towards renting or leasing more equipment because of higher interest.
• The value of used vehicles may go down. However, it may still be a while because of microchip shortages and shipping or manufacturing delays.

Operating in a High-Inflation Environment with COOP

For many, operating in a high-inflation environment like the one we're facing is new territory. Budgeting, fleet optimization, and generating revenue can become a challenge.

We can help your business be flexible as it looks to pivot and find ways to cover costs as the market tightens. Thousands across the nation have diversified their revenue streams and found success with COOP.

Our easy-to-use platform provides profitable solutions for idle vehicles, creates new connections if you need extra capacity, and offers a convenient way to quickly adapt to changes in the industry when you need it.

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