Highway transportation has increased rapidly since the end of World War II. This is because Motor carrier industry results from door-to-door operating flexibility and speed of intercity movement. They are even flexible because they can operate on each and every kind of roadways.
In comparison to railroads, motor carriers have relatively small fixed investments in terminal facilities and operate on publicly maintained highways. Although the cost of license fees, user fees, and tolls are considerable, these expenses are directly related to the number of over-the-road units and miles operated.
The variable cost per mile for motor carriers is high because a separate power unit and driver are required for each trailer or combination of tandem trailers. Labor requirements are also high because of driver safety restrictions and the need for substantial dock labor. Motor carriers are best suited to handle small shipments moving short distances.
The characteristics of motor carriers favor manufacturing and distributive trades, short distances, and high-value products. Motor carriers have made significant inroads into rail traffic for medium and light manufacturing. This is also because of delivery flexibility, tat they have captured a major chunk of the market. In short, the prospect for maintaining a stable market share in highway transport remains bright.
This industry even has a few problems, and one of the primary difficulties relate to increasing cost to replace equipment, maintenance, driver wages, and platform and dock wages. Although accelerating, labor rates influence all modes of transport; motor carriers are more labor-intensive, which causes higher wages to be a major concern. One more threat for hire-motor carrier industry is over-the-road transportation by shipper-owned trucks or by specialized carriers under contract to perform transport services for shippers.
Since 1980, the industry segments have become more definitive since deregulation, and include truckload (TL), less than truckload (LTL), and specialty carriers. TL segment includes loads over 15,000 pounds that generally do not require intermediate stops for consolidation. LTL segment of the industry loads less than 15,000 pounds that generally requires stops at intermediate terminals for consolidation. Because of terminal costs and relatively higher marketing expenses, LTL experiences a higher percentage of fixed costs then TL.
These characteristics have caused extensive industry consolidation, since deregulation has resulted in small number of relatively large carriers worldwide.
Specialty carriers include package haulers such as Federal Express and United Parcel Service. These firms focus on specific requirements of the market or product. It is quite apparent that highway transportation will continue to function as the backbone of logistical operations for the foreseeable future.
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