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How to start a semi truck business

How To Start A Semi Truck Business | 8 Steps

How to start a semi truck business

The commercial trucking industry is a vital part of the US economy. Trucks move around 72% of all goods in the country. Starting a semi-truck business can be an excellent opportunity!
With the proper preparation and planning, a semi-truck business can be a successful and rewarding venture.

Let’s talk about how to start a semi-truck business.

Semi Truck Business Success | 8 Steps

Step 1: Research The Semi Truck Industry

Before you start a trucking company, it’s crucial to research the industry and understand the market. Look at the trends, the competition, and the potential customers. Understanding the industry will help you make informed decisions and ensure your business is booming.

For example, when researching the industry, you can start by looking at the current market trends. This can include investigating the demand for trucking services in different regions, the commonly transported goods, and the current rates for trucking services.

By conducting this research, you can better understand the industry and the market. You will be able to identify potential opportunities and challenges and make informed decisions about your business strategy.

Step 2: Create a Semi Truck Business Plan

Once you understand the industry well, the next step is to create a business plan. A business plan should outline your goals and strategies, and the steps you need to take to achieve them. It will also help you secure funding and attract investors.

business plan

A trucking company business plan should include the following key elements:

  • Executive Summary: A summary of the main points of the business plan, including the purpose of the business, the target market, and the critical strategies for achieving success.
  • Company Description: A description of the company, including the legal structure, ownership, and management team.
  • Market Analysis: An analysis of the industry, including the current market trends, the competition, and the potential customers.
  • Services: A description of the services that the business offers, including the types of goods that will be transported and the routes that will be covered.
  • Marketing and Sales: A description of the marketing and sales strategies, including the target market, pricing strategy, and promotional activities.
  • Operations: A description of the day-to-day operations of the business, including the logistics of transporting goods, the maintenance of the vehicles, and the management of the drivers.
  • Financial Projections: Financial projections for the business, including income statements, balance sheets, and cash flow statements from your business bank account.

Step 3: Obtain The Necessary Licenses And Permits

Starting your own trucking business requires obtaining the necessary licenses and permits. These include a commercial driver’s license and the authority to operate as a motor carrier.

For example, you will need to obtain several licenses and permits to operate a semi-truck business. These may include:

  • Federal Motor Carrier Safety Administration (FMCSA) Operating Authority: This is also known as an MC number. This is required for any company that operates commercial vehicles transporting goods in interstate commerce.
  • USDOT Number: This is a unique number assigned by the FMCSA to identify commercial motor carriers.

Man in truck

  • State Operating Permits: Some states also require a separate permit to operate within their borders.
  • Commercial Driver’s License (CDL): Drivers operating commercial vehicles, including semi-trucks, must have a CDL.
  • Vehicle Registration: Each vehicle used in the business must be registered with the state and have proper business insurance.

It’s important to note that the requirements for obtaining licenses and permits may vary depending on the state. It’s also crucial to comply with federal and state regulations regarding safety, insurance, and other operational standards.

Step 4: Secure Funding

Starting a semi truck business requires a significant financial investment, and securing funding is crucial.

Consider options such as traditional bank loans, equipment financing, or working with a lender specializing in the trucking industry.

Mission Financial Services is a preferred loan process agent for national and regional dealership chains and family-owned, independent, and franchised dealerships. They also offer loans to first-time buyers and loans to those with bad credit scores.

For example, if you want to start a semi-truck business with five trucks, you will need to purchase or lease the trucks, trailers, and other equipment. Additionally, you will need to pay for insurance, maintenance, and other expenses.

Starting the business may cost a significant amount, which may not be feasible to cover with personal savings or credit cards. In this case, you’ll need to secure funding through a loan or other financing options.

Handshake

Working with a lender specializing in the trucking industry, such as Mission Financial Services, can be helpful. They understand the specific needs and challenges of the trucking industry.

They may also offer financing options tailored to the needs of trucking businesses, such as loans for purchasing or leasing trucks and trailers or loans for covering operating expenses.

Step 5: Purchase Or Lease Trucks And Trailers

Once you have secured funding, focus on purchasing or leasing trucks and trailers. When it comes to purchasing or leasing trucks and trailers, there are pros and cons to each option.

Purchasing

Pros
  • Ownership: When you purchase a truck or trailer, you own it outright and have the flexibility to customize it to your business’s specific needs.
  • Equity: As you pay for a purchased truck or trailer, you build equity in the equipment.
  • Tax deductions: You can take advantage of tax deductions for the equipment, such as depreciation.
Cons
  • Upfront cost: Purchasing trucks and trailers requires a significant upfront investment, and it may not be feasible for businesses with limited capital.
  • Maintenance costs: As the trucking business owner, you are responsible for all maintenance and repairs, which can be expensive.
  • Depreciation: The value of the equipment will depreciate over time, which can impact the resale value.

Leasing

Pros
  • Lower upfront cost: Leasing requires a smaller upfront investment than purchasing, making it more accessible for businesses with limited capital.
  • Lower maintenance costs: Maintenance and repairs are often included in the lease agreement, saving money on maintenance costs.

  • Flexibility: Leasing allows you to upgrade to newer equipment more frequently, which can benefit businesses that need to keep up with new technology or regulations.

Cons

  • Lack of ownership: When you lease equipment, you don’t own it outright and may not have the flexibility to customize it to your business’s specific needs.
  • Limited equity: As you make payments on a leased truck or trailer, you don’t build equity in the equipment.
  • Higher costs in the long run: Leasing equipment over an extended period can cost more in the long run than purchasing it outright.

Consult with a transportation consultant or financial advisor to help evaluate your options and make the best decision for your business.

Step 6: Hire Drivers

Even as an owner-operator, a semi-truck business relies heavily on its drivers. Hiring qualified, professional drivers who can ensure the safe and efficient transportation of goods is essential. When hiring drivers, consider the following qualities:

  • Commercial driver’s license (CDL): Drivers operating commercial vehicles, including semi-trucks, must have a CDL.
  • Driving experience: Look for drivers with experience driving semi-trucks and a good driving record.
  • Knowledge of federal and state regulations: Drivers must be familiar with federal and state laws regarding transportation, including hours of service, inspection, and maintenance requirements.
  • Communication skills: Drivers must communicate effectively with dispatchers, customers, and other drivers.
  • Problem-solving skills: Drivers must be able to handle unexpected situations and make quick decisions.

Woman truck driver

  • Physical stamina: Driving a semi-truck can be physically demanding, and drivers must be able to handle the job’s demands.
  • Professionalism: Drivers and owner-operators must professionally conduct themselves and be able to represent the company in a positive light.
  • Safety-minded: Drivers must prioritize safety and follow safety protocols and regulations.

Step 7: Build A Strong Network

Building a solid network of contacts and relationships can benefit your business in the trucking industry.

Here are a few ways to build a strong network:

  • Join industry associations: Joining industry associations such as the American Trucking Association (ATA) can provide opportunities to connect with other trucking professionals and stay informed about industry trends and regulations.
  • Partner with other trucking companies: Consider partnering with other trucking companies to share resources and pool expertise.
  • Develop a good relationship with suppliers: Building a strong relationship with suppliers will help you keep costs down and deliver the goods on time.
  • Provide excellent customer service: Building a solid relationship with customers can lead to repeat business, positive word-of-mouth, and new business opportunities.

Connecting with other trucking companies, suppliers, manufacturers, distributors, and customers can help you gain new business, improve logistics, and stay informed about industry trends and regulations.

Step 8: Keep Accurate Records

Keeping accurate records is essential for the success of a semi-truck business. Here are a few benefits of keeping accurate records:

book keeping

  • Financial tracking: Accurate record-keeping can help you track your income and expenses and monitor the financial performance of your business. You can use this information to make informed decisions about your business and plan for future growth.
  • Compliance with regulations: Keeping accurate records can help you ensure compliance with federal and state laws. This includes keeping track of service hours, vehicle maintenance and inspection records, and driver qualifications.
  • Taxes: Accurate record-keeping can help you file taxes correctly and take advantage of tax deductions.
  • Auditing: Accurate record-keeping is essential. You may be subject to an audit by the Federal Motor Carrier Safety Administration (FMCSA) or other regulatory bodies.
  • Efficiency: Accurate records can help you improve the efficiency of your business. It does this by allowing you to track inventory and deliveries and manage staff and vehicles more effectively.

Final Thoughts

Starting a trucking company requires significant time, money, and effort. Still, it can be a successful and rewarding venture with the proper preparation and planning.

By following these steps and making informed decisions, you can start a semi-truck business that will thrive in the competitive commercial trucking industry in the US.

If you want to start your own trucking company, don’t hesitate to reach out to Mission Financial Services for loans and financing options.

How Inventory Shifts are Impacting Purchase Decisions

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When it comes to buying trucks and equipment, the majority of owner-operators prefer the used market, according to Overdrive’s Truck Purchase and Lease Survey. Out of all of the survey’s respondents, 56% of them reported buying used trucks, 32% bought new, and less than 10% leased their trucks or equipment.

However, while purchasing used trucks and equipment is preferred among owner-operators, finding said trucks and equipment at a fair price is more challenging than ever. Thanks to the COVID-19 pandemic and the delays in production, brought on by component shortages, many owner-operators are forced to consider other purchasing options.

Unfortunately, truck dealerships aren’t receiving much in the way of new inventory. In 2021, new trucks were being ordered, but they wouldn’t arrive until December. And, to top it off, fewer trade-ins are making their way onto the lots, thus pushing prices of used trucks through the roof. In 2021, used trucks retailed for the most they ever have in the modern era. For example, a used sleeper, with over 450,000 miles on it, sold for a little over $90,000. This price was approximately 85.5% higher than the previous year. And while some industry professionals anticipated a slow descent in used truck prices in 2022, others caved to the pressure of the market and sold off their fleets for substantial amounts of money.

Photo Credit: Overdrive

Are higher lending rates to come?

Industry experts also predict that new truck production will eventually catch up and balance out. Once trucks start rolling off of assembly lines, used-truck buyers will want to consider the potential financing impact new truck production could have on trade-ins with higher mileage than normal. 

Financing a used truck is already a challenge due to the higher risk lenders take since used trucks typically face engine problems. When the trade-ins that drivers clung onto in lieu of new inventory arrive at dealerships, they will arrive with higher mileage and a higher risk of performance issues. Thus, lenders will be even more hesitant when drivers request financing and likely raise lending rates.

For small fleets, experts believe it may be wise to consider extending the life of their trucks and equipment through maintenance rather than buying new or used. And for any owner-operators who are searching for a used truck in today’s market, they can also expect higher down payments. In fact, those just entering the industry should be prepared to put 25-35% down. Overdrive recently surveyed a group of drivers who recently bought a used truck to further prove the state of the market. They found that 38% of used-truck buyers paid in cash, and 57% of buyers financed with a bank loan or through a captive or specialty lender.

Is a lower interest rate possible?

Despite all of this, there are ways to acquire a lower interest rate on your loan. The main factors that lenders look at to calculate the monthly payment include your credit score, the model year of your truck, how much money you put down, the owner/driver’s business experience, and your resourcefulness. 

“I’d rather lend money to a guy with a 600 credit score whose father was an owner-operator, grandfather was an owner-operator, brother is a diesel mechanic, and maybe his credit score is down because of divorce,” Grivas said. “That’s a great risk compared to a guy with a 700 credit score who’s just getting started.” 

When buying a new truck, experienced owners and drivers can expect a single-digit interest rate. However, drivers financing a used truck will see interest rates ranging from 10-13% or higher.

How Mission Financial Services can help.

We understand that sometimes times are tough and we’re here to get you back on the road to financial independence. Whether you’re a first-time buyer, have limited driving experience, or have bad credit, we can help.

Mission offers direct lending for owner-operator purchases, lease purchase buy-outs, repair loans, and title loans for operating capital. And even better, we will perform a complete review of applications and get you an answer within four hours.

Our approvals are structured as simple interest contracts with limited terms that let you build equity in your loan quickly to avoid additional finance charges. Mission considers all applicants living in all states except Hawaii and Alaska. And we offer affordable loans and report to all major credit bureaus so you can start turning your credit around. Why wait?

Get Started Today

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What Owner-Operators Need to Know About the Inflation Reduction Act

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On Tuesday, August 16, President Biden signed the Inflation Reduction Act of 2022 (Act) into law. The Act covers climate issues, taxes, healthcare, and other legislation in one bill, serving as a concise version of the Build Back Better bill.

What is the Inflation Reduction Act?

The main points of the Inflation Reduction Act of 2022 include:

  • 15% minimum corporate tax rate: Corporations that generate at least $1 billion in income will now have a 15% tax rate, and stock buybacks will have a 1% excise tax.
  • IRS investments: The IRS will receive $80 billion to hire new agents over the next ten years.
  • Prescription drug price reform: Medicare will now be able to negotiate the prices of particular prescription drugs, and in 2025 Medicare recipients will receive a $2,000 limit on annual out-of-pocket prescription costs.
  • ACA subsidy extension: The current medical insurance premiums under the ACA, which were set to expire January 1st, 2023, will now be extended through 2025.
  • Investments in energy security and climate change efforts: Households will receive tax credits to offset energy costs, the government will invest in clean energy production, and there will be tax credits for reducing carbon emissions.

On August 7, the Inflation Reduction Act went to the Senate and passed with 50 Democratic votes and zero Republican votes. Once it reached the House on August 12, bill 220-207 was passed.

Ultimately, small businesses and hardworking Americans will profit from this legislation through the investments in deficit reduction, increased manufacturing, lowered drug prices, and the push for corporations to give back to their community. But what does this bill mean for owner-operators within the transportation industry?

What Owner-Operators Need to Know

The Inflation Reduction Act will make significant changes to the United States environmental policies, health care policies, and tax codes. However, for owner-operators and other small trucking businesses, the Act’s extended changes to the ACA subsidies and IRS investments will likely be the most impactful.

The increased and extended ACA subsidies will allow owner-operators without employer-provided health insurance access to affordable health care coverage. Marc Ballard, who handles the NAIT’s various health care avenues, said, “We’re seeing about 90% of people who enroll can get a plan for $100 a month. Take, for example, a guy who may be 45 with a spouse and two kids, lives in Florida, and expenses a bunch of his income. … Let’s say his net adjusted income is $60,000. He grossed $200,000, but the reportable income is $60,000. He could literally be paying zero dollars for a health care plan.” Those making more money may face an increase in coverage costs by just a few hundred dollars a month.

And while the ACA subsidy changes won’t affect independent business people as much, it’s wise to use this extension period to shop for different health care plans. Freight rates are slowing due to the rise in fuel costs, and owner-operators’ incomes fluctuate as the pandemic period breaks down. So, now is the time to consider income projections and any potential family or personal status changes, which could unlock new health-expense savings.

The $80 billion investment in creating a larger Internal Revenue Service could also pose a threat to owner-operators with more frequent audits. The Associated Press did disclose that armed agents will not come knocking on owner-operators’ doors unless they are under criminal investigation for dealings in things such as contraband. Truck drivers must also be conscious of their increased chance of being audited. And while the IRS does have a backlog, the 87,000 incoming agents will quickly clear it, making time for them to look at newer returns. So, be sure to be extremely thorough when filing your taxes.

The Future is Green

The $369 billion investment in green energy will also notably change the trucking industry. In the next few years, trucking companies could receive tax incentives to purchase trucks that operate on alternative fuel sources, including electricity and biogas. Similar tax incentives will be made available for installing supportive infrastructure at trucking headquarters. The bill will also offer grant and loan programs to trucking businesses to encourage and fund their switch.

 

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→ What is the COVID HOS Emergency Declaration?

How to Motivate Young Truck Drivers

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What Factors are Most Important to Younger Drivers?

In the last few years, the trucking industry has seen a tremendous shortage of drivers. For instance, in 2018, approximately 60,800 drivers left the industry for good. This year, about 84,000 drivers have exited their careers; if trends continue, we can expect fleets to be short 160,000 drivers by 2030. The question on everyone’s mind is: “Why does the truck driving shortage even exist?”

And while there are a number of reasons, many believe the shortage is caused by high turnover rates, dwindling compensation, and the aging of the workforce. The good news is that there may be a way to combat the ever-increasing shortage of drivers, and it starts with the next generation.

Currently, young people searching for a career don’t see truck driving as a viable path, and if fleets do not work to change this mindset, the shortage will only worsen. 

But, how exactly are you supposed to appeal to younger drivers? The answers may not be what you expect.

Why are younger drivers so important to the industry?

In 2020, people learned the trucking industry’s true value and felt its impact on our country’s infrastructure. Now, as the driver shortage wages on, more and more truck drivers are retiring, but they aren’t being replaced at an acceptable rate. And when they are being replaced, it’s not by younger drivers. However, if we want to see the industry recover and the economy thrive, younger drivers may be the answer.

Millennials are now the nation’s largest generation, making up more than a third of the country’s domestic workforce. And now, they are searching for a promising career path with good pay and benefits. They may not realize that truck driving offers that and so much more. But what if we told you that fleets could also benefit from hiring younger drivers?

Hiring younger drivers will help fleets stabilize as the tide of retirement accelerates within the industry. Younger drivers will also help trucking companies slow down turnover and keep up with the high demand for shipped goods. But, to hire these drivers, fleets must first appeal to them.

How can fleets motivate younger drivers?

Many think the only way to recruit young drivers is by offering a competitive wage. However, there are more critical factors that young drivers consider before jumping into a career. In fact, the American Transportation Research Institute (ATRI) found that only 40% of drivers (ages 21 to 30) consider pay to be the main factor when joining a fleet. In comparison, 60% believe other factors hold equal or even more importance in their decision. These factors include career stability, work-life balance, career benefits, and company culture.

So, as long as your trucking company can offer a positive working environment and decent benefits, finding younger drivers won’t be as hard as one might expect. 

4 tips for attracting younger drivers

Other ways to attract younger drivers include:

1. Embracing social media.

It’s an age-old truth: to reach your target audience, you must go where they go. And if you are trying to reach a younger audience, you must use social media. Research shows that 86% of people (ages 18 to 29) use social media, and 88% are on Facebook.

A great way to reach younger drivers is through social media campaigns on platforms like Facebook and Instagram. These platforms have consistently ranked highly as a thriving source for driver leads. Using social media and reaching out to your local driving schools is a great way to bring young drivers into the industry.

2. Updating your promotional materials.

ATRI found that young drivers are more likely to apply for a job with a carrier if there is more initial information and transparency. An example would be creating a job posting with explicit expectations and requirements. Your company could even benefit from posting videos and other content that help convey what a day in the life of a truck driver is all about. Almost 25% of younger drivers believe that fleets should incorporate younger adults in their non-recruitment advertisements and company materials.

3. Modernizing your benefits.

According to the CDC, truck drivers are twice as likely to suffer from job-related health issues, like obesity, high blood pressure, and problems that come with a lack of sleep. And in today’s society, health is taking priority in younger people’s lives. Simply updating your wellness benefits could be the difference between a young driver accepting a job offer and declining it.

We suggest:

  • Starting a company-wide wellness program or paying for a wellness app subscription
  • Introducing incentives for incorporating healthy habits
  • Giving discounts on health insurance premiums
  • Offering more PTO and bonus opportunities
  • Supporting your drivers’ wellness in any way you can

4. Offering consistent scheduling.

Truck driving is known for putting a strain on drivers and their work-life balance, thanks to long hours, last-minute changes, and erratic scheduling. Offering more predictable off days and consistent scheduling could attract younger drivers to your company.

 

More Like This:

→ How to Retain Your Top Drivers During a Shortage

→ Why More Millennials Should Become Truck Drivers

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Rising Fuel Prices: An Ongoing Problem for Drivers

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5 Tips for Conserving Fuel

These days, the glowing numbers on gas station signs cause drivers to wince as they pass. What once was affordable for most drivers now costs anywhere between $4 and $6 a gallon in some areas. This surge in fuel prices has become a top concern for consumers, affecting drivers and the broader economy. 

Higher fuel prices, especially diesel, strain owners and operators, affect the cost of goods that require transportation via truck, and so much more. In this article, we will look at the reason behind increasing fuel prices, who they affect, and what drivers can do to conserve their fuel.

Fuel prices continue to climb, but why?

The Russian invasion of Ukraine primarily influences today’s surging fuel prices, however, prices were on the rise well before the war. Before the COVID-19 pandemic settled in, energy producers reduced their investments and cut back on projects that were less than profitable. Once the pandemic hit, these same producers minimized output even more as the need for petroleum diminished due to quarantine restrictions.

The economy has since reopened, goods are being manufactured, and the roadways are filled once again. The reboot of society led to a surge in demand and a tightening oil market that led President Biden to tap into the Strategic Petroleum Reserve in hopes of leveling prices, but this plan failed.Once Russia invaded Ukraine, the already fragile energy market was sent spiraling downward. With Russia being the largest oil exporter in the world and the U.S.’s ban on Russian oil imports, U.S. oil reached its highest price point since 2008 at $130 per barrel.  

Oil companies are now reluctant to drill and face obstacles like labor shortages and increasing prices for parts and raw materials. On top of that, Russian petroleum product exports are being sanctioned, pushing the price of diesel higher than ever.

All of these factors contributed to the national average of a gallon of gas reaching $4.589, according to AAA. Now, every state in the U.S. averages more than $4 per gallon. In some areas, like California, they’re averaging above $6. And diesel prices retail at an average of $5.577 a gallon, which is 76% higher than last year’s average.

Who is affected by rising fuel prices?

Higher fuel prices impact not only consumer spending but also company spending, affecting many industries, including transportation. For instance, Target is the latest company to speak out about its struggles with higher costs. Target CEO Brian Cornell said, “We did not anticipate that transportation and freight costs would soar the way they have as fuel prices have risen to all-time highs.” Cornell estimates that the higher fuel costs will run the company approximately $1 billion in incremental costs this fiscal year. Walmart executives had similar concerns, “fuel ran over $160 million higher for the quarter in the U.S. than we forecasted.”

But the prices aren’t just impacting domestic costs. Companies like Tractor Supply and Amazon have noted that their import freight costs have increased over the last year. Currently, the cost to ship an overseas container has doubled compared to pre-pandemic rates. Even the airline industry is experiencing the effects of higher fuel prices. The CEO of United Airlines explained that jet fuel prices would cost the company $10 billion more than in 2019.

The ultimate worry for freight companies is how the higher fuel prices will affect the overall cost of operations. A carrier moving shipments from the West Coast to the East Coast will have to pay approximately $1,000 more in fuel costs than in 2021. If things continue in the same direction, this inflation will impact truckload shipping, ocean freight shipping, air cargo shipping, and train shipping costs, which will ultimately cause a domino effect throughout the economy.

Source: truckstop.com

5 Tips for Conserving Fuel

Conserving fuel is no longer just a want or a good deed. It’s now something we must do to save money. In the U.S. alone, the trucking industry consumes approximately 38 billion gallons of diesel annually. And 39% of drivers’ operating expenses come from fueling their rig. So, drivers must do what they can to improve their fuel economy.

Here are a few ways they can do so:

1. Drive more responsibly

Follow speed limit signs and take things slow. Studies show that every 5 mph over 65 mph yields a 7% decrease in fuel economy. You can also do things like:

  • Switch off the air conditioner (weather permitting)
  • Avoid idling unnecessarily
  • Turn off your engine when not in use
  • Use cruise control on the highways (if possible)

2. Improve your truck’s aerodynamics

Research shows that about half of a truck’s fuel is consumed, overcoming aerodynamic drag while traveling at highway speeds. Lucky, there are a few simple ways to improve your truck’s aerodynamics, including using a roof-mounted cab deflector, a deep angled bumper, or a sun visor to push wind to the top of your trailer. You can also use side fairings to avoid turbulence underneath your trailer.

3. Be conscious of the traffic conditions

Every time you have to restart your rig due to stop-and-go traffic, you use a considerable amount of fuel. So, it’s essential to use your GPS and monitor traffic conditions to get to your next location efficiently. Avoiding traffic will also help your clutch last longer.

4. Engine oil & fuel

By simply using the recommended grade of motor oil for your truck, you could improve your fuel mileage by up to 2%.

We also recommend:

  • Filling up your truck first thing in the morning
  • Pump fuel at a low setting to minimize vapors
  • Fill up well before you reach ‘Empty’

5. Conduct regular maintenance checks

Regular maintenance can go a long way in saving you fuel.

Maintenance practices include:

  • Filling up your tires and changing them when needed
  • Checking your trailer and drive axle alignment
  • Watch for any fluid leaks
  • Invest in an engine overhaul if yours is older
  • Replace any old or worn-out parts, like fuel injectors

At the end of the day, improving your fuel efficiency by 2% to 3% can help you save your hard-earned money and keep your rig running like new.

 

 

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What to Expect from Amazon Prime Day 2022

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Inflation, Labor Shortages, and the Supply Chain

Every year, deal seekers prepare for the highly-anticipated sales event, Amazon Prime Day. The retail giant will hold the two-day summer sale on July 12th and 13th and offer significant savings on thousands of products. Amazon recently gave Prime members a sneak peek at this year’s best offers, which include electronics, household staples, beauty products, and more. And while members won’t know the exact details of the sale until midnight EDT on July 12th, we can guess it will be comparable to previous Prime Days.

However, unlike in past years, this year’s event will happen despite some obstacles. So, what can the industry expect this Amazon Prime Day?

Potential obstacles facing Amazon Prime Day

Amazon Prime Day is held annually and offers members a chance to benefit from exclusive discounts and extremely low prices on thousands of items. This year’s sale is coming at an opportune time with some recent issues curbing consumer spending and, in turn, threatening the success of those in the shipping industry. 

So, while more sales are anticipated, we do expect a few impediments will get in the way, including:

1. Inflation

In May, the inflation rate was at 8.6% –the largest year-over-year increase the country has seen in 40 years. The elevated rate increased the prices of goods and services and decreased consumer spending. However, Amazon swears that its member-exclusive sale will change the tide with savings on products from national brands and small businesses. And there is nothing more valuable than a great deal in a tough economy. As the holiday season approaches and more companies attempt to unload excess inventory with low prices and sales events, consumers will resume spending, and the shipping industry, including the supply chain, will recover. 

2. Supply chain struggles

While Amazon still promises that Prime Day will be full of deals for various products, there’s no denying that this year’s selection will differ from previous years. While there will still be a variety of goods, it will be far less than what members are used to due to the shape of the world’s supply chain. But the retailer isn’t giving up. They accumulated their stocks and upped their inventory by almost 47% from Q1 2021 to Q1 2022. The retailer’s sales also increased by about 8% during that same period. So, the supply chain may see further strain depending on how Amazon handles this year’s exclusive event. But, as those within the supply chain have proven time and time again, there’s nothing they can’t handle.

3. Amazon labor shortages and unions

On top of mounting inflation and unrelenting supply chain issues, Amazon is also battling some in-house challenges. If things stay on their current trajectory, the retail giant could run out of workers by 2024. This loss could cripple Amazon’s service quality and growth plans. The memo that explained the labor shortage also explained how the crisis could be delayed, including raising wages and increasing automation. Still, the only way the company could significantly change the course they are on is by altering the way it manages its employees. The company also predicts that it could lose the availability of staff in some regions by the end of 2022. This loss could damage the potential for future sales events, like Prime Day, and, in turn, take a toll on those within the transportation industry who rely on Amazon’s sales.

Amazon Prime Day still has a lot to offer consumers

At the end of the day, Amazon is offering significant discounts on Prime Day that will draw people in regardless of the state of the economy or the supply chain. The deals will be available for items like Apple AirPods, TVs, gaming systems (PS5, Xbox, and Nintendo Switch), Echo devices, Fire TV Sticks, robot vacuums, and gift cards. To get people excited for Amazon Prime Day, the retailer is also offering early Prime Day deals to drum up some business that will have people returning for the actual sale.

As previously mentioned, those working within the supply chain could feel some strain during this time of year, but there will still be much to gain. As people hunt for online deals, supply chain workers and transportation professionals will be needed more than ever, meaning job security amid a shaky economy.

 

 

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→ What We Can Learn From Amazon Prime Day

→ 5 Things Owner/Operators Should Do to Achieve Success

→ Retail Delivery in the Age of Amazon

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