While the trucking industry finished up the "aughts" with little momentum and an overall weak freight market, analysts believe the next decade will be marked by change that promises to make things better than the last

, according to a Stifel Nicolaus white paper. The white paper from the outlines the factors that turn the freight industry on its head as things change in the years to come.

Most notably, the analysts point to a shift in the supply chain, which will be caused by energy and commodity prices, changing labor demographics and wage rates, declines in the value of the U.S. dollar, increased international security regulation and technological innovation. These factors will shorten the supply chain, says the white paper from the Transportation & Logistics Research Group of investment advisory firm Stifel, Nicolaus and Co.

Shorter Hauls

"The increase of shorter supply chains means there will be an increase in fully integrated, domestic supply chains," the white paper said. "These will not be well served by the current transport infrastructure, which was designed to distribute imported manufactured goods. Shorter haul truckers and carriers of raw materials and components should be able to capitalize on these trends as the new decade unfolds."

Stifel Nicolaus also says that as Asians develop middle-class tastes and their compensation expectations evolve, this will affect the supply chain, tipping the scales away from U.S. imports toward U.S. exports. Trucking companies involved with shorter domestic hauling, intermodal and exports will be poised to take advantage of the shift.

Regulation and Capacity

Something that will greatly impact the balance between supply and demand will be federal regulation, such as CSA 2010, which will push unsafe drivers and trucking companies out of the market. Other potential changes to trucking regulations, including those involving hours of service, electronic onboard recorders, emissions standards, rail re-regulation, and speed governors, could drive transportation prices up, Stifel Nicolaus says.

"While a reduction in capacity may be the remedy needed to cure the industry's current ills; longer term, one has to wonder if transportation costs won't skyrocket, as the cur rent decade matures and after demand rebounds (reflecting the recovering economy) and capacity shrinks (to reflect the implementation of a myriad of new safety and environmental rules and regulations)," the report said.

More Diversification

Stifel Nicolaus says that industry consolidation will not play a large role in the next decade, while diversification of service offerings, particularly into non-asset intensive services, will become a larger trend.

"The idea is that margins are as good or better in these asset-light spaces and investment requirements are significantly less; therefore, returns on invested capital are higher."

One change that is not exactly in the pipeline any time soon is a national transportation plan, as efforts to reauthorize the surface transportation program have been put aside to focus on health care reform, energy reform and Wall Street reform.

"The net effect of this foot-dragging is that highway congestion will sap further productivity from the trucking industry (thereby increasing the costs of trucking) and delay the implementation of a plan that could encourage the use of more productive trucking combinations and that would encourage the transfer of freight from dense highway corridors to the rail and/or the river systems," the report said.