U.S. trucking companies are coming off a year of improved sales growth and profitability, according to data from Sageworks, a financial information company. And some industry experts believe 2018 could mark the start of several years of strong results, based on tight capacity and improving demand.

Privately held general freight trucking companies (NAICS 4841) grew sales, on average 14.9% in 2017, according to preliminary results of Sageworks’ financial statement analysis. “This early estimate from our private-company industry data represents the strongest sales growth since 2014 when sales increased about 17 percent,” said Sageworks analyst Libby Bierman. Sales growth that year was driven by a North American cold wave and wintry start to 2014 that disrupted transportation networks and boosted rates, according to multiple industry experts.

An average net profit margin of general freight trucking companies, meanwhile, expanded to 6 percent last year, compared with an annual average of between 2.5 and 4 percent each year since 2012, according to the preliminary industry data estimates from Sageworks.

“From what I can see, 2017 was an improvement over 2016, and what’s really exciting for trucking companies is that 2018 looks like it could be one the best years ever,” provided carriers manage well through the changing environment, said David Roush, president of KSM Transport Advisors, a financial advisory services company serving trucking and logistics segments of the transportation industry. Truckload carriers saw rates challenged in 2016 and early 2017 as shippers clawed back pricing gains spurred by the 2014 market dynamics. But by the second half of 2017, rates began improving again for trucking companies as demand strengthened and trucking capacity tightened.

New federal mandates requiring electronic log devices in each truck since December may also prompt some drivers opposing the idea of added technology or monitoring to retire early, although the full impact won’t be known until serious enforcement begins, according to Roush. That’s expected to begin April 1, according to the Commercial Vehicle Safety Alliance.

Other factors contributing to tight capacity are the improving economy, low unemployment, and an aging trucking-industry workforce, according to Roush. “The average age for drivers is 52 years old, compared to 42 for the workforce as a whole,” he said. In addition, drivers must be at least 21 years old to operate a commercial motor vehicle in interstate commerce, so many high school graduates move on to other jobs without considering a trucking career.

Wage pressures are likely to present a headwind to trucking companies’ profitability, but the tailwind of the supply and demand dynamics will likely far outweigh it, Roush said. “2018 is going to be a good year,” he said.

“According to the Census Bureau, most general freight trucking companies in the U.S. are small businesses with less than 20 employees,” Bierman noted. “While there are positives and negatives for being a small firm, their size might position them to adjust quickly to market needs. If they have the staff to scale up, they can take advantage of the increased sales,” she added.

Through its cooperative data model, Sageworks collects and aggregates financial statements for private companies from accounting firms, banks and credit unions. Net profit margin has been adjusted to exclude taxes and includes owner compensation more than their market-rate salaries. These adjustments are commonly made to private company financials to provide a more accurate picture of the companies’ operational performance.