Quick refresher: The Hours of service rules (HOS) dictate when and how long truck drivers can operate and have been in place since 2005. The purpose of HOS laws is to manage the amount of time drivers are on duty. The 14-hour driving window says drivers are allowed a period of 14 consecutive hours in which to drive up to 11 hours after being off-duty for 10 or more consecutive hours.
The ELD mandate was established to record compliance with the long-standing Hours of Service rules. The mandate went into effect in mid-December, but more stringent enforcement began on April1st after a three-and-a-half month grace period. Which means that carriers that run without ELD’s installed and moving non-exempt freight are due to be placed out of service for 10 hours, and may have points added to their Compliance, Safety, Accountability program scores, or could even be assessed hefty fines. Drivers that are pulled off the road and parked for 10 hours can use paper logs to finish their shipment but can’t be re-dispatched until they have an ELD installed.
LATE SHIPMENTS AND HIGHER RATES
With the ELD’s in effect, the time spent waiting to load will be more pivotal than ever as it will eat into the total available drive time, which will subsequently reduce overall productivity of a carrier. Drivers will be required by law to end their day when the hours of service are up, regardless of the actual miles driven in the day. Until trucking companies figure out the nuances and costs of operating with ELDs, they will raise prices to make up for lost productivity.
“Bad traffic, delays at docks or the struggle to find parking can stretch those one-day trips into two days, because it removes a few hours of their productive time from their day,” says Peggy Dorf, market analyst at DAT.
DAT reports that approximately 67.3 percent of the truckers responding to its survey said they are driving fewer miles since the ELD rule started late last year. Nearly 71 percent reported earning less money in that same time period because they must stop driving after 11 hours, and drivers are typically paid by the mile.
Drivers now must put greater focus on their route planning, making critical decisions to either find a safe place to park and sleep or push through to make a scheduled appointment time at the risk of being shut down for HOS violations. Industry experts estimate a 3-5% loss in carrier productivity as a result of this new mandate, especially on hauls longer than 450 miles and short-haul operations of up to 300 miles that bump against the 14-hour rule. Ultimately this loss in production will have an adverse effect on freight rates as the drivers must be compensated for their waiting times in the form of detention or paid a higher rate per mile to equalize the fewer mile driven.
Time is literally money in the age of ELD’s, and carriers will continue to adjust their operations to not only be in compliance but squeeze out profitability. They will be more selective of the freight they haul, lanes they service, and shippers they work with. City traffic, multi picks or drops, and even delivering to a receiver that is 100 miles from a major thruway, expressway, or highway are all factors that can take additional time. These factors, along with shipping and receiving times, need to be considered more than ever and then priced accordingly.
Our team here at CPL has been on top of this new regulation for some time now. Here are some of the responses and concerns we've heard from the industry:
With the first week of ELD enforcement under our belt rates and load-to-truck ratios were up for all three equipment types. Compared to the March average, the national average van rate increased 9¢ per mile, and the average reefer rate gained 8¢. The national average flatbed rate increased 10¢. “We definitely are seeing rates higher in April even though freight volumes haven’t been that impressive,” Mark Montague, industry pricing analyst of DAT Solutions, told Trucks.com. “That tells us that more trucks are off the highway.”
Truckers hauling agricultural commodities have another three months of freedom getting another 90-day electronic logging waiver. The extension will push the ELD deadline for haulers of agricultural commodities to mid-June. “We are mindful of the unique work our agriculture community does, and will use the following 90 days to ensure we publish more helpful guidance that all operators will benefit from,” stated FMCSA Administrator Ray Martinez in a news release. If truckers are hauling fresh produce from shipping point areas, they will be exempt from hours-of-service regulations within a 150-mile air radius of origin. Beyond that radius, the hours-of-service rules kick in. During this exemption period, carriers may use paper logs to record the hours of service. Click here for the for a list of Hours of Service and Agricultural Exemptions.
A recent article on Trucks.com reported drivers lose an estimated $1,281 to $1,534 a year and put themselves at higher risk for crashes because of unexpected wait times on loading docks. Collectively, detention time robs U.S. truckers of an estimated $1.1 billion to $1.3 billion in income annually. One positive effect of the ELD enforcement: shipper turn around times at the dock. With the new restrictions placed on hours of operation, drivers will no longer be able to adjust their logs in light of longer wait times for loading and unloading. Shippers will need to be better prepared at that stage to ensure a lower cost for the delivery of goods.
The Owner Operator Independent Driver Association (OOIDA) has been severely critical of the new mandate, and released a study that identified serious concerns regarding “several vendor-wide systems failures, faulty GPS tracking, inaccurate recording of duty statuses, engine disablements, speed irregularities, abysmal customer service from manufacturers, a worsening truck parking crisis and many more." It should be noted that the survey included only 2000 drivers, and that 79% of the respondents were either owner operators or on lease to a carrier. The view of OOIDA can be summed up by one respondent of the survey: “If the ELD rule is to remain, the HOS regulations need to be changed to remove the 14-hour window as it causes us to push harder to complete a run than we otherwise would. With the new rule, safety and common sense takes a back seat to government overreach and the wants of the big carriers so they can push out the smaller companies.”
ELDs are not just impacting the full truckload market but also other modes of transportation. Less-than-truckload (LTL)shippers are facing what top trucking executives are calling a “new era” in LTL pricing because of a combination of pent-up demand, surging e-commerce deliveries and a tightening capacity due to increased government regulations and a shortage of qualified drivers. That means if you are an LTL shipper, you should brace for some of the steepest rate increases in a decade because of rising costs and sharply higher demand.
At the heart of this confrontation is the very nature of what it means to be a trucker. One chooses this line of work because it lies outside the mainstream and offers a sense of freedom on the road. Mandating this technology and automating the recording feels at first like a limiting of the truckers’ liberty – and ability to get the job done. Technologies that allow us to do more and improve productivity should be welcomed into an industry adverse to change, but those designed for surveillance and that place stringent limitations on drivers will always receive pushback.
Still, the key to the mandate and the issue at large is safety – for the drivers and the people that share the road with them. Every new change in procedure – especially when it moves from a previously manual practice to digital – makes people uncertain and nervous. And some of the concerns within the industry are warranted – most notably, the quality and capability of ELD instruments that are currently on the market.
As this month brings an end to the grace period for ELD compliance, the occasion gives rise and reason to the voices of concern. ELD’s alone will not improve safety as the hours of service rules that are currently being enforced will need to be revisited if the overall goal is to improve safety. We can see ELD’s as progress toward bringing the industry to the 21st century, and a wake up call to the vendors and shippers who are throwing a wrench into the proverbial gears of supply chains.
Moving forward it will be more important than ever to work with your transportation providers not only on loading schedules but with flexible appointment times. Those early morning appointments times may not be necessarily as attractive in an ELD environment. If your shipments take hours to load then you should anticipate running into issues for delivery times or appointments. To effectively take costs out of your logistic networks, shippers should work to reduce waiting time at docks and other facilities and work with the understanding that truckers have to make a profit as well. Every hour a driver is sitting idle and waiting to load, is an hour that they can be earning money driving. This is directly impacting their take home pay as a result of inefficiencies within supply chains.
The months ahead will no doubt smooth many of the issues that seem to be so disruptive right now. By April 2019, the ELD will mostly likely just be a part of how we do business. Until then, however, we have to travel the road ahead.