ELD’S SHRINK CAPACITY, EXACERBATE DRIVER SHORTAGE AND INCREASE RATES
We have covered the disrupting effects of electronic logging devices (ELD’s) in our newsletter over the past few months. The requirement will decrease capacity in an already tight market, which is resulting in price hikes. Rather than have us rehash the issue, read below just a few of the recent headlines on the subject:
Conditions for shippers worsen as rates rise, capacity shrinks
FreightWaves, October 31, 2017
Under pressure, US transport rates keep rising
JOC, October 27, 2017
America’s shortage of truck drivers could affect prices and cause delivery delays
CBS News, October 26, 2017
Shippers ready to “bear the brunt” of higher trucking rates as ELD implementation set to begin Dec
Logistics Management, October 23, 2017
Driver shortage could hit all time high this year
Truckinginfo, October 22, 2017
Freight rates poised for big surge
American Trucker, October 18, 2017
Truckload carriers pitch to hike rates driven by ELDs, driver pay, hot market
Transport Topics, October 16, 2017
ELD’S BRING SIZABLE RATE INCREASES
Electronic Logging Devices (ELD) will be mandatory on December 18, 2017, and there is no doubt this change will impact your supply chain. The use of ELD’s will constrict truck capacity and lead to rate increases. It is estimated truck rates will increase by 10% or more.
No matter the mode…full truckload, LTL, drayage…all commercial truck drivers are allowed to be on-duty for a total of 14 hours in a day, with maximum drive time of 11 hours in a day. Should the driver get hung up in traffic, at a marine terminal, at a loading or unloading location, or anywhere else on his journey and not be able to complete the delivery within the allowable hours of service (HOS), he will have to pull over and rest for 10 hours. Yes, even if he is minutes away from his destination. It is a hard, inflexible stop. No exceptions.
There was a last ditch effort by some in the trucking community to delay the implementation of the ELD mandate. However, the appeal fell on deaf ears with our federal legislators.
While Devine invests heavily in our safety program and closely monitors drivers’ HOS to ensure compliance, it is estimated 30% of the nation’s drivers apply “flexibility” with their paper logs. As a result, it could take longer to move your cargo, and, as an industry, it will take more drivers to move the same amount cargo.
The ever-present driver shortage is going to make it even more complicated.
Be prepared! Start a dialogue with your provider now.
ELD’S AND YOU
Electronic Logging Devices (ELD) will be required in all trucks beginning December 18, 2017. Currently, drivers keep track of their hours of service via a manual, paper log. ELD’s, on the other hand, will electronically monitor and record drivers’ on and off duty time.
While Devine enforces a strict policy adhering to the federal hours of service regulations, many motor carriers do not. For motor carriers and drivers stretching drivable hours, there will be a hard stop with ELD’s, and shipments that used to take two days to deliver may now take two and a half to three days. The end result is it will take more trucks to move the same amount of cargo, and truck capacity will tighten.
Much of the focus in the industry press has been limited to the affects of ELD’s on the truckload segment, which will certainly be impacted, but the drayage market will face similar constraints. ELD’s will be required for all interstate truck moves, and all container moves are considered interstate as the cargo came from or is destined for a location outside of your state.
The market is already seeing capacity constrict as motor carriers adopt ELD’s ahead of the deadline. When capacity decreases, rates increase…basic supply-demand principles at work.
We will keep you posted as the ELD mandate materializes.
One of Devine’s ELDs in action
Electronic Logging Devices (ELDs) will be required in all trucks effective December 18, 2017. These devices will precisely measure driver hours of service. As a result, close planning and routing will be of utmost importance to ensure the driver can complete the delivery within the allowable hours of service.
While ELDs will affect all modes of trucking, the drayage market will be especially impacted. Congestion in and around marine and rail terminals, chassis and container shortages, booking and clearance issues, and myriad other roadblocks in getting containers moved will eat through available hours of service. Those delays will have negative repercussions in the number of moves a driver can do in a day.
If these congestion issues persist, drayage costs will rise due to lack of productivity, the necessity for pre-pulls, and drivers leaving the industry.