March 30, 2018

ELD enforcement begins Sunday with some forecasting Armageddon, others a non-event

Compliance rate in 90 percent range, some experts say; XPO executive warns of "tsunami" of carrier closings as safety regulators put hammer down.

By Mark B. Solomon

Easter Sunday (and April Fool's Day) begins the next phase of the odyssey toward electronic logging device (ELD) compliance, as state motor vehicle inspectors begin writing out-of-service orders to drivers whose rigs lack some form of electronic equipment to monitor adherence to federal driver hours-of-service rules. While some have forecast ugliness, others think April 1 will be a non-event.

One who shares the latter view is Noel Perry, principal of Transport Futures, a research firm. Perry bases his thesis on data from Truckstop.com, which operates load boards for the truckload non-contract, or spot, market, and which Perry does work for. In an interview today, Perry said driver compliance with the ELD mandate surged between last Dec. 18—the date the mandate took effect—and the beginning of 2018. The reason, Perry posits, has nothing to do with hard compliance numbers—precise data of that sort is difficult to obtain. Instead, it stems from the unusually explosive spike in shipper load activity during the two-week period, as measured by Truckstop's "Market Demand Index," which tracks load and truck postings.

It has been widely believed that ELD compliance will reduce fleet productivity by between 3 and 5 percent (some have forecast a more pronounced percentage hit) because the many drivers who in the past had deliberately exceeded their legal driving hours without worrying about electronic tracking would no longer be able to do so. Mindful of this, anxious shippers ratcheted up their postings, thinking that most drivers had already become compliant and that the ELD-related hit would be a reality sooner than April 1, when many thought the crunch would begin, Perry believes.

Perry surmises that compliance levels are currently in the low- to mid-90-percent range. That squares with data from DAT Solutions LLC, the industry's other big load board operator, that shows 91 percent of small, independent truckers—the segment that has been the last to meet the guidelines—were compliant either by adopting ELD technology or by being granted temporary exemptions from the federal government. Seven percent planned to comply by April 1, while the remaining 3 percent were unsure whether to comply or exit the business, according to DAT estimates. Eileen Hart, a DAT spokeswoman, said she's been told by some ELD vendors that compliance levels are around 75 percent.

Others are not as sanguine about the impact of the April 1 deadline. Greg Ritter, chief customer officer for Greenwich, Conn.-based transport and logistics giant XPO Logistics Inc., said on a webinar Wednesday that the "worst is yet to come," and warned of a "tsunami effect that will shut down carriers" as enforcement begins to bite. During the same webinar, Jeff Rogers, CEO of Universal Logistics Holdings Inc., a Warren, Mich.-based transport and logistics provider, said he's been told that federal and state officials are going to take a hard line on enforcement starting next week. That contrasts with comments from Benjamin J. Hartford, transport analyst at the investment firm Baird, that post-April 1 enforcement will "likely be more gradual than acute" because of uncertainty over the uniformity of state enforcement regulations. Hartford said ELD-related carrier attrition will also be gradual, as continuing robust spot market demand keeps more truckers in the game.

A driver found in non-compliance will have the truck placed out of service for 10 hours. After that period, he or she can proceed to their final destination. The driver must then become fully compliant with the mandate before being dispatched on another trip. Fines for non-compliance range from $1,000 to more than $10,000 per offense. Carriers or drivers that accumulate multiple violations will face hits to their safety records, driving up their insurance premiums, and perhaps keeping them off shipper, broker and third-party logistics (3PL) provider carrier lists. Many shippers and brokers now require their drivers to show proof of ELD compliance before they will tender them loads.

Another reason to be compliant sooner than later, according to Perry, is to protect against a safety audit down the road or, even worse, potential liability should a carrier be sued as a result of an accident. The last thing any carrier or driver wants, he said, is to be in the crosshairs of an auditor or a plaintiff's lawyer and not be able to demonstrate ELD compliance.

About the Author

Mark B. Solomon
Executive Editor - News
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

More articles by Mark B. Solomon

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