Bearing down

If the value of a government regulation is measured by how much its stakeholders hate it, the Federal Motor Carrier Safety Administration's (FMCSA) rule governing a truck driver's hours of service—known simply as "HOS"—is giving U.S. taxpayers maximum bang for their buck.

Carriers loathe the regulations because they cut into their productivity and require more resources to move the same amount of freight they handle now. Shippers fear them because they could be forced to reconfigure their manufacturing and distribution networks if they want to get their goods to market in a timely fashion. Drivers claim the rules curtail their ability to earn a living and force rest upon them when they don't need it. State regulators worry that carriers will put more trucks on the road to offset the productivity losses, straining their enforcement capabilities. Some in Congress argue the rule creates a safety hazard by forcing commercial drivers onto the highways at the same time as millions of morning rush-hour commuters.

Even those who pushed for changes in the nine-year-old statute aren't happy with the revised product. Safety advocacy groups think the new regulations fall short by not reducing the number of hours a driver spends behind the wheel. The Teamsters union, which in theory should favor the rules because they could foster more driver hiring, is unhappy about the various class exemptions—such as those for grape haulers—which it says will put fatigued drivers on the road when they should be resting.

The rules are set, however, and barring court action to block or delay their progress, enforcement begins July 1, 18 months after the rules were crafted and 16 months after they took effect. Late last week, the FMCSA denied a request by various manufacturing, shipper, and carrier groups for a three-month delay in the July 1 enforcement date, saying the groups didn't propose a valid reason for delaying the compliance date and that the public would be denied three months of enhanced safety if their request was granted.

In its December 2011 rules, FMCSA left unchanged a key provision allowing 11 hours of continuous drive time after a driver has spent 10 consecutive hours off duty. But it reduced a driver's seven-day workweek to 70 hours from 82, a 15-percent cut.

For the first time ever, drivers will have limits placed on their traditional 34-hour minimum restart period, requiring it to occur once every seven days and to include two rest periods between 1 a.m. and 5 a.m. over two consecutive days. Drivers are also now mandated to take a 30-minute break before driving more than eight hours.

The pros and cons will be debated March 15 before a federal appeals court in Washington that is all too familiar with the legal squabbles surrounding the case; the FMCSA has been sued over the rules three times in the past decade, and the December rules were a product of an out-of-court settlement mandating a rewrite.

The focus of the March oral arguments will undoubtedly be the controversial 34-hour restart provision. The language is also the subject of an FMCSA field study mandated by last year's transport reauthorization law to determine if the costs of the provision outweigh its purported benefits. The study is to be finished in September, though no one expects the findings to impact the law unless the study arrives at conclusions the agency isn't expecting.

The rule changes will yield $160 million to $280 million of annual "net benefits," according to estimates published on the agency's website. Most of those benefits are expected to be in improved driver wellness and performance. Critics, including the American Trucking Associations, the group representing major for-hire truckers, said the agency based its estimate on a series of concocted and unjustifiable assumptions.

There is concern the two overnight rest periods will force drivers to rest during lightly congested overnight hours when they would normally be on the road. This will result in a commingling of big trucks with millions of morning rush-hour commuters. In addition, drivers' regular work routines will be skewed because they will be forced to stay off the road even if their bodily rhythms don't demand it, according to Todd Spencer, executive director of the Owner-Operator Independent Drivers Association.

"Drivers need flexibility in the hours they have so they can rest when they need to rest," he said. "Fatigue isn't always predictable. Some days, you feel like you need that rest. Some days, you feel that you do not."

SPLIT DECISION
Opponents can take comfort in the FMCSA's uneven history of defending its positions in court. HOS regulations have been delayed before, and they could be delayed again, they reason. But a court suffering from "HOS fatigue" could simply defer to the agency's judgment and decide not to stay the enforcement.

Whichever direction the legal worm turns, it is unlikely a ruling will come sooner than late spring or early summer, according to Thomas E. Bray, HOS expert at J.J. Keller & Associates Inc., a Neenah, Wis.-based consultancy working with carriers to prepare for the changes.

Bray said many carrier clients are taking a wait-and-see approach, refusing to commit time and resources to meet a deadline that may not come to pass. However, should the court refuse to stay the order, then carriers who haven't prepared will have precious little time to ramp up, he warned.

Bray added that those carriers may need to tell shippers their network is no longer capable of moving their freight in the way the shippers are accustomed to. For businesses who maintain low inventories and use trucks to support just-in-time replenishment and distribution, the effect could be severe, he said.

Even those who think the courts may order a delay of some kind believe the time for discussing the topic is over, and the trucking supply chain needs to get busy.

"This is one of those issues that is easy to sit around and complain about, but we're past that," said Derek J. Leathers, president and COO of Omaha, Neb.-based truckload carrier Werner Enterprises. For his part, Leathers expects the rhetoric leading up to the enforcement date to become so heated that it will compel the court to impose a delay.

Measured by capacity reductions, the productivity loss to truckers is expected to be 2 to 3 percent on the low end, and "worse on the high-end," according to Leathers. Michael P. Regan, president of Elmhurst, Ill.-based consultancy TranzAct Technologies, said based on conversations with multiple carriers, he estimates the reduction in miles will run from 7 to 8 percent for tandem drivers, to 9 to 12 percent for solo drivers.

Eric Starks, head of Nashville, Ind.-based consultancy FTR Associates, expects a significant tightening of capacity at least through the rest of the year if enforcement takes effect as scheduled. This will lead to a pricing pop as carriers use driver capacity rationalization— the higher costs of paying existing drivers and finding new ones—to raise freight rates, he predicted. Ironically, the higher prices will benefit all carriers whether they are ready on July 1 or not, Starks said.

Gary Palmer, senior director of transportation for True Value Co., a Chicago-based cooperative that runs a private fleet serving 5,000 company-owned hardware, equipment rental, and lawn and garden stores, is expecting a 3- to 5-percent reduction in his company's route capabilities, and a 2- to 3-percent rise in operating costs.

Palmer said the magnitude of the adjustments will depend on overall economic conditions and the willingness of the stores—which are independently owned and which receive shipments on fixed delivery schedules—to work with the company to reconfigure their routes. So far, some of the storeowners have been cooperative, while others haven't, he said.

The consensus is that the rules will mostly impact truckload drivers operating over long distances. However, less-than-truckload (LTL) carriers will be affected as well, according to Bray.

For example, if an LTL driver operating between hubs or between terminals makes a 2 a.m. delivery on a Monday, finishes the shift at that time and starts the 34-hour clock, the driver would have to wait until after 5 a.m. on Thursday to return to the road, Bray said. That's because the requirement for two consecutive days of rest between 1 and 5 a.m. nullifies the driver's ability to operate on Tuesday and Wednesday, he added.

Donald A. Osterberg, senior vice president of safety and security for Green Bay, Wis.-based truckload and logistics giant Schneider National Inc., predicted that enforcement would begin July 1 as scheduled. "Two months ago, I wouldn't have said that," Osterberg said in an interview in early January.

Osterberg argued the appellate court is "HOS-weary" and will bow to the FMCSA's opinion regarding the best balance between safety and economics. To prepare, Schneider is reconfiguring the routes operated by the portion of its fleet providing dedicated capacity and miles to customers, he said.

In a post-2013 HOS world, Osterberg said, shippers must reframe their service expectations of their carrier partners and accept some friction in the supply chain as a cost of doing business and keeping the roads safe.

"The shipper's view has always been that 'The drivers will figure it out,'" he said. "The belief was that the driver was the elastic link in the supply chain. Well, the driver link is becoming inelastic."

Osterberg said the advent of electronic logging with on-board recorders has reduced the use of paper-based logs, thus making it impossible for drivers to be creative with their trip reports. In addition, the launch of CSA 2010, the FMCSA initiative to identify and winnow out unsafe drivers, holds drivers and their carriers accountable for proper logging and HOS compliance, he said.

The rule's enforcement could also mark a turning point in trucking's role in the supply chain, according to Osterberg.

"Historic levels of service are not achievable or sustainable," he said. "We've trained a generation of supply chain professionals to believe that inventory is bad. It's time to slow the supply chain down, both from a safety and productivity standpoint."

SAFETY FIRST
The paramount concern is the well-being of all who use the nation's highways and roads. Since trucking deregulation in 1980, annual truck-related fatalities—based on miles traveled—have been cut in half, according to National Highway Traffic Safety Administration (NHTSA) data. In 2010, there were 3,484 large trucks involved in fatal crashes, compared with 4,902 in 2004. There were nearly 2.6 million more "large" trucks—those with a gross vehicle weight of more than 10,000 pounds—registered in 2010 than in 2004, NHTSA said.

In 2010, 3,675 Americans were killed in crashes involving large trucks, a 9-percent increase over 2009 fatalities, NHTSA said. The increase came despite NHTSA data showing that 200,000 fewer big trucks were registered in 2010 than in 2009.

Opponents of the new rules contend they go too far to address a problem that is already well on its way to being fixed. Despite occasional upward blips, the long-term trend in truck-related deaths is down, they said.

However, Osterberg said the status quo is far from good enough. "Can we say that because there's been a historical improvement, that 3,675 deaths—or about 10 truck-related fatalities a day—is somehow OK?" he asked. "The numbers are better, but they are not acceptable. It's still too high."