Motor carrier executives have long warned shippers that unless they make it easier for drivers to operate legally as well as efficiently, they could find themselves short of capacity or discover their wheels cost far more than they have in the past. The warnings have often fallen on deaf ears, however. Many shippers assume their carriers will overcome any obstacle to deliver the goods. Or they are oblivious to possible changes that may upend their universe.
This "ignorance is bliss" era is ending, not because of carrier jawboning but because of the long arm of the federal government. Under Federal Motor Carrier Safety Administration (FMCSA) rules, effective Dec. 18, all trucks built after the year 2000 must be equipped with electronic logging devices (ELDs) to comply with driver hours-of-service regulations. (Fleets with older electronic onboard recorders have until December 2019 to bring their systems up to current standards.) FMCSA, a subagency of the Department of Transportation, recently embarked on a nationwide road show to educate stakeholders on the mandate and its ramifications.
At this writing, the Owner-Operators Independent Drivers Association (OOIDA), which hates the mandate, is lobbying Congress and the Trump administration to delay or overturn it. But the chances of either happening are slim. The mandate has twice been upheld in federal appeals court, and the U.S. Supreme Court has denied the owner-operator group's petition to hear the case.
Official numbers are impossible to come by, but several industry estimates put the number of U.S. commercial truck drivers working beyond the legal limits and falsifying their paper logs at 10 to 20 percent of a 3.5 million-strong workforce. Ken Harper, marketing director for DAT Solutions, a loadboard operator, goes several steps further, contending that all owner-operators fudge their paper logs to some degree.
It is believed that about half of the commercial motor vehicles in operation are not yet equipped with ELDs. Harper said that a DAT survey of around 20,000 carriers and owner-operators conducted in June found that surprisingly few respondents were in compliance with the mandate.SAFETY FIRST, ECONOMICS A CLOSE SECOND
By forcing all drivers to operate in the same way, safety regulators believe the rule will keep tired drivers from logging extra miles to meet a delivery commitment when by law, they should already be off the road. Beyond the safety priorities, however, is the increasing awareness that the mandate will change trucking's economic ecosystem in ways shippers can't imagine, and may not be prepared for.
For example, how will shippers adjust when they find that loads once moved by drivers exceeding the legal limit either don't get moved as intended or are moved at a much higher price? How will shippers and receivers react when a driver pulls in to a loading dock with cargo to unload and no spare time on his or her hours of service, which can no longer be altered by paper logs? Then there is the widespread speculation that many solo drivers—the backbone of the U.S. trucking fleet—will exit the business because they lack the scale and resources to operate efficiently without effectively flouting the hours-of-service rules.
Eric Fuller, chief executive officer of Chattanooga, Tenn.-based US Xpress Inc., the largest privately held truckload carrier, expects that many shipments with 500- to 700-mile lengths of haul, which might move in one workday with a little paper-log fudging, will find fewer takers in an ELD world. Tommy Hodges, a trucking industry veteran and chairman of Shelbyville, Tenn.-based truckload carrier Titan Transfer Inc., said the mandate's impact will be keenly felt in densely populated, traffic-clogged regions like the Northeast, where congestion will only amplify the time pressures on drivers who no longer have the option of manipulating logbooks.
Some high-density markets may go unserved because the mandate makes it impossible to hit delivery targets without fudging logbooks, Hodges said. Shippers in some markets will face freight rates that are much higher than they're accustomed to, he added. The mandate will aggravate an acute capacity shortage in some traffic lanes, according to Hodges. Space in some lanes is already so tight that rates are as much as six times higher than they've been in the very recent past, he said.A HOUSE DIVIDED
Given how high the stakes are, shippers have been surprisingly slow off the mark in preparing for the mandate, experts said. According to Fuller, US Xpress's shipper universe is split between those who fully grasp the mandate's impact and are getting as ready as possible, and those who don't know or care. "There really is no middle ground," he said.
Nor is a shipper's size or its freight spend a predictor of involvement: One of the country's largest shippers, who Fuller declined to identify, has done nothing to prepare for the mandate, he said.
Jacksonville, Fla.-based truckload carrier Landstar System Inc. has tried to emphasize to shippers the importance of their role in making ELD compliance work, according to Mike Cobb, Landstar's vice president of safety and compliance. "It's imperative that shippers understand this. For the most part, though, shippers don't get it."
Private fleets, which are operated by some of the country's biggest retailers, have a similarly cloudy view of the landscape, according to Ryder System Inc., the Miami-based transportation giant that has many large private fleet customers. "They are either unaware of the compliance of their drivers, or they know that they are not complying but don't have a way to determine the total cost around how it will affect them from a productivity or profitability standpoint," said John Diez, president of Ryder's Dedicated Transportation Solutions unit.
Many shippers, of course, are very aware. For example, some have taken the step of informing their carriers that unless their fleets are already ELD-compliant or that they can show a firm road map to getting there in the very near future, the shipper will need to explore other options to get its freight moved.TOUGH LOVE
The irony is that, after a difficult transition period during which a high-single-digit productivity drop is expected because of reduced equipment utilization, ELD implementation will ultimately yield a more efficient and responsive trucking supply chain, according to various experts.
John Seidl, a former Wisconsin state trooper and FMCSA investigator who is working with Arrive Logistics, an Austin, Texas-based third-party logistics service provider, to help carriers understand the mandate, said carrier revenues will decline because fleets and drivers won't be chasing as much freight that rests on the hours-of-service bubble. However, efficiency and profitability gains should offset the revenue decline because ELDs will provide the needed visibility to optimize load planning, Seidl said.
Hodges of Titan expects that carriers will struggle at first to master the torrent of digital data coming at them. Once they do, however, they will be able to turn the data to their advantage. After being behind the productivity curve at the outset of its ELD conversion five years ago, Titan is notching gains today as a result of the technology, he said.
Owner-operators can benefit from ELD use, especially if they drive exclusively for large carriers and are tied into their systems, experts said. Solo drivers should also be spending less time doing paperwork and more time keeping the wheels turning. "Our experience has shown that once drivers experience the benefits of an electronic log, they don't want to go back to paper logs," said Tony Forrest, director of product management for Omnitracs LLC, a Dallas-based fleet management software provider.
The mandate will minister tough love of sorts for shippers, who will have to shed their long-held ambivalence toward the folks who haul their freight. Harper of DAT said shippers "will put pressure on their docks to clean up their act," adding that the level of visibility enabled by ELDs will be "startling" compared with what is out there today.
The payoff will be a trucking industry that's held to a much higher standard than perhaps it has ever been, according to Harper. "The levels and expectations of service that once applied only to big carriers will now apply to everyone," he said.
And as the industry sheds its rogue status, drivers will finally get the respect from shippers they deserve, according to Hodges. "What the mandate will do, over time, is end the shipping and receiving public's abuse of drivers," he said.