How the ELD Mandate & Other Regulations Will Impact the Capacity Crunch

by Jennifer Hart Yim | Dec 7, 2017 | Blog, Logistics, Manufacturing & Distribution, Supply Chain

Within the month, the electronic logging device mandate will take effect. While shippers have known about the mandate for two years, truckers, shippers and carriers are still concerned about how it will impact capacity.

This post comes to us from Adam Robinson of Cerasis, a top freight logistics company and truckload freight broker.

Paired with soaring manufacturing and tightening capacity within the last month, the electronic logging device (ELD) mandate could cause the capacity crunch to worsen. In addition, other regulations, like changing attitudes and backlash at the environmental protection agency (EPA) and struggling infrastructure in Hurricane-affected areas, could cause further capacity problems. To help prevent the worsening of the capacity crunch, let’s take a closer look at how the ELD mandate and other regulations may affect capacity.

What Is the ELD Mandate?

The ELD mandate is a portion of the “Moving Ahead for Progress in the 21^st Century” bill, which was passed by the United States Congress in 2012, explains ELDFacts.com. The bill outlines criteria for highway funding and the use of ELDs for use in a trucker’s Record of Duty Status. Today, the record of duty status is used to record compliance with an existing hours of service (HOS) requirements. Although the ELD mandate is a means to tracking HOS requirements, the two laws are completely different. As a result, but the ELD mandate and HOS regulations may have separate impacts on the capacity crunch.

When Does It Take Effect?

The ELD mandate is set to take effect December 18, 2017, and unfortunately, many owner-operator, truckers have not yet completed the installation of ELDs or found an appropriately authorized and licensed ELD vendor, says Jeff Berman of Supply Chain 24/7. However, the Federal Motor Carrier Safety Administration (FMCSA) will not begin requiring inspectors to place commercial motor vehicle drivers without and installed ELD out of service until April 1, 2018.

Even truckers with prior ELDs installed, which may have been installed before 2012, the upcoming ELD deadline has stringent requirements for what type of ELD may be used and who may install it. Truckers with existing ELDs from the pre-ELD mandate period will be automatically grandfathered into the existing list of ELDs at the end of 2019. Therefore, truckers looking to continue driving for the next two years need to have a new, approved ELD installed no later than the April deadline, if not the preferred December deadline. In the interim, politicians are still in debate about if the costs of installing new ELDs is justified under existing regulations, reports Supply Chain Dive. However, part of the reason the FMSCA has not yet rescinded or pushed back implementation revolves around HOS requirements.

What About HOS Regulations and the Capacity Crunch?

The capacity crunch revolves around how much available capacity is being used at any given time in the trucking industry. As a result, capacity is directly tied to the number of drivers which may be operating at any given time simultaneously. According to the FMCSA, the HOS rules are quite specific for property-carrying drivers. These include the following:

Truckers have an 11-hour driving limit, and truckers may only drive a maximum of 11 hours after 10 consecutive hours off duty. Considering the amount of time required to park a truck, take breaks and other activities, it is nearly impossible for drivers to get in a full, 11 hours of daily driving while still obtaining the 10 required, consecutive hours off duty.
Drivers now also have a 14-hour absolute driving limit for driving after coming on duty, following 10 consecutive hours of off-duty.
Drivers must also take breaks and may only drive if eight hours or less have passed since the end of the drivers last off-duty.
Perhaps the biggest impact for the HOS regulation is its specification of how many hours a driver may work within an eight-day period. If the driver drives for seven consecutive days, a trucker may not drive more than 60 hours on duty in the same period. Similarly, driver may not drive more than 70 hours with it in eight consecutive days. This consecutive. Can only restart after a driver takes 34 or more hours off duty.

Considering the HOS requirements, think about what this means for driver completing a two-way trip that requires 10 hours each way. The driver may now be limited to only making 14 total roundtrips within a seven-day period. Prior to the HOS requirement implementation, the same driver could have successfully completed an extra two trips by adding 2.5 hours to the daily driving schedule. Under the new HOS guidelines, the number of trips drivers may make is severely limited.

The Big Picture

The HOS requirements directly revolve around the ELD implementation and vice versa. The ELD will be used to track and monitor drivers existing adherence to HOS regulations, so regulations may adversely affect existing trucking capacity. Shippers need to consider how the ELD mandate and HOS regulations will result in a tightening of the existing capacity upon implementation, and even if the impact is not immediate, it will come to fruition within the next year. Shippers forgoing implementation of the ELD mandate within their fleets could face stiff penalties and other setbacks due to enforcement actions taken by the FMSCA.

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Freight Driver Shortage Update: Will 2017 Come to a Head & Cause Issues for Shippers?

by Jennifer Hart Yim | Apr 13, 2017 | Blog, Logistics, Strategy, Supply Chain, Transportation & Trucking

This guest post comes to us from Adam Robinson, director of marketing for Cerasis, a top freight logistics company and truckload freight broker.

Growing woes over a forthcoming capacity crunch are not going away anytime soon. But, the capacity crunch may have a major impact on the freight driver shortage and vice versa. In a sense, fewer drivers mean that capacity will grow tighter. Yet, as capacity shrinks, the incentive for drivers increases. As 2017 moves forward, it may be a year that the driver shortage comes to a head, but it might not be as dismal as some shippers have been led to believe.

The Freight Driver Shortage IS BAD and Getting Worse.

The American Truckers Association cites approximately 48,000 unfilled trucker positions, reports Saul Gonzalez. Since 2005, the freight driver shortage has grown from 20,000 unfilled positions to 70,000, and some reports suggest the shortage may worsen to more than 170,000 vacancies by 2025. Meanwhile, the average of age of today’s trucker is 49, and more truckers are aging out and retiring from the industry. This contributes to a growing bleakness among the trucking industry, causing turmoil among shippers and logistics providers. But, there is a light at the end of the proverbial tunnel.

Could Automation Reduce the Impact of the Driver Shortage in 2017?

Politicians and industry experts have claimed for more than a year that automation and drone delivery will be able to handle the driver shortage, and while this belief may hold true, the widespread deployment of driverless trucks is still far from reality. As explained by Sean Kilcarr of FleetOwner®, the political discussion seems to continue pointing toward more affordable and available education of futuristic technologies.

This might be true in the future, but current political turmoil suggests that any such move will be met with extensive resistance from the opposing political party. In other words, education and re-skilling of workers to service autonomous vehicles and automated technology is not ready for widespread deployment. However, the answer to the growing driver shortage might lie in the capacity crunch itself.

How Could the Capacity Crunch Help the Driver Shortage?

It sounds insane; tightening of the capacity crunch could help solve the driver shortage. Look at the historic tightening of capacity in the shipping industry. In 2004, 2011 and 2014, capacity reached a critical point. Yet, major carriers, reports Jeff Della Rosa of Talkbusiness.net, met the increased demand by increasing trucker wages by 7-percent per loaded mile. Consequently, the overall annual wage of drivers increased during these three years, providing temporary relief for a looming driver shortage.

2017 appears to be another year in the lineup of driver wage increases too. Companies, including Crete Carrier, Baylor Trucking and Shaffer Trucking and CFI have implemented per-mile rate increases. Meanwhile, Swift Transportation, Schneider, and CGI have unveiled $4,000 – $8,000 bonuses for new drivers. So, the wages are starting to reflect the demand for drivers. In fact, Delco expects industry-wide wage increases among trucking companies throughout the remainder of 2017.

Will the Driver Shortage Succumb to Capacity Crunch After All?

It’s easy to gain a false sense of security as wages climb among the trucking industry, and for shippers, this means that they may be considering abandoning previous preparations for worsening of the shortage. However, shippers need to continue working to help the freight driver shortage. Yet, shippers want to pay the least cost possible for transportation of goods, which results in lower profits for carriers and wages for drivers. So, how do shippers help prevent the driver shortage from worsening?

The answer is working with multiple carriers to find the best rates without undercutting the industry. In other words, more shippers will turn to third-party logistics providers (3PLs) who offer more than just shipping management, to increase profit margins across their enterprise, allowing for more expendability among the actual freight costs of shipping. In other words, savings found from auditing and eliminating redundancies in paperwork frees funds for use among actual freight costs. To shippers, the overall costs decrease, but to truckers, it means more money available for use as wages, benefits, and better equipment.

In a Nutshell.

As capacity tightens in the industry, shippers will face the challenge of reaching more customers with fewer resources, and the freight driver shortage may spike temporarily. However, the capacity crunch itself will help curb the driver shortage, and reaction to capacity issues will further the cause of better wages and incentive for more drivers to enter the industry. Of course, nationwide low unemployment and better wages among other industries will still draw people away from the trucking industry, reports the Journal of Commerce (JOC). Remember the saying, “it’s always darkest before dawn.” The driver shortage may not come to a head just yet, provided the industry continues to increase wages and work to increase driver retention.