Few transportation topics have ever been as hotly debated as the federal ELD mandate, with shippers, truckers, and logistics professionals divided as to whether the law would represent a minor adjustment to the shipping landscape, or a full-blown catastrophe. After a four-month grace period, ELD enforcement began in earnest on April 1, and the industry has been closely monitoring the market since then. The numbers–of violations, rate hikes, and transit times–are beginning to trickle in, but the debate over the mandate’s long-term effects is far from settled. For shippers nervous about affording shipping rates and securing capacity, it’s important to keep a close eye on all the data.
During the so-called “grace period” of ELD compliance, law enforcement quickly made it clear that they intend to aggressively enforce the mandate, with roughly 30,000 citations issued nationwide between December and April. Though these infractions are not supposed to impact carriers’ CSA scores, they nevertheless have convinced carriers of the urgent need for compliance. That may end up being a good thing, since according to a Carrierlists survey from April 2, compliance is now at 93 percent, after months of alarmingly low numbers from small carriers resistant to installing the devices or hopeful the mandate would be overturned. However, other observers say compliance may still be much lower, with estimates ranging from 75 to 81 percent. If these lower numbers, or really anything short of full compliance, are accurate, there may be thousands of trucks in danger of being pulled off the road, representing a ticking time bomb for national supply chains.
Among drivers with the device installed, many are still in a protracted adjustment period. So far, carriers are reporting scores of violations stemming from drivers misunderstanding how to use their devices, as well as many citations for attempts to hoodwink their ELDs. Law enforcement officers are on a learning curve as well, since they too are adjusting to the new rules and learning how to operate a huge range of devices. Carriers are encouraged to challenge citations made in error through the Data Q reporting service, although, it’s unclear how successful those challenges are likely to be.
The enforcement picture is important to shippers insofar as extends transit time when it forces drivers off the road to meet compliance requirements. This affects overall reliability, and carriers are increasing rates to cover the cost of fines, which can be significant: up to $2500 for a false log violation. The threat of hours of service (HOS) violations is having an immediate effect on delivery times, with one-day routes pushed two, two to three, and so on. They’re also driving up rates, with “spot rates rising by double digits year over year,” according to JOC. Contract rates are also on the rise and Truckstop.com’s market demand index is already nearly double where it was in 2017.
Realistically, it will be months before rates stabilize, and during that time shippers could be looking at spikes upward of 20 to 25 percent. Farther out, though, there are encouraging signs that the trucking situation may not be as dire as some initially feared. For example, the threat of truckers leaving the industry en masse has failed to materialize. In a recent poll of owner-operators, only 2.8 percent said they were seriously considering retirement. In fact, the Department of Labor reported that trucking added 6,700 workers in March, making it the strongest quarter in six years. During the same period, there have been reports of truck-buying sprees at some of the country’s largest carriers, which will help meet capacity challenges. DAT has reported a capacity increase of 11 percent on the spot market since the beginning of April, though carriers are still reporting a decrease in profitability.
Perhaps the most encouraging thing for shippers to be aware of is that they are not helpless victims of a situation outside their control. One point on which all carriers seem to agree is that shippers have a major role to play in limiting the impact of the ELD mandate. The most concrete way to help is by working to limit detention times and getting drivers back on the road as quickly as possible. Carriers are unlikely to have patience with shippers that demand tight delivery windows, yet squander hours of their drivers’ precious time. Shippers should also consider accepting deliveries overnight and on weekends. When possible, pay carriers immediately upon receiving an invoice, since that money can go directly toward cushioning the financial blow of ELDs. Finally, the evergreen advice to simply treat drivers with courtesy by providing them with coffee, a restroom, or a place to park overnight has never been more important. It’s a carriers’ market now, and shippers must maintain positive relationships with their drivers, both for their own good, and the sake of the industry as a whole.