Little evidence exists that truckers are leaving the industry ahead of the Dec. 18 deadline for adopting electronic logging devices, according to a just-released comprehensive survey of carriers and owner-operators.
Although 30 percent of carriers say they would quit the business rather than comply with the federal ELD mandate, close to half say they plan to comply before the deadline or already have. The mandate requires truckers to install devices on their trucks that digitally track driving time to monitor driving hours.
Authorizations for new carriers, device sales, activity in the used truck market and other indicators don’t point to a mass exodus, according to new data from DAT Solutions.
“If there’s a race to the exit, there’s no evidence of it,” said Ken Harper, director of marketing for the load board and freight-rate aggregator.
DAT unveiled the results this week at its annual user meeting in Portland, Ore. The information was compiled from three separate surveys DAT conducted during the summer and early fall with 1,000 owner-operators and carriers with fleets of up to 250 trucks on its mailing list.
Some carriers, including many independent truckers, are vocal opponents of the new rule, which requires a direct connection between a semi-truck’s engine and the device. Regulators say such monitoring will force truckers to comply with a federal rule limiting them to driving no more than 11 hours a day.
However, a larger percentage of carriers are content to play along. Close to four in 10 (39 percent) carriers and owner-operators say they plan to comply with the mandate before the deadline, and another 9 percent already have, according to DAT. Another 9 percent plan to seek an exemption, 4 percent will look for work as a company driver, 4 percent haven’t decided what they will do and 5 percent report plans to take some other action.
Many truckers contemplating leaving the business because of the mandate are taking a wait-and-see approach. When asked what they would do if they were considering leaving, 45 percent say they would see how ELDs affect their income before making a decision. That’s slightly more than the 38 percent of respondents who say they would immediately sell their truck and other assets. The remainder plan some other action, such as retiring or moving into the local-haul business.
Truckers’ willingness to work under the new mandate varies by age, with drivers 61 and older as likely to say they will leave rather than get an ELD as they are to say they’ll stay in the business, said Peggy Dorf, a DAT market analyst. By contrast, drivers in their 30s to 50s are twice as likely to say they are planning to stay with the industry and already had an ELD, she said.
Owner-operators and drivers with small trucking companies might talk about quitting, but the number of carriers with new Department of Transportation authorizations exceeded those leaving the business by 4 percent, according to 2017 DOT statistics that Harper shared.
If owner-operators or small carrier owners were getting out, they likely would be looking to sell assets to recoup their investment. However, the rolling average price for 4- to 5-year-old Class 8 trucks with 400,000 to 500,000 miles on the engines has dropped from around $70,000 in 2014 to under $50,000 today. “If you were trying to sell your truck you could be upside down if you owed money on it,” Dorf said.
If truckers were leaving they wouldn’t be buying ELDs. However, ELD sales are robust, according to anecdotal information collected from suppliers. One vendor that sells the devices to fleets with 20 to 200 trucks reported “hockey stick” sales growth, Dorf said.
Vendors expect strong sales to continue through the April 1, 2018, grace period, after which truckers who don’t have ELDs will receive so-called out-of-service violations and be forced to stop driving.
Of all respondents, “maybe a couple dozen” shared in written comments that they planned to take advantage of language in the law that exempts diesel engines built in or before 1999 from needing ELDs by retrofitting their truck with an older engine.
“But if you look at the cost of buying an ELD versus an older engine, it doesn’t pencil out,” Harper said. The Federal Motor Carrier Safety Administration estimates the devices cost about $500.
Unlike falling prices for newer used trucks, prices for 1999 and older vehicles have increased approximately 50 percent since 2016 to around $12,000. But any lower costs could be offset by potentially larger maintenance expenses, Dorf said.
The difference between how carriers say they will react to the regulation and their actions to date could be attributed to high emotion and denial that the mandate would take effect, Harper said. If you’ve worked in the industry for 10, 15 or 20 years and have assets and relationships, “you’re not going to throw it all out because you’re upset,” he said.
Drivers also are unlikely to leave the business while national average van rates are running above $2 per mile, near a multiyear high, according to DAT data. “For a trucker, these are good times,” Harper said.
While all signs point to the ELD mandate becoming a reality, it’s conceivable Congress could slip language delaying implementation into a year-end omnibus spending bill, said John Larkin, an analyst at Stifel Financial Corp., who presented at the conference.
ELDs could exacerbate a driver shortage that Larkin described as the worst in 25 years, not because more people will quit rather than use the device but because they won’t be able to continue fudging the number of hours they work a day, and carriers will need more drivers to make up the difference.
“If the economy heats up, it could get even worse,” he said.
Large carriers that already have complied with the mandate have seen productivity drop 4 percent to 6 percent, according to DAT.
The drop could be even higher for other carriers, since the first wave to adopt ELDs were “good” carriers that didn’t have a high percentage of false logs to begin with, said John Seidl, a consultant and former Federal Motor Carrier Safety Administration inspector. Carriers that are waiting until the last minute include some of the worst false-log offenders, and they could see productivity rates drop even more, Seidl said.
If each driver at a company with 20 trucks can gain three hours a week by fudging, that’s 60 hours week, the equivalent of an additional driver.
“That adds up pretty fast,” Seidl said.