Many truckers and industry insiders thought that a federal rule enacted late last year that requires truckers to use electronic logging devices to track driving time would disrupt freight and logistics. It hasn’t happened.
Trucks.com talked to DAT Solutions, which tracks freight and rates, truckers and other industry analysts to learn how the rule, which went into effect Dec. 18, is changing trucking. This is what we discovered.
1. Staying in the Game
Drivers threatened to leave the industry, but they aren’t leaving. Trucker employment is growing, adding almost 19,000 jobs over the past year.
There were 1.47 million U.S. truckers in February 2018, up 1.4 percent from the same month a year earlier, according to seasonally adjusted Bureau of Labor Statistics data.
Most truckers are adapting to the new rule, which was put in place to make sure they didn’t exceed driving limits. Truckers are limited by federal law to driving no more than 11 hours a day within a 14-hour workday. Drivers must then be off duty for 10 consecutive hours.
DAT surveyed 645 truckers and found that only 3 percent, or 18 drivers, said they were still likely to leave trucking rather than agreeing to digital monitoring.
This is down significantly from the 30 percent who said they were likely to leave the industry six months ago when DAT conducted a survey about ELDs, said Peggy Dorf, market analyst at DAT.
“In the end, most decided to stay in the industry and get the device,” Dorf told Trucks.com. “Many still don’t like it but are using an ELD because it’s part of their job now.”
Law enforcement and regulators will start fining drivers who don’t use an ELD beginning April 1. Those found in violation could be pulled off the road, according to the Commercial Vehicle Safety Alliance, or CVSA, an organization of approximately 13,000 inspectors in North America charged with enforcing the mandate.
Drivers found in violation must then remain out of service, or parked, for 10 hours in accordance with the CVSA criteria.
“At that point, to facilitate compliance, the driver will be allowed to travel to the next scheduled stop and should not be dispatched again without an ELD,” the CVSA said.
2. Productivity Dips
The system is less efficient.
DAT reports that approximately 67.3 percent of the truckers responding to its survey said they are driving fewer miles since the ELD rule started late last year. Nearly 71 percent reported earning less money in that same time period because they must stop driving after 11 hours.
“Bad traffic, delays at docks or the struggle to find parking can stretch those one-day trips into two days, because it removes a few hours of their productive time from their day,” Dorf said.
Some brokers are requesting more two-driver teams than before. Teams can drive double the miles in a day to ensure freight is delivered on time despite any complications they may experience on the road.
Prior to the mandate, industry experts estimated that ELDs would have a 3 percent to 5 percent impact on carrier productivity, especially on hauls longer than 450 miles and short-haul operations of up to 300 miles that bump against the 14-hour rule, according to Mark Montague, an analyst at DAT.
Large fleets have found a way to maintain productivity by sending out another truck to pick up a load if a company driver is delayed and out of hours, Dorf said.
This isn’t the case for one-truck operations, who have no flexibility in their day once their driving hours are up.
Detention pay, which is compensation paid to drivers while waiting to load and unload freight at a destination, has become a hot-button issue since the mandate went into effect.
In the past, large fleets were able to receive detention pay, while shippers and receivers “could simply tell the little guys” they had to absorb the delays, said Todd Amen, chief executive of ATBS, a trucking industry accounting firm.
“I am not sure owner-operators will get detention pay — they’ll just refuse to haul for those that detain them if the rate of the load doesn’t pay for their detention” time, he said.
3. Freight Demand and Rates Increase
As truckers have to reduce miles traveled per day to stay within their driving limits, there are more loads chasing after available trucks. A strong economy and increased freight demand have made the problem worse.
With less capacity to haul freight, rates have soared as much as 40 percent from a few months earlier, according to Amen.
Brokers on the load board Truckstop.com are posting more than 50 loads for every available truck, he said.
While truckers are adjusting to driving fewer miles with an ELD, “ultimately, it means good things for the trucking industry as rates have soared,” Amen said.
“We believe net income is going to grow significantly this year — we are in a really robust freight market,” he said.
While he hauls only long-term contract freight, Jeff Clark of Kewaunee, Wis., an owner-operator who works for a paper company, is seeing his pay increase as a result of the mandate.
“I received about a 10 percent bump at the beginning of this year,” Clark told Trucks.com.
Freight rates are now higher than at any time in 2017, according to DAT.
On the spot market, rates ranged from $2.14 per mile to $2.50 per mile, depending on what was being trucked. That is 20 to 30 percent higher than a year ago.
4. Less Patience for Sluggish Shippers
Electronic logs do not allow truckers the flexibility to “adjust” their paper logs manually when they are hung up at docks to allow for more driving time.
“The old logging rules allowed a large percentage of capacity to sweep the shipper and receiver abuse under the carpet and hide it with the way logs were managed,” Amen told Trucks.com. “ELDs will bring that abuse to light.”
Truck drivers lose an estimated $1,281 to $1,534 per year because of wait times at loading docks, costing the industry an estimated $1.1 billion to $1.3 billion in income annually, according to a Department of Transportation office of inspector general audit.
Of the 645 carriers surveyed by DAT, 211 truckers, or 32.7 percent, said their carrier’s loads involve detention of more than two hours.
That could change as capacity tightens.
In a tight freight market like the industry is currently experiencing, shippers and receivers “will have no choice but to respect the trucker’s clock because they will find other profitable freight to haul if they don’t,” Amen said.
One driver said he has seen a slight change in some shippers’ attitudes about delaying truckers at docks since the ELD mandate took effect.
“I am starting to see more pre-staging of loads, which helps,” Clark said.
“I know some of the shippers were panicked prior to the mandate because they were worried they wouldn’t get trucks, which worked out well for us,” he said.
Until the trucking industry holds shippers accountable for delays at the docks, Ronnie Sellers, an independent trucker of Knoxville, Tenn., said the fight over detention pay will continue.
There must be “a consequence to the shippers from their customer,” he said, or else “I don’t think things will ever change.”
5. Insurance Rates could Rise
Insurance companies are looking at a driver’s safety record, which is based on their Federal Motor Carrier Safety Administration, or FMCSA, Compliance, Safety, Accountability score. A trucker’s CSA score factors in safety, collisions, roadside inspections, crash reports and data from investigations.
Violations for failing to have an ELD will negatively affect a driver’s CSA score and could drive up premiums. Insurance already can cost an owner-operator $12,000 to $14,000 annually.
“I think insurance companies will be aggressive to stop providing or writing insurance for those that are not ELD compliant,” Amen said.