ELD Mandate Enforcement Spurs Soaring Freight Rates

April 12, 2018 by Clarissa Hawes

Freight rates are soaring thanks to the robust economy and the recent start of enforcement of the electronic logging device mandate, a federal rule that requires truckers to digitally log their driving time.

Strict regulation of the ELD rule started April 1 following a three-and-a-half-month grace period.

“We definitely are seeing rates higher in April even though freight volumes haven’t been that impressive,” Mark Montague, industry pricing analyst of DAT Solutions, told Trucks.com. “That tells us that more trucks are off the highway.”

A shortage of trucks and driver also is pushing rates higher. For example, there was only one flatbed truck available for every 111 loads that needed hauling last week. That is the highest-ever ratio for flatbeds recorded by DAT.

Truck capacity fell 2.7 percent for the week of April 7, compared with the last week in March, according to the latest DAT Trendlines report. Truck capacity dropped 7 percent year-over-year.

Ramped up enforcement of the ELD mandate is causing some truckers to leave the industry, Montague said.

“We think that the 3 percent of owner-operators who said they were not planning to become compliant with the mandate followed through and left the industry,” he said.

A survey of 645 truckers conducted by DAT in March found that 3 percent were likely to stop driving rather than agree to be digitally monitored.

One trucking company owner said that since January he has lost three experienced drivers who refused to switch over from paper logs.

“I now have four trucks parked and can’t find drivers – the ELD mandate has really hurt us,” Mark Jones of Crossville, Ala., told Trucks.com.

His company hauls time-sensitive, custom-built meat processing equipment. Jones estimates that he’s lost around $25,000 in income since Jan. 1 because he doesn’t have enough drivers to haul freight.

“I’ve had to broker out freight to other companies because I don’t have the drivers,” Jones said. “That’s lost income for me.”

The ELD regulation is meant to make truckers adhere to federal hours of service limits. They can drive no more than 11 hours a day within a 14-hour workday. Drivers must then be off duty for 10 consecutive hours.

Drivers who are discovered without a working ELD in their trucks have to stop driving until they put a working device in their vehicle.

Violations for failing to have an ELD also will negatively affect a driver’s compliance, safety, accountability, or CSA, score assessed by the Federal Motor Carrier Safety Administration.

Soaring rates are unusual for this time of year. Rates are often lower in April following the end of the first quarter, according to DAT.

“March is the apex of the first quarter and this year, the Easter holiday coincided with that,” Montague said. “There could have very well been a dip to start April, but the ELD mandate was a bigger thing than any post-holiday, post-quarterly lull.”

Independent drivers are benefitting from the high rates.

“This is the best April I’ve ever seen, thanks to the ELD mandate,” Chad Boblett, a Lexington, Ky.-based trucker, who relies on the spot market, told Trucks.com.

But rates aren’t quite as high as Boblett predicted they would be in April when hard enforcement of the mandate began.

“I thought we would see a whole lot more happening with the rates,” he said. “I didn’t see that huge of a jump as I expected.”

However, rates across the board continue to climb.

Dry van rates increased for the sixth straight week as the national average hit $2.24 per mile. That’s up 9 cents – or 4.2 percent – compared with a week earlier.

Flatbed freight rates averaged $2.63 per mile, the highest ever recorded by DAT. That’s up 10 cents from the previous week, an increase of 4 percent. “Flatbed rates have never been this high,” Peggy Dorf, a market analyst for DAT, told Trucks.com.

Refrigerated freight rates rose to $2.48 per mile, up 8 cents and a 3.3 percent increase from the week earlier.

Rates for all trailer types experienced substantial year-over-year increases. Dry van rates increased 32 percent; refrigerated freight rates jumped 28 percent; and flatbed trailers were up 25 percent.

The truck capacity crunch is evident as freight posted on load boards exceeds the amount of available trucks to haul it.

Though the skyrocketing flatbeds ratio was only 6 percent higher than the previous week, the 101.5 load-to-truck ratio still overwhelmed. Compared with the same period last year, the flatbed load-to-truck ratio increased 148 percent.

“The load-to-truck ratio for flatbeds continues to surprise us,” said Dorf.

Other truck types are experiencing a crunch compared with the previous week, but the year-over-year comparison is telling. The dry van load-to-truck ratio soared 116 percent, and the load-to-truck ratio for refrigerated trailers increased 68 percent.

The strong demand for freight should continue through June, barring a trade war with China.

“We see June as the peak of the spot market this year and we are still building for all segments,” Montague said.

That is unless the U.S. and China decide not to impose higher tariffs on goods worth billions of dollars.

If enacted, this move could dramatically impact freight volumes at the twin ports of Los Angeles and Long Beach, as well as at other ports around the country.

“If this happens, it could tamp down rates we are expecting to see by June,” Montague said.

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One Response

  1. John S

    I think the freight increases will be short lived because trucking startups will increase and we will eventually see capacity increase. Although there is big questions on driver shortages and with the economy doing well people are choosing other jobs then trucking jobs. The big unknown is the 18 year old eligibility for OTR drivers and who will insure such young drivers? Personally I think ELD’s are a rigid clock that is trying to tame a irregular trucking industry. It has caused some positives such as freight rates going up. But parking is getting worse, HOS are now manged by the minute and set in stone. Again trying to place a predictive and rigid clock on a un predictable trucking industry.

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