by Randy Griffin, Distribution Manager
The ELD Mandate – dreaded by nearly everyone involved in supply chain – is almost here. This mandate will have sweeping effects on Lintech, our suppliers and our customers.
So what is this ELD Mandate? The Electronic Logging Device Mandate requires the electronic monitoring of drivers hours or service. The ELD Mandate was passed in December of 2015 and went into effect December 2017. In the past, drivers typically recorded their driving time with a paper log book. Though electronic logging devices have been around since the 1990s, they have never been mandatory.
When drivers are only paid for the miles they drive, there is an incentive for drivers to stretch the rules. We have all heard the stories of drivers having multiple log books to cheat the system. Instances of tired drivers having accidents resulting in motorist injuries and deaths are well documented. Comedian Tracy Morgan was in a car hit by a Walmart truck driver that resulted in the death of fellow comedian Jimmy Mack. The driver had been awake for more than 24 hours. Stories like these, in addition to our own personal experiences sharing the road with trucks, lead to very little political will to stop or even delay the implementation of the ELD mandate. Multiple efforts in the US House and Senate have all failed.
How does this affect us? This hits the transportation industry at the same time it has been dealing with multiple challenges. Insurance rates are up, way up. The average age of drivers is increasing, as younger adults do not prefer the lifestyle and are not entering the profession. Also, this “Big Brother” monitoring, as well as the challenge of new technology, will lead to a lot of older drivers deciding to leave the industry. It is estimated that this will result in a shortage of over 200,000 drivers in the US by the year 2022. The Wall Street Journal reported that in the second quarter of 2016, 120 trucking companies failed. In 2015 an estimated 310 trucking companies closed the doors. The costs associated with all the new FMSCA (Federal Motor Carrier Safety Administration) rules, the cost of insurance, the cost of equipment, and reduced driver retention have made many of the small to medium size companies either go bankrupt or choose to close.
This will have a twofold effect. The first issue is cost. To entice drivers, we are already seeing the effect of supply and demand. Driver incentive pay, per diem, and retention bonuses are increasing the costs of transportation. Trucking companies are buying better trucks with automatic transmissions, better fuel economy and driver comforts. This also adds costs and they will be passed on to us, the consumer. Second, the inability of drivers to “Cheat the System” will also result in an estimated 10% loss of total miles driven. Rail infrastructure cannot make up the difference.
Finally, to make matters worse, the Federal Government (FEMA) is paying big dollars (2-3 times the going rate) to get every available truck for disaster relief efforts to Houston, Florida and Puerto Rico. Currently there are about 6 loads to for every available truck!
So, what does this all mean? It means we need to plan better to avoid becoming victim to inevitable delays. It also means prices will increase. Some estimate prices will rise 20-30% on some lanes and even more for specialized equipment. It means distributors will need to increase inventory stock levels on tight lanes to prevent delays from affecting customers. LTL, just in time shipments, will need to fill the gap for truck load customers when delays hit. This also increases costs.
Get ready. 2018 will be a challenge!