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Reviews are Out, Ballots are In, and Chads are Hung by the Chimney with Care

…That was a Y2K US election joke, for you millennials 😉

It\’s time again for the annual media deluge of Top 5s, 10s, and 100s.

Here are my two cents (rounded down to $0.00 per transaction. Do we miss pennies in Canada?) on a hot topic of 2017:

ELD Mandate

In 2016, the US FMCSA announced a federal mandate making the use of electronic logging devices (ELDs) mandatory to most commercial carriers, taking effect Monday, December 18th of 2018. The mandate aims to more strictly enforce existing Hours of Service (HoS) regulations (thereby reducing fatigue-related accidents), by eliminating drivers\’ paper logbooks and replacing them with automatic e-logs (which can not be revised or falsified). Tangential benefits include reduced paperwork and costs for enforcement officials, trucking companies, and drivers. And reams upon reams of data, for someone, somewhere.

During 2 year head-start period, reaction in the North American trucking industry has been varied, to say the least. In the interests of brevity, allow me to make some generalizations.

Large fleets (100+, mostly late-model trucks) planned implementation well ahead of time, being fairly certain there would still be need for their services despite all the hubub. So they installed ELDs, or upgraded existing systems to become compliant, trained drivers and staff, rescheduled and re-rated routes/contracts/RFPs, and adjusted capacity ahead of the Dec 18 deadline.

Small fleets (1-99 trucks) had some more challenging reckonin\’ on the horizon- Do the economics of operating a solo/small fleet with reduced earning potential still make sense? Will freight rates increase to compensate, and if not, is operating still financially viable? For how long? Is it a good move to purchase and install ELDs on older model trucks, or simply sell the truck/company/assets in a seller\’s market? Some did. Others chose to adopt a wait-and-see approach from Dec 18 to Apr 1, and do a cost-benefit-risk analysis after previewing the mandate\’s enforcement. Still others did nothing but take to the highways, truck stops, and social media in the usual outraged but ineffective protest of what they viewed as \”unfair\”. The bottom line- some figures show small US-based fleets at 60% non-compliance with ELD regulations at the December 18th deadline.

In a microcosm of the situation down south, Canadian fleets hauling to the US (approximately half of Canadian registered common carriers) planned and debated implementation along similar lines. One key difference being Canadian trucks maintain the option of remaining north of the border, if implementation seems unfavorable. However, economics would dictate that carriers not pull out of a record-setting US market, into a lukewarm Canadian domestic market. Why compete with more trucks for less revenue? And for some, the initial cost ($300 – $1000 per unit) could be a barrier to entry. These are companies ready to be acquired, and their assets put to use where they are most needed.

As to Canada\’s ELD future, a few days ahead of the December 18th US deadline, Canada published a draft Canadian ELD mandate, which would come into effect in 2020. This proposal would tie-in with US regulations, ensuring carriers, their customers, and compliance officials across North America have a standardized system to work with.

Purchasers of freight services, as we know, can expect rate increases, at least in the short-term. Add to this that carriers will be pushing for much quicker load and unload times (1-2 hours, max), because this mandatory \”on duty not driving\” translates to lost miles (revenue) for the carrier and driver, and can no longer be creatively \”written off\” a paper logbook. Transit time will be affected on longer (overnight) routes, as driving and on-duty time can no longer be \”compressed\” to show 15 minutes for loading, then 650 miles in 10.25 hours driving time. Welcome to trucking reality, you, The Unprepared.

So, as we ride the red-hot freight market into the 2-3 month post-holiday \”lull\”, it\’s a good time to reflect on sky-high US freight rates, non-compliant fleets, capacity utilization, shipper/receiver efficiencies, enforcement, and what will come of it all.

Until next time,

Phil