Despite continued opposition in some quarters against the upcoming electronic logging device (ELD) rule, there appears to be almost zero chance that the regulation will be postponed before its Dec. 18, 2017, implementation date. So it’s time to be prepared.
The ELD rule applies to most motor carriers and drivers who are currently required to maintain records of duty status (RODS) per Part 395, 49 CFR 395.8(a). The ELD rule allows limited exceptions to the ELD mandate, including:
- Drivers who operate under the short-haul exceptions may continue using timecards.
- Drivers who use paper RODS for not more than 8 days out of every 30-day period.
- Drivers who conduct drive-away-tow-away operations, in which the vehicle being driven is the commodity being delivered.
- Drivers of vehicles manufactured before 2000.
Since the time is near and almost all carriers and drivers will need to comply, let’s look at one of the benefits of the rule that is rarely cited: insurance costs.
While critics of the rule point to the cost to comply – solutions run the gamut from just a few dollars a month to hundreds – there is also a possible insurance savings to be gained. While it’s difficult to say what financial impact any individual carrier may see from complying as an insurance profile encompasses many factors, it does play a role.
Teletrac Navman released its latest Telematics Benchmark Report: U.S. Transportation Edition. Seventy-three percent of fleets responding listed the ELD mandate as their top concern right now. More than 75% said they would be ready on Dec. 18 to meet the rule, which means 25% of fleets will not be compliant. And, in a somewhat surprising result, despite high driver concern about ELDs, 28% of the fleets don’t expect to do anything to address their usage with drivers.
Those fleets that have already implemented ELDs noted the following benefits they have seen:
- 30% cited eliminating manual processes
- 28% reports a reduction in compliance violations
- 16% reported improved driver and public safety
All three of those benefits have a direct correlation to a fleet’s insurance costs. Clearly, ELDs are not simply a compliance tool, but rather a means to operational cost savings.
First and foremost, an ELD, which is supposed to be tamper-proof, provides your insurance provider confidence that your drivers are not running afoul of the law. That’s a good thing. Many believe that a percentage of drivers are running illegally. If so, they are putting lives at risk and risking your carrier’s financial future.
“Logbook violations occur for reasons other than long driving hours, but having driven more than 12 hours since the last main sleep, as reported by drivers, was associated with an 86% increase in crash risk, relative to less than 8 hours,” according to an Insurance Institute for Highway Safety (IIHS) report.
According to an American Transportation Research Institute (ATRI) study, drivers with an hours-of-service violation are at a 45% increased chance of a crash.
Obviously, if a driver is less fatigued, there is less of a chance of a crash, as IIHS points out. Carriers that have fewer crashes have improved safety scores, which lead ultimately, to lower insurance costs.
While an ELD can’t prevent a driver from driving fatigued, it can ensure a driver is driving within legal limits. That removes one of the arguments lawyers can make as to why a driver was involved in a crash. Chances are good that if your driver was on his 13th hour of driving, whether he was at fault or not, he and you as the employer will be held liable. That will no longer be the case, which will help lower overall jury awards. As any homeowner knows, the more claims you have, the more you will pay for insurance.
Typically, according to most studies, carriers that are running ELDs have better SMS scores than those that do not. Better scores can also assist in lowering insurance costs as evidence suggests fleets with lower SMS scores are less likely to be involved a crash.
Another item that hurts carriers is logbook violations. These can range from HOS violations to misreporting required data; even sloppy penmanship that an inspector can’t read has been known to create a violation. With an ELD, all of that is eliminated as a potential problem.
Again, fewer violations leads to an improved insurance profile.
“It will greatly eliminate driver [logbook] errors [which affects a carrier’s CSA score],” Andrew Ladebauche, CEO of commercial insurance provider Reliance Partners, told FreightWaves earlier this year. “Logbook errors are a big area that regulators look at. Hopefully, that gets resolved permanently.”
Ladebauche explained that the introduction of ELDs has many in the insurance industry believing there will be fewer accidents as HOS compliance improves. “If you’re doing everything right, controlling your [safety] scores, you will be okay,” Ladebauche said.
Ladebauche projects that fleets choosing to deploy more robust – and expensive – ELD systems will see additional operational benefits that could also improve their insurance rates.
“Some of the ELDs do other things and there are other programs” fleets can take advantage of, Ladebauche noted. These can include GPS tracking and engine data reporting that can be used for improved asset utilization and more preventive maintenance. “You will see more and more programs [from fleets] and from an insurance standpoint. That helps.”
Finally, more robust transportation management systems offer more data inputs for fleets to take advantage. While not directly providing an insurance benefit, anything that can improve the fleet’s overall safety profile can help. With access to more data, savvy fleets can find operational savings and safety benefits through things like preventive maintenance, driver training initiatives and better asset utilization to name a few.
Finally, fleets that are currently pushing their drivers past legal driving hours will see a productivity hit just as many experts are predicting, but they also could see an insurance rate increase, taking a double hit financially.
When viewed simply through a prism of driving monitoring, it’s easy to draw a conclusion that ELDs are another tool in controlling drivers – as the Owner-Operators Independent Drivers Association claims. But when viewed as an overall management tool, ELDs could open avenues to fewer violations, fewer crash payments, and lower overall costs.
