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The Stifel ELD call: anticipated industry impact

Most carriers are currently coming to terms with the inevitability of the ELD mandate, and scrambling to get ready. Those carriers who are truly ELD-ready are in prime position to benefit. ( photo: shutterstock )

The ELD mandate is just over a week away, but that doesn’t mean everything is all set. From capacity issues to enforcement, there remain a number of questions. Freightwaves participated in a conference call with industry experts and analysts. Below are some takeaways from what we learned.

Steep learning curve

Most carriers are currently coming to terms with the inevitability of the ELD mandate, and scrambling to get ready. Two months ago, the available data from a number of research groups suggested as few as 23% of carriers—large and small—were actually prepared for the ELD implementation. That number doubled last month and continues to rise, although there are still gray areas to compliance and enforcement.

Carriers should anticipate a steeper than expected learning curve. Most fleets under 50 don’t have the infrastructure to even train the drivers, much less manage the process smoothly. Regional carriers are expected to lag super-regional and national carriers. Bulk and flatbed carriers are expected to lag dry van and reefer in full compliance.

Those carriers who are truly ELD-ready are in prime position to benefit.

Classic supply and demand

It’s a classic supply and demand situation: Fewer drivers means more demand. Rates are going to rise across the board.

Spot rates have increased 22% in one year according to DAT, so what impact would removing supply (drivers) have to equation? Large increases across the board is becoming the norm, anticipated to be at least 10% over the next year.

Shippers need to get with the program

A burden is being placed on the carriers, and for now it doesn’t seem as if shippers are quite as aware of the situation. Because truck drivers’ time unloading and loading counts against their eleven maximum hours, the shippers who respect truckers’ turnaround times will benefit the most. In fact, turnaround times promise to become just as competitive as the rates themselves.

Shippers who don’t work well with the carriers are going to be cast aside, and subject to the spot market.

Brokers/3PLs will work to minimize costs while working from fewer carriers. They will have to manage shipper expectations for changes in timely pickup and deliveries, and without coercing drivers to hours-of-service (HOS).

Shippers need to build last minute contingency plans if they haven’t already done so. Communicate with your carriers!

“Golden Age of Trucking”

If ELD-ready, then the next five years will be a “Golden Age of Trucking” prior to autonomous technology adoption and rollout. How many truckers will abandon trucking altogether, contributing to the driver shortage of about 50,000 drivers?

If 1% of carriers exit industry, that amounts to 5,860 fewer fleets, not to mention drivers.

What about enforcement?

There’s really no plan for enforcement. Enforcement will vary state-by-state. The eight-hour inspection training courses aren’t anticipated to begin until next week. For the time being, officials aren’t planning on forcing truckers to turn around altogether, or what they call a backhaul of commodities. It’s a gray area. Will there be a three or four week grace period? In Oklahoma, they’re not planning to issue fines, but instead put the driver out of service for ten hours.

Other Questions and Observations

Lanes in the distance from 500-600 are anticipated to become two-day hauls.

How do you protect your freight from getting caught “in-transit” by a non-compliant carrier?

Will truckers begin to speed in order to make up for lost time? Such issues haven’t been thought through, as there are no clear guidelines for speed enforcement.

Partnerships and cooperative communication between shippers and carriers need to increase. Shippers should ask carriers if they’re ready and where they are with the implementation process.

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