Food prices expected to rise due to ELD mandate

 The prices of fresh produce is expected to rise in the wake of the ELD mandate ( Source: Pexels )
The prices of fresh produce is expected to rise in the wake of the ELD mandate ( Source: Pexels )

Ever since the ELD mandate in December, there has been a discussion about the inevitability in the inflation of food prices across the country. It does not take an economist to understand the scenario – ELDs enforce hours-of-service (HOS) rules, which is widely seen as a restriction on the trucking community and a limit on the number of hours drivers are on the road, thereby increasing the time it takes for freight delivery. It also reduces the profit margins of fleets and drive up rates, which has been quite evident across the industry over the last couple of months.

The FMCSA defends the introduction of ELDs, saying it helps keep the roads safer by reducing truckers from going behind the wheel when they are fatigued. Data collected by FMCSA on ELD usage in 2014 showed a 12% reduction in the total crash rate. But the report also noted that there was a visible skewing in data towards larger fleet companies, which made the results questionable. Nevertheless, ELDs have been implemented, despite the disputed safety claims.

Looked at a different way, though, and ELD enforcement could inadvertently be creating other issues. With HOS being strictly enforced, drivers might try to make up for lost miles by speeding up, which could escalate frequency of accidents on the road. This does not just end with speeding towards a destination, but extends to finding parking lots during the dying stages of their HOS. The HOS rules are strict, with even a few minutes of driving after the service time expiration being considered a violation. Finding evasive parking lots in a new territory could be a struggle, and might make drivers speed up in the last moments fueled by desperation.

All this ends up with the ELD mandate being a cauldron for an unfolding logistical nightmare. Demand for freight capacity has been going up steadily, courtesy of ELDs and the general lack of adequate truck drivers in the industry. Spot rates have been going through the roof and the situation at the moment sounds rosy for drivers. But on the flip side, the shippers are bearing the brunt by spending a lot more than they used to for freight volumes, which would eventually be passed on to the consumers.

And the hike in food prices is already visible. Fresh produce originating from California, Arizona, and Florida have seen a rise in costs ever since the ELD mandate. Though the mandate came in during the time when demand is generally high leading to elevated prices, this time the prices don’t look like they are going down anytime soon.

The trouble is far from over. Various estimates by ELD companies and firms that work closely with carriers put the ELD compliance rates between 50 to 80%, with compliance rates of smaller fleets dangerously low. The hard deadline on the 1st of April is around the corner, and a lot of such fleets would be forced to comply, potentially leading to further increase in prices. FMCSA had granted a 90-day waiver from the Dec. 18 deadline for ag haulers to comply, which also ends by mid-March, potentially escalating food inflation further.

Six months into this, the industry stares at yet another mandate – this time from the FDA with the FSMA – which requires fleets that carry food to have institutionalized a lot of precautionary measures, including strict temperature controls on their reefers. For example, a truck hauling pasteurized milk must maintain a stipulated temperature throughout its journey between the pickup and destination points. If there is a slight aberration in the freight temperature even for a few minutes – due to varying atmospheric temperatures on the highway – the total freight is deemed to be contaminated, rendering it non-sellable.

Drivers are also responsible for sanitary transportation, with them cleaning the truck every time before and after they haul food items to make sure there is no contamination. The time for cleaning also counts against the 14-hour workday, further worsening the situation.

Add to the mix the rising oil prices, and we have a perfect recipe for inflation. The freight industry plays a vital part in determining the rates of fresh produce, as a major chunk of the costs arise while transporting goods from one end of the country to the other. It is the oblivious consumers who will be hit by the end of this year.

Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.

Vishnu Rajamanickam

Vishnu predominantly covers technology stories from within the logistics and transportation space. He connects with key stakeholders within the freight industry, profiles startups, and brings in perspective from thought leaders in the freight space.

One Comment

  1. Great analysis. Compliance costs as measured by FMCSA are a fraction of the actual cost to the economy. I’m an owner operator and I’ve never intentionally violated the HOS even as they’ve gotten increasingly absurd. But the ELD has changed my driving routines for the worse. Big trucks do not always have the luxury of driving on interstates with a truck stop or rest area available every 30 miles. In order to meet schedules, a truck driver can spend many hours driving on roads with absolutely no legal place to park a big rig. Any delay leads to the driver rushing to find a place to stop the truck and log line 1 or simply delay that portion of the journey and not make the delivery on time. Ultimately I will benefit from this boneheaded mandate because I’ve never seen this much freight and these rates in February ( I pull a flatbed ). I’m getting getting nice bonuses for bread and butter loads and premium rates for everything else meanwhile shippers are screaming that they can’t get trucks. Gonna be pretty interesting when freight heats up come summer. A lot of shippers are still in denial. They figured FMCSA was a carrier problem. Now it’s their problem and soon it will be the consumer’s problem.

We are glad you’re enjoying the content

Sign up for a free FreightWaves account today for unlimited access to all of our latest content

By signing in for the first time, I give consent for FreightWaves to send me event updates and news. I can unsubscribe from these emails at any time. For more information please see our Privacy Policy.