Market InsightNewsTechnology

ELDs hurting flatbed carriers more than other modes

Flatbed operations that can’t take advantage of “drop-and-hook,” have not recovered from the implementation of the ELD mandate. ( Photo: )

As the trucking industry continues to broadly install and learn to use the ELDs (electronic logging devices) required by the FMCSA (Federal Motor Carrier Safety Administration), there are beginning to be large disparities in the way the devices are impacting capacity via mode. Carrier size is a challenge to ELD adoption, with smaller carriers struggling more than larger carriers, but equipment type is proving to be a larger challenge than carrier size. 

Truckers that are pulling dry van trailers still face challenges as they learn to re-optimize asset utilization but they are proving to be the most successful of all the truckload modes. Reefers face larger challenges and are still struggling to adapt. Flatbed carriers are struggling and failing to adapt as solutions such as ‘drop and hook’ that are relatively easy for dry van and possible for reefer are difficult, if not impossible, for flatbed truckers.

The capacity constraint produced by ELDs reached its worst point in February for dry van. Demand growth has stayed strong and is continuing to exceed capacity, but capacity is recovering as carriers are pre-planning a driver’s schedule out for the next 48 to 72 hours. The use of additional trailers and giving favorable treatment to customers who allow loading and unloading of equipment without the truck (or driver) being present, is putting even small carriers on the road to asset utilization recovery. We will continue to monitor this closely and should point out that demand still exceeds capacity more than it did at the peak in 2014, however, the improving asset utilization trend is equally significant.

Similar to dry van, the capacity constraint produced by ELDs reached its worst point in February for reefer. Also similar to dry van, demand growth has stayed strong and is continuing to exceed capacity, and capacity is recovering as carriers are pre-planning a driver’s schedule out for the next 48 to 72 hours. Smaller reefer carriers are also seeing benefits on the road to asset utilization recovery.

That said, reefer carriers face two significant challenges that dry van does not: a new reefer trailer is more than two times the cost of a new dry van trailer; unloading, and especially loading, a reefer trailer requires far more monitoring than dry van. The driver, or someone else who can be held responsible, must make sure the door is only opened when the unloading process is about to begin/closed as soon as the loading process is finished; and the temperature must be set to the appropriate level. This reality of the reefer industry has historically driven much lower trailer to tractor ratios (1.4 – 1.6 to 1) than are common in the dry van industry, where trailer to tractor ratios are often 2.5 – 3.0 to 1. Put another way, even if a reefer carrier can work with a customer to yield more customer monitored loading and unloading (without the truck or driver present), the lower trailer count puts a limit on the amount of utilization that can be recovered through ‘drop and hook.’

Unlike dry van and reefer, the capacity constraint produced by ELDs for flatbed carriers became severe in February and has only continued to become worsen. Similar to dry van and reeefer, demand growth has stayed strong and is continuing to exceed capacity, but capacity is not recovering as pre-planning a driver’s schedule is not the issue. The use of additional trailers for most flatbed loads is just not an option. Yes, the flatbed trailers are more expensive than dry van trailers, but the cost of the trailer isn’t the constraint. The driver must be involved in the tying down/securing the load – ‘drop and hook’ is extremely rare in the flatbed industry. So, to the extent a trucker’s 14 hours a day are impeded by loading and unloading time, that capacity is not being recovered. We see no easy solution to the current situation and expect flatbed rates will continue to skyrocket until flatbed driver pay reaches a level adequate to attract a material amount of new talent to the industry, or the industrial economy in the U.S. cools.  Stay tuned…

Show More

Donald Broughton, Principal & Managing Partner, Broughton Capital

Prior to starting Broughton Capital Mr. Broughton spent nine years as the Chief Market Strategist and Senior Transportation Analyst for Avondale Partners. Before that, Mr. Broughton spent over twelve years at A.G. Edwards. At A.G. Edwards, in addition to being the Senior Transportation Analyst, he was the Group Leader of the Industrial Analysts and served on the firm’s Investment Strategy Committee. Prior to going to Wall Street, Mr. Broughton spent eight years in various distribution and operations management roles in the beverage industry, including serving as the Corporate Manager of Distribution for Dr. Pepper/Seven-Up companies and Chief Operating Officer for Bevmark Concepts.

One Comment

  1. So what we are really finding out is flatbed carriers cannot work within DHOS when monitored with an ELD. Another confirmation the one-size-fits-all attempt the FMCSA used for the current rules do not work. Different modes require allowances for their operation. Flatbed drivers should be on line 4 (on-duty not driving) far more than dry van or reefer drivers with chaining/strapping and secureing loads and again at delivery. What will we see next? An exodus of flatbed drivers because of the intolerable rules or higher hourly pay to account for the line 4 time needed? ELD’s are not the problem…it is the DHOS rules that in no way reflect or take into consideration how any trucking operation is actually run.

  2. Flatbeds? How about car haulers or pneumatics or tankers or heavy haul or household movers? I haul cars and never drop my trailer. I also can spend 2 hours at auctions looking for cars only to spend another 2 hours loading those car once they’re staged. There are many segments of trucking that can’t function efficiently under the pathetic 14 hour rule(13.5 hour rule in reality). I believe that the flatbed industry is monitored and analyzed more than the other segments I’ve mentioned. Eld’s have simply shone a brighter light on the far reaching inefficiency and practically dangerous constrictions of the hos rules.

  3. You notice the "title" of this article. "ELDs hurting flatbed ……..
    The FACT is that ELDs have nothing to do with. It is the HOS rules. They have not changed. The ELD mandate did NOT change the existing HOS rules. Why is it so hard, Donald Broughton, for you to call this what it is? SOME carriers are struggling NOW because they have to run LEGAL. It is really just that simple.

  4. Who cares who does what or when they do it? Tarping or chaining a load, sitting at a dock while they load cheese on your reefer unit. Sitting a papermill having your dry can loaded. Being at a customers house loading 20k of stick. We all have to adhere to the same clock, the same laws and rules!!! So much scrutiny on the transportation sector yet every other entity on the highways of our nation can do what they please and fear no retribution!! Days of the outlaw truckers are over fellas!!! These guys buying 99 or older trucks will only get away with it for so long!!! Government will find a way to make them compliant as well at some point!!! Just a dumb bedbugger with 22 years driving and 2 million miles and honestly… running like this has me more tired and worn out then I’ve ever been in a 33 year moving career!!! HOS IS THE PROBLEM!!!

  5. It’s hurt every one how work on is business. They should work on other things like gun violence. live us alone we try to feed our family.

  6. ELD hurts all trucking industries, not only flatbed trucks but more problem is HOS hours. They should change it. But over all, ELD most HORIBBLE thing they ever did it.

  7. Dry bulk is another example when driver never rest. Yes, transportation industry required monitoring but 10-14 HOS are not only profoundly detrimental to industry, it reveal that the government legislature is an incompetent and absolutely incapable to conduct the policies and affairs of the trucking industry.