Shippers’ Supply Chains Could Take Hit from Electronic Logging Device Mandate
By December 18th, the trucking industry must use electronic logging devices. This electronic logging device (ELD) mandate will likely not only affect truckers but also significantly impact shippers.
The ELD rule in and of itself is a good thing, promoting safety for truckers and other drivers on the road, as well as making “it easier and faster to accurately track, manage, and share records of duty status (RODS) data,” according to the Federal Motor Carrier Safety Administration (FMCSA) website’s overview on ELD.
For those unfamiliar with what an ELD is, FMCSA has you covered. “An ELD synchronizes with a vehicle engine to automatically record driving time, for easier, more accurate hours of service (HOS) recording.”
What could be bad about this?
Here’s the problem. There are a great many truckers who falsify their logs in order to drive more. Falsifying logs will be much harder to do with the ELD rule in place, potentially having a large initial impact on the industry as many truckers and trucking companies will have to change their practices.
This could create a couple negative impacts on shippers’ supply chains:
- Decreased trucking capacity
- Increased trucking costs
William B. Cassidy wrote a great article in the Journal of Commerce (JOC) titled Shippers warned ELD mandate will crimp supply chains, in which he quotes John Seidl, a transportation consultant and former FMCSA trucking investigator as saying:
“I think false logs have been an epidemic, from the 1930s until right now, and they’re going to go away.”
But before going away, false logs appear to have increased as the article goes on to say that the FMCSA reported false log violations rose by 11.5% in fiscal year 2017 after a 9.6% increase in 2016 and that the amount of truckers taken off the roads in fiscal 2017 increased by 3,900 drivers to 30,274.
The industry has already experienced a trucker shortage, and more truckers could exit the industry with the ELD rule. Many truckers struggle to make a living, which is a big reason why there is such a strong temptation to falsify logs and do more driving than the law allows.
Fewer drivers would certainly decrease capacity, but capacity will likely take its biggest hit from the decreased hours truckers will be able to spend on the road.
Cassidy quoting Seidl, who says falsifying logs is more widespread than many think, explains it nicely in the JOC article:
“Would you stay at a truck stop for 10 hours if the only difference was a piece of paper and a pencil?” he asked. “Let’s say no. I’m going to stay there 8 hours. That gives me two additional hours of driving. Two hours a day, five days a week, that’s 10 hours a week.”
Multiply that by 10 drivers, and that company is picking up an additional 100 hours a week. “Last time I checked, that’s [the equivalent of] a driver and a half,” Seidl. That 100 hours is also the equivalent of a 14 percent productivity boost that 10-truck carrier will lose with ELDs.
Because it is unknown how many truckers and trucking companies are actually falsifying logs, it’s impossible to know how big of a capacity impact the ELD mandate will have on trucking.
By the laws of supply and demand, decreased capacity should result in increased cost for shippers in trucking their goods. However, there are other factors that would also increase those costs.
AmWINS Group posted an article showing 8 areas in which the ELD mandate will impact trucking. Among them are compliance costs and operational costs. Any cost increases trucking companies experience will, of course, get passed on to their customers, the shippers.
Hiring is another area AmWINS highlighted. “…there will be many drivers who are not comfortable with ELDs because of concerns regarding privacy and other issues, and some will leave the industry as a result.” Hiring, and truck buying, may also increase as companies try to regain lost capacity. With the trucker shortage already mentioned earlier, hiring could be a long process that also comes with costs trucking companies will look to make up for in the prices they charge shippers.
Shippers should be prepared for the likelihood that the ELD mandate will affect their supply chain and costs. But shippers should also know that there’s a way they can help this situation.
Often, truckers are held up by shippers in the process of loading. Shippers being prepared for the arrival, loading, and unloading of trucks helps keep the supply chain moving faster. This means having teams ready for live loading or unloading of trucks as well properly packing containers ahead of time that will be placed on trucks’ chassis and being prepared to receive shipping containers trucks are dropping.
Here are a couple blogs on container loading that can help in that area: