Electronic Logging devices

INTRO

At Total Logistics Solutions in Omaha, NE we operate a trucking company, warehouse and brokerage, and in the near future electronic logging devices mandate will take effect. There is uncertainty on what the impacts of this transition from paper to electronics will do to business and the economy. For those that don't know the Supreme Court denied OOIDA's appeal and the mandate will go into effect on December 18, 2017. ELD's will eliminate the leniency of drivers keeping multiple logs and being able to play with their hours. This small detail will have a major impact on the industry! Below we will discuss the impact for trucking companies, drivers, and shippers.

Shippers

Shippers will have some challenges and most likely will be looking at a price increases. Some things that will be impacted include; no shows, accurate tracking, detention rates, rates, and late deliveries. Let’s break them down one at a time.

No shows:

When shipping, nothing aggravates you more than when an order is pulled and a truck does not show up. I expect this to happme more frequently, especially if the driver got held up at his previous appointment. With paper logs if you're waiting at a delivery you can just say your day started later. With electronic logs as soon as you move your truck you have fourteen hours to get your eleven hours of driving in and will no longer have this luxury. I foresee many times when truckers are an hour or so away and have to stop driving, even though they haven't gotten their eleven hours of driving in that day, causing them to miss their appointment.

Accurate tracking:

Another annoyance shippers deal with is a trucker saying he will be there in a hour when he is really 3 hours away. ELD's will provide more transparency on where their freight actually is, which will save some headaches. There have been many times at the end of the day when a trucker says he is right around the corner and you end up staying late for someone that is hours away. Transparency will definitely be a benefit of ELDs.

Detention Rates:

As mentioned previously, drivers being able to play with their logs while being held up by shippers, will no longer be possible. This will make shippers releasing drivers promptly that much more important, because of this I would expect detention times to decrease and for the rate for detention to increase.

Trucking rates:

There will be a variety of factors that will effect trucking rates including; productivity, driver retention, and insurance. Many companies have already switched to ELDs and have seen a loss in productivity with their drivers. Two different companies reported a 9% decrease in driver productivity after switching to ELDs, in which they raised the driver’s wages to make up for less miles driven. Another issue is driver retention. Currently the average age for a truck driver is 49 years old compared the average age of all workers, which is 42. This means there are a lot of drivers that are close to retiring and many drivers have expressed that they will retire once they have to go to ELDs. One company with 100 drivers reported after they went to ELDs lost 25% of their drivers. Being that by 2020 they are expecting a shortage of 200,000 drivers there could be issues with capacity in the industry. CH Robinson's president of North America surface transfers estimated there will be a 2-3% reduction in capacity. One benefit of ELDs may be that Insurance rates are expected to drop, because drivers will no longer be cheating on their logs, therefore be safer. I personally see this differently and will discuss it later. If prices do drop though, shippers may see a small reduction in rates.

Late Deliveries:

Another expense companies may see, is if their product starts showing up late, because of drivers running out of hours. Once again if a driver is close and has paper logs he can adjust the logs a little to deliver on time, with ELD he has to shut it down no matter how close he is to making his delivery. This could run companies out of product and cause big expenses if it happens. It may take a little more planning for manufacturers to order their product with enough leeway.

Trucking Companies:

Will have some unique challenges of their own receiving some benefits with less paperwork, better tracking, and possibly lower insurance rates and higher safety rating, but initially may have a problem with driver retention, scheduling loads, productivity, and increase in costs to retain drivers.

Paperwork and Tracking:

Having ELDs on trucks will no doubt cut-down on paperwork that has to be done in the office from checking driver’s logs, to running miles, and completing fuel reports. There will also be a relief on dispatchers having to track drivers since their location is always just a click away. For larger companies this could mean some layoffs and a chance to save some money.

Insurance and safety:

Trucking companies are expected to see a decline in insurance rates and an increased in safety from having ELDs on board. The FMCSA, who is pushing for ELDs has done a study and said it would prevent 1844 crashes and 26 deaths a year from drivers not going over their hours. I personally see some flaws in this study. The biggest issue being that with no leeway, drivers will be forced to drive in situations where in the past they have sat. Drivers that already have ELDs installed have talked about being forced to drive in rush hour because they had no choice, when in the past they would rest, wait for rush hour to end and continue. The same could be said for poor weather. Another issue could be, with less time truckers may also have to drive faster. Creete Carriers has raised their regulator on their truck from 62 to 65 mph. Wes Memphis a prominent truck blogger has said his company has also increased the speed on their trucks because of the ELD and he has seen his mpg go from 6.9 to 6.2. In addition, when truck drivers get tired they sometimes like to stop and take a short nap. This many times will no longer be possible, because that 14 hour clock is ticking, so if you get out of a drop late, you have to go nonstop. Finally, when truck drivers run out of hours they may be forced to park in places that aren’t necessarily safe.

I find it difficult to believe that with all of these negative impacts the trucking industry will be safer. If anything I see the positives and negatives of safety canceling each other out.

Driver Retention:

As mentioned previously the average age of drivers is 49, which is a very old age for an industry. That means that many drivers are very close to retiring age, and having to drive with an ELD many will quit. Most of the older generations are not as tech savvy as the younger generation so many just don’t want to have to deal with it. These drivers leaving the industry will make the driver shortage that we currently have even worse. That means there will be fewer trucks on the roads, will require companies to pay drivers even more money to retain them, and supply and demand says rates will increase.

Scheduling loads:

This may be one of the more difficult tasks for companies to adjust to. Dispatchers will have to make sure to give drivers plenty of time to complete their loads. Most dispatchers focus on the 11 hour window that drivers have to drive, it will now shift to the 14 hour window when their clock starts. More lenient scheduling will most likely drop productivity.

CONCLUSION

The era when drivers had flexibility with their schedules seems to be coming to an end. Some drivers may like it, because when their clock is up they are done, there is not pushing it. My guess is most drivers will not like it, because it takes the flexibility out of their driving. Not every driver is the same, not everyone sleeps 8 hours a night, and some people ma‍‍‍y sleep less and take naps. Either way ELD are sure to raise costs for companies and shippers, whether it actually increases safety will be observed here shortly.