US shippers urged to step up planning for ELD mandate
“Even though December 2017 seems like a long time a way, it’s just around the corner when you consider that most trucking companies don’t use” electronic logging devices, Brian Fielkow, CEO of Jetco Delivery, an ELD-equipped diversified trucking and drayage operation.
Starting Dec. 18, 2017, truck drivers will have to scrap the paper logbooks in use since the 1930s in favor of some type of electronic logging device, or ELD. The immediate goal of the transition, mandated by Congress in 2012, is to improve driver hours-of-service enforcement.
Getting ELDs into more than 3 million drivers and trucks before that deadline is a major undertaking, and one projected to cost trucking operators more than $1 billion. Training those truck drivers to use ELDS also could take months, a period in which productivity may decline.
The rejection of a challenge to the ELD mandate by a US Court of Appeals on Monday casts the Dec. 18, 2017 compliance deadline into sharper relief. Truckers who postponed planning for the mandate now have little more than a year to comply with it.
“Shippers are advised to survey their core carriers as to whether they currently employ ELDs, or have a transition plan,” Fielkow said. “If a carrier suggests ELDs are a bad idea, this is a red flag.” At this point, shippers are likely to see red flags dotting the transportation landscape.
A survey of more than 1,000 small trucking companies by Truckstop.com earlier this year found 84 percent of the respondents did not have any ELDs or on-board computers, and most didn’t plan to purchase and install them until the December 2017 deadline draws much closer.
“A lot of people wait until the last minute,” Thayne Boren, general manager of Truckstop.com mobile solutions, said. “A lot of people will get close to that December deadline before choosing a vendor.” That could prove problematic for carriers, freight brokers, and shippers.
Smaller trucking companies adopting ELDs closer to the deadline will initially lose more productivity than did larger companies that have already switched to electronic logging, Derek Leathers, president and CEO of Werner Enterprises, told shippers earlier this year.
Those who haven’t yet purchased ELDs are not just struggling with costs of purchasing the equipment but with the ability to deploy the technology effectively within their operations while keeping wheels rolling and money flowing, Leathers said at the NASSTRAC conference.
Companies such as Werner, with more than 7,000 trucks, were able to introduce ELDs gradually, using their scale to blunt the impact of lower truck utilization rates, keeping the drop in productivity to 3 to 5 percent, he said. He expects a greater impact on smaller fleets.
Many shippers are already asking trucking companies whether they have ELDs and if not, when they expect to install them. Shippers “don't want to be the proverbial last person standing in this high-stakes game of musical chairs,” Richard Stocking, president and co-CEO of Swift Transportation, told Wall Street analysts during an earnings conference call Oct. 25.
“Most shippers are not yet requiring (carriers to have ELDs), however, the majority of them are asking about it in conjunction with bids,” Stocking said. “They are conscious of the fact that any contract they lock in starting next year will span the ELD requirement implementation date.
“The nearer we get to that date the more we expect this topic to be discussed and the more likely it is to be a requirement (from shippers) and ultimately affect the pricing environment.”
“Shippers can expect price increases,” Fielkow said, as trucking companies see truck utilization rates and driver miles slip during the implementation period. Although shippers that don’t plan ahead or think electronic logging is simply the carrier’s problem could face worse than a rate hike.
For one, their shipments could be stranded if a truck driver is placed out of service by law enforcement for violating the rule. If that’s not bad enough, think of the liability implications in an accident lawsuit of having chosen a “non-compliant” trucking company to move freight.
What’s more, shippers will need to ensure that their own lanes and delivery expectations are “compliant” with HOS rules. In other words, shipper delivery expectations will have to fit within the legal driving hours available — asking for more could be considered driver coercion.
“Shippers may need to reset how many hours getting from point A to point B really takes,” said Fielkow, who will lead a think-tank-style roundtable discussion on ELDs at the JOC Inland Distribution Conference in Memphis on Nov. 8. “Working with a noncompliant carrier, shippers may have a false sense of travel times, affecting their production and planning,” Fielkow said.
Planning for the ELD transition will bring benefits. “Carriers should now where their trucks and customer loads are down to the nearest blade of grass,” Fielkow said. “All parties will benefit from being able to prove arrival time, free time, detention time and departure time.”
However, planning time is limited, he pointed out, and the regulatory clock is ticking.