The trucking industry has been teetering on the electronic logging device issue for a years now. Not many wanted to see it come to fruition, and now that the December compliance deadline is rolling around, trucking companies and truck drivers across the nation are hoping for a reversal on the ruling. Mainly this is due to the deregulation stance of Trump, which has sparked optimism in ELD dissenters. The main reasons these individuals and companies hope that the ELD mandate will get dropped is due to a loss of productivity.
Freight Rates in Steady Climb
Whether you haul freight for a company like Core Carrier Corp, Horizon Transport, or McLeod Express LLC you are at the mercy of industry freight rates. These rates are regularly reported according to haul type, i.e. spot van line haul rates, flatbed truck rates, etc. By looking at freight rates over an extended period of time, trucking industry analysts and experts can predict to some capacity the handle the heavy loads. These rates have already begun to increase in 2017 at nearly 3 points higher than years prior for dry van and flatbed trucking loads. As rates increase this should be good news for trucking fleets, but unfortunately the rate increases must be taken into account with other circumstances.
Running at Max Capacity
The trucking industry has been running its trailers at maximum capacity for a while now. Those in trucking are reeling from the low cost of diesel fuel thanks to the North Dakota oil boom starting in 2012, which declined in 2015. Then in the summer of 2016 we had the port trucking strikes that held up imported goods and backlogged the trucking industry. Combined with the Great Recession, this scenario put the industry in dire straits that are now being worked out as company inventories are built back up to optimal operation capacities. However, the industry has not been able to keep up with this growth, which has also been fueled by the new Presidential administration’s optimistic economic forecast. We simply don’t have enough trucks and trailers to increase supply routes.
Decline in Reliable Truck Drivers
In addition, the industry lacks reliable truck drivers to handle the heavy increase in trucking jobs. Several factors are at play when it comes to truck driver retention and trucker shortage. The lack of aged and experienced truck drivers willing to take over the road trucking jobs is the primary issue. However, the retirement of the baby boomer generation combined with the increased job force of millennials who favor tech over trucking is not helping matters. The industry can’t find drivers to fill the seats of semi trucks, even if the industry increased freight hauling capacities at the fleet level.
Perfect Storm for Industry Disruption
As the US economy is booming following the new Presidential administration, these rates are expected to increase. That’s a given as economic growth is passed along to the trucking carriers handling the nation’s goods. At the same time you have the issue of truck driver shortage and lack of truck driver retention that has been plaguing the industry for years now. Combine this with the enforcement of ELDs and you have a perfect storm for trucking industry disruption.
ELDs will force drivers to slow down and take longer to deliver freight. For truck drivers on the ELD system, they are going to be required to stop on a set “9-to-5” type working schedule. Unfortunately this is not conducive with the job of a truck driver. For example, if you are going to have a load delivered in Phoenix for an Arizona trucking company, and you know that Phoenix traffic is horrendous at a certain time of the day, pre-ELDs you are able to take a break when it works best for you. The problem here is that truck drivers are constantly altering their paper logs to accommodate this type of scheduling.
When ELDs are mandated across the board, it will severely limit a truck driver’s ability to drive on a realistic schedule. As a result, more than 70 percent of independent truck drivers and small trucking companies have said they will quit the trucking business before they comply. Tack on all of the truck drivers near retirement age who say the same thing. Now imagine if this takes place, and the trucking industry, already at a max capacity with limited skilled drivers and an increase in freight rates, will be in serious trouble. Fewer companies in operation and drivers on the roads, and for longer delivery times, means that freight will be stuck in transit for more time, creating havoc for shipping customers and causing a decline in economic confidence and stability.