(Editor’s note: This is the second of a three-part White Paper article by National Logistics Management (NLM) concerning carrier capacity issues. The first part appeared in our Dec. 19, 2005 edition.)
The trucking industry moves more than freight; it literally moves the American economy. Components that ultimately comprise a consumer product are well-traveled prior to the product’s assembly having been shipped several times at different phases of the manufacturing process; as raw materials, components, parts and the final product, which is then trucked to retail outlets. Moving freight is an essential economic driver that facilitates the manufacture of goods for consumer consumption.
Yet, in today’s highly-competitive, lean manufacturing environment the carrier industry is facing several issues that threaten to disrupt this precarious balance and, if left unresolved, could threaten to slow the nation’s economy.
With truck drivers literally driving the industry on several levels, one of the major issues faced by truckload carriers is carrier capacity. The industry is experiencing an unprecedented shortage of drivers. There are simply not enough drivers to cover all the shipments with the levels of service manufacturers have come to expect. This has many implications for longer time-to-delivery as well as increased costs, which will ultimately be passed on to the consumer. Higher product prices will cause consumers to alter their spending habits and purchase fewer goods, which will have a negative effect on the nation’s economy.
In addition to driver shortages, another important issue affecting carrier capacity is the new Hours of Service (HOS) rules that went into effect in January 2004. The rules make it harder for truckers to earn the same wages they had prior to the enactment of HOS. The Federal Carrier Motor Safety Administration (FMCSA), a division of the Department of Transportation, implemented the first changes to HOS in 60 years as a way to manage health and safety concerns for drivers. The new rules allow for longer hours and more rest, with the number of hours a driver is allowed to drive and required to rest based on a 24-hour cycle. The old rules were based on an 18-hour on-off duty cycle.
Long-haul drivers can now drive for one additional hour each day, up to 11 hours in a 14-hour period, as opposed to the former 10 hours for a 15-hour on-duty period. However, drivers must now rest for at least 10 hours each day, as opposed to only eight hours of rest required by the old rules. While these changes seem subtle, they have the potential to make a strong impact on the carrier industry. FMSCA sees a reduction in the nearly 5,000 trucking-related fatalities each year by at least 75.
For the truckers themselves, however, as well as carriers and manufacturers, the impact is not projected to be as positive.
With the new HOS rules, drivers in general are finding that they can’t work enough consecutive hours to deliver goods on time. For drivers with multiple stop points, each stop to load or unload goods can take a significant chunk out of the 14 hours allotted per day. Additionally, these drivers may be receiving smaller paychecks because the new HOS rules make it hard for them to drive as many hours as before.