Feb 06, 2017
One small change can have an enormous impact. The change in this case is the electronic logging device (ELD) mandated by the Federal Motor Carrier Safety Administration (FMCSA) in 2015. It goes into effect for commercial motor carriers December 2017, less than 12 months from now. If your business relies on intermodal trucking, it’s important to understand how ELDs may impact your supply chain.
But first, let’s look at the purpose of ELDs and why they’re being mandated. The FMCSA’s goal is to increase safety on the road and strengthen hours-of-service (HOS) compliance. They believe ELDs will help reduce large truck and bus accidents that occur due to driver fatigue from driving long hours or beyond the legal limit. Additionally, ELDs are considered to be a more accurate and efficient method of recording a drivers’ time on the road.
The fact is only 8% of intermodal trucking is handled by large, national firms. The remaining 92% is handled by smaller trucking companies and independent, owner-operator drivers. In many cases, these smaller firms and independents are still logging their miles with paper logs. The transition to ELDs may be a big leap for them for financial and operational reasons. The cost of expensive equipment may be prohibitive and many of these businesses are logging additional miles to stay afloat and support their typically lower base rates. ELDs will simply cut into their current hours of business which will be costly.
The ELD mandate may push these drayage drivers out of the industry which could result in a loss of up to 15% of the drayage capacity
An interesting twist to the ELD mandate is that drivers of vehicles manufactured before 2000 are exempt from the ELD rule. The outcome is drivers are holding onto their 1990s trucks to take advantage of the exemption. But, this raises a possible concern regarding the viability of these trucks and if they will be a weak point for supply chains. Obvious concerns regarding green initiatives are raised as well.
Furthermore, this regulatory change adds to existing challenges in the drayage sector including: port congestion, an aging driver population, and drivers leaving to work in other industries. Together, these factors plus ELDs add up and may create a challenging environment for truck capacity in 2017.
To prepare for ELDs, intermodal trucking firms and owner/operators should prepare early. By getting ahead of this mandate through early implementation of this new technology it gives drivers time to learn and adjust to the new technology.
With ELDs in place it will be important to be fully compliant with all HOS (hours of service) regulations. With a higher level of precision and accuracy there may be an operational impact. To prepare for this impact, firms can develop their network to build driver density to ensure they have the additional capacity in place when ELDs go into effect. This will ensure customers have the service they require for effective supply chain management.
The December 2017 deadline will be here before you know it, so prepare now for ELDs. Determine how they will impact your business and what steps can be taken to address their impact now.