Two years ago, in December 2015, the Federal Motor Carrier Safety Administration (FMCSA) ruled out a new mandate known as the ELD mandate. It states that all fleets and trucks will have to install a certified electronic logging device (ELD) by the end of 2017. The ELD will electronically record a driver’s status, eliminating the need of the paper logbook. Paper logbooks have been the only way for the DOT to monitor a truck driver’s hours on duty. Logbooks are used to record a truck driver’s compliance with the Hours of Service (HOS) requirements.
Fleets now have until December 16th 2017 to implement the ELD that will record HOS. Still, the technology behind the electronic logging device is not a completely new thing. ELD technology is a next-generation technology that will replace the onboard recording devices that many trucking companies use.
The Benefits of an ELD (Electronic Logging Device)
Some of the features included in today’s ELD that are similar to onboard devices have in common include the electronic tracking, the engine sync, and the shared data that managers can see on a real-time basis. However, as a new technology with a lot of novelties a modern ELD can offer mapping features, advanced driver behavior settings and reporting on speeding, idling and hard braking. This data may be beneficial for insurance companies to lower or increase rates for trucking companies.
It’s true that as a next-generation technology, the electronic logging device (ELD) concept will drastically reduce the number of accidents on the road. No one can argue against fewer accidents and a safer road for all of us to navigate on. Trucking managers who often struggle to reduce overhead will be able to better manage their truckload drivers. Truckload management in a more competitive environment is extremely important to keep truckload rates down. However, what a lot of people haven’t thought about are how truckload rates will increase. A simple reason why truckload rates will increase is the initial investment of about $500.00 per truck per year. This can be a huge investment for truckload carriers who have 80 or 100 trucks. Also, the controlled fashion in which carriers will now have to operate is the real culprit of higher truckload rates.
How AN ELD Trucking World (Will) Increase Truckload Rates
Just like any new technology on the market, electronic logging devices have to take their ‘victim’. In this case, it is truckload rates that will suffer most. With a price of up to $500 for a single electronic logging device per truck per year, truckload carrier fleets are investing in a technology that is quite expensive. Although effective in gaining more time on the road and fully transparent when it comes to driver tracking, this technology definitely piles up the costs for many freight shipping companies, forcing them to increase their rates at least until they return the investment. This as we all know, takes a lot of time and will hardly happen.
Another reason why ELD implementation may push truckload rates higher in the following years is productivity losses that will occur in the near term. Another elephant in the room is the ever-present increasing demand for truck drivers who can hardly be found. This ‘productivity hit’ will mostly target large fleets which will be forced to increase their truckload rates from 4% to 8%. The impact of the ELDs to truckload carriers is likely to be much higher.
Why Are ELD’s Being Mandated For Truckload Carriers?
ELD’s or electronic logging devices are being mandated for many reasons. As is the case with many carriers there are always drivers who want to circumvent the law. The DOT or The Department of Transportation has always known that some drivers will rig their log books to allow them to drive for more hours. Most of the time this is seen as an inoffensive act, but the reality is that there have been many fatal accidents due to drivers who have abused this practice. Public outcry and also a high profile accident where Tracy Morgan was seriously injured and James Mcnair was killed brought the need of monitoring driver fatigue to the center stage.
How Soon Will We Know If This New Regulation Will Truly Curb Truck Accidents?
As with any new technology we will have to wait for the data to come in. Data will slowly be shared by the NTSB, possibly sooner if this data shows a significant drop in fatalities due to driver fatigue. We all have to share the same roads and anytime we can feel a little safer most everyone will view this as a step in the right direction. No one wants more regulation or big brother always keeping an eye on us but there have been to many avoidable accidents for us to not do something about it. We all have to accept that technology sometimes will go through growing pains and as other challenges presented in the past we will get throug2 this one as well.
Will This Situation Ever Stop In The Future?
If we take the time and consider this entire situation as ‘normal’ yet ask ourselves for how long it will continue, the most logical answer that you will get is a couple of years to come. With the spot market being more volatile, the 4% increase in truckload contract rates can easily mean a 15% to 20% upswing in the spot pricing.
A lot of trucking companies have agreed that the ‘truck shortage’ is what will most likely cause a 10%-20% increase in truck rates this year, where trucking companies will lose 10% to 20% of their ability to run miles. Large fleets that already adopted ELD’s have seen this in practice and seen how the productivity drops associated with the devices. Yet, smaller trucking companies will likely wait until late 2017 to switch from their paper logs.
In the end, we can all agree that despite quite costly, his type of automation will offer significant opportunities for improving the efficiency and safety in the coming decade, as well as forcing drivers to learn and be part of a more connected, digital future. If right now a truck spends more than half its time sitting while the driver rests, there will be a better way to automate that in the future.