BLOOMINGTON, Ind. — The full effect of the U.S. electronic logging device (ELD) mandate on trucking capacity remains to be felt, according to an analysis by industry forecaster FTR.
Enforcement across the country is not yet in full effect, and failure to comply with the mandate will not place drivers out-of-service until April. Also, many states have thus far taken a lax approach to enforcement, according to Avery Vise, vice-president of trucking research, who spoke during an FTR State of Freight webinar on ELD implementation impacts on Feb. 8.
“Some states are not writing ELD violations until Apr. 1, and others are using the discretion of the enforcement officer,” said Vise. He also noted there’s little evidence to date that insurers or shippers are taking it upon themselves to ensure their carriers are complying with the ELD mandate.
This means that carriers and owner-operators who had been threatening to park their trucks rather than comply with the new regulation will not likely have done so yet, especially as spot market freight rates have strengthened considerably in late 2017 and early 2018.
Even an owner-operator that suffered a 9% productivity hit when switching to ELDs would be making $30,000 a year more today than a year ago, based on the rise in spot market prices, all other factors being equal, Vise explained.
“The question is, will they pick up on that, or are they making an emotional decision?” he said. “If you do the math, until we get below $1.75 a mile…they are still doing better in February 2018 than in 2017.”
He added there is anecdotal information circulating that the ELD mandate is squeezing some capacity out of the market.
“What we’ve seen at this point is anecdotal,” he explained. “We’ve heard people saying owner-operators are returning trucks to dealers, brokers are calling and finding a carrier is not around.”
Clayton Slaughter, senior analyst and general counsel for FTR, said conversations with small carriers have suggested many will run as long as they can until they’re forced to comply.
“Simply having a mandate without a business reason to comply wasn’t going to be enough to them,” he said. “Now they appear to have dug in their heels and said they’re not going to comply until forced to.”
If there’s a widespread exodus of owner-operators from the market when enforcement agencies apply the full force of the law in April, it’s not likely to cripple the trucking industry, Vise said. He said owner-operators account for about 4.7% of the U.S. truck count, so even if they all parked their trucks, “it is survivable.”
However, on the other hand, 4.8% of the carrier base in the U.S. represents about 80% of all power units, so the impact on capacity would be far greater if small carriers park their units.
There’s also the matter of an exemption request submitted by the Owner-Operator Independent Drivers Association (OOIDA) that would allow small fleets with good safety records to be exempted from the mandate. However, Vise explained that as worded, such an exemption would cover the majority of the industry.
The request asked the FMCSA to exempt small carriers with annual revenues of less than US$27.5 million, which don’t have an unsatisfactory safety rating, and haven’t been involved in any at-fault crashes. The comment period ended last week, with more than 4,000 comments filed, and the request had the support of some 25 members of congress.
“My personal feeling is that it’s not likely to succeed, but…there is some chance this could succeed,” Vise warned.
If the exemption is granted, it would apply to 95% or more of trucking companies.
“We could be talking about an exemption that would affect tens of thousands of carriers,” Vise said.
“It’s larger than all the other exemptions on the docket combined,” added Slaughter. “If we exempt everyone from the rule, eventually we have no rule and we get into a legal battle that says ‘We’re not going to enforce that’.”
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