Truck News

News

How will the ELD mandate impact pricing?

Spot market prices could surge 20% as ELD rule takes full effect: FTR


BLOOMINGTON, Ind. — When the U.S. electronic logging device (ELD) mandate is fully implemented, trucking productivity could take a 2.5% hit, requiring the hiring of 60,000 additional drivers.

Such a scenario, outlined by industry forecaster FTR, would push truck utilization to about 100%, potentially driving up trucking rates. In a State of Freight Webinar called Preparing for the ELD future, FTR transportation economist Noel Perry expressed doubts that the industry, already struggling to find drivers, would be able to find 60,000 more in addition to the 300,000 it already needs to hire per quarter just to keep pace, especially since additional regulations in the works could further hit productivity and require the hiring of another 20,000 additional drivers.

“Can we hire 80,000 extra people in a single quarter? Normal sources of hiring demand about 300,000, and it will climb to about 375,000 in the first quarter of 2018. That’s a 26% increase. We believe we can’t, so there’s going to be pressure on capacity until they catch up, some time late in the year,” Perry said.

Such hiring spikes have been required before, most notably in 2004 and 2014, when capacity utilization reached nearly 100%. What happened then? Trucking prices spiked.

In 2004, spot market prices rose 15% and contract prices climbed 10%, thanks to a productivity hit incurred by new hours-of-service rules coupled with strong freight demand. In 2014, spot market prices rose 11% and contract rates 4%. One week in 2014 saw spot market prices rise 20% as capacity utilization was at its max.

Already, trucking capacity on the spot market is “scary tight,” Perry said, citing data from Truckstop.com and its loads-to-trucks ratio.

“A 20% increase in spot rates is not outside the realms of possibility,” Perry said, looking ahead to the impact the ELD mandate will have on pricing. “Our conservative numbers are, if anything, underreporting what’s beginning to show in the marketplace.”

But, predicting the impact of the ELD mandate on trucking productivity is an inexact science. Perry said an over-the-road truck that’s maximizing its hours could see a 5-8% productivity hit, while other trucks that don’t run a full 70 hours a week may not be affected. Perry also noted about 40% of U.S. fleets are currently already using ELDs and will have worked through any hit to their productivity. And of course, there’s no chart that shows how many fleets are running paper logs and egregiously violating hours-of-service regulations, and how many of them will be unable to continue operating in an ELD environment.

But all those factors taken into account, Perry said the maximum effect of the regulation will occur sometime in late 2018, “assuming reasonable enforcement” of the law.

“The effect at the peak, we think will be 2.5-2.7%, which doesn’t seem like much, but when you consider 3-3.5 million trucks and you take 2.5% of that, it equals somewhere around 60,000-70,000 trucks using crude math.”

 

 


James Menzies

James Menzies

James Menzies is editor of Truck News magazine. He has been covering the Canadian trucking industry for more than 15 years and holds a CDL. Reach him at james@newcom.ca or follow him on Twitter at @JamesMenzies.
All posts by

Print this page
Related Articles
TruckNews
TodaysTrucking


5 Comments » for How will the ELD mandate impact pricing?
  1. Steve says:

    If it did spike up 20 percent!! It’s not muchvas it’ll bring it back up to what we had 1. 1/2 years ago!! So not a raise !!!( and if it is a drivers shortage y r the rates down? ???????? If there was 300,000 short the average truck driver would be getting paid half decent!!!!! There is not a shortage!!!!! Them people r just telling the government there is to keep the rates down!!!!!!!!!

    • Steve .N. says:

      That is incorrect Steve, there is a driver shortage, and it is largely due to the fact that we do not get paid as well as a lot of people would like to think. And with the new ELD mandate, many drivers are taking a huge financial hit. With this happening and prices of freight increasing, this will increase the prices to the consumer at the pumps and in the stores. In turn, this will make it even more difficult to get new drivers into the industry because the rate of pay is not increasing with the rest of the costs increasing.

  2. Moto says:

    The estimates are inaccurate and the rates are in flux. What drivers deserve are rates that actually work.
    $1.00 per mile seriously for back hauls and then customers complain about $3.00 per mile inbound. Well umm, I think it’s self explanatory. This is just to maintain a $2.00 per mile minimum which still isn’t that great.
    • Or how about no detention being paid or warehouses not abiding by the appointment times and stretching your hours thin? • Who is responsible for that and why doesn’t the government mandate the shippers to rules and regulations or be forced to temporary shut downs for non compliance.
    • Why is it only the truck drivers and trucking companies must adhere to mandates and rules?

    I could go on and on but who is listening anyway, no-one cares about the truckers.
    They are just another means to the greedy end of the liars.

  3. Fred says:

    As of 12-22-2017
    seen one board post for $15.00 a mile all ready $5.00 a mile becoming the norm got to love the eld mandate Like taking 300000 trucks off the road and no where enough capacity left after EDL !!!!
    It’s a grate time to be an independent driver owner

Have your say:

Your email address will not be published. Required fields are marked *

*